by Clark Halladay
Professionals in todays window and door industry should be aware of the emerging trends and influences changing the way we do business. As these changes affect us, they also affect our customersthe manufacturers who must develop plans to meet these changes successfully while continuing to grow their businesses. As vendors, it is our job to help our customers solve the issues with which they are faced. We can do this better with an improved understanding of the changing industry.
To understand the new trends, its important to understand the relationship between the two main industry segmentsthe new construction and replacement markets. Recently, the difference between the two markets has become increasingly blurred for manufacturers.
The replacement market has been slightly larger than the new construction market for years. The estimated number of installed windows available to the replacement market is about 900 million windows. In total, about 50 million windows are produced annually.
Many traditional window manufacturers are breaking away from purely wood or aluminum products and moving into new PVC single-hung (SH) and new construction product lines and other composite materials. Traditional PVC replacement window manufacturers are entering the new construction market with such offerings as their own PVC SH units.
The composite materials available are primarily fiberglass, cellular PVC, foam PVC, ABS and such materials as ERT, which is made of recycled milk cartons or plastics. These new substrates are entering the market as alternatives to more expensive, high-maintenance wood, thermally inefficient aluminum and rigid PVC. Many of the composites offer no-rot solutions to wood and also have the advantage of paint and stainability, which traditional PVC doesnt have.
The switch to these composites by many wood manufacturers is an interim step. These manufacturers most likely are merely postponing the switch to PVC as they attempt to maintain the more traditional appearance of wood products.
However, while the composite materials will be used in the speciality wood market and in areas prone to rot, the PVC substrate will likely win more market share during the next five years because it surpasses composites in terms of development and technology. Composites will struggle to gain market share for the same reasons PVC took so long to gain acceptancehigh cost, strength, incomplete product line offerings and lack of customizable features.
At present, the most influential industry trend is an excess of manufacturing capacity, especially in the SH new construction or prime products markets, which has sent manufacturers into new geographic areas. As a result, manufacturers are offering lower prices to attract the necessary volume from the new market. Local and regional manufacturers are seeing new competitors and lower prices while their customer bases, volume, prices and margins are dropping.
The result of this is the industrys rapid consolidationa powerful force in changing the face of the industry.
Moreover, distribution channels are changing rapidly as they cross over or are totally eliminated. Two-step distribution is moving toward one step, while one step is moving toward direct distribution in an effort to become more cost-competitive by lowering distribution margins.
Also, we are seeing the rise of the mass merchandiser in the distribution chain. These huge outlets act as silent sales representatives for the industry. They provide pricing and product information directly to the consumer and bring about a whole new form of competition for the replacement market, manufacturers and dealers.
The do-it-yourself market is experiencing a rising trend with the recent promotion of the sash replacement program. Many wood manufacturers are promoting sash replacement as a replacement window alternative to gain access to the replacement market. Sash replacement has been around for some time, but hasnt been promoted until now.
Despite the consolidation of our industry, the regional and small manufacturers are likely to thrive. As the large industry players buy up the smaller regional manufacturers, they often are making few changes to the acquired manufacturer. The smaller companies normally continue producing the same windows that are popular in their region because different markets require different window designs.
In addition, todays window market demands fast service and delivery, which forces large companies to establish a local presence to supply products at the necessary service level.
The major driving force in the industry is an increased education about windows and awareness throughout the purchasing chain. The consumers builders, dealers, distributors and homeownersknow more about the options. They demand higher performance, more customized packages, quick service and delivery and longer-lasting productsall for a lower price. If you cant or wont provide what theyre looking for, someone else will.
For many of the so-called high-end manufacturers, this rising level of consumer knowledge is having a negative impact. Most educated consumers realize windows at the high end of the market dont offer $200 more in design and performance levels. Window technologies are too similar for that to be true.
The industry also is becoming more pressured to provide greater performance because the window market is demanding improved window quality, quicker delivery and service support and high performing products. Companies are turning product deliveries around in 24 to 48 hours, while some offer four-day to one-week delivery.
The technologies built into many of todays designs reduce the previously required field service. The need to make a better designed and higher quality product has led to outrageous warranties, many creating excessive liabilities that few manufacturers are able to cover.
Another force in the industry is the drive to become as efficient as possible. Manufacturers are rushing to optimize operations and are focusing on just-in-time (JIT) cycle times, optimization reduction and work cell production to reduce work-in-process (WIP) inventory. They also are leveraging their suppliers to help them become more efficient. For instance, TruSeal Technologies offers manufacturers using Swiggle ® Seal helpful information on how to increase productivity and reduce WIP inventory with a specially designed work cell program.
Despite these efforts, many manufacturers are making little headway in becoming more efficient because they focus on reducing the labor component. But, they are only shifting the labor to another location within the plant.
The window industry continues to move from standard stock sizes to custom windows in all shapes and sizes. With option packages much like those offered in new cars, customers are demanding contour muntin, special screens, low-E glass, Argon and custom hardware options. Offering such options can allow manufacturers to regain some lost margin points.
A manufacturer also must strive to be as large a single-source supplier to the customer base as possible. Window producers must offer bays, bows, speciality items and morewithout extending delivery times. This effort will keep customers from choosing an alternate supplier to meet their needs.
The window and door industry is a dynamic one, continually advancing to better serve its customers. With a little insight into the trends shaping our industrys future, we can develop sound sales strategies and up-to-date marketing approaches that will allow us to sell more windows and be successful in a tough economic market.
Clark Halladay is the sales and new business development manager for TruSeal Technologies, Inc. of Beachwood, OH.
© Copyright 1998 Key Communications, Inc. All rights reserved. No reproduction of any type without expressed written permission.