Researched by: Ducker Research Company, Inc. 1250 Maplelawn Drive Troy, MI 48084 (248) 644-0086 www.ducker.com Executive Report Study of the U.S. Market For Windows, Doors and Skylights Copyright © 2014 - Published April 2014 by: American Architectural Manufacturers Association (AAMA) 1827 Walden Office Square, Suite 550 Schaumburg, Illinois 60173 Tel: (847) 303-5664/Fax: (847) 303-5774 www.aamanet.org TABLE OF CONTENTS Section Description Page A. INTRODUCTION AND METHODOLOGY 1. Methodology 2. Purpose 3. Methodology and Timeline 4. Terminology 1 B. U.S. CONSTRUCTION ACTIVITY 1. U.S. Summary 2. U.S. Residential Starts 3. Nonresidential Floor Area 6 C. DOOR MARKET 1. Summary 2. Market Size by Application 3. Segmentation by Material 4. Wood Doors by Application 5. Historic and Projected Growth 19 D. WINDOW MARKET 26 1. Summary 2. Residential-Type Market Size by Application 3. Residential-Type Window Segmented by Application and Material 4. Residential-Type Wood Windows in Conventional Applications 5. Residential-Type Vinyl Windows in Conventional Applications 6. Historic and Projected Growth 7. U.S. Nonresidential Glass and Windows Market Size 8. Nonresidential Historic and Projected Growth E. PATIO DOOR MARKET 1. Summary 2. Market Size by Application 3. Segmentation of Wood Units 4. Patio Door Forecasts 65 F. SKYLIGHT MARKET 1. Summary 2. Market Size by Application 3. Commercial Skylights 75 APPENDICES: A. B. C. D. E. F. Eleven U.S. Census Regions U.S. Entry and Interior Door Market by Region U.S. Conventional Residential Window Market by Region Nonresidential Vision Area Models U.S. Patio Door Market by Region U.S. Glass Usage by Region LIST OF EXHIBITS Section Number & Type Description Page A A.1 Timeline Program Timeline 2013 – 2014 Program Approval Draft Report Report Publication 3 B B.1 Bar Graph U.S. New Residential Construction Segmented by Type of Structure 2007-2016 Manufactured Homes Multi-Family Single Family 8 B.2 Map U.S. Conventional Housing Starts by Geographic Region 2013 11 Regions 9 B.3 Bar Graph Forecasted U.S. Residential Construction Segmented by Type of Structure 2012F – 2016F Manufactured Homes Multi-Family Single Family 10 B.4 Pie Chart U.S. Residential Housing Starts by Region 2013 South West Midwest Northeast 11 B.5 Pie Chart U.S. Residential Housing Starts by Region 2015 Forecasted South West Midwest Northeast 11 B.6 Table Expenditures and Growth Over Prior Year 2006 – 2016F 12 B.7 Bar Chart Total U.S. Residential Improvement Expenditures Billions of Dollars 2006-2016F 12 B (cont.) B.8 Table New U.S. Housing by Type of Structure Private and Public, Including Farm 2006 – 2016F Total Shelter Manufactured Housing Total Conventional Single Family Multi-Family 13 B.9 Table New U.S. Conventional Housing by Geographical Region Private and Public, Including Farm 2006 – 2016F Northeast Midwest South West 14 B.10 Table U.S. Manufactured Housing Shipments to Dealers by Geographical Region Private and Public, Including Farm 2006 – 2016F Northeast Midwest South West 14 B.11 Bar Chart Forecasted Nonresidential Contract Awards by Floor Area Segmented by Major Building Category 2011 – 2018F Manufacturing/Warehouse Office/Hotel/Institutional Store/Mercantile 15 B.12 Map New U.S. Nonresidential Contract Awards by Geographical Region 2013 11 Regions 16 B.13 Pie Chart Nonresidential Contracts by Region 2013 South West Midwest Northeast 17 B.14 Pie Chart Nonresidential Contracts by Region 2014 Forecasted South West Midwest Northeast 17 B (cont.) C B.15 Table Nonresidential Contract Awards (Reported) by Selected Building Types and Regions 2012 – 2018F Manufacturing/Warehouse Office/Hotel/Institutional Store/Mercantile Total Nonresidential 18 Total Market for U.S. Doors by Application 2013 Residential Entry Nonresidential Entry 20 C.2 Table Total U.S. Market for Doors by Construction Type and Application 2013 New Construction Remodeling Replacement 21 C.3 Pie Chart U.S. Residential Entry Doors by Material 2013 Steel Wood Fiberglass 22 U.S. Residential Fiberglass Entry Doors by Finish 2013 Smooth Molded/Textured 22 C.5 Table Nonresidential Entry Doors by Material 2013 Steel Aluminum Wood Other 23 C.6 Table Wood Doors by Application 2013 Residential Entry Nonresidential Entry 24 C.7 Table Sales of U.S. Doors by Material and Application 2007-2016F Steel Wood Fiberglass Aluminum 25 C.1 Table C.4 Pie Chart D (cont.) D.1 Table Total Market for Residential-Type Window Units by Application 2011 and 2013 Residential New Construction Residential Remodel Residential Replacement Manufactured Housing Nonresidential New Construction Nonresidential Remodel Nonresidential Replacement 28 D.2 Table Total U.S. Market for Residential-Type Window Units by Application and Framing Material 2011 and 2013 Residential, Nonresidential and Manufactured Housing Window Units Wood and Clad Wood Vinyl Aluminum Other 30 D.3 Bar Graph Total U.S. Conventional Residential Window Demand Historic and Forecasted Window Usage by Framing Material 2007 – 2016F Wood and Clad Wood Aluminum Vinyl Other 31 D.4 Table U.S. Conventional Residential Window Usage by Framing Material Segmented by Construction Type 2011 and 2013 New, Remodel and