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SHUTTER OUTLOOK 2004
Continued growth is forecast, but not without a
price.
The U.S. shutter market has reached
a critical point. As demand continues to grow, more players enter
the field. With an increasing number of suppliers offering a wider
selection of products in various materials the pressure on prices,
delivery time and quality grows stronger.
How will this all shake out? D&WC assembled a panel of shutter
experts and asked them three questions: 1. Do you see the shutter
market continuing to grow in the United States? 2. What are the
main issues facing shutter fabricators? 3. How do you gauge the
effect of imported shutter products in the US market? Here are their
replies:
PRICE EROSION HAS EFFECTS
Steve Reese
Springs Wood Products
Yes, the shutter market will continue to grow. Wood shutters, particularly
in the South, continue to capture consumer attention. The other
growth area is in non-wood shutters, using various types of synthetic
material.
Getting good quality material is probably the No. 1 issue with shutter
manufacturers. The second issue, and a growing issue, is the emergence
of the retail shutter manufacturer. Price erosion is creating less
and less room in the price for the decorator margin, so manufacturers
are forced to go direct.
From a sheer volume perspective, imported shutter products continue
to be a small percentage. The impact is in the price points, which
creates price erosion.
CONVINCING THE SKEPTICS
Art Kessel
CACO, Inc. Window Fashions
For the past year we have been marketing custom shutters from China.
This program can convince even the most hardcore skeptic into believing
in custom overseas programs. When we first started looking into
various shutter programs we believed, like most blind manufacturers,
that the only way for us to be competitive and deliver a product
timely was for us to produce shutters in-house. While looking at
different domestic shutter programs, we were introduced to the unique
option of distributing custom shutters from China. After which,
we began the arduous task of questioning how does it work and does
it make sense. Like everyone else, we were just as skeptical.
What we learned was that we could offer quality custom shutters
at a tremendous value, delivered quickly and made to our customers’
exacting measurements. Orders are processed and manufactured in
four to five working days, then shipped in containers on fast freighters
to a U.S. Western port and subsequently delivered to our customers
in four to five weeks. Choices are a plus from solid hardwoods to
composite materials, to generous color selection and frame styles.
Packaging is top-rated, warrantees are liberal and problems are
corrected expediently. This is the future.
BACK IT UP WITH VALUE
Jim Klawiter
Hunter Douglas Wood Shutters.
In the last year, Hunter Douglas has helped set up 15 manufacturing
locations across the United States to build our custom Heritance®
hardwood shutters, with more to come. Independent and company-owned
Hunter Douglas fabricators have made significant investments in
new jobs, inventory and equipment precisely because of the continued
and exceptional growth that is occurring in this segment of the
window coverings industry.
With the insurgence of fabricators and new products entering the
shutter market, many of them dragging prices down, it will become
increasingly difficult for fabricators to maintain profits and customers
without offering value to back it up. Carrying a strong brand name
and investing in product differentiation will help protect margins
and keep fabricators in business for years to come.
As with any product category, imports have their place in the market.
This typically means lower prices, lower margins, lower service
levels and products that come and go. It’s important that dealers
and designers focus on what they can provide that other import products
sacrifice for their low-cost positioning—such as excellent
service, quality products with quick delivery, premium brand names
and exceptional value.
CONSISTENT QUALITY, PERSONALIZED SERVICE
Joani Grossman
Heirloom Custom Shutters
Heirloom is one of the few suppliers of both North American hardwood
and poly shutters that sells only to the trade. We see the shutter
market growing, fueled by major builders now including shutters
as an added standard feature to their planned community developments.
Shutters have been around for hundreds of years and will continue
to be an important choice when it comes to dressing windows in a
timeless window fashion.
Critical areas to be addressed if domestic suppliers are to remain
viable include labor cost control and accurate analysis of automation
cost effectiveness. A large Houston shutter manufacturer with a
substantial investment in automation ceased operating last year.
It has been said the failure was due, in part, to inadequate return
on investment on the state-of-the-art equipment.
Some of the advantages that domestic producers have over imports
are: (1) Relative ease of installation modification, particularly
being able not only to match the color during touch up, but the
shutter finish (custom paint and stains are critical factors in
our industry); and (2) timely replacement of custom sized shutters
damaged in freight, or those that were simply measured incorrectly
(it does happen!).
In summary, the staying power of a domestic shutter manufacturer
is based on the ability to provide consistent quality, willingness
to customize, prompt production time and personalized customer service
all at a competitive price.
BEYOND THE SUNBELT
Peter J. Wattiker
ITA, Inc.
Thanks to new materials and designs, as well as more efficient production
methods, window shutters will continue to expand beyond their traditional
Sunbelt boundaries to markets throughout the country.
