Dan Gray, director of sales, Roto North America, sat down with Window + Door in February to discuss current supply chain challenges, logistical considerations and how to work through them.
Q: How has your customer base been impacted in the past year?
A: When the pandemic hit in March 2020, Roto North America asked its customers what their projections were for the second half of the year. Nearly everyone indicated a decline of 20 to 40 percent. Of course, we know what happened in July and August. The market just exploded. The customers that predicted significant drops were actually up 20 to 30 percent in the second half of the year. That created a lot of complexity to try to maintain inventory levels accordingly for customers. Today, after completing four months of activity in 2021, demand has “soared to unprecedented heights,” he said.
Q: How are you reconciling such a large difference in expected vs. actual business from your customers?
A: Working with our key top suppliers, we place larger, more frequent purchase orders to try to stay ahead of the curve. For example, we buy large sheets of steel we put on a machine to cut into individual arms for our casement hardware. We try to work very closely, especially with our top highest-volume customers, to get a sense of what they see coming over the next three to four months.
Q: How has material sourcing been?
A: We have two manufacturing plants in North America—Connecticut and Toronto. We’re deeply engaged in local manufacturing, as well as sourcing products from overseas, whether it be Europe or Asia. Roto has a global presence so we tend to tap into the global supply chain where needed for products we do not produce locally in North America. We’re not really dependent on many third-party suppliers from a global perspective.
What has been tricky and damaging to us over the past two months has been the surge in steel demand globally. Our steel suppliers for the parts we make in Connecticut has been greatly backlogged and back-ordered with our shipments, and we’ve had to extend lead times for some products.
This phenomenon is supported by a recent article from Bank of America: “The pandemic brought the American steel industry to its knees last spring, forcing manufacturers to shut down production as they struggled to survive the imploding economy. But as the recovery got underway, mills were slow to resume production, and that created a massive steel shortage.”
Q: What else is happening on the logistics side?
A: The challenge right now is logistically getting parts from China to North America. What would take about five to six weeks in shipping time door to door is now taking 8 to 10 weeks because the ports are so backed up with the influx of imports coming to the U.S. from all across the world. The activity in shipping is so high that we need to pay premium dollar to even secure an actual container in which to put hardware from our factory in China.
Q: What is your top advice for companies struggling with supply chain and logistics challenges?
A: Communication is key. You need to treat your supply partners like you would treat a customer. You need to have open dialog and talk about growth initiatives that are coming to make sure your suppliers will be capable of handling growth initiatives, especially right now with the steel shortages that are taking place. We’re working very closely with our supply base to make sure they know what our annual growth plan is, or even a two-year cycle, to make sure they’re prepared. Right now we are growing relatively well with an average of 12 to 15 percent per year. That takes a certain amount of planning in the market today because it’s so tightly held with supply.
Second, have a willingness to place blanket orders for core products you’re going to need. You cannot afford to run out of key raw material that is used in your manufacturing process because then your whole labor is shut down and idle, and Roto is working to validate alternative suppliers for raw materials.
Q: How did Roto weather the pandemic?
A: We’ve had very little impact to COVID, and I think that’s because we’ve put a lot of safeguards in place and employees seem to really embrace that and have been diligent in their personal lives and not brought the virus into the manufacturing facility with them. Safeguards include social distancing the manufacturing floor, visual messaging and posters, temperature checks and forms employees fill out indicating they haven’t traveled to another state over a given number of days and haven’t been in direct personal contact with a person who has tested positive for COVID. That’s given us strong accountability based on each employee’s input.
Q: What is your outlook on the industry?
A: We’re fortunate we’re in an industry that is busy and performing well. There are a lot of challenges, but the upside is fantastic. There are a lot of people and companies that have suffered tremendous loss during this pandemic and it’s important that while we are trying to deal with the challenges we have right now in our businesses, we remain vigilant on the perspective that our industry has been very robust with its activities and for the most part has allowed employees to remain employed.
Q: How is business?
A: Business continues to be very steady and robust, especially on our patio door hardware. It seems like the patio door market is definitely outpacing the window market in demand. Our facility in Toronto, which makes the majority of our patio door hardware, is incredibly busy at the moment. We’re working six days a week, with a lot of overtime to keep up with that demand. They’re good challenges to have.