It's the little things that make a house a home. And, every house is filled with many items that most people take for granted, such as cabinets, doors and windows, and the numerous handles, hinges, knobs and locks attached to them.
Those little things add up to big business. For instance, more than 60 million residential windows were assembled in the United States last year. Unlike many other industries, the household hardware business is a robust industry that still maintains a strong U.S. manufacturing presence.
Offshore production and outsourcing has not had a major impact on cabinet, door and window manufacturers. However, it is an extremely competitive, highly fragmented industry that has numerous players scattered around the country. Hundreds of companies supply the marketplace, and many of them have been reluctant to invest in automated production equipment.
"The cabinet, door and window industries remain highly fragmented," says Robyn Margulies, a fenestration industry research analyst at the Freedonia Group Inc. (Cleveland). "Production is conducted by thousands of firms, the vast majority of which are privately held, regional concerns with annual sales of well under $50 million. This fragmentation largely arises from the relatively low barriers to entry into the industry, as well as by the ability of smaller firms to remain viable by focusing on targeted product segments, markets or regions."
According to Bob Hornung, president of SashLite LLC (Westport, CT), a manufacturer of automated assembly equipment for vinyl windows, there are 1,200 window fabricators in North America. "The industry ranges from small manufacturers that assemble 10,000 windows a year to large enterprises that make 5 million windows a year."
The cabinet, door and window industry experienced significant levels of consolidation throughout the 1990s, resulting in an increasing number of large firms with operations across virtually every product and market segment. Today, four large firms account for 20 percent of total sales in the $25 billion door and window industry: Andersen Corp. (Bayport, MN), Jeld-Wen Inc. (Klamath Falls, OR), Masonite International Corp. (Mississauga, ON) and Pella Corp. (Pella, IA). Large manufacturers in the $15 billion cabinet industry include Masco/Merillat Industries (Adrian, MI) and MasterBrand Cabinets Inc. (Jasper, IN).
Each of those manufacturers has annual sales of $1 billion or more and state-of-the-art assembly plants with automated equipment. "These large companies benefit from strong brand name recognition and economies of scale in product development, manufacturing, marketing and distribution, making it more difficult for smaller firms to compete," says Margulies.
The rest of the industry is comprised of smaller, privately held firms that concentrate on niches, such as bathroom cabinets, bay windows, garage doors, kitchen cabinets, patio doors, skylight windows or storm doors. Most of those companies have annual sales under $50 million and assemble their products manually.
"The overall competitive environment for cabinets, doors and windows is shaped by general macroeconomic factors, such as patterns in construction spending, which create cycling in potential demand," explains Margulies. "However, producers of cabinets, windows and doors must also compete along more industry-specific variables, including product performance and quality, product styling, price, and sales and service support. This industry differs from other more commodity-like building materials in that price often takes a back seat to service, product styling and quality."
Consumer preferences often influence demand for cabinets, doors and windows. As a result, manufacturers constantly have to adjust their product lines to meet shifting tastes. In fact, many companies have long subscribed to the principles of flexible, lean manufacturing.
In the cabinet industry, aesthetics play a particularly key role in product specification. "Many cabinet manufacturers allot significant resources to examining design trends in furniture and home decor and adapting cabinet styling to match changing consumer tastes," says Margulies. "Trends in cabinet demand are also affected by home design trends, such as the growth of home offices and dedicated media rooms, which has led to increasing manufacturer focus on cabinets specifically designed for these applications."
In addition, the advent of open floor plans has encouraged cabinet producers to design furniturelike cabinets that can be integrated with the overall decor of the home. "Another major trend in consumer preferences includes growing demand for value-added cabinets that use accessories, such as fold-out shelves, lazy Susans and vertical storage drawers to provide customized storage options," notes Margulies.
Aesthetics has always been a key factor for door and window manufacturers, but a growing consumer awareness of energy consumption issues has forced them to develop new products. "There is an ongoing industrywide push toward products with improved energy efficiency," says Margulies. "Manufacturers are seeking to increase window and door efficiency through the installation of advanced glazing products, such as low-emissivity glass and gas-filled window panes."
