by Michael Collins
A chaotic election is now behind us and Joe Biden is the 46th president of the United States. With Democratic control of both the House and Senate behind him, it is particularly important to understand President Biden’s plans. While not all of his intended programs and policies will be enacted, it is wise to pause long enough to consider the potential opportunities and threats that could be created in the next four years for the industry. We reviewed a selection of policy proposals put forth by President Biden during his campaign, focusing primarily on those with the greatest potential to impact the glass and glazing industry or construction and remodeling in general.
President Biden has pledged to improve the efficiency of American manufacturing by encouraging investment in new manufacturing technologies and equipment. In this effort, he will have as a template the tax credits put in place under President Obama. During his administration, numerous glass manufacturers reported taking advantage of accelerated depreciation in purchasing manufacturing equipment. Many later credited having purchased equipment ahead of the next upswing with their ability to participate fully in the post-recession recovery.
President Biden has proposed to tighten standards of what is required for a product to be considered ‘Made in America.’ On a related note, he indicated that he will modify metrics in government procurement methodologies that allow foreign-made products to be selected more easily than products manufactured domestically.
Another important plan proposed by President Biden includes an overhaul of the Paycheck Protection Program (PPP). Scores of glass and glazing companies benefitted from the PPP program that was launched hastily during the early days of the pandemic shutdown. Importantly, proposed enhancements to the plan would guarantee relief for qualifying small businesses with fewer than 50 employees.
In every great financial and economic crisis, the U.S. has faced, capital availability—or a lack thereof—has determined the steepness and severity of the crisis. As we fight through the pandemic, the President plans to make available some $100 billion in low-interest business loans.
Companies with fenestration products that are geared to the proper price point will benefit if the planned $640 billion investment in affordable housing comes to pass. This effort is geared toward an emphasis on durable and energy efficient products, a perfect criterion for fenestration. There is also a discussion in the Biden platform of a first-time homebuyer tax credit up to $15,000. The last such tax credit was highly successful in spurring housing demand. Meanwhile, a proposed renter’s tax credit would drive demand for affordable multi-family housing.
Among the most ambitious goals put forth under the Biden presidency is ensuring that the U.S. derives 100% of its energy needs from clean energy and achieves net-zero emissions no later than 2050. There is a great deal of discussion in the Biden platform of solutions to this goal that don’t include glass, including concepts like appliance efficiency and on-site clean power generation. One Biden proposal does call for weatherizing 2 million homes over four years and singles out more efficient windows as a key solution. Given their central role in determining the energy efficiency of homes and buildings, we will hope that fenestration products receive stronger billing when these energy efficiency policies are actually enacted.
Another building related proposal includes tightening and unifying building codes around energy efficiency. Fenestration manufacturers that improve products in order to meet tougher codes would benefit most if those codes were uniformly enforced everywhere.
Lastly, with regard to the current difficulty in locating qualified workers, the Biden administration promises funding for community colleges and other “high-quality training programs.” These programs would be aimed at assisting recent high school graduates, as well as existing workers, seeking to improve their skills.
In terms of challenges created by these proposals, perhaps the most important one is the fact that none of these initiatives are inexpensive. The funding for these programs will have to come from somewhere, so businesses and business owners will likely see higher taxes in various forms. If properly executed, though, we can hope that these various changes will create enough economic and other opportunities to outweigh their cost.
Michael Collins is an investment banker and a partner in Building Industry Advisors. He specializes in mergers and acquisitions in the door and window industry.