(Almost) Business-as-Usual for Pre-hangers

Pre-recession trends continue to gain some momentum in pre-hanger channel
Christina Lewellen
March 15, 2009
FEATURE ARTICLE | Segments, Channels, Markets & Trends

Some of the trends that were emerging or blossoming before the economy began to bottom out continue to define pre-hangers, even in the current economic environment. That’s not to say the economy isn’t having a big impact on this supply channel—it certainly is. But there are plenty of pre-hangers and millwork specialists that have adopted the attitude to keep on keepin’ on— looking for ways to expand their product offering, stake a claim in the green building movement and incorporate technology to make business more efficient and consistent.

“I think we are in a period of constant change, economically,” says Jack Huse, an industry consultant with the Karston & Randall firm and former owner of a window and door distribution company in Milwaukee. “It’s a little bit of unchartered water. But if you adjust to it, unchartered water is not all that bad. It creates a competitive environment.”

While the economy is indeed pulling down volume, pre-hangers are reporting that a limited number of segments are buoying their businesses through these tough times. “In looking at our sales breakdown, of course all segments are down,” says Tim Luper, president of North Sate Millwork, Rocky Mount, N.C. “But in light of the fact that we had just started our exterior business about a year and a half ago, our exteriors seem to be holding up fairly well. I wouldn’t say any particular item is stronger, except perhaps the higher ticket doors are not down as much. That would indicate that the contract home has not been hurt quite as bad as the speculative market.”

Huse reports that several of his pre-hanging clients have diversified into light commercial or commercial work to offset the dip in residential building. “Some of those companies have posted extremely good increases,” he says. “One of the things we do see as a bright spot throughout 2008 was the commercial and light commercial segments. One of the companies I’ve consulted for saw a 30 percent increase in 2008 and another one was up 25 percent.”

The slab manufacturers providing product to pre-hangers are echoing the importance of diversifying to stay viable. Plastpro sales manager Marcel Chehade notes that with residential new construction so badly bruised, the Livingston, N.J., manufacturer has directed more of its efforts to helping its customers succeed in the retrofit market. “Our efforts that we’ve put in the remodeling part have paid off,” he says. “It has generated new avenues for us. If there’s anything positive about what’s going on in the building industry in general, it’s the remodeling. We anticipate it to grow in 2009.”

Pre-hangers are quick to point out that the recession has not nudged consumers back to “vanilla” doors. Would-be buyers are more inclined to wait to make a purchase than to opt for a cheaper door that doesn’t suit their tastes or the architectural styles of their homes. “Doors are being purchased to make a statement, similar to a piece of furniture in the home,” says Rich Ramella, facility manager at Van Millwork, an interior millwork specialist serving the New England area. “People are not just buying a two-panel door or a four-panel door any longer, but matching the door to their home’s architectural style.”

Pre-hangers have been adapting to growing demand for many more door styles and finish

“It is still a customized product,” agrees Luper. “People want different hinge colors, and that’s a trend that started four or five years ago. The 8-foot tall doors are a big deal and it’s still growing. With 9- and 10-foot high ceilings, and some even higher, 8-foot tall doors are in more demand.”

What has changed as a result of the economy is how distributors are handling this increased demand for customized exterior and interior door systems. While most pre-hangers have increased the size of their inventories to keep up with varied demands, many companies are relying on their manufacturers for just-in-time-like handling of order fulfillment. “We haven’t made any additions to our inventory, but we do continually look for new vendors who can provide items to us within a few days,” says Van Millwork’s Ramella. “This helps to minimize our own inventory and at the same time, provide products to our customers without a time delay.”

Huse mirrors this sentiment with what he’s seeing with pre-hanger clients. “I think what they’re doing is relying more heavily on manufacturers who have a supply on hand that they can order, due to the fact that there’s such a wide variety available,” he says. “What they’re looking for is someone who can supply those materials in a timely fashion. They want to be inventory-light and order per the job.”

Still, Luper has found that North State Millwork can serve its customers better as a two-stepper to up the level of physical products it has on hand. “Since we’ve opened [in 2005], we’ve gradually increased our inventory SKUs to reflect the needs of the market in terms of designs and even sizes,” he explains. “You find more weird sizes now, and we’re carrying those to accommodate the desires of the market.”

Flexibility in physical inventory is also partially the inspiration for Plastpro’s recently-launched line of trimmable fiberglass doors. The company introduced early this year fiberglass slabs that can be trimmed one inch from each side, a half-inch from the top rail and one and a half inches from the bottom rail. “Being able to adjust the height or width of the door and cut-to-size at the point of installation is a major benefit,” says Franco An, president. “It allows contractors, remodelers and builders to fit an existing doorway with precision and avoid having to reconstruct the entryway.”

Peggie Bolan, vice president of sales and marketing for CMI, says, as a manufacturer, her company is staying as flexible as possible to accommodate its pre-hanger customers who are whittling down their inventories. “They’re wanting to buy smaller units of product,” she says. “In terms of customer service, we are selling smaller than our minimums, but that choice comes with an upcharge.”
Even if it means paying more for small orders or rush processing, pre-hangers are moving to different inventory philosophies to maintain cash flow, Bolan says. “We’ve seen the inventories go to just razor thin,” she says. “They’re sometimes getting into trouble when they need rush orders, but it’s all about cash flow.” 

The buzz words and trends sweeping the rest of the industry have their own special place among pre-hangers too—things like the green building movement, possible regulatory changes, consolidation and pursuing lean business practices. “One thing we know for sure is that change will occur,” says Huse. “I think the trends will continue to change, despite the economy.”

