"As I see it"
Given the current state of the economy, what actions are you taking to protect your business in 2009?
“We’re taking a hard look at all expenses, including labor. I can’t say that we’ve cut any fat, but we want to make sure we’re not acquiring any.”
—Guy Selinske, president, American Glass & Mirror, Prior Lake, Minn.
“Like everyone else, we’re tightening our belts and watching costs more closely. Our focus has always been toward natural daylighting, so the push towards green building has helped us to maintain a good backlog. We are being careful to follow up with the leads we do get. We promote our expertise and experience as a way for the general contractor to control costs and stay out of trouble.”
—Phil Zeutenhorst, president, Lacey Glass, Lacey, Wash.
“We’re trying to secure a backlog, but it’s tough. We’re budgeting for less revenue this year and making our plans around that. We’re trying to fit our business to the revenue we’re going to forecast.
“All companies are retrenching, trying to hold on to see what is going to happen politically. With the bailout, we’re waiting to see how that money is going to get distributed and how it’s going to be paid for. People are almost paralyzed by what’s going to happen, because no one has seen it like this before.”
—Bill John, president, InterClad, Minneapolis
“For some time now, we’ve been cautious about our hiring, expenses and capital expenditures. As a result, we have been able to eliminate debt, which is where we wanted to be in anticipation of tougher times. We focused on improving our credit process to better manage our accounts receivable. I’m pleased; I think we’ve prepared well.”
—John Dwyer, owner and president, Syracuse Glass, New York
“We are scrutinizing our expenses like never before, paying closer attention to break-even analysis. Though we are not leveraged, we are taking steps to make sure [we know] exactly where we stand with our bank in the case of a worst-case scenario. We are tightening up our payment terms, and are willing to walk away from questionable business—even when we need sales the most.
“During this time, we are also watching for opportunities, such as the chance to find good people that might not otherwise be available, and acquisitions and/or strategic alliances that might not be formed during ‘good times.’”
—Doug Linderer, owner, Mr. Go-Glass, Salisbury, Md.
“We are taking an even closer look at being ‘lean.’ We continue to learn everything we can about our real costs, so that we can reduce them where possible and control them in relation to sales. We also have scaled back the scope and timing of expansion plans. But we have not stopped; we continue to move ahead. We believe that you can never really be ‘idle;’ you are always either moving forward or moving backward.”
—Chris Mammen, president, M3 Glass Technologies, Irving, Texas
“We are constantly talking about bringing value to our customers—striving to over-deliver. Our customers are also looking hard at value, so it’s a good opportunity for us to grow our business. We must give customers a reason to choose Glasspro. If we can do this, maybe we can actually grow our business. It’s not an easy road, but I feel that it’s an opportunity.”
—Paul Heinauer, president, Glasspro, Mount Pleasant, S.C.
What do you see as the top repercussions to the glass industry as a whole?
“The convergence of the simultaneous slowdown in the glass industry’s major markets of automotive, residential, and commercial will have serious consequences to suppliers as well as customers. Other than the rapid emergence of the worldwide solar industry, all trends are downward until a clear path is established for the resolution of debt financing for commercial projects as well as affordable and available residential mortgages. Additionally, the past mindset of consumer’s personal savings rates will need to be reversed to assist in the purchase of motor vehicles.
“Since cash flow will be difficult during this period, account receivables will command considerable attention since an order is not a sale until the customer’s check is cleared. As the recent past has shown, a competitive price is not the same as security of supply. In the past three years, 20 percent of the North American float glass industry has been permanently disabled, with another 10 percent undergoing repair in 2009.”
—Russ Ebeid, president, Glass Group, Guardian Industries Corp., Auburn Hills, Mich.
“If there is an extended slowdown in the construction industry, and in particular glazing, we could lose some valuable new talent to other types of work. The Pacific Northwest has been having trouble filling job openings and getting new workers into the trade for the last four or five years. The downturn most likely will send prices down to the point where jobs are not profitable and people are taking work to keep good, key employees busy.”
