State of the Industry

Companies investing again as market begins to pick up speed
Katy Devlin, Bethany Stough and Jenni Chase
September 27, 2013
COMMERCIAL, RETAIL, FABRICATION : FINANCE, MEETINGS AND EVENTS

Every year, GlassBuild America: The Glass, Window & Door Expo provides an opportunity to gauge the state of the industry in terms of investment and product development activity, business conditions within the supply chain, and overall economic health. This year was no different, with more than 6,200 attendees and 360 exhibitors taking the show floor, September 10-12, in Atlanta. Reflecting a market that is beginning to pick up speed, companies announced new initiatives, firms invested in new equipment and suppliers introduced new products at the Georgia World Congress Center.

GlassBuild America: The Glass, Window & Door Expo hosted more than 6,200 attendees and 360 exhibitors, September 10-12, in Atlanta. Organized by the National Glass Association, the event is cosponsored by the American Architectural Manufacturers Association, the Glass Association of North America, the Insulating Glass Manufacturers Alliance and the Bath Enclosure Manufacturers Association.

“People are in a positive frame of mind,” said Paul Daniels, vice president of sales for C.R. Laurence Co. and its U.S. Aluminum Division. “We are making major investments in facilities. We added a shift at a main manufacturing location, we are doubling the size of another plant, and we have a new plant in South Carolina: a super center for both U.S. Aluminum and C.R. Laurence products,” he reported on the show floor.

AGC Glass Company North America, also announced new initiatives in Atlanta, publicizing its new 234,000-square-foot fabrication facility. Equipped with dedicated insulating glass lines to serve both the commercial and residential markets, the Atlanta facility is expected to employ up to 120-130 people, according to Shane Sieracki, director of operations, AGC Fabricated Products.

Columbia Commercial Building Products, a Consolidated Glass Holdings company, promoted its new glass division at GlassBuild America, representing a significant investment in new equipment and technology. “We want to do as much large commercial insulating projects as possible,” said Nathan McKenna, glass division manager, CCBP. “We have also partnered with [Quanex], which has a huge presence here [at GlassBuild America], and we promote their TriSeal Super Spacer.” In addition to insulating services, CCBP now offers cutting, spandrel, auto seaming and tempering.

For El SpA also made news on the show floor with the announcement that it is opening a For El North America location in the Minneapolis/St. Paul region to offer sales, parts, service and support to customers.

Equipment sales

Among the most encouraging signs in Atlanta were the equipment sales. During the three-day event, M3 Glass Technologies, for example, purchased several machines. “We are close to capacity, and have to add capacity,” said Chris Mammen, president. “We’re counting on 2014 to continue the upward trend,” he said, adding that “this is the time to invest.”

“The slowdown caused everyone to get leaner. The smart ones are preparing to emerge with new products, new investments,” Mammen said. “If you didn’t invest in new technology [during the last several years], you’re coming out of the downturn with the same products that you had going in.”

According to suppliers on the floor at GlassBuild America, glass and metal companies are beginning to invest in machinery and equipment again, after years of postponing capital expenditures or purchasing used equipment from outof-business companies.

“We have been very busy, and have seen an upswing in business,” said Kip Crabbe, corporate accounts, machine sales and logistics, Salem Distributing, www.salemdist.com. “People have been sitting on their hands, but are beginning to make investments again.”

“Things are picking up,” agreed Stefano Forlani, executive manager, North America, Bottero. “It’s slow, but it’s steady and healthy…the industry is prepared to invest,” he said. “They understand what they need, and we’re seeing a lot of budgeting going on. During the last five years, companies would purchase only when they felt obliged to spend money on equipment. Now, we are seeing companies plan, and new equipment is part of those plans.”

IGE Glass Technologies, which had several pieces of equipment on display in Atlanta, reported business had been “great” for the company. “We’re expecting more of the same in 2014,” said Michael Spellman, president.

During the downturn, glass companies learned to work with fewer employees, prompting growth in automation. “People are willing to invest in the automation [of machinery] to stop individual touching and avoid mistakes,” said John Blasko, customer support technician, DeMichele Group. “They’re really beginning to invest in their own companies.”

