Unlike other building industry segments that still face a great deal of uncertainty about what 2010 will bring, many window makers are looking forward to a second straight year of increased sales or improved market share — thanks to a surge in business triggered by the $1,500 tax credit in last year's American Recovery and Reinvestment Act.
That tax credit also has given a boost to energy-efficient windows and shifted more sales into replacement windows, helping to counter, at least to some degree, the dramatic falloff of window sales into the new-home market during the past three years, said window makers at the International Builders' Show in Las Vegas.
“It was a tough first quarter last year, but the best time to take market share [from others] is in a downturn, and I think we were still taking market share,” said Gary Pember, marketing vice president for vinyl window and patio door maker Simonton Windows of Parkersburg, W.Va.
One of Simonton's advantages? It is a custom builder that delivers its windows in seven days, meaning its customers have no inventory or holding costs.
“We had a very good year in 2009, and we are guardedly optimistic that the market will do even better this year since new construction has hit bottom and can't get lower, and since the tax credit will be in effect for the full year,” Pember said at the Jan. 19-22 builders show.
Partly because of the sales boost from the tax credit, last summer Simonton recalled some 400 full-time and seasonal workers that it had laid off in late 2008, and it added 50 workers for window and door production in Illinois and West Virginia.
The credit also has helped some window makers to boost prices.
“Prior to the ARRA, there was a slight trending down in window prices, as the prices of existing new homes had gone down,” Pember said. But windows that qualify for the tax credit must meet certain energy-efficiency specifications. The result is a higher-priced product that contributes to “an increase in our average selling prices,” he said.
Other companies painted similar pictures.
“Even though it was a struggle, we sold more units in 2009 than in 2008. We are optimistic about 2010 and will be looking for another increase this year,” said Kyle Hendren, marketing director for Amsco Windows in Salt Lake City. The firm makes and sells vinyl, fiberglass and thermoplastic windows, though the bulk of its window sales are vinyl.
Hendren cautioned that the uptick still leaves sales far below peak levels. “We expect a slow and steady improvement, but we are certainly not going back” to anywhere near peak volume levels, he said. “We don't expect a significant jump. It will take until at least 2012 to get the existing market back up.”
At window and door maker Milgard Manufacturing Inc., based in Tacoma, Wash., unit sales fell in 2009, but the company increased its market share, according to spokesman Paul Vanderwal. “We gained momentum and market share in 2009,” helped by the tax credit, he said. “That created more interest in sustainability and more energy-efficient products.
“For 2010, we have our fingers crossed like everyone else,” said Vanderwal. “We would like to see the market come back, but we are projecting that comeback is out at least one year.”
Like a number of other window firms, sales of Milgard windows into the new home and the repair and replacement markets have flip-flopped during the past five years, with repair and replacement windows out front.
The remodeling market also is leading the way for Kolbe & Kolbe Millwork Inc. in Wausau, Wis., which recently merged three of its replacement vinyl product lines into one, premium-quality line of vinyl windows and doors that the firm calls its Latitude Series.
The remodeling market has the most momentum right now because homeowners are “enhancing their current homes vs. buying something new,” said Lance Premeau, Kolbe product and market analyst for windows and doors. “I believe this will continue during 2010.
“Our sales have fallen with the economy. I feel that we are at the bottom and will see a very slow and steady recovery this year,” he said.
“Windows continue to be a big category and a growth market” for building-products maker Ply Gem Industries Inc., said Jerry Blais, Ply Gem marketing vice president for siding. He said the AARA tax credit and the federal government's Energy Star program have fueled that growth at the Cary, N.C.-based firm, which makes windows out of vinyl, aluminum, wood, wood composite, steel and fiberglass.
“And the market is fragmented, so with the variety of products we offer, we have the opportunity to capture market share,” Blais said.
“Vinyl is still the market leader by far in the U.S. and Canada,” he noted. “The challenge with composites is how do you make them affordable?”
Vinyl still comprises more than half of the U.S. window market, according to several manufacturers. But, fiberglass — because of its ability to offer more colors and wood-grain looks — continues to gain market share, they said. The largest maker of wood windows in the U.S. — Andersen Corp. of Bayport, Minn. — declined to comment on market trends.
As with decking and siding producers, window makers are placing greater emphasis on providing more colors and a variety of styles.
“It is no longer good enough to be a white window,” said Simonton's Pember. “People want to have interior window finishes that look like cherry or maple to match their interior look. People want more style variability, and more style, finish and color options.”
In response to that, Simonton Windows has continued to expand its Decorum interior laminate options, which provide antique cherry, maple or wood oak finishes with a wood-grain look. Consumers also want their window hardware to match faucets or lighting in their homes, which is why the firm's offerings include bronze, brass and brushed-nickel finishes, Pember said.
At the builders show, Amsco displayed its Artisan vinyl windows with three new exterior color options — bronze, evergreen and autumn red — and its Renaissance thermoplastic composite windows — in white, almond and taupe — which are encapsulated in an acrylic-based capstock to make them look painted. The Renaissance windows also offer a pine wood veneer for the interior.
“We've been trying to get away from painting windows” said Amsco's Hendren. “The thermoplastics frame is manufactured to look like a wood window.”
However, he added that the firm — which recently expanded its market coverage into Texas, Louisiana, Oklahoma and Southeastern and Eastern seaboard states — still has its greatest volume in vinyl windows.
Milgard also is finding new ways to add color to its vinyl window line.
“We are looking at how you extrude vinyl in a darker color,” Vanderwal said, “and whether you can get a paint material to adhere to vinyl.”
He said Milgard and a sister company, wood and stain manufacturer Behr Process Corp. in Santa Ana., Calif., are collaborating on that project. Both companies are part of home-improvement and new-home construction product manufacturing giant Masco Corp. in Taylor, Mich.
“We expect to roll out a painted vinyl product in the spring” that can compete with fiberglass and wood windows, he said.
Window manufacturers also said that they are continuing to focus on providing windows with increased energy efficiency.
“The new energy performance requirements are challenging companies to use more resources to produce the most efficient product possible,” said Kolbe's Premeau.
“People want products that perform better and reduce energy costs,” Vanderwal said. “The green aspect and sustainability issues continue to drive innovation and sales.”
What's more, it is unlikely that trend will abate, even after the ARRA tax credit expires, said Pember. “People want energy-efficiency products. But we have to keep prices in line because they don't want them at a higher price or at the expense of style.”
Besides, window standards will become more stringent, he said, noting that Energy Star rating standards went up again in 2010. “We have to continue to improve technologies to improve the performance of windows.”
Pember also sees an increased demand for sound-reducing windows as people move back into urban areas.
A potentially revolutionary change, if it catches on, is the SmartCase window installation system unveiled by Milgard at the show. The newly developed window installation system — which Milgard said it hopes to have available by spring — allows builders to install the frames and a temporary cover into the window openings in new homes and add the permanent window later, using an adhesive that binds the two pieces together into a single unit.
“We are not trying to sell builders an extra piece of hardware. We are trying to help them reduce cleaning of windows and damage to windows, which are one of their highest ticket items,” said Vanderwal.
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