The 2021 Industry Pulse
Primed for Growth
Despite challenges around COVID-19, the industry looks forward to a robust 2021 and beyond as demand is booming and residential construction posts historically strong numbers. This year’s annual Industry Pulse survey looks ahead at the booming housing market while taking into consideration challenges around labor, material procurement, supply chain and heightened safety considerations.
Few would disagree 2020 was an unprecedented year. Based on last year’s Industry Pulse survey, most companies were optimistic about business conditions heading into a new decade. They were looking to innovate in the products they offered and ways they did business, and more than 80 percent of respondents anticipated moderate to strong growth. Then March came. The COVID-19 pandemic quickly dominated every headline and, as the severity of virus transmission increased, businesses temporarily shut down and leaders were tasked with navigating an uncertain future. Fortunately, the essential nature of the residential fenestration industry allowed many to continue operations, albeit in a limited capacity with safety provisions and business pivots in place, many of which may remain a permanent part of the landscape. This year’s annual Industry Pulse survey looks ahead at the booming housing market, while taking into consideration challenges around labor, material procurement, supply chain and heightened safety considerations as the coronavirus rages across the U.S.
Editor's Note: Survey responses from which the statistics are derived were collected in October 2020. Manufacturers, suppliers and dealers/distributors contribute to the Industry Pulse each year. Unless otherwise noted, percentages in the numbers quoted throughout this report refer to total respondents. More detailed survey results are available in the January/February issue of Window + Door Magazine.
2021 investments to focus on 3 areas
Expanding production capacity
and retaining employees
Sales and Housing Growth
This year’s survey confirmed what the industry already knows: sales are reaching near-record levels, and sources don’t expect that to ebb anytime soon.
Larry Johnson, VP, sales, North American fenestration, Quanex Building Products, expects the influx of home renovation projects to carry into 2021, driven in part by people spending more time and working at home. Ensuring adequate space and amenities for those setups drives some renovation.
“These trends, coupled with a boom in new housing starts, have really driven up demand for windows and doors,” he says. “We’ve seen the proof, as many of our customers have backlogs of orders.” He also says low interest rates make this an economically advantageous time to purchase homes.
“Even after the pandemic starts to slow down, I think growth is going to continue in a lot of segments,” predicts Steve Dillon, marketing director for Veka Inc. “I don’t know how that can possibly be a negative thing for our economy. I’m excited about the growth potential over the next three to five years. I think it’s going to be pretty astonishing.”
Sales projections & expectations
Higher than expected in 2020
Profit margins stayed consistent or increased year-over-year
Expect sales to increase moderately in 2021
Recruiting and retaining skilled labor remains a challenge for the industry.
Tips for combatting the labor shortage
- Help employees avoid burnout: offer flexibility, avoid excessive shifts and provide competitive compensation and benefits
- Prioritize plant safety
- Provide training on-the-job and opportunities for career growth
- Use LinkedIn for recruitment
“One of the biggest things we can do for our workers right now is to help them avoid burnout,” says Johnson. “For example, several months ago when the industry ramped back up quickly, we had some folks in our manufacturing facilities working 12-hour shifts and weekends,” which he describes as unsustainable. “Being in tune with the people making your products is more important than it’s ever been. Do what you can to offer flexibility, avoid excessive shifts if you can and try to deliver competitive compensation.”
Johnson also says plant safety is a competitive advantage as potential workers may be hesitant to enter environments where they could be at risk of contracting the coronavirus.
Morgan Donohue, vice president of sales and automation, Erdman Automation, credits the company’s employee recruitment and retention with its good benefits, being located in an area where workers can live on a bigger piece of land outside of the downtown area, and a profit sharing and bonus program. The industry’s bright future, he believes, also is helpful for employee security since they feel confident in the market’s strength.
Nicolle Picray, public relations and brand communications manager, Pella Corp., says promoting company cultures and career growth opportunities are key. The company recently launched a pilot program at a manufacturing facility for an alternative shift schedule that allows for every Sunday off and a five-day weekend every third week. “We want to achieve optimal work-life balance for our team members, while giving them the opportunity to earn competitive wages,” she says.
