International Door & Operator Industry

SEP-OCT 2017

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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as operators if installed simultaneously with the door, and dealer markup to cover installation, other costs and profit. As the economy bottomed-out in 2009, the demand for doors to install in newly built housing units reached an almost historic low-point. As the economy slowly re- accelerated, garage door installation in new residential construction followed upward. A detailed consideration of the comparative information suggests that the average value of garage doors in new housing is increasing, and visually the space between the orange bars (GD demand) and blue line (GPDI) is narrowing in recent quarters, which helps confirm that fact. Because much of what is included in GPDI in residential structures is new construction, it should be expected that the variable provides an excellent predictor of garage door demand, and indeed it does. Even on a quarter to quarter basis, as aggregate home construction activity changes, garage door installations follow suit, albeit at increasing values per housing unit. Chart 2 provides a picture of the same GPDI in residential structures, but related to garage doors installed via retrofit activity which includes replacement, renovation, additions and most critically improvements. Again, garage door data is shown at installed value (dealer sales) to the end-users, which may be home-owners, remodeling contractors or other intermediaries. Installed value includes the door, peripheral items (track, springs, etc.), ancillary items such as operators if installed simultaneously with the door, and dealer markup to cover installation, other costs and profit. This does not include aftermarket service and repair, which is a separate consideration that will be addressed in a future article. Instead of the tight relationship between the independent variable and garage door demand denoted in Chart 1, Chart 2 depicts a post-recession correlation, but the pre-2008 relationship is weak. Why As the dramatic expansion of new residential construction accelerated through late 2005, GPDI reflected that value, and it was inconsistent with components such as replacement and renovation. With new construction since 2009 more in line with historical standards, the correlation of GPDI and retrofit demand is more useful. As of early 2017, there are over 107 million residential garage door units in place in the United States. That includes all size and configuration variations ranging from single car doors through two-car doors and the increasing number of houses with 3 or more door units. Moreover, the approximately 134 million U.S. housing units include over 90-million single-unit houses, multi-unit structures ranging from duplexes to hundreds of apartments, and the approximately eight million mobile homes, boats and other vehicles that serve as housing units. Even with that very large market potential, and a growing volume of annual retrofit demand, less than 2.5% of all residential garage doors are replaced, upgraded or added-to annually. As GPDI in residential structures grows (albeit the most recent 2017 quarter indicated a slight downturn), demand for retrofit garage doors appears to have accelerated slightly faster. Much of that growth has occurred because of more 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1,000.0 0.0 400.0 800.0 1,200.0 1,600.0 2,000.0 2,400.0 2,800.0 3,200.0 3,600.0 4,000.0 02 1 02 2 02 3 02 4 03 1 03 2 03 3 03 4 04 1 04 2 04 3 04 4 05 1 05 2 05 3 05 4 06 1 06 2 06 3 06 4 07 1 07 2 07 3 07 4 08 1 08 2 08 3 08 4 09 1 09 2 09 3 09 4 10 1 10 2 10 3 10 4 11 1 11 2 11 3 11 4 12 1 12 2 12 3 12 4 13 1 13 2 13 3 13 4 14 1 14 2 14 3 14 4 15 1 15 2 15 3 15 4 16 1 16 2 16 3 16 4 17 1 17 2 Gross Private Domestic Investment in Residential Structures - $=billions Installed (Dealer) Value of Residential Retrofit Garage Doors - $=millions Residential Retrofit GD - Installed (Dealer) Value GDPI Residential Structures - Chained '09 $ ANNUALIZED Installed Value at Seasonally Adjusted Annual Rates CHART 2 Correlation of Gross Private Domestic Investment in Residential Structures to Installed (Dealer) Value of Residential Retrofit Garage Doors - Quarterly Data 2002 to mid 2017 Continued on page 28 MANAGEMENT (continued from page 24) 26 International Door & Operator Industryâ„¢

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