For those in the door and access-control industry, 2007 was arguably the most challenging year in at least a decade. The housing market continued to slump and unstable materials costs caused some dealers and manufacturers to raise their prices. Cash-strapped consumers put renovations and upgrades on the back burner to pay off their growing debt „Ÿ and in anticipation of higher energy prices to come. Meanwhile, retail DIY chains such as Home Depot and Lowe’s gained market share as they pushed their installation services.
Despite these growing challenges for dealers and manufacturers, there remain a few bright spots on the horizon. But we’re not quite out of the woods yet, and many agree that 2008 will be another test of fortitude, as businesses strategize to work harder and smarter to grow with the industry’s transformations.
A Look Back at 2007
The overwhelming response from the industry was that 2007 was “poor” at worst, and “fair with some good,” at best, as the new-housing market dropped a reported 20 percent from the year before. This left many dealers who had been floating along with the once consistently-rising housing tide looking for a life jacket „Ÿ as a PDD online poll found most dealers reporting that sales were down from the previous year.
“The operating conditions in the industry are tough to say the least,” says Jim Fanning, vice president of marketing for Lewisville, Texas-based door and operator manufacturer, Overhead Door Corp. “My overall rating for 2007 would be a ‘fair,’ but with some good aspects.”
Richard Brenner, CEO of Winston-Salem, N.C.-based Amarr Garage Doors, agrees: “This year was probably the toughest year for the industry in a very long time,” he affirms. “The industry as a whole was down about 25 percent, due mostly to the fact that new-home construction has dropped off dramatically and expenditures were lower and slowing.”
But 2007 offered some changes that weren’t all bad news. Both dealers and manufacturers reported more industry-conscious customers – ones that are beginning to recognize the value of a unique, quality door. This “savvy shopper” shift is attributed to the influx of information online and user-friendly manufacturer Web sites, along with value-cautious customers looking for products and services that will last.
“Customers are doing more research before buying,” says Ken Martin, president of Martin Door, a Salt Lake City-based door manufacturer. Jef Morin, marketing manager for Canadian-based Garaga Inc., agrees. “The Internet is the reason customers are more educated,” he shares “Baby boomers have time to purchase and sometimes they know more than the dealer about one specific product.”
This was a welcome change for dealers bemoaning customers swayed by the most inexpensive estimate – usually at the cost of quality product and workmanship.
“I hear again and again, ‘the cheapest product gets the job done,’” reports Barac S. Bieri, president of Bircher Reglomat, the Elk Grove Village, Ill.-based manufacturer of presence- and motion-sensors. “But the cheapest product is not the cheapest overall solution. Often the installation time involved is forgotten, along with the time it takes to go back to the job and fix something because it does not work.”
Martin, however, attributes the “more informed customer” phenomenon to simply more competition in the market. “Customers are not really more door-savvy, per se,” he says. “But because of intense competition and financial stress, they are sometimes doing more research before buying, which ultimately helps.”
Adjusting to the Strain of Materials
Cost Steel prices remain at historically elevated levels, having started the creep upward in 2003, and manufacturers continue to feel the crunch. “We are constantly facing an uncertainty in energy costs, steel and other commodity futures,” Fanning says.
Overhead Door Corp., along with several of the big manufacturers, has developed strategies through the years to keep from passing along that cost to dealers. But in November, oil prices increased to a level not seen in almost 25 years. And with no break in sight, it’s only a matter of time before everyone – from dealers to manufacturers and distributors to consumers – will feel the pinch.
“With oil prices climbing the way they have, I think there’s going to be upward pressure on material cost,” predicts Bill Earnest, director of marketing and product management for Mt. Hope, Ohio-based Wayne-Dalton. “But, because volume is down for everybody, nobody is real anxious to pass on the price increase.”
What’s Hot for ’08?