Social media such as LinkedIn, virtual search engines like Indeed, professional recruiters and word of mouth are among the best practices for Roto North America to recruit and retain new talent, says Dan Gray, director of sales for North American Group.
FeneTech, meanwhile, relies heavily on college career fairs, many of which went virtual this year, says Samantha Hudeck, manager of administrative services.
Training programs may also help with the labor shortage, such as Andersen’s Certified Contractor Program, which recruits and trains professionals for window and door installation projects, says Grant Davis, senior vice president and general manager, residential and commercial pro division.
Plan to add staff in 2021
Added staff in 2020
Customization is the name of the game in product development, whether it be software, machinery, components or the end product itself.
In-demand products 2020
- Vinyl windows
- Fiberglass entry doors
- Steel entry doors
“Each request is unique to [our customer’s] business,” says Stewart McMillan, Soft Tech product manager. “Requests are for features that take away the need for user calculations.”
Gray reports that Roto North America has several road map projects designed to fill gaps in its product portfolio. “In addition, we are working with several strategic customer partners to develop hardware solutions in close collaboration with their individual requirements,” he says. Among the considerations driving new product development are home automation and larger and heavier windows and doors.
GED Integrated Solutions is set to introduce several new and redesigned products this year, all of which revolve around the goals of minimizing labor, speeding up processes, improving throughput and increasing quality, according to John Moore, vice president of marketing.
Pella solicits consumer feedback regarding product development, launching an online research community in 2018 that Picray describes as instrumental in 2020. “As we’ve navigated COVID-19, we’ve been able to continue gathering insights digitally to move our development and innovation efforts forward,” she says.
“Consumers have certainly expanded their vision for how their homes should function during this time. Along with that comes opportunities to uncover new needs, like improving fresh air circulation and reducing sound from outside the home.” She also notes increased demand for fiberglass products, citing their appropriateness for many climates and low-maintenance appeal to homeowners.
Dillon notes an uptick of interest in hybrid materials and says Veka will be looking into hybrid materials, as well as investing in technology, which he says offers great potential as the world moves further into the digital communication age.
Several sources reference the continuing popularity of biophilic design. “There are countless consumers in locations of stringent coastal code and in locations at risk for hurricanes that still desire to bring the outdoors in and balance overall style with functionality,” says Andersen’s Davis.
Jim Horn, director, channel marketing at Cornerstone Building Brands, which owns Ply Gem, agrees the outdoor living trend, which has topped the company’s trend list for about 10 years, will continue. He also points to the increase of specialized spaces in the home and demand for sound abatement products.
AmesburyTruth also sees more demand for natural lighting and ventilation, which safety products such as window opening control devices can support, according to Michelle Nissen, VP of product management. “The key areas of focus for our teams and our products follow sustainability and safety,” she says.
Increasing building standards also influence design. “Our product development has been based on finding ways to fill openings that continue to get bigger, and we are also driven to keep up with ever-changing demands on thermal requirements throughout North America,” says Steve Bronson, sales director for the U.S. and West Canada, P.H. Tech. Sliding doors will be a particular focus for the company. “People tell me 9 feet tall is the new 8 feet,” he says, also referencing a true triple-glazed slider and hung window system, enhanced color solutions and impact testing as further areas of product development.
“Windows have become so much more than just frames and glass over the past few decades, and high performance is now something buyers expect to receive from windows at any price point,” says Johnson, Quanex.
“Differentiation and innovation will be critical moving into this year and beyond.”
Directing product-development dollars 2021
- Energy efficiency
- Technology and “smart” functions
Plan to offer new products in 2021
Offered new products in 2020
Automation and Technology
Sources indicate more and more customers plan to automate where possible, and companies are responding in kind.
Respondents listed increased throughput and capacity as the top benefits of investing in automation in 2020, followed by quality and labor benefits.
Mitchell Heckbert, vice president sales and service, Urban Machinery, anticipates more business opportunity around Industry 4.0 and connectivity. “We have several customers asking for more connectivity to the machines,” he says.
Todd Tolson, director of sales, ProLine Automation, estimates 80 percent of the company's machines have the ability to be connected. “I expect this trend to continue as customers become more comfortable with their machinery being connected to the outside world.” That connection, however, will place a bigger demand on IT departments, he says. “Regular software maintenance and backup protocols are now just as important on the factory floor as they are in the office.”
