Volume 48, Issue 1 - January/February 2009
In the News
Peers Give Advice on Surviving the Downturn
U.S. employers axed 533,000 jobs in November, which is the most in 34 years. Reports say that the recession is deepening, and many employers’ reasoning behind cutting jobs is that they are cutting where they can in order to survive this recession.
Shelter talked with a number of building product officials to find out how they are getting through these tough economic times.
Les N. Sjoholm, president of LNS Sales in Lacey, Wash., says his company is taking care of current customers to keep the competition away and then looking toward new prospects and products.
Sjoholm says his company hasn’t made any changes to any existing customers or suppliers, it is reviewing and monitoring all customers closer. His sales people are observing their customers’ personality changes if any and, seeing if they are being more inquisitive and observant to accounts/receivables and inventory turns on all of their customers’ items.
“You have to be able to say ‘no’ tactfully and effectively when a customer has reached his credit limit,” Sjoholm says. “Truly manage their accounts because [being] an ‘order taker’ will not make it.”
Keith Castleman, general manager of 84 Lumber in Blue Springs, Mo., and columnist for Shelter magazine (see column on page 24), says his location added installed services for framing, siding, doors and windows. It also created a system that allows the store closest to the jobsite to ship the material even though it gets invoiced from another store, and it shifted its entire focus to professionals and abandoned retail sales entirely.
“This actually saves us more money in payroll than we were making in cash sales,” Castleman explains, adding that his location is closed Saturday and Sunday.
Castelman’s location also converted part of a warehouse to a wall panel plant. “I’m using the term ‘plant’ loosely, but we do build wall panels out there,” he says.
Think Positive Thoughts
While many news headlines paint a dire picture, the consensus of building product company officials is that you must stay positive.
"If we believe it is bad it will be; think positively,” says Eric Kube, president of Kube’s Cabinets and Millwork in Amery, Wis. “Keep moving forward, don’t get down because of fear. There is still work out there. Think outside the box, like ‘green’ work. That is just on the way up.”
Castleman agrees with Kube that you must think differently.
“I’m much more open to out-of-the-box ideas,” he says. “At this point, I listen to any idea that might make us a profit. I listen to every idea regardless of how stupid it might first appear to be.”
What are companies telling employees who are nervous?
Kube says he is telling it like it is.
“I’m being honest and telling them what is coming up or not,” he says.
“Many of my people are nervous, and to be honest, I like it that way,” says Castelman. “I get worried when they are not nervous. I meet one-on-one with each employee once a month and in October I told them to prepare for significant decreases in the hours that they work. I even encouraged a few of them to look for another, more stable, job. The people who are performing are not nervous at all. I’ve got one person who has received two pay increases in the last six months. The people who are doing well are not concerned.”
How long are companies expecting this downturn to last?
“This winter will be slow and then starting in the spring it will come around,” Kube says. “It might take a year or two to be anywhere near where it was.”
“I am planning for it to be down forever,” Castleman says. “Fortunately, my location has had its best year ever this year. We are profitable at our current volume levels, and if it never comes back, we are still fine. If, by some miracle, housing starts would actually increase next year, then we should have another banner year.”
Sjoholm says the down effects will vary regionally. “The season of winter is always the slowest time in our building materials industry. So depending upon the severity of winter, we most likely will not see any significant positive changes until late first quarter or early second quarter ’09,” he says.
Sjoholm has a lot of faith in our country, industry and workforce. “We are still the most resilient society ever and have the most aggressive and most productive workforce in the world. We will come out on the positive side,” he says.
Ohio Window Manufacturer Sees Record Growth
While many window manufacturers are having tough times, Soft-Lite in Streetsboro, Ohio, has achieved remarkable growth and is continuing to expand, grow, and add, even in these challenging economic times. The window manufacturer is adding two warehouse and distribution centers to improve its dealer supply chain, and is increasing the size of its paint department to meet demand for its custom color program. The company also initiated a turn-key installation program for dealers in key locations, which has allowed them to grow installation sales 300 percent. Numerous more dealers will be added in 2009.
Soft-Lite president Roy Anderson credits continuing growth to a multi-faceted business strategy, “Our long-term strategy of investing to improve products, manufacturing efficiency and customer service has served us well,” Anderson says. “Our goal is not to just be a survivor, but to continue our success as a leader of the industry.”
Planning For the Long Haul
Soft-Lite is benefiting from a consistent string of financially-sound decisions made over the years. Profits were channeled directly back into the company, and strategic investments were made for the future.
