The 2017 Industry Pulse – Window and Door

As tradition has it, we enter a New Year by taking stock of what 2016 had to offer in order to assess whats to come.

This years annual Industry Pulse report is a bit of an anomaly, however, considering the recent election. Note that the survey ran just after Election Day through the end of November, when emotions were still running very high. Those reactions will have some bearing on some of the reported projections and, considering much of the nation is still holding in a wait-and-see pattern as the new administration takes the lead, there is still an air of uncertainty. Even so, the overall tone of the data suggests we are on the same path of general health and prosperity that weve documented the past two years.

The challenges of the industry take on the same themes as in the past as well. Respondents told us they are still concerned with overregulation, the still-recovering economy and a housing market that has yet to completely stabilize. Controlling costs, maintaining quality, keeping up with demandespecially during a labor shortageattracting new talent, and turning a profit are all still keeping our industrys finest up at night.

But despite these challenges and the ambiguity of the near future, sales are widely up, companies are seeking to hire and there are more products available to the market now than ever before.

If 2016 had a word, many would say it was uncertainty. The industry reported signs of hesitation among customers as the world speculated about an unprecedented United States election. Every election year, I see much of the same thing, says Joe Mills, Sunrise Windows & Doors. You talk to a lot of people, you give a lot of estimates, and hear a lot of well get back to you.

But, as the speculation finally gave way to a conclusion, the market at large improved. In fact, builder confidence in the market for newly built single-family homes jumped seven points to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index published in December. This is the highest reading since July 2005, NAHB reports.

This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability, said NAHB Chairman Ed Brady. This is particularly important, given that a recent NAHB study shows that regulatory costs for home building have increased 29 percent in the past five years.

Many of those who opted to answer queries regarding the outcome of the election cited this very reasonDonald Trumps stance on federal regulationsas why they believed the new administration could have a positive impact on the industry. Those who believe the incoming administration will have a negative impact widely cited Trumps foreign and domestic trade policies as potential hazards to the industry, as well as economic and education policies. The respondents who have a positive outlook almost unanimously cited tax code reform and Trumps stance on federal regulations as a potential benefit. Another popular opinion among this segment was that the workforce skills and job training programs stand to improve under the new administration.

No matter your opinions on what the new administration will do for our industry, what really makes a difference, says Scott Gates, CEO of Western Window Systems, is businesses that try to make things better. You can overemphasize or over-define your strategy on what you think legislation is going to do, he says. But what we try to do is address what the customer wants. Because the customer is who actually makes decisions, and we feel like very rarely are you punished for making things better.

To put some of the product and sales trends in context, its important to understand which companies are doing business in new construction versus replacement. Of the manufacturers surveyed, 44% sell a majority of their products for replacement, 23% split their efforts evenly and 33% sell more products for new construction.

As for dealer respondents, 62% focus more than half their efforts on the replacement sector. Note that, of the remaining 38% that focus more on new construction sales, 77% are serving both commercial and residential markets.

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The 2017 Industry Pulse - Window and Door