Jeff Dietrich, senior analyst for the Institute for Trend Research, encouraged companies to start making investments— if they haven’t already—during his presentation at the 8th annual Glazing Executives Forum, held in conjunction with GlassBuild America.

“Get off the fence and do things now,” he told attendees. While the economy, and nonresidential construction, continues its slow climb during the next year or two, interest rates will remain low. However, rates will return to the historic norms of 7 percent to 8 percent in the latter half of the decade. You only have about 16 months to borrow money at low rates,” Dietrich said. “Make investments now. Hire new people. If you want to borrow money to expand your business or pay down debts to refinance, do it now.”

Value-added products

The glass industry has become a value-added business, with everything from new decorative glass, to high-performance glass coatings, to more efficient equipment and trucks on display in Atlanta.

Digitally printed glass continues to make its mark on the industry, with both equipment suppliers and glass fabricators on the show floor in Atlanta. Pictured, a crowd gathers for a demonstration of the Dip-Tech GlassJet Pro.

“We’re seeing more complex projects, such as tempered, laminated, insulating units with silkscreen,” said show attendee Kirk Johnson, COO, Hartung Glass Industries. “Insulating and laminated glass are seeing the most growth. Silkscreen is growing for us tremendously.”

Digitally printed glass also continues to make its mark on the industry. In the seminar, “Decoration and Printing on Glass: The New Frontier,” John Bush, vice president of operations for GGI, and Sarah Jacobson, senior associate for Gensler, spoke of the creativity and design freedom that printed decorative glass offers the architectural community. “[Printed glass] allows us to do things where there really was no substitute before,” Jacobson said. “There’s complete freedom. Whatever you can print on paper, you can print on glass.”

“The glass industry is converging with the digital industry to take advantage of an opportunity,” said Frank McGuinn, vice president, Arrow Systems Inc., a show exhibitor and digital glass printer supplier. “Today, there is a pent-up demand. Because of the economy of the past several years, capital expenditures have been held in check and attention to payback and rates of return have intensified. [That payback] is easier to quantify with digital printing than with other [technologies]. I also believe that as more people become aware of the [digital printing] process, the more demand there is going to be.”

Glass companies are being asked more and more to deliver custom products, said Mandy Marxen, vice president of marketing for Dreamwalls by Gardner Glass Products Inc. “Custom is really growing, whether it’s custom colors or custom fabrication—holes, notches, shapes. It’s really become a two-pronged approach in that we need to do both stock sheet cases and amazing custom [fabrication]. We’ve added a new edger and a new tempering oven that allow us to do more in house.”

Energy efficiency continues to be a top priority for the industry as well, as companies in all segments look to improve the performance of glass and glazing products. As demand for energy efficient glass products intensifies, GlassBuild America exhibitors such as PPG Industries, and Guardian Industries, continue to add to their product portfolios. In Atlanta, PPG debuted Solarban 67, a new solar-control, low-E glass that features a neutral coating for a clear appearance that delivers excellent solar control performance, with visible light transmittance of 54 percent in a 1-inch IGU and a solar heat gain coefficient of 0.29, according to the exhibitor.

Guardian Industries promoted the SunGuard Neutral 78/65 product in Atlanta, the newest addition to the SunGuard portfolio of low-E glass. According to the exhibitor, SunGuard Neutral 78/65 is ideal for commercial applications in cooler climates, and offers high visible light transmission and high solar heat gain.

Emerging energy efficient glass products, such as dynamic glass, also had a presence at the show. “Architects love glass; they want to use more of it in more challenging ways. The glass industry is going to be challenged to help them deliver on that design concept while still meeting codes,” said Helen Sanders, vice president of technical business development for Sage Electrochromics. The company’s electrochromic SageGlass “allows you to solve that problem because you can have multiple solar heat gain coefficients in one window. So you can meet the energy codes without a problem and use more glass,” she said.

Energy efficiency remains a top priority for the industry, as companies in all segments look to improve the performance of glass and glazing products. At GlassBuild America, exhibitors such as Guardian Industries promoted their expanded product portfolios.

