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Several new species added to exterior frame and door component line
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HUMAN RESOURCES
Establish a Buddy System for New Hires |
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The Latest...
2008 Trends and Outlook
Limit worrying about the present situation and focus on what the future will bring. That is, in part, the advice offered by investment banker Michael Collins in his recent Industry Update Webinar. Rather than focusing on when exactly the down market will turn next year, window and door companies are better off looking to certain trends and pursuing efficiencies to emerge from 2008 successfully, said Collins, senior associate with Chicago investment firm Jordan, Knauff & Co.
More than 200 participants tuned in for Collins’ Webinar last week, which focused on the current state of the union for the window and door industry. While bad headlines and investor shakiness seem to be crescendoing in recent weeks, there’s really no way to predict when the market will hit bottom. “Even if we had the clarity on that time...I don’t think there are many things we could do with that information,” Collins pointed out.
Collins watches closely the merger and acquisition activity in the industry and pointed out several interesting trends that may mark the upcoming recovery year. First, he reported that several manufacturers are looking to purchase window companies with excess capacity thanks to the sluggish market. He sees this as a positive indicator for the industry as those shoppers are bullish on the industry’s future prospects. He also pointed out that some of the largest window and door manufacturers in the country are pursuing diversification—such as Pella’s purchase of commercial player Efco—and confirmed that some not currently offering garage door product lines are looking to enter this arena through acquisition.
With the reality of the soft market, Collins said companies in all areas of the industry that are being proactive about developing powerful marketing messages and streamlining operations will emerge in a stronger position on the other side of the housing market dip. He suggested honing Web sites, producing new promotional collateral, and rationalizing and/or expanding plants to be ready for the inevitable recovery. “These are steps that should be taken,” he advised. “When the recovery comes, these people [who pursued efficiencies] are going to look like geniuses. They’re doing it when there’s some slack in the system.”
Although merger and acquisition activity has slowed this year, Collins reported that favorable macroeconomic conditions resulted in more than 20 window and door industry transactions up through November. “We’ve seen some softness in window and door transactions this year,” he said, adding that this year’s numbers are behind the pace of 30 transactions in 2006. “A number of companies are on hold until things pick up again.”
Collins also noted that competition from China is being eroded by the weakening U.S. dollar and a movement to increase Chinese workers’ salaries. Still, he pointed out that even if China “fades” as the low-cost supplier country, there are numerous other countries around the globe with low labor and production costs that can easily step in to fill the void.
Collins announced that his company will be conducting its annual benchmark survey in early 2008. Manufacturers that anonymously participate will be eligible for a copy of the completed study. For more information, email Collins at mcollins@jordanknauff.com.
To request a copy of a PDF of the Webinar, click here.
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