Replacement Wood and Clad Wood Vinyl Aluminum Other 32 D.5 Table Conventional Residential Window Usage Segmented by Framing Material 2011 and 2013 Wood Aluminum Clad Wood Vinyl Clad Wood Aluminum with Thermal Break Aluminum without Thermal Break Vinyl Other 33 D (cont.) D.6 Table Conventional Residential Window Usage Segmented by Configuration 2011 and 2013 Wood, Vinyl, Aluminum and Other Double Hung Single Hung Casement Gliding/Slider Awning Fixed Specialty 34 D.7 Pie Chart Conventional Residential Window Volumes Segmented by Customization 2011 and 2013 Standard Stock Windows Customized Windows 36 D.8 Table Conventional Residential Window Glass Usage Segmented by Framing Material 2011 and 2013 Single Lite, Two Lite Sealed IG, Other Wood Vinyl Aluminum Other 37 D.9 Pie Chart Conventional Residential Windows – Insulating Glass Segmented by Type of Spacer 2011 and 2013 Rigid Warm Edge Non-Rigid Warm Edge Aluminum Spacer 38 D.10 Pie Chart Conventional Residential Windows – Hurricane Resistant Florida, All Other Regions 2011 and 2013 Non Hurricane Hurricane Impact Glazing Hurricane Non-Impact Glazing 39 D.11 Table Conventional Residential Windows Segmented by Glass Type 2011 and 2013 Wood, Vinyl, Aluminum and Other Clear Tinted/Reflective Low-E 40 D.12 Pie Chart Conventional Residential Windows – Low-E Segmented by Coating Type 2011 and 2013 Sputtered Pyrolytic 41 D (cont.) D.13 Table Conventional Residential Windows – Energy Ratings Segmented by Rating Type 2011 and 2013 Wood, Vinyl, Aluminum/Other NFRC Rating NFRC and Energy Star Rating No Rating 42 D.14 Table Conventional Residential Wood Window Units Segmented by Configuration 2011 and 2013 Double Hung Single Hung Casement Gliding/Slides Awning Fixed Specialty 43 D.15 Table Conventional Residential Wood Window Units – Window Sash and Frame Segmented by Wood Species Used 2011 and 2013 Ponderosa Pine Southern Yellow Pine Radiata Pine White Pine Fir/Hemlock Other Softwoods Oak Other Hardwoods 44 D.16 Pie Chart Conventional Residential Wood Window Units – Non-Clad Segmented by Exterior Finish 2011 and 2013 Primed/Prefinished Natural No Finish 45 D.17 Pie Chart Conventional Residential Wood Window Units Segmented by Type of Insulating Spacer 2011 and 2013 Rigid Warm Edge Spacer Non-Rigid Warm Edge Aluminum Spacer 46 D.18 Pie Chart Conventional Residential Wood Window Units Segmented by Low-E Usage and Technology 2011 and 2013 Sputtered Pyrolytic 46 D (cont.) D.19 Table Conventional Residential Vinyl Window Units Segmented by Configuration 2011 and 2013 Double Hung Single Hung Casement Gliding/Slider Awning Fixed Specialty 47 D.20 Pie Chart Conventional Residential Vinyl Window Units Segmented by Type of Insulating Spacer 2011 and 2013 Rigid Warm Edge Spacer Non-Rigid Warm Edge Aluminum Spacer 48 D.21 Pie Chart Residential Vinyl Window Units Segmented by Fabrication Method 2011 and 2013 Fully Welded Frame Mechanically Fastened Frame Hybrid of Mechanically Fastened Frame and Fully Welded Frame 48 D.22 Pie Chart Conventional Residential Vinyl Window Units Segmented by Solid Extrusion Color 2011 and 2013 White Tan Other 49 D.23 Table Conventional Residential Windows Usage 2006-2016 Forecast New Construction, Remodel/Replacement and Total Construction Wood Aluminum Vinyl Fiberglass Other 50 D (cont.) D.24 Table New Nonresidential Construction and Major Additions Segmented by Building Category 2011 and 2013 Curtain Wall, Storefront, Site Fabricated Windows and Shop Fabricated Windows Office and Bank Stores, Other Mercantile Manufacturing/Warehouses Educational Hospital/Health Care (incl. Government) Public/Government Religious Amusement/Recreational Hotel/Motel/Dormitory Miscellaneous High Rise Multi-Family 53 D.25 Table Total Nonresidential Vision Area Segmented by Type of Construction 2011 and 2013 New Building/Major Additions and Replacement Curtain Wall Storefront Site Fabricated Windows Shop Fabricated Windows 54 D.26 Table Framing Materials Used in Nonresidential Construction 2011 and 2013 Curtain Wall, Storefront, Site Fabricated Windows and Shop Fabricated Windows Aluminum with Thermal Break Aluminum without Thermal Break Wood Vinyl, Other 55 D.27 Table Nonresidential Aluminum Framing Segmented by Finish Material 2011 and 2013 Anodized Finish Standard Paint High End paint 56 D.28 Table Calculations –High-Rise Construction – New and Major Additions 2011 and 2013 Ratio High-Rise, High-Rise Vision Area, Total Vision Glass Area Office/Bank All Other 57 D.29 Table Total U.S. Nonresidential Glass Usage Segmented by Glazing Configuration 2011 and 2013 Single Lite and Non-Sealed Insulating glass units 58 D (cont.) D.30 Table Glass Usage – Nonresidential Windows 2009 to 2013 Clear Tint Reflective Low-E 58 D.31 Pie Chart Usage of Low-E Segmented by Coating Technology 2011 and 2013 Sputter and Suspended Film Pyrolytic 59 D.32 Pie Chart Non Residential Glazing – Hurricane Resistant Florida, All Other Regions 2013 Non Hurricane Hurricane Impact Glazing Hurricane Non Impact Glazing 60 D.33 Picture U.S. Market for Commercial Windows Segmented by Window Type 2013 Site Fabricated Shop Fabricated 61 D.34 Pie Chart U.S Market for Architectural Rated Shop-Fabricated Windows by