Volume 13, Issue 1 - January/February 2009

Is Window Film in Recession
Is Diversifying the Answer?

by Drew Vass

The worse thing you can do with a problem is ignore it. We’ve all heard the words, “If we had just talked about it, we probably could have worked through the issue.” That’s why nearly every advice book on relationships advises keeping communication lines open. And the window film industry is largely built upon relationships—relationships among manufacturers, distributors, dealers, installers and ultimately customers. Everyone plays a role in the overall success of the industry and the current economy is an issue that affects the entire chain.

While some industry members previously claimed that the window film industry is recession proof, on the whole, manufacturers agree: we are in a “window film recession” and it’s time to talk about it.

“To say there’s no effect in this economy would just be silly,” says Jennifer Shorr, vice president of sales and marketing domestic for Commonwealth Laminating and Coating. “We have certainly experienced a slow down with some of our dealers,” she adds.

“Things, general industry-wise, are a little rough—U.S. in particular,” says Jeffrey Plummer, senior vice president of sales, marketing and distribution for Solamatrix Inc. “You start to add up a few of the typical economic drivers and … window film is by no means an essential,” he adds. “When people are worrying about $4 a gallon gas or worrying about losing their jobs, then perhaps the $150 to $200 auto tint job, or making their living rooms a little more comfortable … I think those things begin to take a back seat.”

Plummer says he especially noticed economic effects during the last hurricane season.

“When there’s a big scare in the windstorm market, usually we feel that,” he explains. “We’ve had good close scares but, perhaps due to the economic situation, it hasn’t brought the rush of business that near misses often bring. We used to see a several million dollar bump [industry wide] when there was an active storm season … and, talking with folks in the industry, I get the impression that no one really felt that this year,” Plummer says.

If you’re a dealer, you might be thinking “Great, so the economy is in rough shape and we’re in a recession. Now, what are we going to do about it?”

Take the Bull by the Horns
“We as manufacturers need to step up and drive things,” explains Cody Forbes, worldwide marketing director for Johnson Window Films. Forbes says his company’s strategy includes remaining focused on the long term. “It’s an unfortunate situation that we’re all dealing with,” he says. “We try to tell our dealers that, hopefully, this is going to be a short term situation. We’re in it for the long run and they should be too. We will do anything we can to help them get through this. But ultimately, it is still about building long term relationships.”

Shorr agrees. “It will get better, we all know that, but we don’t know when,” she says. “We’re encouraging everyone to hang in there.”

But, when the purse strings are tightening for the average household, it will take more than a good old-fashioned pep rally to help keep dealers busy. “Instead of just saying these things, though, we’re trying to actually help people do that,” Shorr explains. For one, her company isn’t placing the burden on dealers by pushing them to purchase more film when they don’t necessarily need it. The company is also focused on keeping costs down.

“For the dealers, it’s all about making profit,” explains Commonwealth’s chief executive officer (CEO) Steve Phillips. “And you increase profits in one of two ways—you sell more, or you buy at a lower cost.” For this reason, Phillips says the mantra of driving quality, while keeping costs down, has become more important than ever for his company. Inevitably, he says some dealers will try to patch the difference in profits with a less expensive product. “But, if you’re buying at a lower cost but you’re trading off quality, that’s not a good value proposition,” Phillips warns. “I think, just like all industries, we need to adjust to the needs of the market. Right now, it’s even more important to have value for the money. But beyond that, we’re going to focus on supplying very good service and support to the trade.”

Been There Done That
For many, this is not the first “tint recession.” The industry has experienced (and survived) many difficult economic periods in the past—worldwide.

“You remember 1997?” asks Susan Shu Shan Yuh, managing director for Marko Tack, a Singapore-based manufacturer. “We had a very big financial crisis. Companies were experiencing 50 percent reductions in business.”

Yuh agrees that now is not the time to try and force the issue onto dealers by asking them to buy more film.

“In difficult times, we don’t fight with our customers,” she explains. “We don’t lower our prices, but we focus on giving our customers more and more in terms of marketing tools and services. We don’t push them to buy more, we allow them to buy less and we stick with them.”

Yuh points out that this issue hasn’t exactly taken the industry by surprise.

“I feel comfortable, because everyone knows that things have slowed down and they’re preparing to deal with it,” she says. She also believes this period could provide the industry with respite. “This is a good time for us, in many ways,” she says. “It’s an opportunity for us to slow down to plan and prepare.”

Some believe that the current slow down will be short term and many are diversifying their product and service offerings to fill the gap in the meantime. At the manufacturer level, several indicate they have diversified their product offerings to suit the specific needs of dealers during a recessionary period.

“Things are getting more and more competitive at the dealer level. That’s where some of our newest concepts are aimed,” says Raj Sood, president of Protect Gard. “Anyone who comes into a shop to have their windows tinted shouldn’t leave that shop without having their car tinted. If they can’t afford to pay high-performance, lifetime-warranty prices, then a cheaper option needs to be available. Otherwise, they’re just going to walk away and have their car tinted somewhere else.” One of Protect Gard’s newest lines is aimed at the lower end of the price spectrum. “The idea is—installers that purchase from us should not be losing business,” Sood adds. “In these times, any money that’s coming your way, you simply cannot afford to send it somewhere else.”

