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
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
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
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
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
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.
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.
T. Brant O’Hair
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
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
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.