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Volume 6   Issue 6                July  2005

WHAT'S NEWS

Experts Say Housing Market to Stay Healthy

Economists at the Construction Forecast Conference held by the National Association of Home Builders (NAHB) recently said housing should remain healthy through next year even as it recedes from peak levels. Despite some softening in U.S. economic growth, the Federal Reserve’s ongoing interest rate hikes and rapid price gains in the nation’s hottest housing markets, continued health is expected through next year. 

Driven by ongoing population growth and household formations, an expanding market for second homes and the need to replace aging units, demand for housing should hold up well in the foreseeable future, said panelists. Also, further growth in the nation’s job force and rising incomes should help offset the negative impact of higher mortgage rates, which are still expected to be at affordable levels by historic standards.

Some experts voiced concerns regarding speculative investment activity in a few of the nation’s frothiest housing markets-including California, Las Vegas, South Florida, Washington, D.C. and the New York-Boston corridor. However, they expect to see a slowdown in the rate of price appreciation in most parts of the country rather than an actual decline in house prices.

How aggressively the Fed pushes up interest rates will depend on the inflation picture, and although inflation has now moved to the upward range of what the Fed finds acceptable, prices remain well under control, economists said. Barring unexpected increases in energy prices, the overall outlook appears quite favorable.

One unanswered question at the forecast conference pertained to the state of the nation’s job market. 

“There are deep uncertainties about the issue of slack in the labor market,” noted NAHB chief economist David Seiders, and that’s a big reason the Fed has been moving so cautiously as it tightens monetary policy.

Unemployment fell to 5.3 percent in the first quarter, and Seiders predicts it will continue downward to about 5.1 percent in 2006. That may be as low as it can go without generating some inflation, he said.

“We’re only in the second inning of economic recovery,” said Jim Glassman, managing director and senior policy strategist with J.P. Morgan Chase and a panelist at the forecasting conference. While payrolls have returned to where they stood at their peak in February of 2001, “the number of people who have come of working age has increased by 9 million” in that same time frame. 

Estimating annual housing demand at 2 million units over the next decade, Glassman also said that recent productivity gains bode well for housing in the period ahead because they have bolstered corporate profits, which in turn should lead to increasing wages. With current annual productivity gains in the 2.5 to 3 percent range, he said that America’s standard of living will double in a single generation. This compares to the 1 percent productivity gain of the 1970s and 1980s, a rate at which it took three generations for the living standard to double.

On the other hand, Macroeco-nomics Advisers president Chris Varvares estimates that today’s expansion is “in the bottom of the seventh inning,” and doesn’t expect too much more improvement on the employment front. He sees the economy settling in for a soft landing and 3.4 percent GDP growth for the year as a whole.

Varvares also expects to see some measurable decline in housing activity next year, but sees no recession on the horizon and pegs sustainable GDP growth at 3.5 percent. Agreeing with Varvares’s assessment of the first-quarter economic slowdown that has continued into the current quarter, NAHB’s Seiders predicted that “we do come out of it, we do better and we glide out in 2006” with “pretty good” GDP growth in the 3.2 percent to 3.5 percent range.

Seiders also projected a rate of 4 percent for federal funds at the end of this year, with another one-quarter percentage point increase in 2006. This would move up the prime rate from its current 6 percent to about 7 percent at the end of 2005 and 7.25 percent at the end of next year.

Although it now looks possible that 30-year fixed mortgage rates won’t quite reach the 6.4 percent average that NAHB economists were forecasting for this year’s fourth quarter, the pressures on those rates “have to be up going ahead,” Seiders said.

J.P. Morgan’s Glassman discounted fears of reduced house-price appreciation taking a toll on the economy. With the exception of a few boom markets, he said, higher prices largely reflect the real estate market catching up with the lagging prices of the 1990s. 

“Worry if you want to,” he told audience members. “But I think I would take most of the worries with a grain of salt and just get back to business.”

COMPANY NEWS

Andersen Corp. Acquires Eagle Window and Door
Andersen Corp. of Bayport, Minn., has finalized its purchase of Eagle Window and Door, an Iowa-based manufacturer of aluminum clad wood windows and patio doors. Eagle will be operated as a managed, wholly-owned subsidiary in its Dubuque, Iowa-facility, according to the company. 

