Better days ahead

Industry prepares for economic rebound
Jenni Chase
October 31, 2009
COMMERCIAL, RETAIL, FABRICATION : TRENDS & ANALYSIS

We’re closing in—if we’re not there already—to the bottom of the trough, said Rod Van Buskirk, president, Bacon and Van Buskirk, Champaign, Ill., during the State of the Industry panel discussion, Sept. 30, at GlassBuild America: The Glass, Window & Door Expo, in Atlanta. “It could get worse, but I don’t think it’s going to get too much worse, if it does. Right now, we are preparing—and we would suggest other glaziers prepare—for better days ahead when the economy rebounds,” he said.

That rebound will occur in 2011, according to Jeff Dietrich, senior analyst, Institute for Trend Research, Concord, N.H., who gave a presentation, The Future is Your Decision, Sept. 30, in Atlanta. For the overall economy in general, and for nonresidential construction specifically, 2010 will be a year of transition or slow recovery. "Our forecast for 2011 is a return to growth,” Dietrich said.

What the rebound will look like will depend on a number of factors, among them the commencement of projects funded under the American Recovery and Reinvestment Act. The act contains about $140 billion for construction, although much of those dollars remain stuck in the pipeline. See “Stimulus money slow to translate into project starts."

“I think it’s taking awhile for projects to be approved at the local level, and once that happens we should start seeing a benefit,” said Jerry Razwick, president, Technical Glass Products, Snoqualmie, Wash., at the show. “Not all parts of the glass industry will see a boost from the stimulus; it depends on their market segment and products. I feel good about fire-rated glass, though, since it’s required by code in many schools and hospitals, and those are among the key projects where the government is helping out.”

The ARRA allocated $17.6 billion to the “modernization, renovation and repair” of educational facilities alone, according to The Associated General Contractors of America, Arlington, Va. Yet, “Most of the stimulus we see in our area hasn’t resulted in too much, other than a little bit of defense work,” Van Buskirk reported. “We haven’t seen too much more school work—not too much more college, university or government, publically funded projects, at this stage. We have seen a little in the [U.S. Department of Housing and Urban Development] work that’s out there, but very little other than that. Hopefully, it’ll get there someday.”

For glass companies involved in the residential side of the market, that “someday” might come sooner than later. At DEsigned Glass, Burnsville, Minn., “it’s crazy busy,” said Erica Chandler, co-owner, in an interview. “It really started picking up in May and June. We did more in May than we did in the first four months of the year, and it’s been crazy since then.”

Chandler attributed the increase in business to the $8,000 tax credit given to first-time homebuyers under the ARRA. “A lot of the big builders in our area are putting a lot of houses up,” she reported. “We do all of the mirrors and shower doors for the two largest builders in Minnesota [which translates into] mirrors and shower doors in four to five homes a day.”

Whether that business will continue into 2010 largely depends on a government decision to extend the first-time homebuyer tax credit beyond the Nov. 30 deadline, Chandler said. The National Association of Home Builders, Washington, D.C., has called on Congress to extend the credit for an additional year and to make it available to all purchasers of a principal residence, according to an Oct. 7 NAHB release.

In addition, some glass companies are starting to benefit from the ARRA tax credits for energy-efficient windows, doors and skylights.

“The residential part of our business is seeing [the effect of the stimulus funding],” said Gary Jones, president, Manko Window Systems, Manhattan, Kan., in an interview. “The first question people ask us is how they can get their $1,500 tax credit. The consumer is obviously aware of it. The commercial side will take longer, because you have to get owners and architects involved. We’ll probably see some of that in 2010.”

It would be difficult to point to much evidence of the ARRA impact in the commercial market segment at this point, though buildings appear to be the beneficiary of some of the spending, said Scott Follett, director of new products and services, PPG’s Performance Glazings strategic business unit, Pittsburgh, at the show. “However, in the residential window segment, the influence of incentives is much more evident. The ARRA has generated increased interest in our expanded portfolio of low-E glass products by residential window makers. This was a direct response to the demand created by ARRA incentives to home owners.”

While the commercial glass industry might have to wait a bit longer for the ARRA effect to kick in, business owners remain optimistic that a rebound is on its way. Looking at the show floor in Atlanta, Jones observed, “The people here are buyers, which is a good sign. It lends me to believe that our industry has a positive outlook.”

To read more about the state of our industry and the business tactics companies are employing to remain strong, see “Profit strategies” and “Closer look."

 

Jenni Chase is editorial director of Glass Magazine, e-glass weekly and GlassMagazine.com. Write her at jchase@glass.org.