Volume 10, Issue 1 - January 2009

eye on energy

Plan Now So a Bailout Wonít Be Needed
by Arlene Zavocki Stewart

The difference between planning for growth and planning for the future is important to note. One depends on increasing volume and the other on anticipated market desires. Inevitably one of the following phrases turns up when I talk with manufacturers about future planning, growth and producing efficient windows: ďItís not that simple.Ē ďIt takes five miles to turn a battleship.Ē ďOh, we can make a more efficient window, but thatís not what people are buying.Ē ďYou just donít understand.Ē 

Well, over the past ten years of market transformation work, I have come to understand that getting to the next level really can be challenging, slow, painful and risky. Yet, I still think that two essential components for long-term viability are adopting yesterdayís efficient technologies as todayís mainstream products and developing the next generation. 

Lately, Iíve been struck by the parallels between the window and auto industries, including Chrysler and Fordís technology tales. What number bailout request is this for Chrysler? Yet it seems that 2009 will be the first year the manufacturer has a hybrid for sale. When asked if the company would build cars and trucks that consumers want to buy, and that support the countryís energy security and environmental goals, Chrysler provided a plan from 2009 to 2013. Isnít this a bit late? Conversely, Ford promoted its restructuring plan, including more fuel efficient and hybrid products (already in its line-up), to the private sector in 2006. Consequently, Ford expects it will only need federal bailout dollars to weather cascade effects if GM and Chrysler go under. 

Yes, I know itís not as simple as Ford having hybrids when Chrysler didnít. Iím sure that I donít understand all the factors that caused this auto crisis. However, an observation from Fordís chief executive Alan Mulally bears repeating: ďEven when we got into tough times, we kept our R&D spending alive, and it was something [in which] I was personally involved to make sure we spent on the new technologies that will get us to real modernization.Ē

So as the economic crisis continues and companies trim budgets, I would argue that perhaps itís prudent to think twice about cutting the R&D budget. I would go so far as to suggest that future viability might even depend on producing more of the most efficient products you have now, even though shifting your lines is more challenging, slower, more painful and riskier than ever. 

In its Green Outlook 2009, McGraw Hill Construction reports that despite the economic downturn, the green building sector is gaining market share. In 2005, residential green building had a 2 percent market share that rose to between 6 to 10 percent in 2008. In 2013, it is expected to jump to 12 to 20 percent or $40 to $70 million. More important when measuring longevity, McGraw Hill also reports a paradigm shift in attitude. Whereas building green started out as the right thing to do, by 2013, quality will be the most important factor for builders thinking about going green. Given studies on global environmental changes, reduced natural resources and the way other industrialized nations have had to respond to these limitations, I tend to think this is not merely another trend.

The last parallel between the two industries came from former presidential candidate Ron Paul. ďIn bailing out failing companies,Ē he writes, ď[the government is] confiscating money from productive members of the economy and giving it to failing ones Ö An essential element of a healthy free market is that both success and failure must be permitted to happen when they are earned.Ē 

So perhaps there is a lesson to be learned from the perfect storm that hit the auto industry. Chrysler was ill-prepared on several fronts. Ford was better preparedĖincluding being able to respond to a market shift because it could produce more efficient products already in the line-up. Maybe the perfect storm canít occur if all the factors arenít perfect. But, Iím sure I donít understand; Iím sure it isnít that simple; and Iím sure Iím not the only one drawing these conclusions. yArlene Zavocki Stewart is a member of the Efficient Windows Collaborative and an energy code advocate. She can be reached at azstewart@azsconsultinginc.com. The views and opinions expressed in this article and in materials of the Collaborative do not necessarily reflect those of this magazine.

Arlene Zavocki Stewart
is a member of the Efficient Windows Collaborative and an energy code advocate. She can be reached at azstewart@azsconsultinginc.com. The views and opinions expressed in this article and in materials of the Collaborative do not necessarily reflect those of this magazine.

DWM
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