“Eagle Window and Door is a great strategic fit for our company,” said Jim Humphrey, president and chief executive officer of Andersen. “We now have another piece of the puzzle we are building to make Andersen a more complete supplier, especially in the high-end, residential new construction segment of the market.”

Representatives at Eagle were equally pleased with the change. The company’s product line includes a range of design options including standard exterior colors, wood species, factory interior finishes, decorative glass and blinds between glass.

“The purchase by a market leader who is focused on the long-term growth of the business gives our employees and customers a partner that will help to take us to the next level,” said Dave Beeken, Eagle president and chief executive officer.

Designer Doors Direct Changes to Avalon Doors
Designer Doors Direct LLC based in Encinitas, Calif., has announced that it has changed its name to Avalon Doors LLC to better reflect its market and products. The decision was made because Designer Doors is a common name in the United States, according to the company. The word Avalon translates to “the birthplace of art.” The company felt that this name better represented its artists and craftsman.

Avalon Doors, which manufactures solid mahogany hand crafted exterior and interior doors, offers exclusive Tuscany, old world, contemporary and custom designs to meet the needs of homebuilders and homeowners.

Avalon doors has opened new showrooms in Las Vegas, Orange County, San Francisco, Palm Desert, Detroit, Minneapolis, Phoenix and Denver. 

TruSeal Declares Relationship with Tremco
TruSeal Technologies Inc. of Beachwood, Ohio, recently entered into a distributor relationship with Tremco Ltd. of Berkshire, England. Tremco will be responsible for sales and distribution of TruSeal high-performance, warm-edge spacers, Insuledge® and DuraSeal™, in the United Kingdom, Republic of Ireland and France.

“We are very excited about working with Tremco to develop a larger presence for TruSeal insulating glass spacer systems in the U.K., Republic of Ireland and France,” said August J. “Gus” Coppola, president of TruSeal.

MI Windows and Doors Builds North Carolina Facility
In order to meet the increased demand for vinyl products, MI Windows and Doors Inc. of Gratz, Pa., has announced the opening of its new 150,000 square-foot facility in Salisbury, N.C.

The new facility is dedicated to providing new construction and replacement products in the mid-Atlantic and southeast geographic regions of the United States. Salisbury joins the rest of MI’s national plants in a commitment to provide the industry with premium service and worry-free products. The facility will employ 200 people initially with future plans for expansion. 

In late 2003, MI Windows and Doors opened a vinyl and aluminum product fabrication plant in Van Alstyne, Texas, which has helped increase market share in that region. In addition to the two new facilities, MI continues to focus on upgrades and improvements of existing locations by adding equipment and technology to several of their plants, according to the company.

BSI-Door Hardware Moves to Larger Plant
Dan Raap, general manager for BSI-Door Hardware announced the move of its sliding patio door hardware production, formerly called Sash Controls, to its swing door hardware facility located in Sioux Falls, S.D. Approximately 40 people are employed at the facility.

“BSI-Door Hardware is experiencing strong growth in demand for its sliding and swing patio door hardware, including hinges, multi-point locks, handles, rollers and an assortment of other door hardware products. The increase in demand for BSI-Door Hardware products has facilitated the expansion of our operations to our existing plant in Sioux Falls,” said Raap. 

The company had facilities in Canton and Sioux Falls, S.D. The plants, formerly divided by swing door and sliding product lines, have now been integrated into the Sioux Falls facility. This move provides better synergies between departments and resources, better control of inventory and production and also allows more room for expansion, according to the company. 

EVENTS

Get Ready for interGLASSmetal/FENESTRATION world 2005 
Boston will be the host city for the 15th biennial interGLASSmetal/ FENESTRATION world (iGm/FW), which will take place November 1-3 at the Boston Convention and Exhibit Center.

Key Communications, publisher of DWM magazine, will be presenting and organizing the seminar program. Topics to be covered include lean manufacturing, field testing, sound control, green building designs, the future of the industry and more. 

