Simonton Windows president Mark Savan was one of just four industry leaders invited to the private dining room to have lunch with President Obama today. Leading the agenda for the working lunch was home improvement and its important role in the president’s energy-efficiency platform.
“It was an honor to be able to join the president today and represent Simonton,” Savan told Remodeling. “The agenda today was focused on energy efficiency in homes, and the president is clearly interested in that issue and in putting together a program or programs to promote it.” Savan was selected to attend the lunch meeting after U.S. Secretary of Commerce Gary Locke, West Virginia senator Jay Rockefeller, and Governor Joe Manchin toured Simonton’s West Virginia facility in October. Other window manufacturers have also received attention from high-ranking government officials in recent months.
“Windows are one of the most influential changes you can make to your home. There are not a lot of other products that will increase energy efficiency more than windows,” Savan says in explaining why the window industry has been given so much attention in the national discussion on energy efficiency. “There are many other things you can do with insulation within the walls, or upgrades in other areas of the home, but windows are something that people understand, so they’re moved to the top of the list.”
Tax Credits a Boon to Industry
Savan says that President Obama is approaching residential energy efficiency from two perspectives: energy consumption and job creation. “Homes and their residents account for 40% of the nation’s energy consumption, and if you have housing stock that is relatively old, we can really move the needle by way of energy-efficient upgrades,” he says. “And, by the way, if we are enlisted to make those upgrades, it also creates jobs across manufacturing, sales, installation, and other areas.” Recognizing this, Congress’ American Recovery and Reinvestment Act passed in February, complete with federal tax credits for installing energy-efficient building products in existing homes. Numerous window companies, including Simonton, were able to re-hire hundreds of laid-off workers as production ramped up, thanks to consumer interest in the tax credits.
Without revealing sales projections for the year, Savan says that Simonton “saw a significant impact from the tax credits,” and is exceeding its sales expectations thanks to positive momentum throughout the year. “We’re like everyone else in the window industry in that we’re seasonal,” he says. “Our hiring peaks are in the summer and fall, and it cycles every year. Our employment peak this year was higher thanks to the stimulus, and our trough was higher as well, meaning that we had more people than usual employed during the winter months.”
Savan says he attributes Simonton’s success this year to three things: overall signs of recovery in the industry, the impact of the stimulus plan, and the company’s share gains as a result of new product introductions and marketing. He adds that the president seems happy with how the stimulus plan has taken effect, and referenced remarks President Obama made this morning at a Home Depot location in Alexandria, Va. In addition to calling insulation “sexy,” Obama said, “the simple act of retrofitting these buildings to make them more energy-efficient -- installing new windows and doors, insulation, roofing, sealing leaks, modernizing heating and cooling equipment -- is one of the fastest, easiest, and cheapest things we can do to put Americans back to work while saving families money and reducing harmful emissions.”
Pending Legislation Regarding Window Efficiency Criteria
In his remarks, the president also referenced new incentives that he has called on Congress to put in place to spur additional home improvement upgrades. Other programs are in discussion as well. In addition to the stimulus plan, the impact of other programs such as the Retrofit for Energy and Environmental Performance (REEP) initiative, and Home Star remain up in the air. “You have a lot of programs looking at the home as a system, and I can’t say how it will all play out,” Savan says. “As a representative of the window industry, I absolutely believe there’s science behind the energy-efficiency boosts that good windows can bring to a house. To me, the more rigorous the criteria the better because windows are a good investment for consumers.”
Savan's perspective is closely tied to pending legislation that would alter the energy-efficiency requirements for windows set forth in by the stimulus plan. As it is, windows and doors must have a U-factor of 0.3 and a solar heat gain coefficient of 0.3 to qualify for federal tax credits. The legislation supported by Simonton would instead require windows and doors to meet 2010 Energy Star standards to earn the tax credits.
“As much as we welcomed the stimulus, we think that its criteria is suboptimal to say the least,” Savan says. “The criteria should be based on Energy Star levels, which is sponsored by the Department of Energy and has more science behind it to tailor the energy-efficiency requirements to different geographic areas. Homes in Cleveland don’t need the same windows as homes in Miami, and we’re hoping the new legislation will change those criteria.”
Regardless of whether the legislation passes, Savan says that Simonton is ready with a full complement of windows eligible for tax credits. “We’ve designated our qualifying products as ETC,” he says. “If you order an ETC window, we guarantee that it will meet the current federal tax credit requirements. If the requirements change, we’ll have products that will meet the new criteria.”
Savan says that the change in the criteria isn’t about coming up with less stringent energy-efficiency guidelines but about tailoring the guidelines to the geography. “We aren’t interested in relaxing the standards,” he says. “We simply want to make sure the right windows are going into the right homes.”
At this point, Savan says the 0.3/0.3 rule has crossed the line of diminishing returns in some areas of the country. “In a strong heating zone, for instance, you’ll want more solar heat gain, but people are buying the windows just to get the tax credit. As a result, they’re installing windows with features and costs embedded in them that the homeowner really doesn’t need.”
Innovation Will Drive the Industry
As a part of parent company Fortune Brands, Simtonton’s sister companies, including Moen, are also focused on energy and resource efficiency. Having worked for Fortune Brands for several years before stepping into his role at Simonton, Savan says that he expects manufacturers across the industry to be able to step up to energy-efficiency requirements for their segments. “Other participants in our meeting today represented insulation and other products, so it’s a wide-ranging issue,” he says. “For windows, when the 0.3/0.3 criteria came out, a wave of innovation occurred that allowed manufacturers to reach those levels of performance within their budgets. As long as the criteria remain reasonable, I would expect the same level of innovation going forward. Innovation provides a great basis for competition in the industry.”
Continuing to speak for the window industry, Savan says he believes that energy efficiency has always been a component of building a quality product but that the concept has been brought to the forefront and is here to stay. Discussions of energy efficiency at all levels, he says, have built consumer awareness that will play an important role in the New Year.
“One topic we discussed in the meeting today is that, regardless of what programs are in place, whether it’s government stimulus or some other incentive, at the end of the day, consumers will have to make the decision to invest in their homes, and remodeling channel partners will have to execute on that,” Savan says. He noted that the availability of consumer and contractor credit was discussed briefly during today’s lunch meeting, and that opening up credit channels is on the president’s radar.
“What the president was doing today was to reach out to industry partners to talk about discussing programs that will be comprehensive, and yet remain straightforward.” --Lauren Hunter, associate editor, REMODELING.