Rating Segmented by Window Rating Type 2011 and 2013 AW C H/C 61 D.35 Table U.S. Architecturally-Rated Shop-Fabricated Windows Segmented by Window Configuration 2011 and 2013 Fixed Projected / Awning Slider Hung Door Specialty/Other 62 D.36 Pie Chart U.S Shop-Fabricated Patio and Terrace Doors Segmented by Door Type 2013 Hinged Sliding 63 D.37 Table U.S. Window Usage in Nonresidential Buildings – 2009-2016F New Construction Remodeling & Replacement 64 E E.1 Table Total U.S. Market for Residential Patio Doors Segmented by Framing Material 2009 - 2013 Wood Aluminum Vinyl Steel Fiberglass Other 66 E.2 Table Total U.S. Market for Residential Patio Doors Segmented by Construction Type and Framing Material 2011 and 2013 New Construction, Remodeland Replacement Wood Aluminum Vinyl Steel Fiberglass Other 67 E.3 & E.4. Pie Charts Patio Doors by Framing Material 2011 and 2013 Wood Aluminum Vinyl Steel Fiberglass Other 68 E.5 Table Total U.S. Market for Residential Patio Doors Segmented by Application and Framing Material 2011 and 2013 Hinged and Sliding Wood Aluminum Vinyl Steel Fiberglass Others 69 E (cont.) E.6 Table Total U.S. Sliding and Hinged Patio Doors Segmented by Number of Panels 2011 and 2013 One Panel, Two Paneland Three or More Panels Wood Aluminum Vinyl Steel Fiberglass Others 70 E.7 Table Total U.S. Market for Residential Patio Doors Segmented by Low-E Usage and Technology 2011 and 2013 Clear, Tinted, Reflective and low-E Wood Aluminum Vinyl Steel Fiberglass Others 71 E.8 Table Wood Patio Doors Segmented by Cladding and Type of Door 2011 and 2013 Hinged and Sliding Clad Non-Clad 72 E.9 Pie Chart Non-Clad Wood Patio Doors Segmented by Finish Type 2013 Primed/Painted Natural Finish No Finish 73 E.10 Table Wood Patio Door Lumber Type Segmented by Wood Species 2013 Ponderosa Pine Southern Yellow Pine Radiata Pine White Pine Fir/Hemlock Oak Other Softwoods Other Hardwoods 73 E.11 Table Residential Patio Door Market 2007 – 2016F New Construction Remodel and Replacement 74 F F.1 Table Residential-Type Skylights (Including Light Commercial) 2007 – 2013 New Construction Remodel/Replacement 76 F.2 Table Skylights by Type and Application 2013 Plastic Glazed Skylight and Glass Glazed Skylight Residential Light Commercial 76 F.3 Pie Chart Total Market for Skylights by Type 2011 and 2013 Glass Glazed Skylights Plastic Glazed Skylights 77 F.4 Pie Chart Plastic Glazed Skylights by Type 2013 Acrylic Polycarbonate 78 F. 5 Pie Chart Plastic Glazed Skylights by Type 2013 Translucent/Diffusing Tinted/Colored Clear 78 F.6 Pie Chart Glass Glazed Skylights by Type 2013 Low E Clear Tinted Reflective 79 F.7 Pie Chart Residential-Type Skylights by Framing Material 2013 Vinyl Aluminum Wood and Clad wood Frameless / Other 80 F.8 Table Residential-Type Skylights by Type and Application 2013 Plastic Glazed Skylights and Glass Glazed Skylights Fixed Venting Venting – Motorized/Operable 81 F.9 Table Forecast of Residential-Type Skylights 2012 – 2016F New Remodeling / Replacement 81 Appendix A APDX-A.1 Map Eleven U.S. Census Regions APDX-A.2 Table Four to Eleven Region Conversion and Abbreviation Definitions Appendix B Table U.S. Entry Door Market Segmented by Application and Estimated Geographic Segmentation 2013 Residential Nonresidential Appendix C Table U.S. Conventional Residential Window Market Segmented by Application and Estimated Geographic Segmentation 2013 New Construction Remodeling and Replacement Appendix D APDX-D.1 Graphic Conversion: Total Vision Glass Area APDX-D.2 Graphic Model: Total Vision Glass Area APDX-D.3 Table United States Nonresidential New and Major Additions 2013 Contract Awards Office and Bank Stores, other Mercantile Manufacturing/Warehouse Educational Hospital/Healthcare (incl. Government) Public/Government Religious Amusement/Recreational Hotel/Motel/Dormitory Miscellaneous High Rise Multi Family APDX-D.4 Table U.S. Nonresidential Total Wall Area – New and Additions 2013 Floor Area and Wall-to-Floor Ratio Office and Bank Stores, other Mercantile Manufacturing/Warehouse Educational Hospital/Healthcare (incl. Government) Public/Government Religious Amusement/Recreational Hotel/Motel/Dormitory Miscellaneous High Rise Multi Family APDX-D.5 U.S. Nonresidential Vision and Opaque Wall Area – New and Table Additions Segmented by Building Category 2013 Total Wall Area and Vision Glass Office and Bank Stores, other Mercantile Manufacturing/Warehouse Educational Hospital/Healthcare (incl. Government) Public/Government Religious Amusement/Recreational Hotel/Motel/Dormitory Miscellaneous High Rise Multi Family Appendix E Table U.S. Patio Door Market Segmented by Application and Estimated Geographic Segmentation 2013 New Construction Remodeling and Replacement Appendix F Table U.S. Glass Usage Segmented by Glass Type and Estimated Geographic Segmentation 2013 Clear Tinted Low-E Copyright © 2014 AAMA All rights reserved. This report or any part thereof may not be reproduced in any form without the written permission of the publisher. A. INTRODUCTION AND METHODOLOGY Ducker Worldwide has been conducting the study of the U.S. residential and nonresidential window and door markets for AAMA (the American Architectural