July 16th, 2015
What Will A Glass Shortage Mean to the Fenestration Industry?
In recent travels it seems that everyone is talking about an impending glass shortage. During the big downturn, many of our industry’s domestic float plants were shut down and now several more will soon need to be shut down for upgrades, which will exacerbate the situation.
So what will this glass shortage mean to our industry? Will glass prices rise dramatically? Will it put a damper on the fenestration industry’s comeback? Some think it will cause certain window company’s be forced to shut down their businesses due to the unavailability of glass. Others even forecast alternative products replacing windows.
That won’t happen. If there are two things that the world cannot replace, they’re windows and doors. Can you even imagine living in a house or working in an office building without windows? Even the prospect of having fewer windows is scary. Windows are our connection to nature and our surroundings. They enable us to feel secure and to be protected from nature’s elements without giving up the beauty and the connection to nature. Windows are one of the few things in life that enable us to “have our cake and eat it too!”
So, what will shortage mean for our industry?
Prices Will Go Up
For one thing it will mean higher prices, After all, that is basic economics and the law of supply and demand. How will the industry adapt? Higher glass prices will mean higher window prices. So this creates a competitive challenge. Whoever can absorb these higher component costs while passing on the least amount of this increase to the consumer without sacrificing performance will indeed gain a strategic advantage!
New Trends Will Form
With a glass shortage on the horizon, I see several trends increasing in our industry:
- There will be a greater interest in automation;
- We will see a greater increase in vertical integration and specifically keeping in mind the optimization of the value of available factory floor space; and
- More strategic alliances will form.
Automation Will Greatly Increase
Automation, although expensive up front can pay huge dividends in the long haul when it comes to maximizing efficiency, reducing labor costs and increasing quality. Automating an insulating glass line can oftentimes enable a company to offer higher grade components such as superior spacers and gas at the same overall cost as a manual line processing inferior IG components. An older glass cutter can be replaced with a more modern cutter thereby reducing glass waste, a factor which will now be more critical than ever.
Companies Will Vertically Integrate
Vertical integration is another big factor, but it must be approached from the standpoint of maximizing the value of available floors space. There are many companies that are outsourcing insulating glass but at the same time manufacturing their own screens in house. Does this make sense? We must use our precious floor space to vertically integrate components that play a larger role in our overall value proposition to the end consumer.
Strategic Partnerships Will Form
Lastly, with a glass shortage looming, the small players are oftentimes the most apprehensive, thinking that if anyone will be left out in the cold, it will be them. So, another trend that I see continuing will be the growth of strategic alliances, examples of which are the Earthwise Group and the American Window Alliance (AWA). Groups such as these give otherwise smaller players a much bigger voice and buying power with vendors as well as other strategic partners which can greatly impact the growth and success of the alliance members.
So, yes, as our industry regains its footing and continues to grow, we will see a bit of a glass shortage. But one thing is for certain, the fenestration industry will adjust and will come out of this situation stronger and more strategically well positioned for the long haul. Yes, “Necessity Truly Is the Mother of Invention!”