Volume 7 Issue 5 May 2006
FMA Unveils Installation Standard
for Florida at Spring Meeting
When the Fenestration Manufacturers Association (FMA) met for its spring meeting April 12-14 in Tampa, Fla., the big news was the association’s completion of installation standards for Florida. Drafts of FMA 100-06, Standard Practice for the Installation of Windows with Integral Mounting Fin in Wood Frame Construction and FMA 200-06, Standard Practice for the Installation of Windows with Flanges for Masonry Construction were completed and submitted for peer review. These were developed after the FMA was approached by the Florida Building Commission to develop installation methods best suited for Florida’s severe climate conditions.
Mark Daniels, chair of the installation standards committee, outlined the standard at the meeting (for more on Daniels and his work on this project, see page 32). Barry Hardman of the National Institute for Building Sciences, also a member of the committee, outlined some items covered in the standards. These included the facts that it covers buildings three stories high, requires pan flashing under every opening, requires water management and requires a drainage screen between levels. Two types of installation methods and are outlined in the standard. (Contact the FMA at www.fmausaonline.org for a copy.)
Hardman told manufacturers, “You have to take back your products, folks ... Somebody’s got to tell these people [installers] you don’t do that.”
At the close of the FMA meeting, the board voted to have Jim Krahn of Marvin Windows and Doors and a member of the Window and Door Manufacturers Association (WDMA) to ask WDMA to support FMA 100/200.
One popular speaker was Jaime Gascon of Maimi-Dade’s Protocol Office who talked about doing business in the high velocity hurricane zone after Hurricane Wilma.
He mentioned that some failures due to Wilma were from tempered glass falling out of openings, and mentioned that there will be further discussion into this topic.
He also added, “What was falling out of buildings was large shards of glass.”
The subject of deflection was brought up during several of the presentations including Gascon’s. When asked where the issue of glass-edge deflection was headed, he responded by saying, “I want to see how it plays out in the Florida Building Code.”
The FMA tried some new presentation styles during the meeting. Three of the discussions were roundtable conversations moderated by Dick Wilhelm, executive director and Tara Taffera, DWM publisher. In one of these sessions, Krahn talked about changes coming up in the various codes and standards.
He pointed out that in the International Residential Code (IRC) manufacturers are now responsible for providing flashing requirements in the installation instructions “for each window.”
Krahn also discussed AAMA/ WDMA/CSA 101/I.S.2/A440-05. He pointed out that there are significant changes from the 1997 to 2002 version then from the 2002 version to 2005 of which manufacturers need to be aware.
“Manufacturers need to be aware of what’s happening with the codes,” he said. “The International Building Code and IRC are not identical. The Florida Building Code (FBC) will be based on the IRC.”
One attendee asked Krahn if he recommends manufacturers test for water infiltration even though it is not required in the code for some products.
“If you put the customer first, which you should, then yes. But manufacturers need to look at the markets they serve.”
The FMA’s next meeting will be held October 4-6 in San Antonio, Texas.
Door and window demand is increasing in the replacement market, niche products are becoming more important to manufacturers and more national jobbers are looking at door and window manufacturers with a national presence, according to an interactive online presentation from Jordan, Knauff and Co., a lower-middle market investment bank in Chicago. The Spring 2006 Window and Door Industry Update webinar, held on April 19, offered industry information and the promise of upcoming industry benchmark surveys.
Presenter Michael Collins began by noting a “definite shift in the emphasis right now from the new construction market to the replacement market.”
High energy prices and aging housing stock are leading homeowners to upgrade doors and windows.
In the manufacturing process, Collins said that automation is becoming more important, as customers demand quicker turnaround times. To stand apart from the competition, manufacturers need to develop niche products. For instance, in the Southeast, the demand is for impact-resistant products.
He also notes that many national homebuilders are beginning to favor working with manufacturers that have a national presence. He mentioned a few recent transactions—Fortune Brand’s acquisition of SBR and Kenner Equity’s buyout of Champion Windows—and expansions.
Collins noted that of all acquisitions completed in 2005, private equity funds were involved in about 15 percent of those transactions. Between 2000 and 2005, 25 percent of transactions involving private equity funds were in the door and window industry. Collins said these funds are interested in door and window companies because the industry is a fragmented, consolidated industry, with high cash flow margins and low capital expenditure needs, and it has a low risk of foreign penetration into the market.
He notes that expansion “continues at a good pace.”
He says that American Weatherseal’s expansion in Orville, Ohio, to an 180,000-square-foot facility is well above median cost of expansions seen in last five years at a total of $12 million.