Manufacturers Association) since 1982. It is the only program of its kind to have served the fenestration industry continuously for over 30 years, and it is the longest and most commonly referenced research program in the industry. This particular study details market volumes and trends in the U.S. for 2013, forecasted through 2016, as well as historical volumes. A summary report, the Statistical Review and Forecast Report, is also available. Prior to 1982, studies were conducted for the Sealed Insulating Glass Manufacturers Association (SIGMA) since 1978. This association is now called the Insulating Glass Manufacturers Alliance (IGMA). Additionally, Ducker’s fenestration research history goes back to 1972 when we first developed a demand model for flat glass usage in the United States. Ducker further produces many syndicated and custom market research studies for the fenestration and building products markets annually. These include the annual studies of the North American Flat Glass Market Study and a bi-annual study of the Northern American Fabricated Glass Market, among many others. This following report is the result of a combined market study and a database analysis funded by AAMA. The intent of this study is to develop a full database and a comprehensive report on all segments of the window and door market. The database is designed to be utilized for studies into the foreseeable future and to compare ongoing trends. 1. Methodology The role of Ducker Worldwide is to combine primary and secondary market research efforts with its own body of knowledge to profile and track residential and nonresidential segments of fenestration market volume. As a major input to the research, Ducker receives confidential disclosures from AAMA members along with non-members. However, multiple industry sources, such as demand models, raw material and component suppliers and internal databases, are necessary and consistently used to triangulate market statistics. Public databases are also utilized, such as the U.S. Bureau of Census and other sources of construction metrics. In addition, Ducker interviewed several hundred home builders, contractors, installers and distributors, which help to develop indicative product usage factors and channel flow as a cross reference to the various manufacturers’ input. This report, the U.S. National Statistical Review and Forecast and associated regional reports were prepared by Ducker Worldwide LLC. Opinions and estimates constitute the best judgment as of the date of this material and are subject to change without notice, as additional information becomes available. Any interpretations derived from these findings are the sole responsibility of those using the report. Reproduction without the explicit, written consent of Ducker Worldwide, LLC or AAMA is strictly prohibited. The metrics published throughout the report represent the best judgment of Ducker through March of 2013. However, the Census or other sources of construction metrics frequently do not finalize their 2013 data totals until late into 2013, and they also will revise historical information. Ducker takes into account these historical revisions when updating models and thus minor differences between published construction data may occur. These revisions do not impact market size estimates for fenestration categories unless stated throughout the report. Please note that while all individual numbers are accurate as rounded, totals may not always add due to rounding. The following report represents our research and analytical efforts beginning in late 2013. 2. Purpose The purpose of this study is to provide a comprehensive single report detailing the window and door market for AAMA. 3. Methodology and Timeline Study findings are based upon disclosures from window and door manufacturers, suppliers, secondary construction data metrics and our prior database and experience in providing this information in the past. Study findings are segmented by geographic region as illustrated in Appendix A to this report. The research program for AAMA spans from December 2013 through April 2014. A timeline is provided on the following page as Exhibit A.1. Exhibit A.1 Program Timeline 2013 – 2014 Program Approval Draft Report Present draft results Fieldwork complete Review draft reports with AAMA advisory committees Make revisions, final edits Kick-off meeting Initiate fieldwork Analyze and report information December 2013 Report Publication late-March, 2014 end-April, 2014 For purposes of presenting data in this report, the term Exhibits will be used to display all graphics, charts and tables. 