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HPmag | Magazine | Winter 2007 | Guest Editorial

GUEST Editorial

A Seasonal Outlook with a Silver Lining
Brisk sales have been sheared off, resulting in a slow moving wave and mild depression.

by Scott D. Kuntz

Seems just like yesterday, the active hurricane season of 2004. That season was highlighted by major storms such as Charley, Frances, Jeanne and Ivan. They made an immediate impact (no pun intended) and brought back some brisk business to the hurricane protection industry. This trend started in the fall of 2004 and made its way into the winter of 2004-05 without too much of a break or downturn in business other than the usual four-week hiatus during the holidays. Sales started up at a nice pace in early 2005 and began the normal peak going into that year’s hurricane season.

There was a good amount of momentum going into the 2005 season, and there was a prediction from our friend at Colorado State University (CSU), William Gray, that the season’s activity would be above normal (see HP, Winter 2005, page 6). Sounds like another active year, right?

Well, as history had it, this turned out to be “The Hurricane Season of the Century,” where not only were the forecasters off by a few storms, but off by double digits resulting in records and new precedents being set. There were so many storms that we eventually went through the normal list and ended up having to use the Greek alphabet. We had names that we were not exactly used to, sounding like something between covert operations and a trip down Fraternity Row.

The 2005 season gave us some more names to remember such as Katrina, Rita and Wilma. The destruction and the damage were astounding. People were starting to get hurricane fatigue. How much could a person endure having to continually watch weather related information for days and days? Many thousands without homes and many more without power. So many hurricanes within such a short period of time. More business and more momentum for the hurricane shutter and protection industry—straight through the holidays and right into the beginning of 2006.

As some homeowners contemplated moving away from coastal areas, many individuals decided to get into the industry. Business got a quick start and became fast and furious as early as February. We all thought that 2005 was busy, well here we go again and then some. Business was booming with no end in sight.

Most manufacturers were clamoring to keep pace. Retail installers were watching their waiting list and delivery times go way out of reach. New companies were everywhere with homeowners scrambling for something quick. Some shutter companies were booked up for a year with answering machine messages that sounded like this: “Sorry we cannot take your call right now, but if you can wait forever and pay for everything up front, please leave your name, phone and credit card number.”

How much longer could this go on? The answer was soon to follow.

By the Fourth of July, not much storm activity, by the middle of August, not much more. Wait a second—Ernesto! Oh my goodness, this could be The Big One. South Florida, here we go again. Channel 7 said we’d better get the gas, groceries and maybe evacuate now—Woops, nothing but a scare. The forecast team at CSU then came out with a downgraded forecast and then the bottom fell out. Yes, we had a few named storms that curved north, but nothing of significance. No storm that really hit home and got the media play that seems to always garner attention.

BACK TO REALITY, BACK TO BASICS
What does all of this mean? Fortunately, it looks like there will be a minimal amount of pain and suffering for homeowners. For those in the shutter industry, it means that we are back to reality.

Back to days of yesteryear when we must keep our inventories low and resort to the just-in-time ordering approach. Back to Business 101, where we must go to our strengths and rely on what we do best. Back to the fundamentals of customer service, product quality and aggressive pricing.

In years past, we learned that during slow times having product line diversity or an alternate business may be a lifesaver for any company. Taking on business with a lower margin is good when it can be relied upon year round, as it is with large builders and developers.

Who takes the biggest hit? The new or upstart company. Some of these companies are a great addition to the industry, but in this marketplace it is survival of the fittest. The phones have stopped ringing—fortunately for some, they have a backlog of work that may last for three to four months or more. In this type of market condition where the fear factor may be gone and no amount of advertising will help, sometimes only the well established and the diversified will survive.

You may think that everyone has protection now, not true. The pool of likely candidates may have shrunk significantly, but there will be plenty more business for years to come. Besides jobs from new construction, there still will be plenty of work from jobs that involve home remodels, shutter upgrades and shutter replacements. The insurance industry continues to provide some incentives for shutters. Don’t forget about the many coastal areas that have recently adopted the new I-Codes and the thousands of building department jurisdictions that are stepping up their efforts to enforce code compliance.

Yes, this industry appears to be in sleep mode for a while. Remember, business could intensify immediately as we are only one storm away and next year’s Hurricane Season 2007 is right around the corner.

Scott D. Kuntz is national sales manager for Transparent Protection Systems, Inc., West Palm Beach, FL.