Overseas and Industry Trends are Topic of Discussion on Sanibel Island

"There are massive global trends that I think are sometimes easy to ignore when you're out in the field," said Michael Collins of Jordan, Knauff and Co. at the open of his keynote address at the Insulating Glass Manufacturers Alliance (IGMA) 8th annual conference. To bring his audience up-to-date, Collins, a columnist for USGlass sister publication DWM magazine, took IGMA members through some of those global and industry trends impacting the door and window industry and commercial construction market.

With regard to windows, Collins noted that vinyl window suppliers are being pinched by rising fuel costs and energy surcharges from glass suppliers that they often aren't able to pass onto customers because of the competitiveness of the marketplace. However, despite these difficulties and the slow residential construction market, he has noticed that many window manufacturers are searching for acquisitions within the traditional door and window industry, "and that's extremely positive." Several such companies have examined an acquisition as a way to gain excess plant capacity, a positive step, Collins said, that indicates that these manufacturers are preparing to need that space once the market picks up.

While Collins says that consensus is showing that a bottom to the residential construction decline is coming in mid- to late-2008, the commercial construction market is expected to remain favorable in 2008. As Collins commented, "You'll still be happier on the commercial side in '08 than on the residential side."

Jordan, Knuaff & Co. anticipates continued strong interest in acquiring commercial door and window companies. While he says that increased consolidation in the commercial area is likely, he expects that Pella's acquisition of EFCO in 2007 (CLICK HERE for more) will not be the last instance of a residential door and window manufacturer purchasing a commercial company.

Collins also touched briefly on building information management (BIM) systems, which he explained will be the "replacement to 3D CAD." This software is able to store a variety of information regarding every part and component of a building, much like 3D CAD. However, where CAD libraries were private, companies are being formed to create these libraries for a number of manufacturers, allowing architects to reference this information.

According to Collins, this is a trend that all commercial building product manufacturers will be following—especially because overseas companies will be jumping on it. (CLICK HERE to let us know if this is a trend that you're following.) As he explained, the BIM library provides overseas manufacturers an instant audience of architects. "I'm encouraging companies to get ahead of this," Collins said.

And speaking of overseas competition, Collins also touched on the topic of competition with China. He said that in his research on this topic, "It became clear that different companies were at risk and different companies were not at risk."

Product areas with a high threat assessment included architectural flat glass, curtainwall, extrusions, door and window production machinery and hardware, due to their long, uniform production runs; high labor and materials content; and high ratio of value to weight and volume.

One member of the audience asked if the lower quality of Chinese products was swaying customers from buying overseas.

"Companies that are outsourcing there will tell you that the quality's there," Collins replied. "It didn't use to be, but now it's there."

In order to compete effectively, Collins advised his audience on several points:

• Spend as much time as possible interacting with the end customer, and their customers. "I'm always stunned about how little [manufacturers] know about the people who use their product," Collins said. "You've got to be a miner of data about your company." That data can provide early indicators of market needs, he explained.
  
  
• Cater to those customers with "tough" requests. Customers with frequent changes and short lead times will find it difficult to switch to an overseas supplier.
  
  
• Support innovation. Collins noted that patents from small companies are twice as likely as large companies to be among the top 1-percent of high-impact patents. While large companies tend to focus on making existing products better, or more affordable, innovation will help keep companies ahead of Chinese competition.
  
  
• Embrace lean manufacturing. Shortening lead times and becoming more cost-competitive will help give manufacturers an edge.

The IGMA conference concluded today with a meeting of the board of directors. The next meeting will be held June 16-19, 2008, at the Westin Resort and Spa in Whistler, British Columbia.

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