4. Terminology Certain terms are used throughout the report which may require definition. Also, in our analysis, assumptions are made regarding units and construction activity. The following is a list of definitions and assumptions used in the development of this report. Specific questions on terminology throughout the report can also be directed to Ducker Worldwide, LLC. Bifold Door: An interior application utilizing two or more individual door leafs, conjoined with hinges, which operate on a sliding track. A bifold door is primarily a form of a closet door. However, bifold doors do not include folding doors or overlapping sliding doors. Bifold door volume counted on a per leaf basis. Included in interior door volume. Closet Doors: An interior door used for passage from room or hallway to closet. Included in interior door volume, but not reported separately. Doors: Units are defined as actual door slabs and panels, rather than openings where one or more slabs would be used. Excluded from door units are closet doors, bifold doors and service and industrial doors. Entry Doors: A door opening that allows passage from the exterior of a building or home to the interior. In the residential market, hinged rear entrance doors connecting an attached garage to a home are included, while patio doors are excluded and reported separately. In the nonresidential market, entry doors also include vestibule doors. Flush Door Construction: A method of door construction whereby a thin face material is attached to a light internal frame (often made of wood). Face material may include high density fiberboard, steel, wood veneer, MDO, or other products. Framing: Metal, wood, fiberglass, vinyl, or composite members comprising the window. In operable windows, framing members include both a operational portion and fixed portion of the window. Insulating Glass: A combination of two or more panes of glass with a hermetically sealed air space between the panes of glass separated by a spacer. This space may or may not be filled with an inert gas, such as argon. Interior Door: Includes both Passageway and Closet doors. Nonresidential: Nonresidential construction is defined as all commercial buildings, from small to large, that are not meant for residence. Hotels, motels and dormitories are included in nonresidential figures. Patio Doors: Units are defined as openings at the manufacturer level, to avoid double counting units due to multiple operable, or inoperable panels. For example, a double French door and a triple panel sliding door are all considered one unit. Figures in this report identify units with single panels and multiple panels alike as one singular unit. Further segmentation by number of panels in detailed in the Patio Door section of this report. Passageway Doors: An interior door used for passage from room or hallway to room. Excluded from this are garage hinged and service doors. Residential: Residential construction is defined as dwelling units: single-family attached, single-family detached, multi-family and manufactured homes. Apartment buildings, although considered commercial construction, are included in our residential figures, except for high rise construction which uses commercial shop fabricated windows. Stile and Rail Door Construction: A traditional method of construction for wood doors whereby the structural components are exposed. Structural components include wood stiles (vertical beams) and rails (horizontal beams), which encompass wood panels. Stiles and rails are held together using glue and dowel pins, while panels often “float” within channels grooved into the stile and rail components. Skylights: Standardized unit specified by product. Not included in window volumes. Sloped Glazing: Nonstandard specification, also called custom skylights or monumental glazing. This product is captured in curtain wall data, but not segmented out. Does not include sunrooms, which are a separate category. Study Regions: Eleven geographic regions are used throughout the report. Appendix A to this report illustrates the definition of these regions. Sunrooms: Separate classification from sloped glazing. Not included in window volumes, but some windows may be ultimately destined for use in a sunroom. Vision Glass Area: Unless otherwise noted, glass area figures are surface measure of vision glass area. Figures for spandrel glass materials also are surface measured. Windows: Units are defined as openings at the manufacturer level. However, the definition of a unit differs among manufacturers (e.g., a bay window to some may be three openings while to others it may be one). This does not account for multiple windows that are nailed together at the distributor level for one opening. Figures in this report more closely reflect units at the manufacturer level, rather than openings at the job site. Sliding and hinged patio or French doors are considered a separate market from windows. *** 2013/2014 U.S. National Statistical Review and Forecast – April 2014 Introduction Market estimates in the U.S. Industry Statistical Review and Forecast are driven not only by statistics published by the Census Bureau and other construction statistics organizations, but also from primary interviews with leading manufacturers of windows, doors and skylights, as well as component suppliers. All forecasts are based on projections of construction activity as of March 2014 and appropriate usage factors and tabulations developed by Ducker Worldwide LLC, which is solely responsible for the data. Any questions on the Review or its contents should be directed to Ducker. Please note that totals may not always add due to rounding. Ducker has been conducting residential and nonresidential