News of the Last Decade
From Boom to Bust and Everything in
by Tara Taffera
The industry has certainly undergone a great deal of changes during the
past ten years and many of those changes are no surprise, and some are
still at the forefront of people’s minds. It’s interesting to note, too,
how many huge, significant changes have occurred just in the past few
years. Has the industry borne the brunt of that change or is there more
to come? Let’s take a look back and see how the changes of the past will
affect the industry’s future.
1. Housing Market Boom
When housing numbers reached their peak in 2005, the industry was at an
all-time high in terms of window sales. Then, toward the end of that year,
all you heard about was the dreaded housing bubble and whether or not
it would burst. And, of course, we all know now it did burst—in a big
Future Prognosis: Should housing numbers ever return to those
record levels, or even close to it, let’s remember the lessons learned
from the boom and subsequent bust. Company owners will no doubt be even
more cautious when investing in major expansions or new plant openings.
Perhaps they will think of the slew of companies who closed (see number
three ). Proceed toward growth, but with caution.
2. Housing Market Bust
When the housing market went bust, it set in motion a few other items
on our list (see numbers 3 and 4). It also had everyone scrambling to
figure out when the worst would be over. In 2008, when politicians were
campaigning for president, they all did so using a platform of change—to
put Americans back to work. When President Obama was elected, he set the
American Recovery and Reinvestment Act into motion in 2009 and out came
federal tax credits (.30/.30), first-time homebuyer tax credits and a
host of other measures. Whether these had the intended effect is up for
debate as well.
For example, the Administration touted Serious Materials as an example
of the Stimulus Act at work for its part on purchasing the defunct Republic
Windows and Doors (see number five) but the number of workers brought
back to work are nowhere near what they were before the plant closed its
But there is no doubt that the state of the housing industry plays a monumental
role in our country’s economy, and its collapse had a major impact. The
bust was so large that it caused the government to intervene.
Future Prognosis: See number one above.
In 2008, DWM’s pages were dominated by news of plant closures—approximately
28 in 2008 and 22 in 2009—and likely there were more beyond that. Add
to that the number of company closing and bankruptcies and the number
rises even higher (see charts at right). The rumor mill also worked overtime
during that time period, as many suppliers weren’t being paid and people
started to wonder if even more manufacturers would close their doors—and
eventually many did. Others who didn’t do so filed for bankruptcy and
then re-emerged as viable companies.
Future Prognosis: According to Michael Collins, vice president
of the Building Products Group at Jordan, Knauff and Co., the slow rate
of company closures through 2010, as well as plant closures, seem to confirm
that the worst is over.
4. Mergers and Acquisitions
Some companies facing financial troubles that didn’t close were fortunate
enough to be acquired by another. But acquisitions occur in both healthy
and unstable markets and both types are outlined here. In fact, the chart
at right shows the highest number of acquisitions taking place in 2004
when the market was exploding. However, 2008 had an amount almost similar
to that year when the housing market was crashing.
Looking back at a few notable transactions, Who can forget Andersen’s
purchase of Silverline in 2006, crossing over from wood to vinyl windows?
That same year, Fortune Brands purchased SBR Inc. and its home products
brands (including Simonton Windows). Another shift took place in 2007
when Pella, a residential manufacturer, bought commercial window maker
According to Collins, 2010 has seen only six mergers and acquisitions
in the fenestration industry to date, as opposed to 29 in 2009. Until
recently, financing has been very difficult to obtain, which also could
be a contributing factor to the decrease in activity.
Collins says another reason for the slowdown stems from a trend that is,
in itself, positive for the industry. A number of the sales conducted
in 2009 involved companies that, in a stable market, would not have been
for sale in the first place. Thus, as the market has improved and companies
have started to stabilize, there are fewer sales driven by a lack of finance
Future Prognosis: “We continue to believe that mergers and acquisitions
(M&A) activity in the industry will be strong in the next 12 to 18
months,” says Collins. “Private-equity buyers, for their part, are holding
or raising billions of dollars that must be put to work in acquisitions.
Thus, the pace of M&A activity in 2011 should strengthen and will
serve as an important indicator of the market’s belief in the recovery
of this segment.”
5. Republic Windows Closing
The closing of Chicago’s Republic Windows in December 2008 wouldn’t have
ordinarily stood out amidst the many companies that had already closed
that year. But a few things that happened made sure that it did. Here
are a few key news events to refresh your memory: the sit-in; the opening
of Echo Windows (formerly TRACO’s residential division); the apparent
executive-level corruption; the closing of Echo windows two months later;
the arrest of Republic’s president; and the purchase of Republic by Serious
Materials. All of the above were news stories on their own. Put it all
together and you have a story that received national media attention.
Future Prognosis: Former Republic president Richard Gilman is
out on bail and a trial date has not been set yet, but when it is, you
can bet the industry will be watching. And, surely in future years plant
closings will be viewed a little differently than they have in the past,
after the industry and the public watched this story unfold—from how it
affected employees to suppliers and even the city of Chicago at large.
6. Government Regulation/Intervention
There is no doubt that Congress and various government agencies such as
the Environmental Protection Agency (EPA) and the Department of Energy
are more involved than ever in setting standards. Some come with praise
from the industry (such as formaldehyde regulations) and others are marked
by fierce debate (lead-safe work practices, for example).
Formaldehyde legislation urged by the Composite Panel Association, signed
into law in 2010, will establish the first comprehensive national standard
for formaldehyde emissions from composite wood products, and directs the
EPA to promulgate implementing regulations by January 1, 2013.
