Volume 8, Issue 9 - October 2007
It’s no secret that the U.S. housing market has slowed down considerably in the last 18 months. Just a quick glance through the last year’s “Industry Indices” section of DWM will show you that—not to mention that the housing market makes national news almost daily.
But, what about vinyl window manufacturers who make windows for new construction? Is the slow housing market trickling down to them, too? And how are they dealing with it? Many manufacturers are diversifying their businesses to accommodate the slowdown in new construction.
When asked if the slowdown has been apparent at National Vinyl Products in Chicopee, Mass., which makes both vinyl new construction and replacement windows, Scott Channell, president, answers with one re-sounding word: “absolutely.”
He says his company started to see a lag approximately in April 2006.
“[We started to see a downturn] about 15 months ago, about the same time the gas prices started going up,” he says.
While National Vinyl predominantly manufactures replacement windows, Channell still says he’s seen a 15- to 20-percent drop in business on the new-construction side.
Wayne Gorell, president and chief executive officer for Gorell Windows & Doors in Indiana, Pa., manufactures retrofit vinyl windows mainly, but new construction does make up a small portion of his business. Gorell says his company has seen a downturn on both sides.
“Both retrofit and new construction were down 20-percent-plus last year and this year, but we’ve managed to stay flat by adding new customers and new products,” he says.
Jeff Hearst, general manager for Alliance Vinyl Windows Co. Inc. in Mount Ephraim, N.J., says the fact that it’s slow on both sides is particularly unusual to him. Approximately 60 percent of his company’s business involves replacement windows.
“Generally, when new construction is down, replacement is up, but I haven’t seen that happen yet,” he says.
He notes, though, that it’s affecting the whole industry—not just one company here or there.
“It’s not the first time there’s been a slowdown in our industry—it’s just the first time in a long time,” Hearst says. “It doesn’t make it easier to know others are suffering also, but it is comforting to know there’s not a lot that can be done.”
Gorell agrees that it’s an industry-wide problem.
“We think it affected us because it affected the whole industry,” he says.
The downturn has also spread to Mathews Brothers, a window manufacturer in Belfast, Maine, that makes both new-construction and replacement windows.
“Replacement hasn’t completely made up for the shortfall on the new construction side,” says Brent West Jr., vice president of the company.
“We decided it wasn’t going to get any better and the only way to grow was to add market share,” he says. “We added a whole bunch of options to our replacement windows to enhance the offering so we could basically offer everything.”
Among the options Gorell has added are a new 1⁄6-inch energy glass option, six new exterior painted colors and a full line of interior decorator trims.
In addition, the company added hurricane products to its line in an effort to combat the slow housing market in late 2005.
“We started with products that would be acceptable inland, more than a mile from the coast, and then earlier this year, we came out in the first quarter with a full line of coastal hurricane products,” says Gorell. “We’re still adding to that [line] now with casements and patio doors coming out soon.”
Alliance also chose to enter the hurricane market in an effort to remain competitive.
“We have introduced an impact window here recently—a grade-50 product … as well as an impact product, launched in the last six to eight months,” Hearst says.
In 2005, Gorell decided to enter a whole new arena of products: patio rooms.
“We came out with a full line of vinyl rooms with a foam room and aluminum rooms with foam roofs and conservatory rooms with vinyl walls and Lexan roofs,” he adds.
Channell took a similar route this past June.
“We’re trying to add more value-added [options] to our processes and to our window products,” he says. “We’ve got a new window line … which is allowing us to go after a completely new market segment.”
Mathews Brothers, a traditionally wood window manufacturer that expanded into vinyl about 15 years ago, went back to its wood roots during the downturn.
“We have expanded our line to include the Mikron Wood system,” says West. The Mikron system utilizes cellular PVC with a wood veneer on the interior. Known as the DuraClassic™ at Mathews Brothers, the window was added to its line two years ago to combat the slow housing market.
Simonton Windows, headquartered in Parkersburg, W.Va., has followed the lead of its fellow vinyl window manufacturers. While the company says its line of new construction, replacement, impact and West Coast windows has kept it balanced during the market woes, it still is adding to its product line to prepare for the future, says Chris Monroe, vice president of marketing. “We are … in the process of introducing a new Double Hung Brickmould new construction product line this fall since our Single Hung Brickmould new construction has done so well this year. We expect that product introduction to have a positive impact on our builder sales,” he says.
Crystal Window and Door Systems in Flushing, N.Y., has taken a similar route, but has gone a bit further than adding a new product line. The company actually launched an affiliate in 2006—an ornamental fence manufacturer, On Guard Fence Systems in Plainfield, N.J.
While many manufacturers are adding new products and options to stay afloat, Gorell notes that this project hasn’t been without its challenges—but that with diligence, adding new products and options in a slow market is possible.