Bolan says more of CMI’s customers have time to explore industry trends and buzz topics now that business has dropped off of peak levels. “Everyone we’re seeing is going back to the basics,” she explains. “People are more interested in stuff they haven’t paid attention to in a long time. A lot of our customers at the distributor/dealer level are interested in talking about displays, promotions, anything that’s going to drive traffic. They’re also using this time to get product education and have their own people get training.”

Among the topics on the training agenda is anything having to do with the green building movement, she notes. “There’s a lot more interest in our literature and the way we promote the green message,” she says. “For a long time we’ve been saying to our customers, ‘Here’s where our products fall in terms of the various green programs,’ but for all we know it was falling on deaf ears. Now that information is really getting to people. They’re absorbing it because they have time to do so.”

Van Millwork is spending time making sure its customers’ customers—the homeowners—are getting good information about green building products. “With so much information in the media about green building, the majority of our homeowners are confused and poorly informed,” says Jennifer Driscoll, director of marketing for Van Millwork. “It’s important for us to keep abreast of the newest and greatest products while also educating our consumers.”

Many pre-hangers are also keeping an eye on the continuing shift in preferred materials. “Fiberglass is slowly but surely taking over the market and for some very good reasons,” says Luper. “There are some inherent problems with steel, not the least of which is its price. The world market for steel and steel products continues to escalate. The price of steel is going to catch fiberglass and if the price is the same, people will be foolish not to buy the fiberglass.”

Imported fiberglass slabs are also helping to narrow the price differential, Huse points out. “With imports becoming a bigger part of the fiberglass market, that raw-slab cost between steel and fiberglass has gotten to be a lot narrower. When you look at the raw product, which to the hanger has a price difference of $30 to $40, I think the fiberglass door is an extremely good value.”

“There will always be a desire on the consumer end for some wood doors,” says Plastpro’s Chehade. “The wood door is flexible and can be custom made. But the popularity of fiberglass is on the rise and will continue to grow.” 

Pre-hangers continue to keep a close eye on proposed changes to how exterior door systems are tested. The International Code Council has sent the industry back to the proverbial drawing board to try to reach a compromise on S141, a proposal aimed to remove the current code exemption for exterior side-hinged doors to meet AAMA/WDMA/CSA 101/I.S. 2/A440, which is referenced in both the International Building Code and International Residential Code. The exemption allows distributors and pre-hangers to substitute components in the field to meet customers’ needs. Removing this exemption would mean that, for each component swap, every door assembly would have to be re-tested and re-certified to the tune of $1,500 to $3,000 per configuration. Given the exorbitant cost and marketplace impracticalities associated with the proposal, industry associations are working together to come up with an alternate plan to present to code regulatory bodies.

“The way the original document was written, it was very specific that each combination had to be tested,” Huse says. “In a smaller pre-hanging operation, that could amount to as much as $100 per opening for the consumer. At some point, to me anyway, we have to put a sense of reasonableness to this. We have to look at what we get for what we give. If the consumer actually knew what this would cost, I don’t think they’d make that decision [to eliminate the exemption in the code].”

North State Millwork uses a systems approach with its exterior doors but Luper continues to keep informed on this issue with the help of his suppliers. “It could present a real problem ultimately, but I don’t think that thing can ever really pass,” he says. “It would throw the market into such a quandary; I just don’t believe the government would stand by and allow it to happen.” 

As the economic situation unfolds, most pre-hangers and their suppliers are trying to stay flexible and lean, and they expect the playing field will be thinned out on the other side of the recession. “There will be fewer players at every level,” Luper says. “A situation like this tends to have a purging effect and it usually starts at the builder and dealer level. Ultimately, there will be some manufacturers falling out, and with that probably a thinning of some distribution.”

“The longer this slowdown in the business continues, the more people it’s going to bring down,” agrees Chehade. “There are a lot of folks who are ready to not exist, and more who could survive the next few months but not a year. I do see this coming back, but there will be fewer providers.”

Huse says he thinks consolidation of pre-hangers will continue to happen throughout this economic trough. “We still see people are bargain hunting and there are a lot of bargains out there. People are still shopping and if it’s a good fit for them strategically, they’ll move forward.”

CMI intends to stick to the pre-recession lean initiatives it established to remain as flexible as it can for its pre-hanger customers. “We’re evaluating decisions so differently than we would have even a year ago at this time,” Bolan says. “We started using lean management philosophy about two years ago and all our initiatives with quality and customer service continues to be tied to that.”

Pre-hangers, meanwhile, will continue to focus on segments that are faring better with methods proven to work for them. “Surprisingly enough, we find that all tiers of our target market are still spending,” says Van Millwork’s Driscoll. “The middle-income market through the luxury market continue to buy. Our company … continues to maintain sales through educating our customers on their various product options. A well-informed customer is confident in their decision and will purchase as long as it is within their means.”

“In some ways, and this is by design, we’re more primitive [in terms of using technology for order entry] than our larger competitors,” says Luper. “Let’s just say we consciously opened our doors with a certain business model. We put more of a personal touch into our order entry, confirmation and follow-through, and that’s our claim to fame. In terms of the shop, we intentionally chose mid-range capacity equipment. There are more high-speed, larger pieces of equipment you can buy, but there’s a downside to some of those things. We chose what we chose to give us more flexibility.”


Contact Christina Lewellen, senior editor, at clewellen@glass.org.