Volume 49, Issue 3 - March 2014

Boom, Boom (East, West and Some Places in Between)

Some Regions are Booming, Others, Still Recovering
by John Hollis

If expert predictions hold true, 2014 is poised to be a good year for construction—welcome news to many in the contract glazing industry. Still, as the market continues to rebound, some areas of the country will likely fare better than others. Which regions are busy and which ones have been slower to mend? Here’s a regional roundup of what glass companies are seeing nationwide.

Easy Does It
Business is much improved these days, but far from great. That seemed to be the recurring theme among contract glaziers along the East Coast as they collectively struggle to regain their footing following the worst economic storm to batter the U.S. since the Great Depression.

“Business is okay,” says Peter Cornellier, vice president of the Upper Marlboro, Md.-based TSI Walls and Architectural Metals. “Not great, not terrible … pretty even keel, as expected. I think the industry is still slow with the exception of high-rise buildings.”

Recent numbers appear to support that claim as construction employment jumped by the largest monthly amount in nearly seven years in January 2014, adding 48,000 jobs bringing industry employment to the highest level since July 2009, according to a recent analysis of new government data by the Associated General Contractors of America (AGC).

That boom in business couldn’t have come at a better time for some contract glaziers in the East.

Thomas J. Mayo, the chief estimator/director of preconstruction services for Boston-based Karas & Karas Glass Co. Inc., says the construction industry is definitely showing signs of life again in Boston in the form of new construction projects, especially in the areas of rental towers and academic projects.

“There’s a ton of construction going on here,” he recently told USGlass magazine. “Everybody’s busy and that’s good.”

That relative prosperity as of late, however, has been slow getting around. TSI Walls is hoping for a similar outcome in the near future.

As in so many companies, the lack of work in 2013 forced it to lay off 10 percent of its employees last year, Cornellier says, as the company adjusted to a shrinking market size. Revenues were up just three percent from the year before.

The long bright spot, says Cornellier, came in a bevy of high rise residential construction that put a premium on the need for larger pieces of glass that were as clear as possible. Unitized curtainwalls were desired for many of those projects.

Southern Comfort
Donill Kenney, the vice president of Palm Beach Glass Specialties Inc., says there’s no escaping the South Florida construction boom underway.

“You can’t go anywhere without seeing construction,” he says. “It seems like there are cranes everywhere. Every piece of grass that used to be there, somebody bulldozed over. It’s out of control.”

But not everybody in the South is sharing in this sudden economic resurgence, according to findings by USGlass magazine. Florida and Texas have been the two biggest beneficiaries of the recent uptick, but that renewed prosperity has yet to fully filter across the entire South.

Texas is likewise enjoying a resurgence of sorts, says Jerry Wright, president of AAA Glass in Fort Worth as well as the Texas Glass Association.

“I would say that conditions are favorable, especially in North Texas,” he says. “Any time you have people complaining about not finding enough qualified help, that means business has improved.”

Amy Thomas, the co-owner of The Glassmen Inc. of Slidell, La., would love to have such “problems.”

Her small, family-owned business has long specialized in showers and mirrors, but the lack of work means the company may be forced to branch out into other avenues if it hopes to remain viable.

“Slidell is just dead right now,” she says. “After Hurricane Katrina [in 2005], everything was booming. But everything is just at a standstill right now. It’s terrible. It really is.”

No such problems at Palm Beach Glass where net sales pushed up roughly 10 percent in 2013 to $8.8 million, Kenney says. He credits proper planning and adequate prudence for allowing his company to weather the economic storm.

Taking advantage of federal tax incentives that would help keep it competitive, the company invested in several hundred thousand dollars’ worth of new equipment in 2013.

Midwest Living
Lou Cerny says he’s read all the recent stories heralding the resurrection of the construction industry. The vice president and project manager for Chicago-based Arlington Glass is optimistic, but remains cautious about heralding any such renaissance just yet in the Windy City, as progress remains slow, but steady with private investments.

“We are seeing more private work being bid, with municipal, city and state still leading the bidding process,” he says, “but private monies seem to be loosening up … For me, the biggest factor is seeing private investments going into the market. With government spending, one never knows what the real economic direction is and, as a matter of fact, large spending by government (in comparison to private) typically means that the private sector has slowed down.”

Cerny’s caution is counter to the more optimistic industry forecasts as of late that have projected a continued spike in construction spending and employment.

One doesn’t have to look far to find the problems still plaguing the construction sector and the ancillary fields such as the glass industry that depend on it. One of the city’s oldest glaziers confirmed as much. Chicago Glass Co., a family-run business that first opened in 1924, shuttered its doors for good in December, according to a representative who answered the phone at the company headquarters.

Susan Knauss, the owner of Liberty Glass in Perryville, Mo., says sales have remained about roughly the same over the past year, meaning her company didn’t have to lay off any employees, but didn’t have reason to hire any new ones either.

“It’s getting a little better,” she says, “but it seems like every time it’s getting better, something always seems to come up.”

But Jurate Akstakalnyte, the manager at Chicago’s Ashland Glass, says things can only improve from the dismal state where they once were.

“We survived the hard times,” she said, “so we keep going.”

Winning out West
The good news was that dire economic conditions forced Perfection Glass into laying off just one of its employees last year. The best news yet is that things began improving so quickly for the Kennewick, Wash.-based glass company that the same employee was hired back within a month.

But vice president of operations Robert J. Rojas isn’t so sure that 2014 is going to bring more of the same upswing.

“I wish I could say [2014] would trend more like last year,” he says, “but I have a feeling it will be more like 2012 unless we have a big push in new construction and remodeling.”

Like a number of areas across the nation, the West Coast also saw a mixed bag in new construction activity in 2013, but benefited from an increased demand for the remodeling of older homes.

“We saw about an 11 percent increase [in sales] over last year and profits right in line with previous years,” Rojas says.

But 2014 has gotten off to a slower-than-expected start for the company, with a slowdown in new construction and a reduced demand even for retro-fits prompting recent layoffs.

Based in Fremont, Calif., Walters & Wolf was pleased to see net sales increase in 2013, as well as critical profit margins, and anticipates more of the same ahead.

“Business is looking up,” says Tom Black, the company’s COO. “These past years have been slight terms of revenues and margins. We, and many in the industry, took advantage of this period to hone skill sets, re-examine the business and accomplish the goal of keeping the team intact. In addition, those of us who have been through previous troughs resisted the temptation to take work with little or no margin.”

Black says he sees more of the same ahead.

“The economic factors seemed to be healthier nationwide with select regions more robust than others,” he says. “All in all, the slope is up. As for industry specifics, the adaptation of the new codes, with NFRC criteria embedded, is impacting the industry as a whole. Additionally, the decision-making process at the project level is elongated due to the increased number of stakeholders influencing those decisions causing uncertainty of schedule and thus revenue flows.”

John Hollis is a contributing writer for USGlass magazine.

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