February 16, 2009

Let’s Clean Out the Mail Bag!

By Paul Bieber

Over the last couple of weeks I have received numerous questions about the economy and the glass industry. Here are a few of them that I hope are beneficial to the whole industry.

From Bill F.–“What would be the single most important thing for a glass business owner to do in the face of this economy?

Bill–the best thing to do is :Don’t Panic. Continue running your business prudently. Make changes with forethought and confidence. Don’t reduce pricing below the point of profitability, don’t do a mass firing, and don’t climb into a shell. Run your business carefully and with any eye towards growing when the recession runs its course.

From Jayson–“We are a medium size shop doing store fronts and glass of all kinds. What should we be looking at for the future?”

Jayson–the future is in energy savings glass–well built IG with Low-e is the future. Become an expert in the various types of Low-e so you can offer your customers the best product for their needs. Sometimes soft-coat and sometimes hard-coat is the right answer. Make sure your IG supplier is certified by IGCC or IGMA. Even bullet resistant glazing can have an IG component. Oil is cheap this week, but that won’t last. It will go back up.

There should not be an installation you do that doesn’t have a low-e component as part of the unit makeup.

Tina F.–“Did you think I looked like Governor Palin?”

I just threw this one in to see if your were reading–Paul

Tom M.–“I use my bank line-of-credit when working with big jobs, and I have to make deposits for material. My banker tells me they might not be able to work with me in the future, even though I have never made a late payment. What can I do?”

Tom–More and more vendors want deposits as the economy tightens. Are you getting a deposit from your customers? Many glass shops are afraid to ask for a deposit, as they think it will scare away a potential order. Just about every business or property owner knows that funding is tough now, and they would rather use your funding than their own. Offer an incentive to get the deposit–a one or two per cent discount on the prepayment often works. Have your customer pay just for your materials in advance, or get your vendor to write a joint pay with you and your customer for the materials. This is an easy tool to use–call me at 603-242-3521 and I will go over the details with you.

Susan L. writes–“What is with the workforce? We did a small layoff, (4 people) at the first of the year, and now my workforce thinks they are safe. They have gone back to their lazy ways. Help!!!”

Hi Susan–there could be many reasons–from one bad seed who influences the rest, to a certain laxness in your foreman. Whatever the case, just because you did a lay-off is no reason why you can’t fire a malingerer and replace him with a person who wants to work. The only golden part of this recession is that there are a lot of good people who are unemployed. Use this time to trade-up on your employees. Replace one or two of your rotten eggs, and the rest will get the message real quick.

Michael S. asks–“One of my vendors is having trouble with money and sometimes runs out of glass sizes or tints. The owner has asked me to buy ten-percent of his business, and with my cash, he will increase inventory.

Any thoughts?”

Dear Michael–Wow, this is a bigger question than can be answered in a few paragraphs…but here is a plan. Ask for audited statements from your vendor and give them to your accountant and your lawyer, asking them to look them over as a possible investment for you. Their advice will be your best local source. Think if your vendor has you has a partner, will your competitors be afraid to buy, as they will feel that you will get the inside track on all quotes. Will the vendor’s business go down rather than up because of this?

Are you a good fit with the vendor? Do you have the same philosophies on business management. Will he spell out what your duties and rights will be under this new arrangement? As a ten percent owner you can demand nothing, unless you have it set up along with your purchase documents.

Get the advice of two or three industry people who you trust. These should be people drawn from your bigger customers who are good business people, or a local chamber of commerce can recommend a local consultant.

Feel free to ask me any direct questions.

Phil from Washington DC writes–“I use a lot of tempered glass, for shower doors and store front work. I have looked into buying my own tempering oven for my own product and to sell in the local area. Is there a guideline on how much tempered glass I buy now as to whether it would be worthwhile for me to go ahead?”

Dear Phil, We would have to do a survey of the current temperers in your market area to gauge if one more can profitably set-up. If this is promising, the next step is to sort your purchases by thickness of glass and types of edging, computing square feet purchased, along with inches of edge work. Also do yo use a lot of low-e? Split it out between soft-coat and hard coat.

An oven’s cost is based on size. An eighty-six inch oven costs more than a seventy-two. Look at your product mix and see where you peak out. If 90% of your glass is under 72, go with that. You can still buy your larger glass out. The smaller the oven, the lower your expense, your plant size needed, and your utility bill.

The cost of the oven is equaled by the high-speed cutting line, a couple of edgers and a beveller, a shape polisher, a washer and overhead cranes and forklifts.

You need at least $500,000 and up to $1,000,000 for a better manually operated system. There are fully automatic plants available, but those are for the heavy-duty users, like auto-parts fabricators, or mass produced patio furniture makers.

A very quick rule of thumb is this: You will get abut 50% efficiency out of your oven…a 72″ x 144″ oven has 72 sq. ft. of area, so your average yield will be 36 sq. ft. per load. In a single chamber oven, which would be a good starter oven, figure one minute of heating time per each sixteenth of an inch of glass thickness. So, a 1/4 load would take about four minutes, and so on. When you have totaled up your usage by square feet and thickness, it is just a lot of math work to figure how many hours of tempering you will use. Can you fill up the rest of the time by selling more to current customers? To new customers?

I would be glad to meet you to go over these concepts and help you to draw up budgets and space requirements.

Please feel free to write at anytime. I will try to answer each question individually and privately. I only print the generic type questions that come in. Catch me at paulbaseball@msn.com.