Continuing difficulties with labor are also pushing automation. “Anything we can do to lower the labor costs in our customers’ factories has been welcomed by them,” says Donohue, Erdman Automation. “All of it is pushing in the direction it’s been going for a while now, which is from an automation standpoint anything you can do to lower your reliance on labor is being done now.”
Further advantages of automation can include reduced costs for the customer. “Many manufacturers are seeking higher-performing products and components and cost savings simultaneously,” says Johnson, Quanex. He says labor reductions stemming from using automated machinery, rather than the price of the components themselves, is one area to cut costs. “We’ve seen this with automated equipment for warm-edge spacer systems and other areas. Solutions like these can also help with the labor shortage, creating a double advantage for manufacturers.”
Business has been brisk since June 2020, says Tolson, which he credits mostly to increased demand and the inability to get reliable labor. “It’s no surprise to me that the machinery that is most in demand right now is those machines that eliminate or reduce labor,” he says. “I expect this trend to continue.”
Despite delaying equipment investment decisions to this year or even 2022, Marco Patermann, manufacturer’s representative in North and Latin America, says FUX used the opportunity to ensure its customers were up to date with their equipment and promoted service calls. The company is planning to update some of its lamination/wrapping and bending equipment lines with new components. “Some lines are being completely reengineered, taking into account new techniques, technologies, insights and requests from our customers,” he says.
Several sources agree automation is poised for significant growth in the coming years. “We have a bright future; our business is strong,” says Donohue.
As companies look to introduce more automation into their facilities, Matt Batcha, business development at FeneTech, encourages companies to develop a long-view plan. “When a window manufacturer buys a new piece of equipment, they are not going to replace every piece of equipment in their business,” he says. “Equipment runs for decades. It’s important for people to start having discussions because it’ll be a gradual transition for an overall plan. Maybe it’s just automating one line, and that’s OK, but how do we make those steps to get there?”
Sources see tremendous opportunity for technology, including visibility in the supply chain and the expanded use of virtual reality.
“The continued focus on digitalization throughout the entire business and supply chain will provide many future opportunities to all companies that provide consumables and machinery to the industry,” says Ron Crowl, president and CEO of FeneTech.
The transparency technology can provide is also increasingly critical. For example, Dillon points to the NFC tag and RFID technology on products that allow for two-way communication and transparency about where a product is in the manufacturing process.
Crowl and Batcha echo that sentiment, each noting the growing requests for customers to have better visibility of consumables availability in the supply chain. Other popular features include central software systems to aid in efficiency gains and capacity/production features.
GED’s virtual reality system gained traction last year amid the travel restrictions, and is expected to further expand in 2021, according to Laura Fiegelist, marketing communications coordinator. The system uses virtual reality glasses so the customer and GED representative can communicate in real-time and for the GED representative to “see what the customer sees and walk them through everything virtually,” explains Fiegelist.
Moore also shares that the continuing obsolescence of PCs and programmable logic controllers—as well as equipment that has been designed around these—is a concern in the industry. “You either need to find those obsolete controllers out in the market somewhere to continue to service the equipment or redesign to a new controller,” he explains. “We’re doing a lot of modernizing and redesign of our products to allow our customers to have access to the most updated controller so if a controller goes down, they can replace it.”
Software providers note an increased demand for solutions through the pandemic as customers need to adapt to remote work and do more with less. “Flexibility was, and still is, key during these times,” says McMillan, Soft Tech, who also says the company’s biggest call is integrating into ERP systems.
McMillan also saw companies working on their systems rather than in them. “With some forced downtime, companies took advantage to review their systems to make upgrades and improvements.”
Batcha observed the same trend at FeneTech, with existing customers in particular looking to accelerate projects or do software upgrades while business was shut down or slow. Batcha remembers many discussions with customers who presented business struggles and they worked together to see where they could improve processes. “People are making time to have those discussions because they’re trying to look at how we can improve today and for next year,” Batcha says.
“Software systems should be no different than machines,” he continues. “You’re doing regular maintenance on your machines and, while a software system isn’t a physical thing on the floor, it requires maintenance as well.”