market studies continuously since 1982 for the American Architectural Manufacturers Association (AAMA). From 1978 to 1981, studies were conducted for the Sealed Insulating Glass Manufacturers Association (SIGMA(currently referred to as IGMA). The U.S. Industry Statistical Review and Forecast is published annually in the spring. Additional and much more detailed information on window, door and skylight markets is contained in the (2013/2014) Study of the U.S. Market for Windows, Doors and Skylights, and The Distribution of Residential and Nonresidential Windows and Doors in the 2013/2014 U.S. Market. All reports are available from AAMA. Contents Residential Construction Activity Privately-owned housing New housing by type of structure Residential construction activity Improvement expenditures Manufactured housing shipments Existing home sales Residential Product Statistics Prime windows Skylights Patio doors Entry and passage door usage Door forecast Copyright © 2014- Published by: American Architectural Manufacturers Association (AAMA) 1827 Walden Office Square, Suite 550 Schaumburg, Illinois 60173 Tel: (847) 303-5664/Fax: (847) 303-5774 www.aamanet.org Researched and Edited in March 2014 by: Ducker Worldwide, LLC 1250 Maplelawn Dr. Troy, MI 48084 (248) 644-0086 www.ducker.com 5-6 7 8 9 10 Nonresidential Product Statistics Entry door usage Door forecast Insulating glass statistics 9 10 11 Nonresidential Construction Activity Contract awards Regional construction Window usage U.S. Map of Geographic Division Forecast: Ducker Worldwide LLC 1 1 2 3 4 4 12-13 14 15-16 17 Researched by: Ducker Research Company, Inc. 1250 Maplelawn Troy, MI 48084 (248) 644-0086 www.ducker.com Executive Report The Distribution of Residential and Nonresidential Windows and Doors in the 2013 U.S. Market Copyright © 2014 - Published April 2014 by American Architectural Manufacturers Association (AAMA) 1827 Walden Office Square, Suite 104 Schaumburg, Illinois 60173 Tel: (847) 303-5664/Fax: (847) 303-5774 www.aamanet.org TABLE OF CONTENTS Section Description Page I. EXECUTIVE SUMMARY ....................................................................4 II. INTRODUCTION AND METHODOLOGY ..........................................6 A. Introduction B. Study Objectives C. Study Methodology III. CHANNEL MEMBER DEFINITIONS AND PROFILES ......................9 A. Characteristics of Channel Members B. Characteristic Definitions C. Distributor Profiles IV. PRODUCT FLOW ANALYSIS .........................................................25 A. Market Size B. Distribution Discussion C. Windows D. Patio Doors E. Entry Doors V. ISSUES AND TRENDS ....................................................................55 A. Channel Member Trends B. Regional Trends VI. NONRESIDENTIAL WINDOWS AND DOORS ................................59 A. Nonresidential Windows and Glazing B. Nonresidential Windows and Glazing Supply Channel Chain Definitions C. Nonresidential Window Distribution Analysis D. Nonresidential Door Channel Member Definitions E. Nonresidential Door Distribution Analysis 1 INDEX OF EXHIBITS Exhibit III.1 III.2 III.3 III.4 III.6 III.7 III.8 IV.1 IV.2 IV.3 IV.4 IV.5 IV.6 IV.7 IV.9 IV.10 IV.11 IV.12 IV.13 IV.14 IV.15 IV.16 IV.17 IV.18 IV.20 IV.21 IV.22 IV.23 IV.24 IV.25 IV.26 IV.27 IV.28 Title Page Number Definitions – Categorizing Process .............................................................. 10 Millwork Wholesaler Profile .......................................................................... 13 Big Box Profile.............................................................................................. 16 Lumberyard Profile ....................................................................................... 18 Shortline Distributor Profile........................................................................... 20 Specialty Retailer Profile .............................................................................. 22 Summary of Distribution Definitions ............................................................. 24 2013 Market Size - Residential .................................................................... 25 2013 Windows – Manufacturer Direct .......................................................... 27 2013 Windows – Secondary Distribution Channels ...................................... 28 2013 Windows - Total Volume by Channel Distribution ............................... 29 2013 Millwork Wholesaler – Actual Window Purchases and Sales .............. 30 2013 Big Box – Actual Window Purchases and Sales ................................. 31 2013 Lumberyard – Actual Window Purchases and Sales ........................... 32 2013 Shortline Distributor – Actual Window Purchases and Sales .............. 33 2013 Specialty Retailer – Actual Window Purchases and Sales .................. 34 2013 Summary of Window Volumes – Segmented by End User ................. 35 2013 Summary of Window Volumes – Segmented by Construction Type ... 36 2013 Patio Doors – Manufacturer Direct ...................................................... 37 2013 Patio Doors – Major Distribution Channels.......................................... 