Volume 415, Issue 6 - August 2006

In a Pinch
A Special Report on the Door Skin Shortage
by Samantha Carpenter

Manufacturers, distributors, dealers and retailers are currently facing a massive challenge within the supply chain—a shortage of molded interior doors. The shortage is a result of a shortage in door skins, which is a primary door component that adheres to both sides of molded interior doors.

Three door skin manufacturers are Klamath Falls, Ore.-based JELD-WEN, Mississauga, Ontario-based Masonite International Corp. and Chicago-based CMI—and are the suppliers to the majority of North America’s distributors of building products.

There has been a lot of speculation in the supply chain on what happened at the manufacturing level to lead to a shortage. The unofficial word from many distributors was that one supplier was cut-off by its door chips supplier, and because door chips are necessary in making doors skins, that led to a shortage in production. Others were saying that a plant fire was what led to the shortage. Neither of these speculations have been confirmed. 

Masonite and CMI declined to respond to questions from SHELTER magazine. However, in a statement from JELD-WEN, the company said, “Two years ago, in anticipation of growing interior door skin demand, JELD-WEN outlined plans for a new door skin manufacturing plant. That plant is now operational. Today, the company produces more skins than ever before.”

The company statement said that although housing starts through April were reported as being down 0.8 percent over the same period in 2005, there are other factors increasing the global demand for interior molded door skins. 

“Residential remodeling continues to rise, growing demand from emerging markets overseas, and a stronger preference for molded interior doors rather than flush doors or more expensive alternatives are all reasons why demand has mushroomed,” the statement said.

“JELD-WEN invested substantial capital in building a new door skin manufacturing plant in Latvia. The goal was to supply foreign customers from this Eastern European plant, so skins produced in the U.S. could ship to domestic customers. The company has also stopped using its interior door skin plants to produce an exterior door skin line. This has freed up equipment and labor to produce even more interior molded door skins,” the statement continued.

Negative, Positive Impacts

SHELTER talked with distributors, dealers, retailers and regional manufacturers of interior molded doors who have been impacted both negatively and positively by the shortage.

“We, as a company, have only managed minor inconveniences,” says Brian McIlwee, president of McIlwee Millwork of Itasca, Ill. “However, we have utilized every resource possible, including buying doors off-the-shelf of a big box retailer and other distribution, to meet our customer commitments. It’s definitely not the way we normally operate, but our customers have not skipped a beat. It has really been a time-saver problem, more than anything else. Simple economics tells you that capacity will catch up quickly, especially if prices continue to rise.”

Terry Bumgarner, president of Mocksville, N.C.-based King Sash and Door, has also been resourceful in supplying his customers.
“It’s been a nightmare to try to satisfy our customers’ needs … We have bought from retail stores and other distributors in order to fill our customers’ orders,” Bumgarner said, adding that they have traded door styles with other companies, too, so both companies benefit.

“It’s affected us in how many doors we can purchase, whether or not we can go look for new business,” says Kimberley Mondry, purchasing agent for Grand Rapids Sash and Door Co. of Grand Rapids, Mich. “We have people contacting us, trying to look for a supplier because they have been cut off by some of the other distributors because of the shortage.”

“We’re running into a few backorders lately that are taking an extra two or three weeks. It’s not the oddball designs or sizes, but—your bread and butter stuff,” said Jay Harman, owner of Atlantic Architectural Millwork of Asbury Park, N.J.
“We are the Ply-Mart manufacturing facility. We supply to 14 locations. All 14 locations are experiencing record sales. We did a little over 300 million last year, and right now we are pacing at well over 400 million,” says Ray Sandridge, general manager of Winder Manufacturing of Athens, Ga. “We currently produce about 19,000 interior door units per month, and how this is affected us is we are on allocations based on the nationwide [shortage]. We deal with a Masonite company, called Florida Made [Door Co.]. We’ve solely put our eggs in their basket, so to speak, so we are getting 18 trucks when we typically use about 25 trucks.”

“Basically, with our door-shop members at Do it Best, we deal primarily with Masonite as our supplier. What they have done is put us on an allocation. So the members are only getting a percentage of the doors they need based on last year’s business,” says Art Augspurger, merchandise and sales manager for Do it Best Corp. of Fort Wayne, Ind. “The only contract we have is a vendor agreement. We are just relying on good information flowing back and forth as far as to make sure that we are getting our allocation of doors corporately. Some areas of the country are depressed and other areas of the country [like] the Gulf Coast area after the hurricane season last year are really picking up. We are just policing the situation to make sure that we are being treated fairly, and we have been so far.”

“LEDCO is a full line flush and molded interior door manufacturer, and we have been impacted by this shortage,” says Drew Scott, vice president of sales and marketing of the Shelbyville, Ky.-based company. “Our primary vendor for door skins has all of its customers on allocation. We are also dealing with allocations on particleboard door core, and medium-density fiberboard is getting tight on the supply side. Our order file has grown substantially, and we have added capacity to deal with the increased demand. The cost for doors has gone up due to raw materials and fuel.”

