Volume 43, Issue 7 - July 2008
AAMA’s Summer Meeting: A Tale of Two Michaels
Michael Collins #1, vice president of Jordan, Knauff and Co., an investment banking firm in Chicago, specializes in the door and window industry and writes a monthly column in USGlass magazine’s sister publication Door and Window Manufacturer. He gave an expansive overview of what’s happening in that industry and crammed tons of statistics into his one-hour presentation. Among his comments about the United States housing market were that:
At the bottom of a business cycle such as this one, Collins says there is a “festival of wealth destruction” that takes all types of wealth out of the market. He also reminded the audience that commercial market lags behind residential by 12 to 18 months.
“The United States is the single biggest construction market in the world,” he said. “It’s a 1.6-trillion dollar market.”
Collins expects the nonresidential construction market to grow five percent this year, but he cautioned about the factors that are hurting the business.
“There seems to be a lack of coordination among the various standard and code writing organizations; this creates an artificial tax, or a lot of additional cost for the industry,” he said.
He said the glass industry continues to defy description. “There are some companies that pay up to 25-percent more for exactly the same glass as another company buys. There is no good reason for this. I had someone told me that if the glass industry woke up, they would buy their glass by the pound, rather than the square foot.”
Collins then turned his attention to LEED certification. He said that, in general, achieving Platinum certification will add 6.8 percent to a building’s cost, Gold adds 2.2 percent, and Silver 1.0. “We expect to see most people move toward Gold or Silver [certification],” he said.
“We are still seeing a ton of activity in door and window companies,” he continued. “And the multiples have remained a steady four to seven times EBITA,” saving the best nugget of information for close to the session’s end. “The problem is that the EBITA has come down in the last 18 months, not the multiples.”
It was easy to tell Michael Collins #1 and #2 apart. Michael Collins #2 spoke to the audience with a snappy accent. Collins #2 is affiliated with BIM World and knows and understands what building information modeling (BIM) will mean to the future. He said there are currently more than 300,000 BIM licensees throughout the world.
“First we had line drawings, then AutoCad that you see so prominently today. The difference is that when you make DWG files, the lines and arcs don’t know what they are—a square is a square. With BIM, they can live and breathe intelligently. Those squares have information saying whether it’s a door or a window or a piece of glass. The whole process is parametric.”
Collins used EFCO Corp. as an example (“I’ll pick on Dave Hewitt because he’s not here,” he joked). “EFCO offers one window with more than 6,000 variables. With other programs you have to draw that 6,000 times. With BIM, you make one window and then 6,000 parametric variables. The new generation of Internet-driven design engineers will design this way. It’s already here.”
One other notable trend within the industry was discussed at the June AAMA meeting. An informal group of the companies, individuals and groups that began conversation at the American Institute of Architects show in May continued its work at the AAMA meeting by forming a coalition to the fight the National Fenestration Rating Council’s (NFRC) Component Modeling Approach (CMA). Members of the group have been frustrated by the perceived lack of response by the NFRC to their concerns about the direction and efficacy of its Component Modeling Approach.
The group began meeting informally after an USGlass editorial (see March 2008 USGlass, page 6) about the subject was met with an overwhelmingly positive response from many people with similar concerns about the CMA. Many of those who responded decided to meet at AIA and have now created a coalition to fight against the CMA in its present form.
The group is expected to release a position paper in the near future.