“I have not seen an economy like this in my adult life. The closest thing was in the ‘70s, when I was still in high school. Then, we saw the first big spike in gas [prices], similar to today. The price of fuel and oil pushes through the entire economy and ends up affecting us in a lot of different ways—wherever we go, the prices of goods go up.”
“Economic downturns are a given. Not all repercussions are necessarily negative. For example, government spending will offset the current reduction in private commercial spending to a large degree. The obvious key to success is to simply follow the money. The companies that have ignored the public sector will face the most serious repercussions. Those companies that are experienced in cultivating contracts in this market segment will have an obvious advantage. A great deal of funding for local public works projects has already been approved and is flowing. The Federal government will soon follow with an array of fully funded new projects. There’s always a silver lining to bleak economic news.”
—Jeff Griffiths, director of business development, Safti First, San Francisco
“We’ve found that raw float glass is much easier to get now. Last fall, clear glass supplies were really tight, but the supply situation is returning to normal now. If there is one positive thing about a recession, it’s that it makes you look for unprofitable elements of your business and take action.
“I think we’ll see companies in the glass industry shifting from weaker markets to stronger markets. In our market, for example, a vinyl window manufacturer that used to be focused on residential jobs is more active in the light commercial market. Glass is great that way—it’s a versatile product that has many uses.”
“First, the ‘credit crunch’ is resulting in fewer building projects. The resulting decrease in demand for architectural glass is dramatic, though worse in some parts of the country than in others. Secondly, I think that some players will hurt themselves and our industry as a whole by lowering their prices more than is necessary or even reasonable. Some will do this because they do not have a handle on what their costs really are, but some will do it out of panic, thinking that they must do so in order to keep orders flowing through their organization. They are worried more about their top line than their bottom line. Thirdly, there could be a slowing in the introduction of new products. There is great competitiveness out there, and many smart people are developing new products for our industry. But if demand slows, it will be longer before we see these new products (and their margins) make it into the marketplace. Even worse, we could see less R&D for future products.”
What’s your best guess right now as to when things will improve?
“I’m not planning on things improving for another year, but we’re hopeful it will turn around in 6 months. … For my company, I think we’ll see things turn around when housing starts go up.
“There is one bright spot. Because people are staying in their houses, we’re seeing an increased amount of remodeling. People are looking around at their houses and saying, ‘This is the room that needs work.’ Sometimes it’s a kitchen, sometimes a master bath and even some additions.”
“We do a lot of public work, which will probably be the first sector to get up and moving again, although larger jobs take more time to get off the ground. I would hope that bidding will start to pick up in spring and summer. There also may be energy conservation and repair work that could help to keep people busy over the next few years. When businesses can’t afford to buy, sell, or move, they tend to spend a little more on upgrades to existing facilities.”
“Business is going to come back; it’s just a matter of timing. Usually, [the construction industry] is one of the last sectors to go down. So, conversely, we’re some of the last to go up. We’ll see [a rebound] before it reaches us. I’m thinking that sometime in the middle of 2010 construction will come back. The other parts of the economy will see signs of life for the last part of 2009.”
“The economy will continue to improve as the credit crunch begins to ease and investors realize that current economic conditions offer a tremendous opportunity for long-term growth and expansion.”
“When will things get better? That is the toughest question of all. The best and brightest economists disagree on this one. We’re forecasting a pickup in the second half of 2009, followed by gradual arithmetic recovery in 2010/2011.”
“I truly believe that we will see some resilience. Improvement will be underway by summer, or at least the worst will be behind us.”
“The experts are saying 12 months to 18 months, but I’m not focusing on that part of it. I’m focusing on what we can do to manage during these times. I don’t wear rose-colored glasses, but adversity is something we’re used to facing as entrepreneurs. We’ll use that to our advantage as opposed to letting it define us.”
“It is doubtful that a clear direction will be visible until the end of the second quarter of 2009. At this juncture, the economic trough should subside and a lengthy and slow recovery shall commence for those who have successfully weathered the tsunami.”