Industry leaders predict slight uptick in the market for 2013
U.S. glass company leaders— from full-service glass shops, to large contract glaziers, to glass and metal suppliers—say they are optimistic about 2013. While the industry continues to face notable challenges—a slow recovery, uncertainty over taxes, and concerns about the implementation of the health care law, to name a few—officials, for the most part, say market conditions will continue to improve in the coming year.
On the supplier side, executives are forecasting gradual growth in 2013, over 2012. “Viracon finished 2012 with stronger performance than the year before, and we see continued upward momentum for 2013,” says Kelly Schuller, president. “Our indicators tell us that we are slowly but clearly coming out of the recession and beginning to see a more widespread, although muted, national recovery. It is still tentative, but we are anticipating the best conditions we have seen since the recession began.”
Scott Thomsen, president, Flat Glass Group, Guardian Industries, also expects increased demand over 2012. Thomsen forecasts growth will come primarily from two segments: residential windows and doors, and automotive glass.
“We see as much as 15 percent to 20 percent growth in the residential market this year. Obviously, that will lead to increased float demand, and increased demand for low-E coatings and solar-control coatings due to the codes,” he says.
On the commercial building side, Thomsen anticipates growth of 2 percent to 4 percent. “I think there is still a lot of vacant building space, and people are leery to construct new commercial buildings,” he explains.
In the metals market, “indicators show steady and optimistic growth for the industry,” says Mike Turner, vice president of marketing for YKK AP America. “Some of the key indicators that support this forecast are the residential market, which is climbing, and the Architecture Billings Index, which remains above 50.”
“We’re very optimistic about the new year,” adds Lloyd Talbert, president, C.R. Laurence Co. “We had good growth in 2012 and see positive signs in the market for 2013.”
Among full-service glass companies and contract glaziers, several anticipate growth in all of the segments they serve in the coming year.
“We are excited about our prospects during 2013,” says Norm Plotkin, CEO at Binswanger Glass. “We service all segments of the glass market, including commercial, residential and auto. … We expect to see growth in all of our business segments, including the commercial and residential markets, as the political environment reaches a point of greater clarity and the economy continues to improve.”
Bill Evans, president of full-service glass company Evans Glass Co., also projects growth this year. “I expect Evans Glass Co. to have its best year in terms of revenue and profit in 2013,” he says. Evans adds that a strong regional economy will drive growth even more. “I do not see the available work, in our geographical area, diminishing this year. … Middle Tennessee’s economy is strong,” he says. “We are attracting companies, entrepreneurs, and job seekers to move here. Our unemployment in Nashville is 5.7 percent.”
Contract glazier Gamma, a division of the Far East Global Group Ltd., also forecasts a stronger year for the industry. “There is considerably more work coming out at this point. We see a lot of bidding action…, and I think you’re going to see a lot of things pop in the next 90 days,” says Elliott Kracko, chairman. “In the U.S., commercial buildings and residential high-rises are starting to come out, and I think in the next 90 to 180 days, you’re going to see a lot of work.” Geographically, Kracko expects growth in New York, on the West Coast and in Texas.
Challenges and changes
While industry officials remain optimistic, many say companies need to be very aware of the challenges that remain. Several officials say uncertainty about government actions―including taxes and budget issues, the further implementation of the Affordable Care Act, and high fuel prices―could hinder progress.
Bill Wilson, president of Specified Systems, a contract glazing firm based in Canonsburg, Pa., says these concerns over taxes, fuel costs and the health care law could derail growth.
“2013 will be a slow growth year due to the concerns about the impact of Obamacare … and the unknown impact of policies at the federal level,” he says. “To us, this will be another status quo year. We were hoping for a solid domestic energy policy that would give all American companies lower fuel costs for our facilities and fleets. It appears that we will still have higher gasoline prices. We also expect there to be limited investment commercially because of the risk of low occupancy rates.”
Wilson says he does not project an increase in sales for 2013; however, the company continues to look for new market opportunities, “with new products and margin-enhancing services.”
Mark Liston, president of Glass Doctor, doesn’t expect the Affordable Care Act to affect Glass Doctor or its franchisees, and anticipates 2013 will be “a very good year” for the company. “The changes in healthcare will affect only those who have 50 or more employees, and most of our franchisees don’t,” Liston explains. “On the other hand, I believe this policy is crippling the franchising industry as a whole. I know too many stories throughout the country where this has affected some folks severely.” Schuller says the greatest challenge for the industry going forward will be “to understand true market conditions and not overreact or underreact to a somewhat tentatively improving market. To keep service levels high as demand conditions change.”
In the face of continued challenges and uncertainties, several officials said diversity will still be paramount in 2013. “You have to be flexible and nimble enough to do different types of work,” says James (Jim) Mitchell, president, Gamma Canadian Operations. “You have to adjust to your customer base and follow the work as you see it. A lot of companies sit with the client base they’ve had for 10 years. If those clients go out of business, and you don’t make the shift, you have a real problem.”
Sue Moore, co-owner of full service glass company Moore Glass, agrees, attributing her company’s growth and success during the recession to its diverse product and service platform. “Being diversified is the thing that helped us the most [during the downturn]. When one area was down, another one would provide us with the necessary business. We can go from auto to commercial to homes to schools to businesses. We are diversified enough so we don’t have to rely on one side of the economy.”a question mark,” Simonton added. “It may be a continuation of what happened [in 2012].”