While many in the industry are pleased with this new law, as it was developed
with industry consensus, the same cannot be said for the EPA’s lead-safe
work practices rule, which it issued in December 2008.
Skim through the comments readers have posted on the DWM website and you
will quickly see statements such as, “Big brother strikes again because
he knows what’s good for us.” And another: “This law was constructed to
the point where the government almost wants you to fail. It’s almost like
trying to put in a window with handcuffs on.”
Readers have also expressed dismay with everything from healthcare and
the effect it will have on small business owners (including window manufacturers)
as well as President Obama’s decision to pour billions into the Stimulus
The topic of the government playing a role in energy is its own issue
altogether and is the focus of a few stories in our anniversary-issue
coverage. But from a possible climate bill to tightened Energy Star®
requirements, government regulations
are definitely driving the industry.
Future prognosis: Don’t look for government intervention to end
soon. In fact, it will likely be even more of an issue in the next ten
7. Energy Star® Program Gets More Stringent
Several changes have occurred within the Department of Energy’s (DOE)
Energy Star program. First, it is no longer administered by the DOE, but
rather by the EPA, with the DOE’s input. We also have new maps, new zones
and a whole other host of changes, some of which have already taken place
and others that are in the works.
New Energy Star changes went into effect in January 2010, and phase three
is likely to go into effect in 2013, with even more stringent standards.
But these aren’t the only set of changes that has taken place with the
program in the last ten years.
In 2005, there was fierce debate over a change that implemented performance-based
ratand South Central Regions, thus allowing trade-offs in these areas.
Some in the industry were concerned that the changes would complicate
the otherwise simple rating system, and cost more energy by allowing lower
performing products to claim Energy Star ratings.
Future Prognosis: DOE and EPA representatives have stated that
windows within the Energy Star program now account for 50 percent of the
marketplace and that the program was designed to identify superior products,
signaling that more stringent products are forthcoming. It is no doubt
that Energy Star standards will continue to evolve and will become even
more stringent as time goes on, and as government officials continue to
work to set Energy Star products apart from their industry counterparts.
8. Blurred Distribution Lines
Ten years ago you heard a lot about two-step distribution in that the
manufacturer sold to a distributor who in turn sold to a dealer. This
was traditional two-step distribution. Today we have one-step and no-step
distribution as well as distribution lines become increasingly blurred.
Sometimes a manufacturer goes right to the dealer (whether that be a lumberyard,
a window dealer, a big-box store, etc.—the list goes on). Other manufacturers
go right to the homeowner.
"There are so many variables
that impact the way the distributor and manufacturer do business
The Association of Millwork Distributors CEO Rosalie Leone states, “So
much has changed in our industry; there are so many variables that impact
the way the distributor and manufacturer do business today.”
“Which direction the banks move with lending is going to affect our industry.
Issues with foreclosure documents will most likely prolong the slow recovery
in the housing market,” says Leone.
Future Prognosis: Leone admits, “No one can say what the industry
will look like next year. We can only take one day at a time. I do see
companies continuing to implement strategic plans,” she says. “A strategic
plan is a great roadmap as long as it is flexible and adaptable to a change
9. Associations Working for the Industry
Like any organization that changes throughout a decade, so do associations,
and there have been a few major highlights in the past ten years. In 2000,
the Insulating Glass Manufacturers Alliance formed as a result of a merger
between the former Insulating Glass Manufacturers Association of Canada
and the Sealed Insulating Glass Manufacturers Association. The result
was an association that is well respected today and drives many industry
Some associations haven’t been as successful at a merger, though—or have
explored the idea of merging but have never pursued. The Window and Door
Manufacturers Association (WDMA) and the American Architectural Manufacturers
Association (AAMA) tried twice within the past decade to merge but ultimately
weren’t able to unite.
Both seemed to have found their strides, though. Following a few management
changes, the WDMA has emerged as a force on Capitol Hill fighting for
the rights of the industry. AAMA, known as pivotal for developing key
standards for the industry, works hard for its members as well, including
speaking up on key issues such as the recent lead-safe work practice rules.
And while remaining separate, industry associations have found ways to
work together, as they did in 2001 when the landmark North American Fenestration
Standard (NAFS) was created. NAFS is a comprehensive standard that combines
the U.S. fenestration standard, AAMA/WDMA 101-IS2 standard, the AAMA/WDMA
skylight standard and Canada’s fenestration standard, A440, into one standard
for all of North America.
Future Prognosis: Though IGMA looked close to a merger with the
Glass Association of North America this year, that didn’t happen, which
seems to indicate that the industry’s major associations will stand alone
for now. Hopefully their ability to unite on key issues will remain in
play for years to come.
10. The Green Scene
Some may grow tired of the word “green,” but whether it’s green, sustainable
or energy-efficient, this has been a major theme over the past several
years and this will continue. There are so many things that point to the
evolution and growth of the increased push toward energy efficiency (several
are mentioned on this list and the one on
page 20) but following are a few examples of our industry’s commitment
to this issue.
From commercial buildings to homes to neighborhoods and even to cities,
the U.S. Green Building Council’s Leadership in Environmental Efficiency
and Design (LEED) program has pushed everyone from buildings owners to
homeowners to consider environmental principles when designing a project.
Though some items have generated controversy, such as what gets a certain
amount of points, to an insane amount of paperwork, the program has taken
While the overall appeal of energy-efficient programs is saving energy,
it also can save companies money and the smart ones are finding ways to
capitalize on this concept.
Future Prognosis: As associations and research bodies look at
items such as life-cycle analysis and as the government debates climate
change legislations, it’s clear that the green scene is here to stay.
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