Adding Products to the Showroom
While manufacturers are diversifying their products and services for dealers, dealers are considering doing the same for their customers. But not all are sticking strictly to window film. While the concept is nothing new, especially for those who operate in areas subject to cold weather, it seems more and more are considering it a viable option these days. At the recent SEMA Show in Las Vegas, some dealers said they were seizing the opportunity to shop additional product lines. Barb Moran, CEO and president of Moran Industries, an automotive aftermarket franchisor, says she believes automotive tinters would be wise to consider diversifying within their current trade.

“I don’t know if [automotive film dealers] should really be looking at the audio or alarm sector,” Moran says. “I think they need to go out of the box and look at how they can evolve into a green concept. They’re already a film provider and they can provide products [within that segment] that offer carbon footprint advantages.” 

Christophe Fremont, president of Bekaert Specialty Films, agrees.

“Within window film, there are a lot of opportunities,” Fremont urges. “I am a proponent of focusing on your core. It’s very important to remain focused on what you do best. Instead of trying to go in all sorts of directions, focus on what you do. Focus on window film,” he adds.

Keep It in the Family
In addition to cross selling from automotive to residential, Fremont suggests automotive dealers consider adding products related to window film, because they’re easier to cross-sell. In example, he sites paint protection.

“Sometimes you don’t know that you want that,” Fremont says, pointing to a paint protection installation. “When you have your [automotive] customer in the showroom, waiting on his car, you can do some cross-selling. You should promote residential, safety and security and the energy savings concept. But, again, when you have an automotive customer in your shop who is investing in window film, paint protection is one more opportunity to increase the average [sales] basket.”

Ryan Eichhorn, president of AutoEffects in Pittsburgh, Pa., agrees that tinters should explore every option within their own industry.

“What automotive tinters should consider is—you’ve got residential and even paint protection,” Eichhorn says. “You’ve got so many options available within the window tinting industry.” But Eichhorn’s business is not a window film-exclusive operation and he admits that there are other product lines that combine well with film. He suggests that tinters working in regions with cool seasons consider adding remote starters to their line-ups.

“We started out as a window tint business back in 2000,” Eichhorn says. “We are window tinters,” he assures. “I have three installers working for me right now, but they will all become remote start installers as soon as the weather fully changes.”

Eichhorn says his company is not suffering from economic changes.

Of course, the window film industry isn’t the only considering picking up new products and services. At the recent SEMA Show, there were plenty of dealers from other aftermarket segments with their eye on tint. (See related article on page 26 of this issue.)

“I get calls from glass shops, stereo shops or detail shops all the time,” explains Robert Doan, president of windowtinting.com. “They say that so many of their customers ask whether or not they do tint. Because they don’t, they have to refer that business to someone down the street.” Doan’s business is a web-based window film trade school. “A lot of them are beginning to try and keep this business in house and want to add tint to their list of weapons for features and services to offer to existing customers,” he explains.

Not All Gloom and Doom
The fact is, despite market conditions, not all is gloom and doom in the industry. In fact, as 2008 came to a close, many at the manufacturing level reported strong results for the product segment. 3M recently announced a third-quarter sales increase of 6.2 percent over the third quarter of 2007 and partly credited the success to its safety, security and protection services, including its protective window films. Southwall Technologies Inc., a primary provider of raw polyester films for the window film industry, announced third quarter 2008 revenues of $10.6 million, representing a 15 percent increase over 2007 third quarter revenues. Southwall officials say the increase is primarily due to higher sales of energy efficiency and solar control solutions, including automotive, architectural and window film products.

But, for manufacturers, worldwide sales may be the key.

“On average, the domestic market last year was down,” Phillips says about Commonwealth and its SunTek brands. “The domestic market this year is down even more—consistent with the economy, consistent with new car sales and consistent with new home sales. However, our business is very good right now.”“

The international story is a much better one for us,” Plummer says of Solamatrix.

Manufacturers remain focused on the long term and maintain that, while the recession is certainly a significant bump in the road, the industry still faces a bright future.

“I think, in the long term, our industry is in a good position because of the increasing awareness of energy savings,” Phillips says.

“We are all in this together,” Fremont assures. “And I’m a firm believer that, even in today’s economy, there are many opportunities. I would urge the [dealer] network to focus on window film, not as a [product], but as a solution. Energy savings is a huge opportunity for them to grow their businesses.” His final words of advice: “Prepare yourself for rebound.” 

In Impeccable Timing,
A Distributor Goes Purely Web-Based

So what are window film distributors doing to help cut costs and keep profits up during lean times? Perhaps somewhat by coincidence, one Tulsa, Okla.-based company made the right move at the right time by converting to an entirely web-based system.

“Everyone out there has had to raise prices to their customers. I haven’t,” says Mark Reynolds, owner of Valuetint.com, a now web-based distribution company. 

Reynolds has been in business since 1981 and, until last year, operated like most—with a full office staff. In a stroke of impeccable timing, he converted his front office to a web-based system about a year ago. The result, he says, is a much leaner operation with lower operating expenses.

“We no longer have to have a receptionist who answers the phone,” Reynolds says.

In addition to no longer needing a receptionist, he also no longer employs a full sales staff. Dealers place their own orders using his company’s web-based system and can even self-serve by checking inventory and tracking their own orders. Reynolds says the system took a full year to create using an outside developer. But he warns that, while the internet can replace staffing needs, it does not remove the need for a human element.

“The internet is a great tool, but I’ve come to the conclusion that nothing replaces relationships,” he explains. “People want to do business with friends and people they can trust.”—people being the key word. He says you have to balance the two parts. “It’s kind of a partnership,” Reynolds explains. “I can’t rely on the internet to develop leads.”

Drew Vass is the editor of Window Film magazine.

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