Glaziers report decreased backlog and margins going into 2010

Katy Devlin
January 7, 2010
COMMERCIAL : FORECASTS
Last year was bad for commercial construction, but not necessarily a bad year for commercial contract glaziers. Strong backlogs kept many busy throughout the year. However, the story has changed for many firms going into 2010, as fewer jobs are coming down the pike and backlogs have diminished. Decreased job volume has also led to lower profit margins for many companies.
 
In a November 2009 e-glass weekly poll, 54 percent of contract glazier respondents said their backlogs were down more than 20 percent going into 2010, compared to going into 2009. Some companies are down even more.
 
Andrew Canter, president, Ridgeview Glass Inc., Upper Marlboro, Md., said the company’s backlog going into 2010 is down in excess of 50 percent. John Heinaman, president, Heinaman Contract Glazing, Lake Forest, Calif., said the company’s backlog is down 65 percent versus last year, and Bill John, president, InterClad, Minneapolis, said the firm’s backlog is down 72 percent.
 
 “We had a high backlog at year-end last year, but we have had only a couple of large projects that we’re successful on,” John said. In 2009, fewer large projects were up for bid, affecting backlogs. “The size of the jobs we bid [in 2009] averaged about $600,000, which is one-third the size of our average bid [in 2008] at $1.8 million,” he said. “We bid only one job that was just at $3 million [in 2009], and only one other job that exceeded $2 million, which was combined with metal panels.”
 
Contract glaziers are tightening budgets, reorganizing and diversifying to prepare for the coming year and the lower backlogs.
 
“We have adjusted margins, labor rates, and the quantity and type of our bids,” Canter said. “We have developed a plan in the event that additional layoffs are required. Next year, [the plan] will be constantly monitored and updated as required.”
 
Tom Niepokoj, vice president of sales, Harmon Inc., Eden Prairie, Minn., said the company is increasing planning on the jobs it has lined up in the 2010. “We’re able to apply greater management planning and oversight to the projects we do have in the backlog,” he said.
 
Pat Shurnas, estimating, project management, Horizon Glass, Denver, said the company’s backlog is down 20 percent. As a result, “we are looking for other avenues to create work … other product lines to enhance our overall backlog.”
 
Keystone Glass, Omaha, also is facing a 20 percent drop in backlog going into 2010, said Jeff Creason, owner and vice president. “We’re controlling overhead and labor costs to maximize profit margins.”
 
While Ace Glass, Little Rock, Ark., has a backlog going into 2010 that is 20 percent higher than last year, the company is still keeping lean and watching costs, said Courtney Little, president. “We are not rehiring until necessary, and we’re carefully watching our overhead,” he said.
 
As job volume has decreased, and competition has increased, profit margins for many glaziers have fallen. While some said they were able to keep margins at normal or even higher-than-normal levels during 2009, they expect decreases in 2010.
 
“Our margins were up 4 percent in 2009,” Canter said. “However, after the first quarter of 2010, the margins and the volume will decrease.” 
 
John anticipates InterClad margins will be down more than 10 percent from 2009 to 2010. And Niepokoj reported margins were down 5 percent to 7 percent in 2009, and he expects them to stay down this year.

Katy Devlin is editor for Glass Magazine. E-mail Katy at kdevlin@glass.org.