“They’re obviously investing very heavily in automation,” Collin said.
He added that Midwest Manufacturing is planning to break ground this summer in Shelby, Iowa, on an “absolutely mammoth facility at 735,000 square feet.” Collins said this expansion is notable since 60 percent of expansions in last five years have been of window manufacturing facilities and this one is “pure door play.”
From 2000 to 2005, Collins said, there was one expansion a month for the door and window industry. And most of those companies expanding their facilities are making them larger than needed in anticipation of their next expansion.
The firm also found that smaller companies—with $5 to $10 million in revenue—are more commonly targeted for acquisitions. It is also more common for companies to look at companies that are close geographically. Companies that don’t wish to acquire are focused on dealer networks to increase their size.
Some smaller companies are getting out of manufacturing altogether because larger manufacturers are simply much more productive and efficient. Noting that, Jordan, Knauff and Co. asked about the impact of big box stores.
While some companies acknowledged that these stores have made things more difficult, Collins said that other companies are seeing big box influence as a positive.
He explains that large companies that distribute to big boxes are expected to have constant price reductions, and to do so they can’t afford to produce a product with the high quality that might be expected. That creates a niche for regional players to produce higher quality products.
In conclusion, Collins detailed the firm’s plans to compile a series of benchmark studies to allow participants in the industry to compare their financial characteristics with competitors. Data will be contributed to the benchmarking process anonymously; contributing companies will receive priority access to the results of the survey.
In conjunction with this industry update webinar, the firm is offering a complimentary copy of its report, “The Impact of Capital Events and the Life Cycle of Window and Door Companies,” to interested manufacturers.
States to Adopt 2006 IECC
In its February 2006 newsletter, the American Architectural Manufacturers Association looked at decisions by three states to adopt the International Energy Conservation Code (IECC) in part. While there’s no objection to adopting the code in part, AAMA members have expressed concern that the wrong part will be chosen.
According to the newsletter, the 2004 Supplement to the 2003 IECC contains requirements for vertical glazed assemblies in commercial buildings that are not backed by Aluminum Material Council (AMC) members.
AAMA representatives submitted a “fix” for these problems, which will be incorporated into the next edition of the IECC, due to take effect in 2006. However, some states—in particular, Illinois, Iowa and New York—are looking to adopt the 2004 supplement to some degree.
AAMA has sent letters to both Iowa and New York, asking them to either wait to adopt the 2006 edition of the IECC or consider including an amendment that incorporates the fix that AAMA has approved for the 2006 edition.
According to AAMA representatives, Iowa appears to be proceeding with adopting the 2004 Supplement as it stands. The state of New York, on the other hand, is looking into adopting the 2004 Supplement for residential construction only. AAMA says that this is not a workable solution for a variety of reasons.
In addition, the state of Illinois begins enforcing the 2000 edition of the IECC with the 2001 Supplement in January 2006. However, AAMA officials have determined that training being provided to code officials in Illinois by the ICC is based on the 2004 Supplement to the 2003 edition.
Energy Star™ Windows Could Make Federal Tax Credits Easy
In the Internal Revenue Service’s (IRS) Guidance Notices for tax credits for existing residential, new homes and manufactured housing, published in February, there is a “special rule” (on page 7 of the IRS notice 2006-26) for claiming $200 residential efficient window tax credits with Energy Star windows. According to Arlene Zavocki Stewart, with AZS Consulting, the rule allows taxpayers to treat an exterior window or skylight with an Energy Star label, and installed in the region identified on the label, as an eligible building envelope component. The taxpayer may then rely on the Energy Starlabel, rather than a manufacturer’s certification statement, in claiming the §25C credit.
The rule is intended to make compliance with the IRS tax credit requirements easy for consumers, contractors and window manufacturers.
Rather than wading through the windows technical requirements in the 2001 and 2004 International Energy Conservation Code (IECC) and obtaining a special manufacturers’ certification statement, Stewart said, all parties can rely on the established regional Energy Star window rating label.
The new IRS special rule for efficient windows is based on an Alliance to Save Energy and Efficient Windows Collaborative (EWC) report, The Tax Credit for the Installation of Energy Efficient Windows: Does the Energy Star Help Consumers Find Products that Qualify?
In an analysis of 3,111 U.S. counties, the Alliance to Save Energy and EWC showed the IRS and the U.S. Department of Energy that the Energy Star label met or exceeded the International Energy Efficiency Code criteria in all but a small number of counties. They recommended that regional Energy Star window labels serve as the qualifying criteria for the windows tax credits.