Communication is the Key

“When this situation first started in February, the present demand wasn’t instantaneous. At first, when all these new opportunities started presenting themselves to our salespeople ... we didn’t really understand the scope of the situation, so we were very willing to take on a lot of the new business, but even though our comp productivity was up 30 percent over the previous year. We quickly found we couldn’t take on a lot of new business and properly take care of our existing customers, so we refocused our efforts,” says Sam Bell Steves II, president of San Antonio, Texas-based Steves and Sons Inc.
Many in the supply chain feel their supplier has been very forthcoming about why there is a shortage.

“In general, the molded door skin shortage created quite a bit of turmoil in the beginning as it first began to unfold. I’m not sure we are comfortable about the current or future status of the problem. Information has not been readily forthcoming other than regarding price increases. Our biggest problem was having our orders pushed out eight to ten weeks from two weeks,” says McIlwee. 

“They [our supplier] have been very upfront as far as the reasons why and what had happened,” says Augspurger. “The downside about it was there was no reaction time. It just kind of happened overnight, but they have communicated as far as how they are handling the situation. We just had our market the middle of May, and everybody had their allocation sheets to make sure that the members who have been supported by the Do it Best program were getting access to the allocation.”

“We are in constant communication [with our supplier]. At this point, they have no idea how long this is going to last. They do everything in their power. If they have a slot and somebody can’t fill it, they will contact us for us to fill it, and we are [grateful] to do that,” says Sandridge.

“Yes, the Masonite team has been very upfront and frank with us on what has caused the shortage, how long they expect the shortage to last, what they are doing strategically to overcome the shortage in both the short-term and long-term,” says Nathan Potter, vice president of sales at DW Distribution Inc. of Desoto, Texas. “We hear and see unprecedented demand for smooth door skin profiles. It has increased quite a bit over the last two years but has increased substantially in the January through May 2006 timeframe.”

JELD-WEN feels it’s been very upfront with its customers “about our ability to supply their needs,” explains Jim Hackett, JELD-WEN vice president of door marketing. “Even with the measures taken to increase production, demand was outpacing supply, and we communicated that to our customers promptly.”

Increases in fuel charges, resin and other materials costs have necessitated an increase in prices. “But we still charge less today for door skins than we did 15 years ago,” Haskett adds.

The Big Cut Off

Some distributors, dealers and retailers have been put on allocation, but some have been cut off by their supplier completely. Many manufacturers and distributors are trying to extend business to these companies, but they have to be careful.

“We have people contacting us for a supplier simply because they have been cut off. A lot of the smaller door hangers have been cut off from the distribution, so they are looking for suppliers, and because of the allocations that are out there, we aren’t sure we dare take on new business,” says Mondry. “We have enough to supply our needs at this moment, but it’s not the busy season. Once the [busy] season gets here, and if the allocations don’t change, whether or not we have enough to supply our own needs is yet to be seen.”

Steves and Sons recently finished building the largest door plant in North America in Tennessee. 

“It has never been a skin supply issue for us; it is just a productivity issue. We are able to ramp up,” says Steves. “We didn’t anticipate the added demand this soon at our new plant, so there were manning issues and other logistics issues that needed to be addressed, and we’ve told the trade that we expect to take another 20 percent increase in volume starting in July. Similar increases and infrastructure improvements have also been in effect at our Texas and Virginia plants.”

“We’ve been very careful about selecting new business,” says Steves. “We are only interested in expanding our opportunities with customers that are going to be doing business with us once this situation is a memory. When this is over, I imagine there will be a new pairing up of manufacturers with distributors ... if that happens, we hope our customers will choose to ‘dance with the one that brought ‘um.’”

The Price is Up

Price increases have also been an issue with the molded interior door shortage.

“Yes, we have seen price increases, says Potter. “Several suppliers have passed price increases along in our markets. We pass price increases through to our customers at cost, so we aren’t making anymore margin due to the increased prices. As a company we strive to treat our customers the way we would like to be treated ourselves.”

“Price increase have affected us as well,” says Sandridge. “We pass it on [to our customers]. We have no choice but to pass it on.”

Where’s the End?

There are different ideas of when the shortage will lessen or end.

“We understand that based on current housing starts and demand that it could be as late as September or October before the supply of product normalizes,” Potter says.

“The shortage is being caused by several factors. One of the largest manufacturers had skin production problems and the other major player has capacity issues in their door plants. Add these problems to a worldwide demand for molded hardboard, the dramatic shift from flush doors to molded hardboard doors and the proliferation of door skin designs that are equally available on the market now, and it created the perfect storm,” says Scott. “We anticipate that this shortage will be in effect for at least the next four months.”

“We don’t know where the end is, and that’s the big question mark,” says Steves. “Just as there’s a beginning, there will be an end. Some people think the end will be through housing slow down, but nobody’s seen that yet. That’s just not happening.”

In the Same Boat

Manufacturers, distributors, dealers and retailers all face the shortage of molded interior doors. 

“The thing that makes this a little bit easier to manage is that this has affected every domestic supplier of molded doors the same way. There’s nobody to go to for us and hence there’s nobody to go to for our competition either. We’ve had some situations that we’ve tried to run up the flag pole and had the response we expected—they’re taking care of their existing customers as well,” Augspurger says. 

SHELTER
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