Volume 46, Issue 3 - April 2011

Glazier’sGuild

Recovery Measures
A Contract Glazier’s Call to Improve
By John Juba


Many economists, analysts and strategists are stating that there are some positive signs ahead for future sales in 2011. Although this news is exciting and gives a positive attitude of expectation, I believe the challenges in the next couple of years will be the greatest yet of the current economic downturn for our industry.

Privately funded commercial work is at a crawl except for hospitals and institutional structures. The vast majority of construction in 2010 was performed on local, state and federal government projects, which includes military-related projects. I believe that a large portion of these projects were funded by government stimulus funds that will end very soon.

The current commercial glazing environment is weak due to a combination of the commercial overbuilding during the last decade, the residential bust, the depressed economy in general and the fear of financial institutions to lend development funds. I believe commercial construction will rebound very slowly starting in 2012.

One major detriment to growth is that many manufacturers of glass and aluminum products have suffered substantial financial losses during 2010 and continuing into 2011. These losses likely will result in manufacturers taking recovery measures by raising prices this year. Rising energy costs may very well increase these prices even more. These higher material costs may cause designers to utilize alternatives to glass in order to reduce building costs.

"John Juba is chief executive officer of Juba Aluminum Products in Concord, N.C. Mr. Juba’s opinions are solely his own and do not necessarily reflect the views of this magazine."


Declining Quality
Another issue that may result in profit losses in 2011 is continuing “panic building” practices. This is an ongoing problem, which does not seem to have stabilized in the last 18 months. Glazing contractors are hard bidding projects at cost, or below cost, in order to maintain cash flow and to retain key personnel. They are using the lowest prices from manufacturers and passing the pricing onto the general contractor. The general contractor has to utilize the pricing to have any chance of being awarded the project. The lowball pricing scenario often results in poor quality products, performance and service. The general contractors and building owners ultimately lose and the lawyers win. The old cliché that “you get what you pay for” also is true in the commercial glazing industry. I am appalled at the reports we are receiving from the field concerning poor quality and performance and productivity problems on projects that have fallen victim to cheap pricing.

On a positive view, there are some companies (like ours) that are financially stable and will not sacrifice high quality standards in materials and installation practices. We will continue to build strong client relationships and take proactive steps to deliver our customers high-quality products with on-time deliveries at competitive prices when comparing apples to apples.

Call to Action

I believe the following actions could strengthen our industry so it can move ahead in a positive direction and be strong and ready when the market returns.

For glass manufacturers:
• Strategically consolidate manufacturing plants and archive or close plants that are incurring substantial losses.

• Do not lower prices to below cost or procure jobs with very marginal profits.

• Avoid tendencies to control the market by lowering prices. A company will not achieve long-term success by intentionally lowering their pricing to control or capture the market majority and make their competitors weak.

• Focus on quality and services. In the end, this will always prevail over low pricing and poor quality.

• Understand there is, and will be, enough volume for all manufacturers to have their needs fulfilled but not all their wants. Our industry does not need one or two “fat rats hoarding borrowed cheese” with all of the rest being undernourished and weak.

For glazing contractors:
• Do not attempt to control the market by consistently low-balling prices. Contract glazing is not the type of business where one can reduce pricing consistently and make up the profits by volume sales. This mindset ultimately will yield volume losses

• Do not attempt to control the market by consistently low-balling prices. Contract glazing is not the type of business where one can reduce pricing consistently and make up the profits by volume sales. This mindset ultimately will yield volume losses. Not only can consistent lowball pricing cause irrevocable financial damage, but it can weaken the market and bring embarrassment to our industry. When architectural firms start planning building design products for a new project, we want them to think glass, not leaks, potential failure and problems.

• Make a concentrated effort to offer glazing products as a viable substitute for other substrates during building design. Glass can be promoted as a true value-added alternate work scope. Continually educate the architects and contractors at the local level on the benefits of glass products usage for items such as balcony partitions, interior walls, column wraps and lobby partitions.

• Profits are increased by having a passion for doing the job right and on-time the first time, with highly trained personnel who take pride in their work. Hire and train personnel to perform work above industry standards. Avoid the use of multiple inexperienced sub labor companies on a single project. Poor quality can cause an architect to consider an alternative to glass on the next project.

 

John Juba is chief executive officer of Juba Aluminum Products in Concord, N.C. Mr. Juba’s opinions are solely his own and do not necessarily reflect the views of this magazine.

USG
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