The Alliance report is available for download at the Tax Incentives Assistance Project website at www.energytaxincentives.org/tiap-recommendations-implementation.html.
Windows and Human Thermal Comfort Studied
The National Fenestration Rating Council (NFRC) has funded the impact of fenestration on thermal comfort in buildings. The study was performed by the Center for the Built Environment at the University of California-Berkeley and Australian-based Arup Façade Engineering. The goal of the study was to review relevant literature to develop a technical basis for evaluating the impact of windows on thermal comfort.
Researchers evaluated thermal comfort by using the UC-Berkeley Comfort Model, a thermal comfort model developed in 2004. The model takes into consideration non-uniform thermal environments, dividing the body into 16 segments and four layers, to predict local discomfort (such as that caused by a window, where only part of the body is affected by the temperature) as well as whole body comfort.
In the end, the study concluded that a single system could not evaluate the thermal comfort performance of windows effectively, because the impact of windows on thermal comfort varies greatly between summer and winter.
During the winter, thermal comfort is driven by inside window surface temperature, as related to the window’s U-factor and the outside temperature. During the summer, the windows’ thermal impact is a combination of the inside surface temperature and solar radiation transmitted through the window.
According to NFRC, this research could be used to develop a thermal comfort rating system for windows, allowing designers and builders to compare one product against another.
Lupus Capital to Acquire Schlegel Building Products
On March 3, Greg Hutchings, chairperson of Lupus Capital, announced that the company has agreed to acquire Schlegel Building Products from Unipoly.
Schlegel Building Products reported worldwide sales of $125 million in 2005. Lupus Capital is a specialist investment vehicle and a publicly traded company on the London Stock Exchange.
“We are very excited about the progress we are making,” said Hutchings.
“The acquisition of Schlegel, an international building products manufacturer, is yet another step in creating a successful growing international business in line with our strategy of developing Lupus Capital PLC.”
The Schlegel management team under chief executive officer Ian Pawson will continue to run Schlegel Building Products.
“The existing business has a strong brand and good market position that we will seek to build on,” said Pawson. “We will look to increase sales to existing customers, exploit new market segment opportunities and invest in new product opportunities. Schlegel is the foundation of a substantial new building products group.”
L.B. Plastics Donates Windows to Hospice House
Ron Thompson, president and chief executive officer of Gordon Hospice House in Statesville, N.C., knew he needed a number of quality windows for the construction of the Gordon Hospice. That’s why he went to L.B. Plastics and spoke with them about donating windows for this construction project. L.B. Plastics ended up donating 60 of its 8600 series casement PVC windows to the project.
“We were very grateful for the beautiful windows that were donated by L.B. Plastics and are happy that we were able to partner with them on this special project,” said Thompson.
It was also extremely important that the windows limit the growth of mold and germs, a critical characteristic for a hospice building. According to information from the manufacturer, the 8600 series casement windows fulfilled that need with its ease of maintenance. The windows also feature a sealing technique designed to keep out environmental noise.
MERGERS AND ACQUISITIONS
NSG and Pilkington Boards Reach Acquisition Agreement
The boards of Japan’s Nippon Sheet Glass (NSG) and Pilkington have announced they have reached an agreement on the terms of a cash acquisition by NSG of Pilkington. Under the terms of the acquisition, Pilkington shareholders will be entitled to receive 165 pence ($2.80 USD) in cash for each Pilkington share held. Acquisition terms value the entire existing issued and to-be-issued share capital of Pilkington at approximately $3.5 billion USD (net of options proceeds), and the cash consideration payable for the entire issued and to be issued share capital of Pilkington not already owned by the NSG Group at approximately $3.1 billion.
According to the announcement from Pilkington, upon completion of the acquisition, NSG intends to nominate Stuart Chambers, Pilkington’s current group chief executive, to the board of NSG. NSG expects that the executive directors of Pilkington (Chambers, Iain Lough, finance director and Pat Zito, head of automotive), along with the rest of Pilkington’s senior management team, will remain with the combined group and that Chambers will lead the integration process for the combined glass activities.
“Over the past nine years Pilkington has significantly improved its cost structure to become leaner and more profitable,” said Stuart Chambers, group chief executive of Pilkington. “Recently Pilkington has moved to the third stage of its strategy, focusing on investments in the growing emerging markets of Russia, China, India and the Middle East. The combination with NSG will expand our geographic reach and enhance Pilkington’s position as a global ‘World Class’ glass manufacturer.”
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