ITA leads this trend with LaPlaya™ Shutters, crafted from MikronWood™
XT®, a high-performance resin composite that surpasses wood,
vinyl and other composites in strength, weight and durability. A
SuperCap™ Sating cap stock finish ensures surface integrity
and beauty without sanding or painting. Easy, low-cost production,
plus complete turnkey manufacturing and marketing support from ITA
will enable fabricators to quickly enter and begin profiting from
this growing market.
Looking ahead, LaPlaya will be well suited to the broadening diversity
of architectural styles and consumer tastes, always serving as an
affordable design element offering versatile light control, durability
and a uniquely attractive appearance.
In an expanding market, fabricators will strive to maintain precise
materials-supply and production timelines. ITA’s far-reaching,
rapid-response delivery capabilities and dedicated customer support
ensure smooth operations.
Fabricators will increasingly face the challenge of customization—of
meeting customer demand for individual design expression. LaPlaya
Shutters offer flexible customization possibilities, enhanced by
various frame styles, louver sizes and color choices.
Another challenge is intensifying competition as markets grow in
depth and scope with significant pricing pressure coming from products
originating overseas.
Competition, whether foreign or domestic, is certainly nothing new
in this industry. Fortunately, an alert, well-prepared American
company can remain more closely in touch with domestic markets and
respond more quickly to consumer preferences than foreign competitors.
ITA continues to meet the pricing challenge by introducing new,
high-efficiency production methods, materials and plant management
techniques.
Ultimately, we’re confident that superior products will always
outdistance imported competition through continuous innovation in
design and engineering—a distinctively American talent. Demand
creation is still the name of the game; by evolving shutters of
unsurpassed strength, quality and beauty we can remain dominant.
THE REAL QUESTIONS
Lance Reed
G&L Technologies Inc.
Shutter manufacturers are constantly looking for new ways to remain
viable in the highly competitive window coverings industry. Foreign-made
shutters coming into the U.S. market emphasizes the need for American
companies to stay abreast of the latest advances in shutter technology
in order to increase productivity while reducing overall costs.
There is an ongoing debate throughout the industry regarding foreign-made
shutters and their future impact on the U.S. market. Some dealers
have been touting the benefits of the shutters over their American-made
counterparts. Meanwhile, American shutter manufacturers are wary
of foreign competition and want to learn more about their products.
How does the quality of foreign-made shutters stack up against their
own? How will the foreign companies address service issues such
as installation repairs and warranties? What about environmental
concerns? What about arch tops?
This is not the first time that foreign competition has challenged
U.S. companies—American manufacturers have a long history of
innovation in the face of foreign competition that makes us the
world leader in technology and manufacturing. A classic example
is the U.S. auto industry in the late 1970s. Foreign automakers
seized a sizeable share of the American auto market by offering
higher quality products at more affordable prices than their U.S.
counterparts.
To counter the foreign competition, American car manufacturers adopted
new methods of production, established higher quality standards
and utilized the latest technological advancements in their development
process. As a result, the U.S. auto industry is stronger than ever,
producing better quality cars than ever before, at prices that every
American can afford.
Like the automakers, shutter manufacturers can stay ahead of the
competition by utilizing technology and automation to improve manufacturing
efficiency, product quality and ultimately their bottom line.
Many questions exist regarding the long-term effect of foreign made
shutters on the American window coverings industry and how their
success or failure will impact U.S. manufacturers. But the real
questions that American shutter manufacturers should be asking are;
how can I lower my cost, shorten my delivery time, improve product
quality and still maintain my profitability?
The answer is easy: Increased efficiency through modernization of
the manufacturing process by implementing the latest technology
at your facility. In today’s competitive market, shutter manufacturers
must use every method available to stay ahead of the competition.
That means automating the manufacturing process in order to increase
productivity while maintaining high quality standards and lowering
production costs.
EFFICIENCY OBSESSION
T. Brant O’Hair
O’Hair Shutters
2004 will be a good year for growth in interior window shutters.
Optimism among shutter specialty dealers has improved. Retail shutter
pricing in several cities across the United States has risen slightly
in spite of competition. This is a reflection of increased consumer
interest. New shutter specialty retailers are developing in market
cities where full custom service had been limited. This will lead
to strong development in those local markets.
Shutter fabricators must continue to progress in labor efficiency
as competition will increase from imported ready-to-install shutter
units. Improvement in the typical eight-week delivery on custom
installations is desperately needed in order to overcome cheaper
competition. A one-month turnaround from order to installation should
become an obsession for shutter specialty companies that are serious
about justifying a higher price.