“It’s hard to bring on this many new options with all the computer programming that’s required, the added vigilance you need in the plant to get everything done properly and the marketing tools you need to sell to consumers,” he says. “We’ve been very diligent in trying to have everything ready and put together to do a good job on it.”
For National Vinyl Products, the answer was in a new market: the high-end dealer.
“We’re a relatively local manufacturer that sells to a lot of the contractor market … we’re not [traditionally] looked at from a high-end dealer market,” Channell says. “[With the new window line,] we’re allowing ourselves to provide dealers with a product that’s not sold to the masses. It gives us, as well as them, differentiation.”
So, how does the new window line allow them to now market to these new, high-end dealers?
“The particular product we manufacture is one of the best-performing products in the market today as far as dual-glazed, thermal[ly] and structural[ly],” he adds.
Gorell continues to focus on its current customers for its added options on its window line, but has branched out for the patio room line.
“There are a few [of our patio room customers] that are door and window customers,” he says, “but mostly we focus on people who focus on being in the sunroom business.”
And, he notes, marketing to those in the sunroom business is a whole new ballgame.
“[A patio room] is a want instead of a need, which marketing-wise is as different as black and white,” says Gorell. “It’s a whole different approach to the marketing of the product and the way to take it to the dealer and to take it to the consumer.”
For manufacturers such as Mathews and Simonton, which have stuck with more traditional expansion methods, they note they’ve stuck to their primary market: window dealers.
While West doesn’t expound much on the success of the DuraClassic™, he answers the above question with a definite “yes.”
Channell says that, so far, the addition of a higher-end window to its product line has assisted it in adding new customers during a time that otherwise could have been troubling.
“We are seeing a difference in some new accounts that have come on board, and we’re enthusiastic about our future with our new Contempo™ window [the new product’s trade name],” he says.
For Gorell, the results have been surprising.
“[The patio rooms] have actually beat our expectations,” says Gorell. “[Sales of the patio rooms] more than doubled this year and last year … We see no reason it won’t double next year as well.”
Help from Suppliers
“We follow what our customer base is looking for, and a lot are looking for fencing,” says national sales manager Patrick Rutherford.
Aquasurtech in Laval, Quebec, has taken the route of offering additional options for its customers to offer dealers or end users, including a spray-on finish to make a vinyl window appear metal. The finish is available in bronze, copper and silver.
Bronze Craft in Nashua, N.H., has branched into the bomb-blast market, by offering a multi-point locking system designed for bomb-blast conditions to fill the needs of those wishing to offer bomb-blast-resistant windows.
Royal Group of Woodbridge, Ontario, has expanded its entire line for the same reason—offering new profile systems, including a patio door profile line, and options, including new stains.
“We’ve tried to bring a lot of products to the market and to the show to give manufacturers lots to offer,” says Art Ramey, Royal’s president for North American sales and marketing.
Those Not Affected
“We’re so busy we don’t know what to do with ourselves,” says Mike Rosati, owner of Rosati Windows in Columbus, Ohio—a company that manufactures replacement windows only.
George Dailey of Dailey Manufacturing Co. in Willow Grove, Pa., tells DWM his company’s business has remained steady as well through the downswings—but didn’t attribute the continued business to anything in particular. Dailey manufactures both new-construction and replacement windows.
What Lies Ahead
“The housing market is still contracting, but [the] action by the Federal Reserve to cut the federal funds and discount rate calmed the financial markets and sent a message to American consumers that our central bank intends to ensure that the economy continues to move ahead,” he says. “This well help to support housing, especially if the Fed takes further action in the months ahead. We expect starts and permits to bottom out by mid-2008 before the systematic recovery process gets underway.”
If Seiders is right, vinyl window manufacturers—and the rest of the new construction industry—may have more than a year before they start to see an upswing, and even then, the recovery could be a slow process.
Based on this, West says Mathews Brothers is still in the process of determining its next step.Gorell already has plans for the future.
“We plan next year to do some product enhancements on our existing product lines and the following year, we’re looking at adding some additional product lines,” he says.
Simonton’s Steve Wrubleski, vice president and general manager for SimEx, Simonton’s extrusion arm, agrees with Seiders—though the timing is unknown, the market is bound to head the other way eventually, allaying manufacturers’ fears.
“I think the whole market is trying to figure out how to fill capacity while waiting for the market to come back, which it will,” he says. “The market has had a pretty good ride for the last eight years.”
Hearst is optimistic, but, like many others, expects it to take time.
“I think it’s going to drag on for awhile to be honest,” he says. “I think it’s going to be late next year before there’s any meaningful pick-up in business.”
Penny Stacey is the assistant editor of DWM magazine.