The carriage door began gaining popularity in 2004, and continued to hold the spotlight as the “hot product” in 2007, seemingly setting the stage for what many manufacturers are calling the trend for 2008 „Ÿ more sophisticated and custom doors that set a customer’s house or business apart.
“We’ve seen our growth in the high-end wood doors, and in our 9700 series, which is our steel designer series,” Earnest shares. “Anything that’s not the plain, vanilla door is showing growth.” On that same track, Wayne-Dalton reports a decline in sales of low-end doors such as the raised panel style, as customers are favoring doors that are both economical and more sophisticated-looking. At Garaga, Morin reports similar shifts, “Carriage door types [are still popular], but special orders for specific colors, designs, dimensions, etc. are prevalent.”
At Overhead Door, they’ve focused on offering more options to keep up with the growing demands of consumers. “Customers today have more innovative product options at their fingertips,” Fanning reports. “Homeowners can choose from a variety of styles, from modern to traditional, as well as from a variety of colors, textures, windows and decorative hardware. As consumers become more educated and increasingly aware of the options, we are seeing fewer standard steel garage doors.”
Time to Get Green?
While eco-friendly products flooded the market in 2007 and green building skyrocketed, the so-called green trend is still something of an amorphous concept for manufacturers and dealers: What constitutes a “green” product still remains a point of debate, and many customers are left wondering if it’s all just a marketing ploy and industry hype.
“The term ‘green’ is a commonly used word in marketing products, but it is also one of the most confusing,” Fanning states. “This is also the case with the door- and access- systems industry, as it is in its infancy with respect to green products „Ÿ therefore, ‘green’ garage doors and openers are not yet well defined.” It is also an industry, Earnest reports, where many consumers don’t place a value on green products. “I don’t think in most cases there is a premium people will pay for green, unless you’re talking about a higher R-Value. Then yes, people will pay more for a well-insulated door.”
Despite the fact that “going green” may not necessarily boost sales, manufacturers and dealers alike are taking it upon themselves to operate in an environmentally responsible way. “We use a lot of recycled steel, and employ a lot of continuous improvement activities in our plants; [which] eliminates a lot of unnecessary action and cuts down on waste,” Earnest says.
Bieri reports his company uses lead-free components; Chamberlain takes care to be as environmentally friendly as possible in its operation and packaging; Amarr now carries seven products that are eligible for the Energy Tax Credit program; and Overhead Door Corp. has developed its own company definition for green: doors and openers that save energy, use recycled or sustainable raw materials and minimize the cost of energy to deliver them to market.
As a dealer, Doug Robinson, owner of Metro Garage Door in the St. Paul-Minneapolis area, says he does his part by recycling what his company takes out of buildings. “When I bought the business, I was distressed to learn the practice was to just take these old wood doors and dump them in the landfill. Not only is that costly, but it’s dangerous and it’s unproductive time-wise. I found a consultant who tracked down companies that would be interested in those wood products to grind up and put in animal bedding, and the steel goes into the steel recycling bin „Ÿ we’ve been doing that for four years.”
“Green products are more than just buzzwords or hype,” Brenner adds. “They are real, and more and more homebuilders and homeowners are seeing the advantages of using these products.”
Still Struggling with Professionalism
In 2006, PDD ran an in-depth article looking at professionalism in the industry – when many dealers were criticized as fly-by-night, untrained and uncertified weekend installers (often referred to as “tailgaters”) for offering inferior service at a fraction of the cost of more legitimate dealers. These tailgaters often go out of business in a year or two, leaving poor-quality installations and angry customers with bad experiences in their wake.
Now, nearly two years later, some dealers are still reporting troubles while others are trying to take it in stride. “When I first bought this business in 2000, I was quite surprised to find the lack of professionalism,” Robinson says. “The barriers to entry are low „Ÿ you got a truck and you got a guy who has worked for a door company, and if he thinks he can start his own business, he’ll do it. But five or six years down the road, he realizes he doesn’t know how to run the business side of it and he’ll go do something else „Ÿ and any problems he’s created get thrown to us, and any criticism that comes out of it, we get smeared with that same brush.”