The code community is beginning to recognize dynamic glass’ performance abilities, said Erich Klawuhn, VP of sales for dynamic glass supplier View Inc. “What we’re seeing is that a lot of the codes are now starting to adopt carve-outs for dynamic glass. They are using the same methodology of solar heat gain coefficients, U-factor and thresholds for static glass … but they are recognizing that dynamic glass, because it can change, shouldn’t be held to that same single threshold. We’re seeing [recognition] that dynamic glass should be considered differently within the codes. This is step one, because then incentives can be built on those codes for some of the advanced green building standards, LEED standards, etc.”

Efficiency is also driving trends in the transportation segment of the business. Fuel efficiency, for example, remains a top priority for glass companies, said Robin Donker, sales and marketing for Unruh Fab Inc. Aluminum and stainless steel are becoming more common for glass truck racks, as they provide “more payload,” she said.

F. Barkow, www.barkow.com is looking to boost fuel efficiency by offering a Ford F450 model with super-single rear tires. “This allows customers to have full-length glass racks on both sides of the truck,” again helping to increase payload, said John Weise.

The economy

In terms of the economy, Jeff Dietrich, senior analyst for the Institute for Trend Research, had mixed news for attendees in Atlanta: Nonresidential construction is growing, and will continue to grow through 2017; however, the pace of growth will remain slow for the remainder of 2013 and into 2014.

Commercial construction is growing at a rate of 2.3 percent in 2013, slightly behind last year’s growth rate of 3.2 percent, Dietrich said. By segment, public construction remains slow, while there are some bright spots: private medical building construction is up 11.5 percent year-over-year, private lodging up 23.5 percent and multifamily residential up 53 percent.

Looking at the overall economy, Dietrich warned that the industry would not see break-out growth until about 2015. “We are seeing steady, but mild, growth ahead. We don’t see things changing over the next 18 months. However, in 2015, 2016, we’re seeing tremendous growth,” he said. “The key word is growth. We are not in recession.”

Due to the slow pace of the rebound, nonresidential construction remains “less than half of what it was at the peak,” Dietrich said. “We’re not building as much in square feet, there are not as many projects out there. … This sector is still coming out of recession, and it’s going to take a long time to get back to where we were.”

Attendees on the show floor expressed optimism, despite the slow pace of growth. “The market is headed in the right direction,” said F. Barkow’s Weise. “Business is not great, but it’s getting better. We are ramping up. We have more people in the shop, and we are generally optimistic.”

“Our sense is that 2014 should be OK, maybe even better than 2013,” said David Balik, president of GGI. “We are cautiously optimistic.”

Some geographic and product segments are performing better than others. “Our successes are driven by taking market share in certain geographic segments,” said Hartung’s Johnson. “This year … has been very good; [we’ve seen] significant improvement in our margins, as well our bottom line. We’re still not where we need to be but we’ve seen improvement. In terms of outlook, I’m going to say ‘cautiously optimistic.’ I feel pretty good about the direction we’re heading. In regards to the economy, the recovery has been slow, and I don’t think it’s going to be on fire. I think we’re particularly enthusiastic about Texas. We’ve seen a big uptick in residential, which [affects] our shower door divisions. And now money is being lent for building.”

“Everything across the United States is picking up,” said Drew Dawson, sales manager for Cristacurva. “The Texas market, in particular, is really strong. We are based in Houston, and it is booming right now.”

“We have already seen significant recovery of the market, and we expect that to continue in 2014,” agreed Arne Klöfkorn, president of Bohle America Inc. Driving growth for Bohle is the renovation market. “People want to upgrade their homes; companies want to upgrade their offices. They’re looking toward sleeker, more in-style looks with ample glass that bring in more light. For offices, companies are looking for new things, a new look, to differentiate them from the competition.”

Despite the hardships of the Great Recession and its aftermath, surviving companies are likely stronger than they were pre-recession, Dietrich said. “Most companies have right sized. Most companies have paid down debt. Everybody has wised up. Businesses are in great shape, compared to where they were,” he said. “Congratulations for making it through the last five years. You’re probably creating something more significant than you know.”

See complete coverage of the products and services on display at GlassBuild America 2013, photo galleries of the show floor and videos of demonstrations and new product introductions.