Investment in automation & advanced software
Will invest in 2021
Invested in 2020
Adapting to the Coronavirus
Industry responses to the pandemic
- Paused operations for anywhere from a matter of days to several months.
- Permanent shifts to include virtual meetings internally and externally, remote work policies and greater willingness to invest in technology
- Plant staff most affected by furloughs and layoffs, followed by support staff
- 92% of companies applying for COVID relief funds received assistance
“Early on, like everybody else, we were prepared for the worst,” remembers Veka’s Dillon. “There were so many unknowns in the beginning.” Veka prepared by reducing production and not overpreparing for the pending selling season, he says. “We were cautiously ratcheting down a bit and as things went on, we discovered a ramp-up was happening across the board.” At that point, Veka reversed course and increased production for all of its plants and ended up with what Dillon describes as a banner year in terms of sales.
Many companies have similar stories: uncertainty around the beginning of the pandemic, then quickly pivoting to accommodate demand spikes as businesses re-opened and homeowners invested in their residences. Along the way, companies continued to adapt to keep employees and customers safe and meet demand.
The majority of ProLine Automation's support staff is located in Canada, where its machinery is also manufactured, says Tolson. The closed border between Canada and the U.S. challenged the company, but Tolson says the company has used virtual support as its first line of defense for 10 years. “Start-ups with new customers have been interesting,” he says, “but we’ve managed [to] support them by providing videos prior to the machine arriving, and supporting their start-ups via live video meetings.”
“Virtual service and installs were implemented and worked very well. We plan to offer this service into the future,” says Mitchell, Urban Machinery.
Conducting business virtually is pervasive across the entire industry. Gray says Roto pursues new business activities through more product videos, enhanced social media activity and Zoom training sessions.
Most sources also agree remote working is now standard practice, though what form it will take—permanent work remote or a hybrid office/work remote model—is yet to be determined in many cases.
Long-term pandemic effects
Some changes made will be permanent
Adopted virtual tools in the office
Adopted automated machinery and/or software solutions on the floor
Supply Chain, Materials and Demand
While less than half of manufacturers, suppliers and dealers anticipate needing to find different material sources in 2021, 88% of manufacturers, 72% of suppliers and 100% of dealers expect that material prices will increase in 2021.
The supply chain took a hit in 2020 between COVID-19-related shutdowns across the world at different times and demand spikes. As such, many companies employ various strategies to ensure a healthy supply chain.
Supply Chain & Materials
Supply chain was affected by the pandemic
Tried a new supplier during 2020
Anticipate having to find different material sources in 2021
“Roto is utilizing several tactics, such as transport to different ports, securing containers in China in advance of planned shipment, increasing production capacity and investing in new equipment to increase output,” says Gray.
Other companies have been able to expand facilities, such as Pella, which opened new manufacturing facilities in Reidsville, North Carolina, and Troy, Ohio, in addition to adding new production shifts at existing facilities. P.H. Tech expanded its Leetsdale, Pennsylvania, plant, and made equipment investments in that plant and its Quebec, Canada, facility.
AmesburyTruth leveraged the scale of its multiple manufacturing locations and ability to dual manufacture products to keep business going. It also moved manufacturing of some products to North America to reduce long lead times on imported products, according to Nissen.
Continental Industries, meanwhile, anticipated global supply and logistics challenges and adapted by increasing its stock levels to ensure product availability, while also increasing production quantities and frequencies, says Marco Patermann, manufacturer’s representative in North and Latin America. “The logical subsequent step,” he continues, “is an increase in capacity, which has already been initiated and partially implemented. We live in exciting times and quick adaptation with versatility is one of the key success factors.”
Dillon says Veka’s four plants across the country help each other. Veka also uses third-party logistics rather than its own trucks. “It’s nice to have a network across the country that is in constant communication for all the shipping lanes we can get product out,” he says, also citing the need for patience and understanding among companies.
Although material and components suppliers grapple with supply chain challenges, the picture is a bit different for some machinery and equipment providers. Donohue estimates that Erdman Automation sources up to 95 percent of its parts in North America and the company hasn’t experienced any significant delays for overseas parts it does procure.