From the manufacturer’s standpoint, Earnest says he understands the challenge dealers face when competing with tailgaters: “You will have good, well-run professional dealers that employ 20 people and do everything right, everything by the book,” he states. “They’re competing with the guy who’s a fireman who also hangs doors two days a week – he may not have certification, but he has no overhead and can beat his competition’s price by $30.”
This may be where the increase in consumer awareness will really pay off, some hope. “Professionalism is in big trouble because scam artists are so prevalent that many consumers are beginning to accept their techniques,” Martin says. “We hope that because of the recession, consumers will do more research before they buy.”
While the full-time dealers’ dream is the well-researched consumer who chooses service and experience, not merely price, many realize this all-too-often isn’t the case, and are opting for more proactive tactics such as voluntary certification and high service standards.
“Getting every technician certified is an important step,” Robinson recommends. “And the code of business conduct that IDA requests its members to subscribe to is right on the money.” Robinson also has his technicians leave a postage-paid survey card behind after every job. “We track their performance, and do a report that tabulates the results. It’s really impressive – we even read them to the group at meetings and allow the employees to get feedback they wouldn’t normally get to hear. It gives them a chance to shine a little bit, and keeps us on our toes.”
Brenner agrees, suggesting educated consumers are a large part of polishing the industry’s reputation. “Consumers are very savvy, and as this trend continues, they will become more aware of what to look for when selecting the right installer – unethical dealers will not be in business long because the word will spread quickly.”
Bob Markwart, executive vice president of sales and marketing at Elmhurst, Ill.-based Chamberlain Professional Products, says that, as more dealers care about the image of the industry, customers will, too. “As consumers become more sophisticated, dealers must also continually increase their level of professionalism, as well as their understanding of the market. Overall, successful dealers are paying more attention to how they are perceived in their local marketplaces, in terms of image and positioning.”
What Does the Future Hold?
Perhaps the only dealers who could report 2007 was a good year were the ones who anticipated the downturn in the new-housing market.
Robinson reports his company’s performance was ahead of last year’s. “But we don’t do as much construction work, so we’re not affected by the slowdown in building. We have a good mix of commercial and residential, as well as the retrofit and repair work.”
Robinson, whose company has been in business since 1978, is also feeling the effects of the new competition, as once residential-focused dealers dip into the commercial market to find work. But making that switch in targeted customers takes money, time and know-how, he reports. “It’s fairly difficult, because if you’ve just been doing residential installation, you’re not going to be able to move into the commercial arena very quickly „Ÿ you won’t have the equipment, the know-how or the pricing. You won’t have the supplier relationships.”
Staying ahead of the game is how Southern California-based Security Garage Door Inc. owner Lance Little has leveraged his company to keep its head above water.
“I always try to peer into the future and rub the crystal ball to figure things out,” he shares. Little, who started his business from the ground up more than 30 years ago, might just have the experience to better predict the industry changes, but he chalks it up to old-fashioned planning for the tough times, even during the good years. “You just have to be willing to look down the road and anticipate those shifts.”
This method proved fruitful for Little, whose company’s numbers remained steady due to his cautious planning and industry insight. His self-proclaimed motto of “What goes up, must come down,” and “The higher it climbs, the harder it falls,” prompted a wise decision: “We started focusing on commercial two years ago, and are slowly moving in that direction, slowly building our customer base.”
In the end, dealers and manufacturers know that it’s all cyclical, and while they brace for another challenging year, they remain optimistic about the industry and keep focused on providing the best service to their customers until the going is not so tough. “Nothing happens overnight,” Little says. “Service is always extremely important „Ÿ personal contact, focusing on and paying attention to the business and being the best we can be; which is really no different than how we are in good times, it just takes on a new emphasis now.”