Consolidation's Impact on the Construction Industry

By Brooks Gentleman | Posted: 08/20/2013 12:42PM

 

I am upset. The American dream has been compromised. I found out this week that Custom Window Company out of Englewood, Colorado was purchased by Wausau Windows. It’s not that I am opposed to mergers and acquisitions; they happen every day. Some M&A activity can even include fascinating drama and intrigue such as the current situation going on with Dell Computers. So why does the fact that a large publicly traded conglomerate purchasing a small company like Custom Window Company hit me in the pit of my stomach? 

I think that when a large corporation snatches up a small entrepreneurial company, it squelches the American spirit. This country was built on the premise that you can make your fortune by becoming really good at something unique to the marketplace. Custom Window served as a great example of such a success. The thing that concerns me is that the dog-eat-dog behavior exemplified by this recent purchase is becoming epidemic in the construction industry. Architectural firms, general contractors, and developers are all going through a consolidation that will affect the entire industry.

One aspect of the US economy that I truly appreciate is the role of the renegade who has the courage to take an industry to a new level. It is the pioneer spirit that our country’s forefathers exemplified when they forged the American character. It is how we earned our independence from the British and how we expanded into new territories. In business, people like Steve Jobs, Jeff Bezos, and Ross Perot wouldn’t succumb to convention and had to scratch and claw their way to the top of a new mountain. They defined entirely new industries. Custom Window followed this same formula.

The company was founded by Dick Gann back in 1981. Dick was an engineer by training and he became excited about how complacent the large aluminum window manufacturers were in their product development. Efco, Kawneer, Traco, and Wausau were all following the path of simplifying manufacturing to gain efficiencies of scale through commoditization. Dick capitalized on the opportunity to manufacture exactly what the customer wanted instead of feeding the marketplace a standard series of products. Features like a self balancing double hung window were designed specifically for a building at MIT. Custom Window was also the first aluminum window company to fabricate a true divided lite muntin. Unfortunately, Dick passed away years ago in a plane accident as he returned from a window testing facility. The man was always looking for a better way to do things and actually took his last breath in the pursuit of that goal.

Now flash forward to the current day. The industry is in a recession and companies like Custom Window are grappling to stay in business. The industry has tanked and the competition is fierce. Other aluminum window manufacturers like Graham, Quaker, and St. Cloud started to develop features that gave the appearance of customization, moving in on Custom’s marketplace and stealing sales. Add to that a couple of jobs that went south and Custom Window is on the ropes. So Wausau moves in and purchases the company so they can benefit from Custom’s flexibility and creativity. Let us hope for everyone’s sake that Wausau doesn’t squelch the essence of this small company from the suburbs of Denver.

So what does this industry news tidbit mean to you and your company? If you haven’t noticed, the languishing economy has had a consolidation impact on the entire construction industry. The Custom Window scenario has been playing out at architectural offices all over the country. I can’t tell you how many architectural firms I know that have either closed their doors or changed their names. General contractors are going out of business or consolidating with other companies in their markets or with national firms looking to expand. Developers who have experienced a decline in demand and increased financing pressures have also been set up for failure or purchase by others.

Unfortunately, consolidation tends to undermine creativity and breed group think behavior. As small firms are gobbled up by the larger companies, they succumb to the tedium of the rules and regulations of the larger enterprise. Systems and procedures are necessary to maintain control, achieve productivity, and satisfy stockholders. Individuality is squashed and conformity is rewarded. So get ready my friends, we can count on slogging through some boring years ahead.

We can also count on the indefatigable spirit of the entrepreneur to once again rise above this din of mediocrity sometime in the future. The Dick Ganns of the future will once again seize an opportunity that is unrecognized by the industry’s complacent giants. Such is the circle of life in our economy.

I feel much better now that I have gotten this off my chest. I guess I needed to remind myself that it will take more than the purchase of a family owned window company to undermine the entrepreneurial spirit. To all you entrepreneurs out there still trying to hold your own in this economy…hang in there! The industry needs you and your creative spirit even more than it needs economies of scale. Without your creative vision and entrepreneurial initiative the industry would just have to settle for mediocrity. Hats off to Custom Window for blazing a trail for the past 32 years! Rest in peace.


Prev 1 2 Next All

 

About the Author

Brooks Gentleman

Brooks Gentleman has been in the wood window and architectural millwork business for the past 25 years and is currently the owner of Re-View, a manufacturer of custom wood window replicas for historic landmarks across the country based in Kansas City, MO. www.re-view.biz

Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left

 

Search our database for woodworking equipment, supplies and services:

Select a category:


Feedback Form
Leads to Insight