38 2013 Patio Doors – Total Volume by Channel of Distribution....................... 39 2013 Millwork Wholesaler – Actual Patio Door Purchases and Sales .......... 40 2013 Big Box – Actual Patio Door Purchases and Sales ............................. 41 2013 Lumberyard – Actual Patio Door Purchases and Sales....................... 42 2013 Shortline Distributor – Actual Patio Door Purchases and Sales .......... 43 2013 Specialty Retailer – Actual Patio Door Purchases and Sales .............. 44 2013 Summary of Patio Door Volumes – Segmented by End User ............. 45 2013 Summary of Patio Door Volumes – Segmented by Construction Type45 2013 Entry Doors – Manufacturer Direct ...................................................... 46 2013 Entry Doors – Secondary Distribution Channels ................................. 47 2013 Entry Doors – Total Volume by Channel of Distribution ...................... 48 2013 Millwork Wholesaler – Actual Entry Door Purchases and Sales .......... 49 2013 Big Box – Actual Entry Door Purchases and Sales ............................. 50 2 INDEX OF EXHIBITS (continued) Exhibit IV.29 IV.30 IV.31 IV.32 IV.33 V.1 V.2 VI.1 VI.2 VI.3 VI.4 Title Page Number 2013 Lumberyard – Actual Entry Door Purchases and Sales ...................... 51 2013 Shortline Distributor – Actual Entry Door Purchases and Sales .......... 52 2013 Specialty Retailer – Actual Entry Door Purchases and Sales.............. 53 2013 Summary of Entry Door Volumes – Segmented by End User ............. 54 2013 Summary of Entry Door Volumes – Segmented by Construction Type54 Historic View of Window and Door Product Distribution Channel Characteristics ............................................................................................. 57 Historic View of Window and Door Product Distribution Flow – 2003-2013...................................................................... 58 Nonresidential Construction Specification Process and Cycle....................... 60 Architectural Glazing Products Supply Chain ................................................ 67 Fabricated Commercial Window Supply Chain ............................................. 70 Nonresidential Door Product Flow ................................................................. 73 Copyright © 2014 AAMA All rights reserved. This report or any part thereof, may not be reproduced in any form without the written permission of the publisher. 3 I. EXECUTIVE SUMMARY The window and door market has continued to grow since the rebound began in 2010. New housing construction activity has been picking up steadily in the double-digit growth range, which is driving channel dynamics. Lumberyard volume has increased substantially within the window and patio door categories, while Millwork Wholesale share is returning to pre-decline levels within the door market. In contrast, remodeling volume has been somewhat softer than expected, and while representing the bulk of the fenestration markets during the downturn, this segment is seeing some dilution vs. the strong growth reported in new construction. Modest growth should continue within R&R for the foreseeable future, but new construction is expected to continue growth in the double digit range for several years. The window market reached 46.9 million units for 2013, an increase of 16 percent from 2011. Patio and entry doors comprise an estimated 12.1 million units, growing 15 and 11 percent respectively. Combined residential window/door market volume grew at modest rates, with a continued shift in product flow at the first line of distribution direct from the manufacturer. Similar to 2011, growth in new construction drove an increase in combined volume through lumberyards, shortline distributors and professional builders. Specialty retailers continued to decline, from 23 percent in 2011 to 21.7 percent in 2013, while lumberyards saw the greatest increase to 29.5 percent. This growth in the lumberyard channel is largely due to their primary concentration on the new construction market, while specialty retailers suffered with their focus on the relatively unfavorable replacement and remodeling market. These categories are followed by big box which declined in their share of window distribution by approximately 2 percent, and shortliners who saw a 1 percent increase. Millwork wholesalers maintained low levels, accounting for 3 percent of window volume. For patio doors, lumberyards grew their share to a leading 38 percent, with specialty retailers dropping but maintaining the second largest patio door volume at 19 percent. Millwork wholesaler as well as big box both decreased since 2011, representing 6 and 18 percent respectively. In contrast, sales of entry doors direct from the manufacturer to millwork wholesalers increased from 35 percent in 2011 to 40 percent. In contrast, big box share of entry door volume fell 37 percent. 4 The new construction market continues to grow, with approximately 40 percent of windows, 45 percent of patio doors, and 30 percent of entry door volume ending up in that segment of the market. Production levels of window products are expected to continue to increase at double digit rate over the next two years, driven by the new construction market. Door products are anticipated to follow suit and continue high levels of growth, with entry doors reaching approximately 14.6 million units by 2016. 