Celebration Time? Not at All
WDMA Members Learn It’s More about Making Drastic Changes to the Way They Do Business 
by Tara Taffera

Though it was time to gather with peers, there didn’t seem to be much too much reason for celebration. After all, attendees of the Window and Door Manufacturers Association annual meeting, held January 26-30 in Palm Beach Gardens, Fla., were told the following:

• That housing starts will continue to drop and the worst may be yet to come;
• That the DOE is overhauling its Energy Star® program so vastly that manufacturers will have to make major changes to meet the new criteria;
• That lawyers are targeting window manufacturers for class action lawsuits in an increasing number; and
• The future of oil is uncertain and even the experts don’t know what’s coming; There was one good-news, bad-news scenario presented—green is not a fad, it is here to stay and companies must embrace this trend. The good news is that it could be the key to making your door and window company profitable.

There were a few bright spots. If you’re a fiberglass manufacturer, your market share will continue to grow. If you’re a WDMA member, at press time a major announcement regarding moving the association forward for future growth was forthcoming. And, a new concept, Building Information Modeling, is the big trend hitting the construction industry.

Oil Prices
Jerry Taylor, senior fellow of the Cato Institute, offered his insights into oil economics, though even he noted insights may be a strong word. He recapped for attendees the fact that oil prices rose from $60 a barrel in August 2007 to $100 today.

“This is one of the largest price increases in recorded history,” he said. Why? “Beats the hell out of me,” he said in a statement repeated several times throughout his presentation.

“People who say they know are lying,” said Cato, who told attendees not to listen to the energy forecasters.

“Energy forecasting is horrific. They have been jaw-dropping wrong,” said Cato. “If past is prologue, we will see a jaw-dropping decline in price.”

Those who are worried about high oil prices being an indicator of the economy shouldn’t worry, according to Cato.

“The conventional narrative about how high oil prices tank the economy is wrong,” he said. “If you would have asked economists what would happen if oil went from $26-$100 a barrel they would have said ‘a steep recession.’ This didn’t happen.”

Cato also addressed the energy crisis, and singled out the items he believes will not provide any solutions to it. This includes nuclear power as Cato said the costs to build these new plants are huge. He said the same for renewable energy alternatives, and then went a step further. “Reducing greenhouse gas emissions will increase prices,” he said. “Protecting the environment and reducing prices are at odds,” he says. “The two don’t mix.”

At the conclusion of his presentation, one participant asked Cato what he thought about government guidelines regarding energy.

“I hate them. I’m an old fashioned guy. If people want to build an efficient building, let them. If I want to pay high energy costs for my house with high ceilings, that’s my right.”

He added, “I’m happy to see green labeling so consumers get a good picture of what they are buying, but beyond that I don’t agree with it.”

Litigation—How Not to be a Target
While door and window manufacturers should not share cost information with each other, attorney Dan Smith of Bowman and Brooke law firm told attendees that there is one exception to that rule. “Litigation is one area in which manufacturers should share information with each other,” he said. “If you win that’s good for the industry—it shows you are a difficult target.”

Smith points out that window manufacturers are more at risk than those who make doors. Smith offered valuable tips regarding what companies can do to make themselves a less desirable target. These includes:

• Training customer service personnel. “The claims will be brought to customer service people first so they may end up determining whether or not you will get sued,” said Smith. Warranty reps and customer service reps should document everything. He added that if a case is brought to court, a company can say, “If there is a problem, why aren’t customers complaining?”
• Training Installers. “When you look at the cases, many come down to the fact that windows aren’t installed properly,” said Smith. He added that it is important to be very specific with installation instructions, such as adding photos to instructions. He also encouraged manufacturers to make sure installers are trained properly. 
• Product Labeling. Putting dates on windows is extremely important, said Smith, as this helps with the statute of limitations.
• Warranties. Smith said manufacturers are doing a good job with warranties as far as making them available on company websites and through other methods. He did offer some advice, however. “Have different warranties for different products and different geographic areas,” he said. 

BIM—a Groundbreaking Model 
Window manufacturers were educated and awed by the presentation regarding “Integrating Products with Building Information Modeling (BIM),” given by Steve Jones of McGraw-Hill Construction. 

“This is the biggest change our industry will go through in our lifetime—no doubt,” Jones told attendees. BIM is a database of physical and functional characteristics of a facility. “It’s the most current set of DNA for a building,” said Jones.

Through the BIM model, parametric objects can understand their relationships with other objects. “This eliminates a lot of dumb mistakes that get made,” Jones said. For the door and window industry, the timesaving advantages of BIM are huge. “You can put in a certain set of windows and get an energy calculation,” he said. 

“This used to take weeks.” The model also may be used for existing facilities.

“You want your products being pulled into these models,” said Jones, who told attendees that the tipping point for BIM will come in 2008. (To view the presentation, visit www.wdma.com.)

From Green to Gold 
While energy topics dominated much of the WDMA’s meeting, it ended appropriately with a presentation by Andrew Winston, author of From Green to Gold. He told attendees how smart companies can use environmental strategy to innovate, create value and build a competitive advantage. He gave several examples of companies, such as Dupont and Wal-Mart, that have made a commitment to waste reduction and have saved billions of dollars doing so. “It’s not a fad, it’s a permanent way of doing business,” he said. “It could be the key to making your company profitable.”

He pointed out how Toyota is known as the innovative leader in the automotive market, and how door and window manufacturers can follow this example.

“If you do this in the window industry, it will make your brand,” he said. Winston warned attendees, however, that if they introduce green products they better make sure they are actually green. He also told them to not be afraid to set big targets as the companies who do this are the ones who enjoy great success. 

Ducker Releases Preliminary Forecast Data at WDMA Meeting 
Scott Shober, partner with Ducker Worldwide, released some preliminary data for the annual window and door market study before attendees of the WDMA’s annual meeting. Ducker performs this research, which is commissioned by WDMA and the American Architectural Manufacturers Association. Shober stressed that this is preliminary data and the final data will not be released until April.

Some of the statistics were no surprise for door and window manufacturers, who are all too familiar with the dramatic decline in housing starts.“2007 marked the worst residential construction slump in decades,” said Shober. “But it was a banner year for non-residential.”

He reported that single-family starts declined 28.6 percent, and projects another steep decline in 2008.“The outlook is rough for 2008 …. Certainly we are all anxious for 2009 to get here,” he told attendees. For the residential window market, following is how the individual materials fared in 2007: vinyl—57.7 percent; wood—27.1 percent; aluminum—12 percent; and fiberglass—2 percent. “There was a little gain on share for wood—a little decline for vinyl,” said Shober, though he added that vinyl has gained slightly on the remodeling side.

Other trends noted: The average home size is leveling off. And on the remodeling side, as a whole the market will double in 2008, but the door and window market won’t fare as well as other remodeling markets, he said.

Shober offered some additional preliminary statistics, including:

• In 2007 the patio door market declined 16 percent.
• The interior door market is expected to soften through 2010. 
• On the skylights side the downturn is pretty severe. Ducker estimates a 17.1- percent decline for 2007 and a 13-percent decline in 2008.
• In the distribution study, the area of installation services is becoming the new battleground between the big box and the lumberyard. Additionally, lumberyards and specialty retailers are getting growing business from manufacturers.
• While non-residential spending increased by 25 percent versus 2006, Shober reported that this market is starting to peak. Ducker predicts a flat outlook for 2008 while adding that the hospital and educational markets are “spots of light.”

More on Energy Star^®
The DOE’s Richard Karney spoke before WDMA attendees regarding proposed changes to the Energy Star^® program. For that story, see page 16. 

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