Survival Instincts: How the Down Economy Is Affecting Product Development and Selection
- By Sharon O'Malley
- Source: BUILDING PRODUCTS Magazine
- Publication date: 2009-02-17
"Oddly enough," muses Seattle custom home builder Jon Alexander, "my business gets better in a bad economy."
The long-time green builder does one job at a time and is booked through the end of 2009, even though he admits that some green building materials—even in a recession that has relaxed labor and commodity costs considerably— remain more expensive than non-green alternatives. Still, he notes, "I can't imagine my customers saying because of the economy that they don't mind having off-gassing materials in their homes."
In turn, he says, more building product manufacturers are courting his kind in their bid to make it through to the other side of the recession.
"A down economy," notes the owner of Sunshine Construction, "gives contractors and suppliers a greater impetus to do green materials. We need to do it to differentiate ourselves."
Building manufacturers are working to differentiate themselves as well—and the effort is helping builders fill the same need. Short of closing up shop, companies are pushing through products that cost less to make but last longer, are more convenient to use, solve homeowner problems, or can be touted as healthy or green alternatives to the items the consumer already owns.
"The people who have money and want to spend money are not going to be looking for the same ... old vanilla products," says John Kemp, senior vice president of marketing for Oldcastle, a manufacturer of concrete and paving products. "It has to have a high degree of value or they won't spend the money."
Those high-value products aren't exclusively green. Builders and manufacturers are finding a market—albeit a slow and careful one—for all kinds of innovative products that set them apart from their peers in this über-competitive environment— sometimes without cutting prices.
Here are six economy-induced trends that builders and remodelers will find as they look for the best buys.
Research and development is alive and fairly well —at least among a good number of building product manufacturers.
While some manufacturers are killing their creative efforts in a last-ditch effort to stave off bankruptcy, others are clinging to R&D like it's the life raft that will keep them afloat until the recovery rolls in.
Because it takes around five years of development before a product hits the distribution pipeline, plenty of companies found themselves in mid-invention when the economy tanked. Most, predicts Monica McGuire, a senior policy director for the National Association of Manufacturers, would opt to finish what they started and cut corners outside of R&D instead.
Chris Beyer, senior director of marketing for composite decking maker Fiberon, agrees. "R&D is not the place to cut," he says. "New products and innovation are the lifeblood of this American economy."
Still, R&D spending increases with profitability, notes McGuire, so it's likely that few manufacturers are pouring new money onto the product drawing board.
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