Other energy efficiency-related trends include the growing use of insulation in metal and plastic doors and windows, and the use of thermal breaks in metal windows. In addition, many manufacturers now offer vinyl products that meet Energy Star qualifications, meaning they will exceed the minimum energy efficiency criteria for various regions of the country.
"Energy efficiency is a key driver in the door and window industry," says Nick Limb, a market analyst at Ducker Worldwide (Bloomfield Hills, MI). "The Energy Star program has had a big impact on manufacturers."
Energy Star is a government-backed program initiated by the U.S. Environmental Protection Agency (EPA, Washington, DC) to help businesses and individuals protect the environment through superior energy efficiency. Doors and windows that meet Energy Star qualifications can help consumers reduce their energy bills by up to 15 percent. According to the EPA, if all residential windows in the United States were replaced with Energy Star qualifying models, the nation would save $134 billion in energy costs over the next 15 years.
Cabinet, door and window manufacturers are also faced with new challenges and opportunities when it comes to architectural hardware. Handles, hinges, knobs, latches, locks, window operators and other hardware are available in numerous sizes, shapes and styles. For instance, one leading manufacturer, Ashland Hardware Systems (Lowell, IN), boasts that it produces more than 4,000 different items in 150 colors and metal finishes.
Many consumers are no longer willing to settle for stock designs. "More and more homeowners view hardware as a decorative accessory that begs to be color- and finish-coordinated with other hardware around the home," notes Craig Heinberg, marketing manager. He says purchasers of high-end cabinets, doors and windows demand a wide choice of hardware styles and finishes.
According to Heinberg, bright brass still claims 70 percent of door hardware market share. Alternative finishes, such as copper, distressed brass, oil-rubbed bronze and satin nickel, make up the other 30 percent. Heinberg says many of the new designs are migrating from the plumbing hardware industry.
Today, many home builders are putting more emphasis on garages. As developers keep carving out smaller and smaller lots, builders are faced with the challenge of creating impressive homes with curb appeal. Many homes now feature three-car garages. However, when a 20-foot-wide garage with front-facing doors dominates a 38-foot-wide home, it often looks like garages are being built with small homes attached.
To address that challenge, architects are starting to specify garages with two or three single doors, rather than one large door. Door manufacturers are responding with new products that soften the impact of garages. In fact, several companies have recently unveiled products that recreate the look and feel of traditional carriage-house doors, with fine detail.
Consumers are also starting to turn sections of their garages into recreational rooms or "grown-up club houses." They're equipping their garages with special cabinets, paneling, appliances and flooring. According to a recent study conducted by Sears, Roebuck and Co. (Hoffman Estates, IL), the garage is the area of the house that homeowners most want to improve after the kitchen. To tap into that market, the retailer plans to open a string of garage shops after successfully testing the concept in several Midwestern markets.
In addition to changes in consumer taste, manufacturers closely monitor activity in the housing market. "The most significant driver of demand for residential cabinets, doors and windows is patterns in construction activity, including both new construction and repair and improvement spending," says Margulies.
Because of constantly changing economic factors, such as interest rates, most housing forecasts focus on the short-term outlook. However, several economists have unveiled long-term forecasts that bode well for household hardware manufacturers. During the next decade:
• Demand factors will support average production of 2 million new housing units per year.
• The national home ownership rate will continue to rise from today's record level and will exceed 70 percent by 2013.
• House price appreciation will average approximately 5 percent per year on a national basis and exceed that pace in regions with severe land-use constraints.
• Mortgage originations will average nearly $3 trillion per year and residential mortgage debt will more than double by 2013.
According to Michael Carliner, an economist at the National Association of Home Builders (Washington, DC), the substantial influx of immigrants expected to enter the United States during the next 10 years "will be a major support for housing demand in both the rental and for-sale markets." He says immigrants "typically provide an initial stimulus to rental markets for their first few years in the United States. After becoming established in the United States, they become a major factor in the for-sale marketplace.
