Money in the Bank

John G. Swanson
November 1, 2008
COLUMN : Opening Remarks

Dan Glover, owner of River Valley Window & Door in Lake Havasu, Ariz., was part of a “state of the window and door industry” panel that spoke at GlassBuild America in September. His company was one of our 2007 Dealers of the Year. Serving builders in the new construction market, he enjoyed growth and success as more people flocked to that desert community. He has seen firsthand the housing market meltdown.

In his area, permits for new houses have dropped from about 100 a month to one or two. Glover has since moved his business into the remodeling and replacement market, and says “we’ll be okay.” Sales are down, but profitability is up. He also notes that if new construction comes back at all, he’ll be a lot more selective in working with builder customers.

His company is smaller, however. One of Glover’s comments that struck me most was what he said was the most difficult part of the whole experience—telling workers he could no longer afford to keep them. “It was devastating.” Many had moved to the small enclave because of the job offer, he noted, and had no other good options nearby. In reporting all the manufacturer plant closings of the past few years, I realize each one of these stories represents a dramatic event that is devastating to employees who worked in those locations. The vast majority of these people had very little control over their company’s destiny.

But some of us do. What pleased me most about GlassBuild was the sense that window and door manufacturers coming to the show—and it was somewhat of a surprise to me, given the current economy, just how many came —was the sense that they were there to take some control of their destiny. Manufacturers came out to looking at new products—composite window materials, unique hardware, 2013 Energy Star window design options—to either gain market share now or position themselves for when the market does come back.

I don’t know where the stock market will be by the time this issue is in print, but the Dow plummeted each day we were at GlassBuild and apprehension was in the air. The road ahead is tough. The timeframe for “hitting the bottom” and starting to move upward as far as window and door sales is being pushed back by most. Those once hoping for a 2009 recovery are now saying 2010. Those who said 2010 before are saying 2011.

I asked one supplier if anyone had any money to buy equipment these days and he said, sure. And, he added, “After the last 10 years we’ve had in this industry, shame on those companies that don’t have cash. If they don’t, I don’t want to do business with them.”

A harsh assessment, perhaps, but there is some truth in it. We have enjoyed some remarkable years before the housing industry tumbled. If companies weren’t making money for much of this decade, and putting some in the bank, it’s hard to blame someone else if they’re struggling now. Keeping money in the bank—“preserve cash”—was the advice offered by other experts in the “state of the industry” panel. My guess is that most of the manufacturers at the show owned or worked for companies that had been able to do that.

When window and door sales do come back, I suspect much of the industry will be like River Valley Window. Many companies will be smaller and, maybe a bit smarter. We’ll focus not just on sales but on profitability, and perhaps we’ll all put more money in the bank.