Energy tax credit helping boost business for Minn. window makersby Mark Zdechlik, Minnesota Public Radio
The main goal of the massive economic stimulus package is to keep people from losing their jobs and to create new jobs. There are signs the energy tax credit component of the bill is working. Two big Minnesota door and window manufacturers that employ thousands of people say sales have picked up since credit became law. For them, the energy tax credit is proving to be a bright spot for an industry that's been particularly hard hit by the downturn.
St. Paul, Minn. — Many Americans are hesitant to spend their money. The new energy tax credits have given businesses that sell a variety of energy efficient products an attractive carrot to entice customers.
Big companies and small ones are aggressively promoting the tax break.
Insulation manufacturer Johns Manville released a survey last month indicating home owners are more interested in using the tax credit to buy windows than other qualifying products including roofing, insulation and water heaters. It is exactly what Jerry McClelland of Roseville is considering. McClelland's Colonial home looks like it could be on a magazine cover, but it needs new windows.
"This particular window, the ropes have broken so this window will not stay up in the summer," explained McClelland as she stood in front of a the large window in her home.
Prior to the economic stimulus bill, McClelland and her husband were looking at replacing just that window that won't stay open. Now that the energy conservation tax credits are available, they're seriously considering spending several thousand dollars to upgrade a bunch of old, inefficient windows.
McClelland says if they go ahead with the window project, they'll spend enough on windows to get the full tax credit.
"Absolutely and we'll go beyond it," McClelland said.
The energy tax credit is equal to 30 percent of the cost of qualifying energy efficient products. It is capped at $1,500.
If McClelland spends at least $5,000 on energy efficient windows, she'll get the full $1,500 tax credit. McClelland and her husband are recent retirees and she said they're carefully watching their expenses. She said they'll make a decision about windows based on what's best for them financially. Still, McClelland sees a broader good in going ahead with the project.
"I do like the idea of improving our own energy conservation and also, you know, providing some work for a small company or an individual," she said.
Among the replacement windows the McClelland's are considering are products from two Minnesota-based manufacturers; Marvin Windows and Doors and Andersen Windows and Doors.
Dan Marvin heads the replacement window division at Marvin. He said the energy tax credit seems to be breathing life back into the business after a few extremely difficult months beginning last fall.
"I think there's no question that it's had an impact," Marvin said. "We've seen people return to the market. They're talking about it. The second thing I would say is we've seen usage of those products that met the criteria in the tax credit increase significantly."
Unlike many manufacturers whose businesses supply the construction industry, Marvin has thus far survived the collapse in new construction without laying off any of its 5,300 employees. Instead, the company cut hours and other costs. Dan Marvin said the uptick in replacement window orders has meant more hours on the job for some workers from week to week.
"We're nowhere near being out of the woods from the market as a whole, but having a segment like replacement improving is really great for our company," Marvin said.
Andersen Windows and Doors did lay off more than 500 of it 11,000 plus employees earlier this year.
But spokeswoman Maureen McDonough said they've all been called back to work. McDonough said the workers are back earlier than expected thanks, in part, to the energy tax credits.
"It's been difficult to track exactly the impact, but we've seen more activity," said McDonough. "We've seen homeowners who are very interested in getting that tax credit."
McDonough said at about the time the tax credit was signed into law, Andersen was trying to figure out ways to bring in more business. She says the company ended up lowering prices and ramping up marketing.
"We call that the Andersen stimulus package," said McDonough.
McDonough said with new construction still deeply depressed, Andersen is focused on its replacement and remodeling business. It's even rolling out a new label for Andersen products that qualify for energy tax credits. While Andersen has called back all of the employees it laid off, McDonough said some will likely be working reduced hours for next month or so.
Down the street from Andersen's Corporation headquarters in Bayport, Jim Ruvelson, who works as an electrician at the big plant, said he thinks the company is doing a good job brining in business with help from the tax credit.
"I believe it has affected our business in a positive way," Ruvelson said.
Ruvelson was not laid off, but he's delighted those who were, are back on the job. What's happening at Andersen has Ruvelson bullish on the economy.
"You're around and you watch a couple hundred people walk out the door and now they come back, geez it puts a smile on everybody's face," Ruvelson said. "And it's nice to see the smiling faces that are walking back in. You know, 'Hey! How are you?'"
But the tax credit is not enough to turn around a sector that depends on a healthy housing industry. New Windows for America Minnesota owner Rhonda Steffes said she too has seen a marked increase in interest in energy efficient doors and windows. The problem, Steffes said, is that many homeowners who want to take advantage of the credit, can't come up with the money to put in new doors and windows.
"It has been busier," said Steffes. "There's a lot of interest in it, but it's still coming down to trying to qualify for loans. In order to get loans so you kind of have to prove you don't need a loan to get a loan and so that makes it tough on a lot of people."
The housing bust has been tough on a lot of people in Minnesota's wood products industry. Companies that make doors, windows and materials like plywood, have shed thousands of jobs. Employment in the industry reached more than 17,000 in 2005. Now, it is well below 12,000.
Although the energy tax credit appears to be helping some companies, the sector is facing a long road to recovery.
- Morning Edition, 05/15/2009, 7:45 a.m.