"Since the 2000 census, it appears that immigration has accelerated, with a net of about 1.5 million new immigrants coming to this country annually since the beginning of this decade." Carliner predicts there will be a net flow of up to 1.7 million foreign-born people coming to this country every year between now and 2012, "with labor demands created by the retirement of baby boomers likely to provide economic and political influences supporting immigration. Because of the demographic changes projected for the next decade, the long-term outlook for single-family home construction is expected to be more favorable than the past decade."
Frank Nothaft, chief economist for Freddie Mac (McLean, VA), predicts that the nation's homeownership rate will grow 0.5 percent annually over the next decade, "as baby boomers enter the peak home buying years and as minority households gradually narrow the homeownership gap between them and white households."
The aging U.S. population will also affect the future housing market. By the year 2010, Americans will be living longer. For instance, the baby boom generation will begin to turn 65 in 2011. Over the next 20 years, the fastest growing segment of the U.S. population will be those aged 55 and over.
"The vast majority of people prefer to stay in their existing homes and neighborhoods as they age, but there are a number who want to move into a new home or community," claims Kent Conine, NAHB president. He says that a number of builders are already including "aging-in-place features" in new construction projects, such as conveniently located and easy-to-use controls and handles on cabinets, doors and windows. For instance, Conine says more than 80 percent of builders include lever door handles in new homes that make it easier to operate for people with arthritis and other ailments.
A major trend in the household hardware industry involves growing consumer acceptance of nontraditional materials, such as composites and plastics. Twenty years ago, material choices were limited to aluminum, steel and wood. Today, there are numerous materials available in every price range and style to fit different tastes and needs. New options include fiberglass and vinyl products.
"One of the major factors that has worked to increase the competitiveness of the window and door industry is the growing competition between the different types of materials used," says Freedonia Group's Margulies. "Because most construction projects could employ any number of materials, increasing material competition has caused window and door producers to step up their use of product development, manufacturing and marketing strategies to gain, or at least maintain, market share."
According to Margulies, product prices vary significantly, "not only across material types but also among the different products within these material types." She says wood doors and windows are generally the most expensive, with comparable vinyl products ranging from two-thirds to three-quarters the price of wood. Metal windows are roughly the price of comparable wood windows, while metal doors are typically less expensive than either wood or fiberglass doors.
Traditionally, wood has been the preferred material for cabinets, doors and windows. But, despite its aesthetic appeal, this material can be very expensive. Newer materials are usually less expensive, but they can also be less appealing to consumers.
Wood is one of the most popular upgrade options, with wood doors being specified five times more frequently in remodeling projects than in new construction. Recent developments in wood treatment technology are making wood an appealing choice for homeowners in coastal or desert areas, where wood products can be difficult to maintain because of humidity or temperature extremes.
Some manufacturers have unveiled solid-wood doors that are pressure-treated to protect them from decay. To prevent water damage, some door manufacturers are removing the natural wood that surrounds glass, door jams and sills and replacing it with extruded composites or injection-molded plastics.
"Steel is still the dominant material for residential entry doors," says Janice Charletta, marketing manager at the American Architectural Manufacturers Association (Schaumburg, IL). "However, in the next few years, fiberglass doors are expected to slowly surpass wood door market share."
Currently, fiberglass is ranked third-in terms of entry-door purchases-by homeowners, and has quickly gained market share and popularity in the past 20 years. Most observers expect to see this trend continue in the future as builders look to alternatives to satisfy consumers and more door manufacturers develop new ways to believably imitate cherry, hickory, oak, maple, walnut and other popular wood tones with fiberglass. According to Ducker's Limb, "fiberglass is more expensive than vinyl, but it's a structurally sound and resistant product."