5 II. INTRODUCTION AND METHODOLOGY A. Introduction The following report highlights results of the Ducker Research study of the 2013 U.S. market for distribution of windows and doors. This research effort is the ninth report of its kind and represents a complete standalone analysis that incorporates key market evolution elements that have transpired since the original 1998 and subsequent 1999, 2001, 2003, 2005, 2007, 2009 and 2011 reports on the market. This study is conducted on behalf of The American Architectural Manufacturers Association (AAMA) as part of the total window and door program for 2013. This effort provides members with a thorough understanding of relevant distribution channels and volumes of window and door products through identified channels. Our experience in researching and reporting on the window and door market coupled with an industry need for more thorough information on distribution channels led to the initial study conducted in 1998. This product proved to be an invaluable source to leading window and door product manufacturers as well as distributors. The reports in 1999, 2001, 2003, 2005, 2007, 2009 and 2011 continued to highlight trends affecting this market and validate key data regarding volume shifts and changes among channel members. The 2013 study will provide an update to all the previous studies. Each time this effort is undertaken, further depth is achieved as a result of an increase in data points and industry participation as well as extensive analysis of window and door volumes. 6 B. Study Objectives As with previous efforts, the primary objective of this study is to profile the U.S. market for residential windows and doors as it flows through the identified distribution channels. Market size figures for 2013 window and door materials will be used as well as a three-year forecasted estimate of market conditions and statistics for window and door material flow. The gathering of market size figures and segmentations is a part of the total research project on behalf of AAMA. A summary of study objectives follows. A major function of the eight previous reports was to develop definitions and profiles of channel members serving the window and door market. The preceding studies were successful at validating definitions as well as providing opportunities for refining profiles and existing data. Profiles for each distributor type are defined in detail, further refined in this 2013 report. Product volume estimates through the channels to the end user are based on 2013 market figures for residential windows and doors. Separate analyses for windows, patio doors, exterior doors and commercial products in both new and replacement applications are included. Information regarding end users remains a part of the overall report. Finally, forecasts regarding future product volume flow through the channels and anticipated trends as well as conditions affecting the marketplace are analyzed and presented for each product area. 7 C. Study Methodology The primary means of information gathering has not changed since the initial effort due to its success and remains telephone interviews with window and door product manufacturers, distributors, and manufactured housing producers. These interviews are augmented with personal interviews and high level discussions with industry participants during AAMA gatherings and other relevant trade events from 2005 through 2013, and into 2014. Approximately 250 interviews have been conducted for the 2013 effort by Ducker Research principals, managers, analysts and our experienced inhouse fieldwork research team. For this initiative, approximately 250 distributors and manufacturers interviews were conducted. Both branch and headquarter contact was made for large, chain distributors to get both a national perspective as well as local trends. Other channel members, such as builders and contractors, were also contacted to get a deeper understanding of product distribution. Interviews are segmented evenly across the 11 U.S. Census regions. . Channel member definitions and profiles are examined in the following section. 8 III. CHANNEL MEMBER DEFINITIONS AND PROFILES A. Characteristics of Channel Members This section of the report provides a thorough definition of each channel member under study. Characteristics include products carried, customers served, and market focus as well as additional services offered by distributor types. Channel members have been evaluated and placed into one of the five different distribution categories. The five categories are: 1. Millwork Wholesaler 2. Big Box 3. Lumberyard 4. Shortline Distributor 5. Specialty Retailer Volume to the OEM segment is also accounted for throughout the report. For the purpose of this study, OEM refers to manufactured housing producers. The OEM segment serves as an end user in this case as the installation of fenestration products occurs at OEM factories with no further channel member involvement. 9