Import shutters will continue to impact the U.S. market as a force
increasing the total market. An effective response to this low-end
competition is a shift toward higher-end products and service. Shutter
specialists will remain profitable if they excel in custom capabilities.
This requires a can-do commitment to excellence in custom woodworking
and finishing.
ENERGIZING THROUGH INNOVATION
Stormy Clements
Norman Shutters
It’s been a phenomenal year for the shutter industry. The number
of window coverings professionals selling shutters is increasing,
as is consumer awareness and desire for shutters. Historically,
shutters were seen as a big-ticket investment in home décor
reserved for high-end installations.
Today, the overall shutter market is expanding and comprises multiple
segments requiring different products at different prices. This
has resulted in the need for additional choices and supply in the
marketplace. Norman Shutters has met this challenge by developing
three distinct shutter products to satisfy each unique segment of
the marketplace: Sussex® is completely customizable in luxurious
wood, Woodlore’s® composite construction offers durable
value and Normandy® is an affordably priced wood option.
Price-conscious homeowners are particularly drawn to our Woodlore
Custom Shutters. Woodlore Shutters offer affordability and unique
performance characteristics including moisture resistance. Woodlore
shutters are a snap to install with a patented framing system that
allows final adjustments before permanently attaching the shutter
to the wall. This speeds installation, improves efficiencies and
promotes profits. Increasing labor, materials and insurance costs
amplify profitability issues for fabricators. In addition, market
demand for greater selection in shutter products increases complexity
and costs. Norman Shutters offers a partnership with fabricators,
by providing them with complementary products to round out their
lines. Our products are recognized within the industry for high
quality and value pricing. This allows them to be presented with
confidence. Fabricators can also focus on building shutter products
for their traditional high-margin customers, who require total customization.
They can then use Norman Shutter products to increase sales by meeting
the needs of the many new customers who are discovering the beauty
and functional advantage of shutters.
Norman Shutters imported products offer more choices for window
coverings professionals and their customers, while expanding the
shutter market through increased awareness and availability. Norman
Shutters will launch two inventive product lines in 2004 to offer
greater diversity and to meet these new market preferences. Woodbury®
will be a new concept that presents a unique three-in-one shutter
line including components, panels and complete shutters. This new
line will afford complete flexibility to the fabricator and even
offer specialty shapes, colors and styles. Another new shutter line
will be made of stunning Western Red Cedar, which naturally resists
humidity, deters insects and is sturdy for large-panel construction.
While there will always be a strong market for traditional high-end
shutters, imported products make shutters more accessible to greater
numbers of homeowners and energize the industry with innovations.
BIGGEST CHALLENGE: ADDED COMPETITION
Drew Schubert
Vinylbilt® Shutters, a division of Turnils® North America
Over the past few years, we have seen incredible growth in shutters,
and 2004 looks to continue this trend. As more manufacturers enter
the shutter business, the price of shutters has declined at all
levels, making them more affordable and allowing designers, decorators
and retailers to offer the product to a much broader customer base.
There continues to be advancements in materials, product design
and manufacturing, which also have allowed the consumer to have
more choices available to them.
Additionally, an increasing number of retailers have become more
educated on shutters, which in turn makes them more confident in
promoting and educating the consumer on the product. Dealer promotion
coupled with the aesthetics of custom shutters continues to drive
consumer popularity.
Three out of four consumers who purchase shutters for one room return
to make a second shutter purchase at a later time. Shutters provide
the consumer with a beautiful balance of form and function. The
large louver sizes give the consumer superior light and privacy
control and shutters also add tangible value to the home.
Vinylbilt Shutters allow fabricators to meet the consumer’s
need of visual appeal, consistent quality, competitive pricing,
fast delivery and customer satisfaction. The consistent quality
and unique features of the Vinylbilt product also eliminate many
of the traditional measuring and installation problems that can
occur with wood shutters. Vinylbilt fabricators are excited about
the growth potential for this year and beyond.
The number of shutter fabricators and the increased availability
of imported shutters have grown dramatically over the past few years.
This added competition is the fabricator’s biggest challenge.
Like all businesses, shutter fabricators will want to focus on value-added
features and benefits to distance themselves from competing on price
alone. The best way to accomplish this is through support and education
of their dealer base. Educating their dealers to the unique features
and benefits of their product, offering installation services and
developing programs that will assist the dealer in capitalizing
on sales opportunities are just a few ways to build dealer loyalty.
Ninety percent of consumers go into a purchase with price being
their No. 1 consideration. One in six consumers makes the purchase
based on price alone. The remaining five out of six will make the
purchase decision based upon value added features/benefits or the
additional services they will receive with the product. Vinylbilt
strives to provide education, value added features and unique services
to both their fabricators and dealers.
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