"In the new construction window market, wood is expected to maintain its No. 1 rank in market share until 2005, when vinyl is expected to begin surpassing it," adds Charletta. She says vinyl has become one of the most popular products in the window industry due to its energy-efficiency and virtually maintenance-free performance.
Material use trends differ significantly between the cabinet, door and window industries. "In the cabinet industry, wood has been and will remain the dominant material used, largely as a result of ingrained consumer preferences for wood's aesthetics," explains Margulies. "Use of plastic and metal materials, in contrast, is largely limited to niche products, such as medicine cabinets. Plastic materials are also utilized indirectly in cabinet manufacture as laminating materials used to cover engineered wood cores.
"Residential window and door material use is much more diverse, with much higher penetration of plastic and metal products," adds Margulies. "Material use does, however, vary significantly by product segment."
For example, Margulies says unit-based residential prime window demand is about 50 percent plastic, 40 percent wood and 10 percent metal. In contrast, wood is dominant in passage doors and steel is preferred for entry door applications.
"Plastic materials will continue to gain market share at the expense of more traditional wood and metal products," predicts Margulies. "Vinyl window products will benefit from lower price and higher durability than wood units, and better aesthetics and energy efficiency than metal products. In the door market, gains will derive from the continued popularity of vinyl patio doors and fiberglass entry doors, as these products offer superior performance characteristics, such as low maintenance requirements and high durability. Growth in demand for plastic window and door products will also be supported by advances in material technologies that enhance performance and appearance."
Levels of mass production vary somewhat between cabinet, door and window manufacturers. While there is increasing demand for customized styling options, few products are made to order.
"Stock cabinets are the mainstay of cabinet production, with a 60 percent market share," says Margulies. Custom and semicustom products account for the remainder. "Although [those products] will continue to be used for higher-end applications, stock cabinets are increasing in popularity as a result of an expanding range of styling and trade-up options," claims Margulies.
Residential repair and improvement projects constitute the largest end use market for cabinets. According to the Kitchen Cabinet Manufacturers Association (Reston, VA), kitchen cabinets have traditionally dominated U.S. cabinet shipments and will continue to account for more than four-fifths of the total for the foreseeable future. Cabinet manufacturers are benefiting from the increasing size of kitchens, as well as from the continued popularity of kitchen remodeling projects. Demand for bathroom cabinets will also propel the market, driven by design trends such as larger bathrooms and a greater number of bathrooms per house.
The door and window industry also is dominated by stock products, with only a small share of demand from custom and semicustom products. Among the customization trends in the window and door industry are growing demand for semicustom wood products and custom-sized vinyl products.
Mass customization trends in the cabinet, door and window industries are strongly affected by the increasing adoption of advanced manufacturing technologies, such as computer numerically controlled (CNC) machinery, automated assembly fixtures, automated material handling equipment and computer-aided design and manufacturing methods. "In addition to advantages such as reduced costs and improved quality, these technologies allow for the rapid manufacturing of customized parts, thereby blurring the line between stock and custom products," notes Margulies.
In sharp contrast to many other industries, outsourcing does not play a significant role in the U.S. cabinet, door and window industry. Although imports of these products did increase significantly throughout the 1990s, imports continue to account for only about 5 percent of total U.S. demand. According to Margulies, the vast majority of these imports are sourced from Canada, rather than offshore locations in the Asia-Pacific region.
"Imports of cabinets, doors and windows from offshore locations has been, and will remain, limited by a number of factors," says Margulies. "To begin with, the high weight of fully assembled products leads to relatively high shipping costs, resulting in many offshore firms participating in the U.S. market through local production operations rather than importing.
"Imports are also restrained by variations in styling preferences between the United States and other nations, as well as by the ability of [domestic] producers to use advanced manufacturing technologies to reduce prices and cycle times," adds Margulies. "In addition, different countries maintain varying building codes specifying materials, and it is often difficult for producers from one region to conform to the specific codes of other regions, particularly with respect to window and door products."