“We have always adhered to strict financial controls and have always had a big four audit each year without one single audit adjustment,” says John Patrick, Soft-Lite’s chief financial officer.
Money was continuously reinvested into research and development, and capital was carefully allocated to planned expansion, technological improvement and product development.
In Tune with the Times
“Our dealers are telling us what’s happening in their markets, what homeowners are interested in and what our competition is offering,” says Irving. “This keeps us in line with the pulse of the industry and has led us to several key decisions. With that feedback in mind, we’re constantly finding new and better ways to meet the needs of our dealers and their customers.”
To better help their dealers sell, Soft-Lite offers training modules, brochures, sample kits and an award-winning website, according to a company release. It also provides both custom net and retail price books for individual dealer sales teams. The books are easily modified and produced instantly in-house on demand.
Economy Takes Toll as Several Millwork Companies Close
During the past several months, a number of window manufacturers have announced closures and/or bankruptcy filings. Following is a summary of these.
Republic Windows and Doors closed its doors on Dec. 5. The company reached a settlement with its employees after five days of negotiations. Employees will receive eight weeks of pay, two months continued health coverage and pay for all accrued and unused vacation. Before this settlement was reached, employees had argued that they were not given proper notice, citing the Worker Adjustment and Retraining Notification Act, a Federal law from the late 1980s which requires employers to give workers 60 days’ notice (or 60 days of pay) in cases of plant closings or large layoffs. (See www.dwmmag.com, Shelter's sister publication, for the latest developments on this story.)
Window Enterprises Inc., based in Carrollton, Texas, has closed and has been placed into a court-appointed receivership. The order appointing Matthew Donnell as receiver of the company was issued in by the 192nd District Court for Dallas County, Texas. Creditor Hilco Financial LLC had filed a request for this action.
As receiver, Donnell will:
• Manage the company’s assets;
• Receive its income;
• Invest any funds held as receiver in an interest-bearing account; pay all funds received to Hilco immediately “to satisfy the outstanding debts and obligations of the defendant;”
• Take any and all actions necessary to preserve and maximize the company’s assets;
• Take any and all actions necessary to use, convert, process and market the company’s assets; • Perform any other acts in regard to Window Enterprises’ assets as authorized by the court; and
• Work with Hilco to agree on a budget to fund expenses of the sale or other assets without the need for further court approval.
The order also states that “nothing herein shall interfere, prohibit or impede [Hilco] from exercising its rights against [the company’s assets], including, but not limited to, proceeding with non-judicial foreclosure on the collateral.” The receivership will continue until the court orders otherwise, according to the order, signed by Hon. Craig Smith.
In May, Window Enterprises issued a press release that the company was “recapitalizing the business for future growth.”
Hilco Financial LLC provides senior secured bridge loans for mergers and acquisitions, acquisitions of distressed debt, and specialty financing, according to the company’s website.
Window Enterprises wasn’t the only company that closed recently. Kensington Windows in Vandergrift, Pa., shut its plant on October 27, leaving 150 employees out of work. Survivor Technologies in Hillside, N.J., also ceased operations according to newspaper reports. Both were owned by Jancor Cos. Inc. of Ohio.
In late October, it was reported that Kensington vice president of operations Chuck Wetmore was working with investors in an attempt to revive the company. As of press time, though, no announcement had been made.
Wolseley plc, distributor Stock Building Supply’s parent company, announced on October 23 that it would be closing 86 Stock branches. “With the on-going decline in U.S. new residential construction, significant over-capacity in the industry and the consequential negative impact that Stock is having on the Group’s results, it is imperative that we take further action to restructure this business. The measures we are taking will move us back towards profitability, while still keeping a presence in key districts for when the market recovers,” said Chip Hornsby, group chief executive of Wolseley.
Ply Gem Industries Inc. announced that it will close two door and window manufacturing facilities—Hammonton, N.J., and Phoenix. Together, the two facilities employ a total of approximately 306 employees. Lynn Morstad, president of Ply Gem’s U.S. Window Group, says the Hammonton and Phoenix plants were selected because of their proximity to other Ply Gem facilities. While Ply Gem made its announcement in late November so did MI Windows and Doors Inc., based in Gratz, Pa. The company will close its Lebanon, Ind., window fabrication facility.
Employees were notified on August 26, 2008 that Huttig Building Products’ location in Fredericksburg, Va., would close. Company officials expected the action to be completed in the fourth quarter of 2008.
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