Costs Continue Upward for the Garage Door Industry

© 2006 Door & Access Systems
Publish Date: Fall 2006
Author: Deborah Baron
Page 50

Costs Continue Upward for the Garage Door Industry
Are We Boiling in Oil?

By Deborah Baron, DAS Special Correspondent

“(Manufacturer) today announced a price increase of (X) percent to help cover higher material, energy, and fuel costs.”

Sound familiar? Almost all manufacturers in the garage door industry have been forced to increase prices in 2006. Some raw materials have increased prices numerous times.

Manufacturers that use oil-based ingredients, such as paint, plastics, and foam insulation, have been feeling a significant impact. But oil is not the only factor. Other critical raw material shortages—some related to oil and some not—affect our industry.

To find out the reasons for these price increases, and a forecast for the near future, we talked to several experts among key suppliers to the garage door industry.

Steel: Up 25-40%
Depending on the gauge, rising base prices and dramatic zinc increases have led to price hikes of 25 to 40 percent for galvanized steel, according to Dan Zecca, vice president and general manager, Macsteel Service Centers.

“The primary reasons are that all steelmaking raw material costs are close to record levels," says Zecca. He adds that rising energy costs have also affected steel prices. This, in turn, affects garage door panels, rolling doors, track, extrusions, and brackets.

“I think the market should level out in Q4,” says Zecca.

Plastics: Up 8-12%
“The increase in oil prices has affected resin suppliers to the plastics industry and has also raised delivery (trucking) expenses,” says Rob Pilgrim of the purchasing/planning division of Elton Manufacturing, a maker of molded window frames and rigid PVC weatherstripping.

He says raw materials for this industry have increased 8 to 12 percent in 2006. “This affects all of our manufactured window frames and weatherstripping for the garage door industry,” he explains.

In the next six months, Pilgrim forecasts additional cost increases of 5 to 7 percent. “Unfortunately, with the Alaskan pipeline closure and the conflicts in the Middle East, perceived oil shortages will continue to push prices upward,” he sums up.

Foam Insulation: Up 5-7%
Expanded polystyrene (EPS) foam, common in insulated garage doors, originates from petrochemicals and natural gas. EPS beads are the raw material for foam manufacturing.

An EPS manufacturer, who declined to be identified, says the cost of EPS beads has recently increased twice, totaling about 7 cents per pound. “The average price of a pound was just under a dollar, so 7 cents per pound is significant,” he explains.

He says that instability in the market has obliged U.S. manufacturers to import more EPS beads, noting that “Asian beads are more expensive than domestic right now.” In the next six months, he foresees a plateau in raw material prices.

Paint/Coatings: Up 3-5%
Both Dan Knight, Central Region Sales Manager at Akzo Nobel, and Tom McKay, Product Manager at BASF Industrial Coating Solutions Group, have seen similar price increases in the paint and coatings industry. Both primers and topcoats for garage doors are affected by these increases.

“Our costs have increased about 3 to 5 percent,” says McKay, “but over the previous two years, it was in excess of 20 percent.”

The rising prices of petrochemicals are having the greatest impact on raw material costs for paint, both say. About 30 to 40 percent of every gallon of paint is composed of petroleum products.

Knight and McKay agree that raw material increases will be moderate, maybe 3 to 5 percent in the next six months.

The Future
Stay tuned. And think out of the box. For garage door dealers, it’s a matter of trying to absorb higher door prices caused by raw material increases—or resorting to creative ways of passing along costs to customers.

What is your plan?



Editor’s Note: For ideas on how to respond to price increases, see Bruce McConnell’s business tips on page 72.