Of course, that outlook on outsourcing could change. Alan Campbell, president of the Window & Door Manufacturers Association (Des Plaines, IL), points out that there is a constant demand in the industry to improve efficiency and control costs. He says there is a growing volume of window and door components being imported from China and other low-cost nations.
Cabinet, door and window manufacturing is a very labor-intensive industry. While state-of-the-art machining centers that cut and shape wood are not uncommon, many companies rely on fragmented and separated assembly operations with stand-alone workstations. This widespread practice results in excessive floor space utilization and increased product handling. Most work-in-process is carried from workstation to workstation. Operator fatigue from excessive lifting is common.
"There's a lot to assembling a window," says SashLite's Hornung. "It's not as simple as people think. Typically, there are about 30 parts, ranging from extrusions and weather stripping to security latches and balances."
"Cabinet assembly is even more labor-intensive," claims Chuck Gibbons, vice president and general manager of Carlson Systems Engineering (Omaha, NE). Although cabinets are typically not as heavy as windows, he says there is "a little more variation involved. Also, the average cabinet maker is not as sophisticated as the window industry.
"The cabinet assembly process typically uses nails, staples and hot-melt adhesive," explains Gibbons, who has developed a line of semiautomated cabinet assembly machines. One piece of equipment squares and clamps base and wall cabinet material prior to manual fastening procedures. Another machine, a cabinet door pinner, can assemble 1,800 doors per 8-hour shift. An automated drawer box builder can assemble 500 to 1,000 drawers per shift with only one operator.
Many of the processes for assembling doors and windows are similar to cabinets, but there are some variations, especially since glass is involved. Adhesive tape or silicone adhesive is typically used to insert glass, a critical assembly process called glazing.
Most metal and vinyl products are assembled with welding. However, wood products rely heavily on fasteners. For instance, most architectural hardware is attached with screws.
"If all [assembly] was done manually or with manual tools, hardware attachment would be the most labor intensive [process]," says Morgan Donohue, vice president of sales at Erdman Automation Corp. (Princeton, MN), which makes a full line of automated assembly equipment. "Typically, there are more than five or six-up to 10 or 12-screws to drive depending on sash and hardware type. Next comes squaring and fastening the sash or frame corners, which uses staples or screws for wood."
Gibbons claims that most manufacturers still rely on homemade equipment. However, things are starting to change. To improve efficiency and stay competitive, manufacturers are investing in varying degrees of assembly automation. Large companies are leading the charge, but smaller firms are trying to catch up.
"I see a drive toward more automation in the future," says Gibbons. "But, automation is making the disparity between large and small greater."
One assembly process that has been successfully automated is glazing. "Silicone application is fairly quick manually or automated, but cleanup from messy and imprecise manual application adds labor and obvious problems with quality and waste," notes Donohue. Several suppliers offer automatic glazing tables that apply a continuous, uniform bead of reactive hot-melt silicone.
The equipment reduces window-to-window variability and allows manufacturers to assemble products faster and more economically. For instance, Dow Corning Corp. (Midland, MI) recently unveiled a product called InstantGlaze that is robotically applied. Unlike traditional glazing tape, there are no wrinkles, joints or gaps to leak. At one large manufacturer running five assembly lines, the automated glazing process reduced the number of operators from 25 to 15. At the same time, the number of window units produced per hour increased from 750 to 1,000.
"Because of ergonomic and safety issues, material handling will be a major focus for automation efforts in the next 5 years," predicts Donohue. He says it's not unusual to find windows that weigh 300 pounds. Glass accounts for up to 90 percent of the weight. There has been a strong demand for pneumatic lift tables that reduce operator strain and prevent potential back injuries.
As cabinet, door and window manufacturers look for ways to streamline their operations and reduce assembly costs, they are slowly migrating toward fully vertical, in-line assembly systems. "Most assembly is still done in the horizontal position," says Donohue, "but that is changing. The trend is toward vertical systems that address ergonomic concerns and space issues. However, many companies simply don't have the volume to justify automation."