To learn more about iGm/FW or to register, visit www.igmfw.com

Joint Meeting Holds Promise of Education and Feedback 
The Insulating Glass Manufacturers Alliance (IGMA) has announced its technical services committee will meet during the American Architectural Manufacturers Association (AAMA) fall national meeting, to be held October 23-26 in Tucson, Ariz. According to AAMA, the meetings will be held in conjunction with each other because there is a strong correlation between the projects undertaken by the two associations. The crossover in development has formed the basis for a solid relationship between the organizations. Areas of mutual interest include gas permeability, gas retention, insulating glass unit performance and product certification, which will be explored. 

“The meeting will provide for direct input and feedback between the members of both organizations, reduce the duplication of industry resources and strengthen the focus on those areas of mutual interest,” said Margaret Webb, IGMA executive director.

KUDOS

Deceuninck NV Named Entrepreneur of the Year in Belgium
Deceuninck NV of Belgium has been selected Entrepreneur of the Year in Belgium for 2004 by the global accounting firm Ernst & Young. The company was chosen from five other finalists and from 900 Flemish growth companies in the annual contest. 
The competition began 10 years ago by Ernst & Young to give successful companies the attention they deserve and to highlight their performance and achievements, according to a company release. 

“Deceuninck works with an extremely innovative production method that contributes to a striking expansion of the activities, which results in an impressive international growth. The company constantly aspires to product innovation and efficiency improvement in purchasing and distribution,” said chairperson of the jury Baron Paul Buysee. 

Company chairperson Arnold Deceuninck and chief executive officer and managing director Clement De Meersman received the trophy during a presentation ceremony from His Royal Highness Prince Phillip of Belgium in the presence of Belgium Prime Minister Guy Verhofstadt.

STANDARDS, GUIDELINES AND ACCREDIATIONS 

ICC Partners with Mexico for Safe Housing
The International Code Council (ICC) says it will provide technical assistance to the Mexican government to develop a residential building code as part of a Memorandum of Understanding (MOU) between the U.S. association and the Mexican National Commission of Housing Development. Under the MOU, the I-Codes developed by the ICC will serve as a guide for the creation of new codes and standards in Mexico.

“The Mexican government has a long-term plan to update its construction standards to include the safest techniques, materials and technologies. The I-Codes, already enforced in thousands of U.S. jurisdictions, will be the basis for housing construction in Mexico. The codes will provide Mexico’s residents with safe, affordable and comfortable housing,” said James Lee Witt, ICC chief executive officer.

The MOU signing took place during Building Safety Week, May 8-14.

“Signing this agreement is a concrete step in support of the housing sector within the framework of the Housing Sector Program strategies,” said Carlos Gutierrez Ruiz, national commissioner of housing development for Mexico.

Free Literature
TruSeal Technologies Inc. has released a True Dual Seal (TDS) Systems product brochure. It details compatible insulating glass equipment manufacturers, a new enhanced warranty and U-value and K-Lin and MVRI value charts. The company also has a new eight-page brochure titled “Worry-Free Windows,” which shows homeowners how to reduce condensation and moisture transmission with DuraSeal™.

Briefly
Kensington Windows Inc. of Vandergrift, Pa., supplied its all-vinyl, Energy Star® approved Quantum2 windows to ABC television’s Extreme Makeover Home Edition. The episode aired May 15, and featured a family who lost the mother of three children to leukemia ... Tecton Products LLC has earned North Dakota’s first Occupational Safety and Health Administration (OSHA) Safety and Health Achievement Recognition Program (SHARP) designation. The achievement recognizes companies that demonstrate an exemplary safety and health management program, according to the company ... Edgetech I.G. Inc. of Cambridge, Ohio, has been one of the two recipients of the Eastern Ohio Development Alliance (EODA) Business Excellence Award which was presented at the EODA 15th annual meeting in Walnut Creek, April 29, 2005. The award recognizes companies that improve the economy and quality of life in Eastern Ohio through employment, civic involvement and innovation ... The Window and Door Manufacturers Association (WDMA) was presented an American Institute of Architects (AIA) Ad Award at the annual AIA National Convention and Expo for its article: Performance Override: Door Specifications Meet the ‘Real World’. The article focused on newly revised industry interior architectural door standard I.S. 1A-2004 Industry Specification for Architectural Wood Flush Doors. 


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