AAMA/WDMA 2008-2009 U.S.

National Statistical Review and Forecast

FENESTRATION PRODUCTS

2008/2009 U.S. National Statistical Review and Forecast

Introduction Market estimates in the U.S. Industry Statistical Review and Forecast are driven not only by statistics published by the Census Bureau and other construction statistics organizations, but also from primary interviews with leading manufacturers of windows, doors and skylights, as well as component suppliers. All forecasts are based on projections of construction activity as of March 2009 and appropriate usage factors and tabulations developed by Ducker Worldwide LLC, which is solely responsible for the data. Any questions on the Review or its contents should be directed to Ducker. Ducker has been conducting residential and nonresidential market studies continuously since 1982 for the American Architectural Manufacturers Association (AAMA). From 1978 to 1981, studies were conducted for the Sealed Insulating Glass Manufacturers Association (SIGMA(currently referred to as IGMA). Ducker has been conducting the update study of the U.S. residential and nonresidential window and door markets for AAMA in combination with the Window and Door Manufacturers Association (WDMA) since October of 1994. The U.S. Industry Statistical Review and Forecast is published annually. Additional and much more detailed information on window, door and skylight markets is contained in the (2007) Study of the U.S. Market for Windows, Doors and Skylights, and The Distribution of Residential and Nonresidential Windows and Doors in the 2007 U.S. Market, as well as individual Statistical Review and Forecast market overview reports for each of the 11 major U.S. regional markets. All reports are available from AAMA, WDMA, or Ducker. Copyright 2009- Co-published by: Contents Residential Construction Activity Privately owned housing New housing by type of structure Residential construction activity Improvement expenditures Manufactured housing shipments Existing home sales Residential Product Statistics Prime windows Storm doors Skylights Patio doors Entry and passage door usage Door forecast Nonresidential Product Statistics Entry and passage door usage Door forecast Insulating glass statistics Nonresidential Construction Activity Contract awards Regional construction Window usage U.S. Map of Geographic Division 13-14 15 16-17 18 10 11 12 5-6 7 7 8 9-10 11 1 1 2 3 4 4

American Architectural Manufacturers Association (AAMA) 1827 Walden Office Square, Suite 550 Schaumburg, Illinois 60173 Tel: (847) 303-5664/Fax: (847) 303-5774 www.aamanet.org Researched and Edited in March 2009 by: Ducker Worldwide, LLC 1250 Maplelawn Dr. Troy, MI 48084 (248) 644-0086 www.ducker.com

Window & Door Manufacturers Association (WDMA) 401 North Michigan Avenue Chicago, Illinois 60611 Tel: (312) 321-6802 www.wdma.com

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Review of New Residential Construction Activity

Total New Residential Housing (Thousands of Units)
% Change '08 vs. '07 -40.5% -8.3% -14.3% -31.9% % Change '09(F) vs. '08 -42.1% -47.1% -20.7% -41.8%

New Residential Construction SINGLE FAMILY STARTS MULTI FAMILY STARTS MFD. HOUSING SHIPMENTS TOTAL

2007 1,046 309 96 1,451

2008 622 284 82 988

2009(F) 360 150 65 575

Total housing starts continued to decline in 2008, dropping to the lowest level since the Census Bureau began tracking the data in 1959. Single family starts showed the largest drop, declining by 40.5 percent to 622,000 units. Multifamily housing starts and manufactured home shipments showed a more moderate decline, but these segments declined by 8.3 and 14.3 percent respectively. Regionally, the West showed the steepest decline in conventional starts during this timeframe at 38.9 percent. The Northeast showed the most resilience and declined by only 15.3 percent due to a higher percentage of multifamily in this market. The Midwest and South declined at a similar rate to the national total at 35.8 and 33.4 percent respectively. For 2009, starts are expected to continue to decline by nearly 42 percent as both single and multifamily starts decline significantly. The residential new construction market is forecast to improve in 2010.

New Housing by Type of Structure

Total New Housing Starts 2003 - 2012F (Thousands of Units)
Manufactured Housing Units 131 131 147 117 96 82 65 70 75 80 % 7% 6% 7% 6% 7% 8% 11% 9% 7% 7%

Year 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Total Shelter Units 1,979 2,087 2,215 1,918 1,451 988 575 770 1,005 1,150 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Total Conventional Units 1,848 1,956 2,068 1,801 1,355 906 510 700 930 1,070 % 93% 94% 93% 94% 93% 92% 89% 91% 93% 93%

Single Family Units 1,498 1,611 1,716 1,465 1,046 622 360 525 710 830 % 76% 77% 77% 76% 72% 63% 63% 68% 71% 72%

Multi-Family Units 350 345 353 336 309 284 150 175 220 240 % 18% 17% 16% 17% 21% 29% 26% 23% 22% 21%

Source: History: U.S. Bureau of the Census Forecast: Ducker Research Company, Inc.

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Review of New Residential Construction Activity

Total New Residential Housing Single and Multi-Family Starts 2003 Through 2012F (Thousands of Units)

Year
2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Total 1,848 1,956 2,068 1,801 1,355 906 510 700 930 1,070

Northeast 163 8.8% 175 9.0% 190 9.2% 167 9.3% 143 10.5% 121 13.4% 51 10.0% 67 9.6% 87 9.4% 102 9.5%

Midwest 374 20.2% 356 18.2% 357 17.3% 280 15.5% 210 15.5% 135 14.9% 77 15.0% 106 15.1% 140 15.1% 161 15.0%

South 839 45.4% 909 46.5% 996 48.2% 910 50.5% 681 50.3% 453 50.1% 255 50.0% 351 50.1% 467 50.2% 537 50.2%

West 472 25.6% 516 26.4% 525 25.4% 444 24.6% 321 23.7% 196 21.7% 128 25.0% 176 25.2% 235 25.3% 271 25.3%

2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Single Family

Multi-Family

Manufactured Housing

Source: History: U.S. Bureau of the Census Forecast: Ducker Research Company, Inc.

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Total Residential Improvement Expenditures

The Bureau of the Census ceased tracking and publishing data on the remodeling market in the fourth quarter of 2007. Ducker continues to estimate and track this market using data from the Harvard Joint Center for Housing Studies Leading Indicator of Remodeling Activity (LIRA) in additional to review of same store sales by large home improvement retailers. Based on these inputs the remodeling market is estimated to have declined by 12 percent to $124.5 billion in 2008. Declines in the overall sales of existing homes, double digit declines in home values, and much more stringent credit requirements for mortgages and home equity loans continue to adversely impact the remodeling market. 2009 residential improvement expenditures are expected to decline by an additional 14 percent, but the market should improve by 8 percent in 2010.

Year
2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Expenditures ($B) Growth Over Prior Year

112.7 121.7 133.4 143.4 141.4 124.5 107.0 115.6 129.5 139.8 4.9% 8.0% 9.6% 7.5% -1.4% -12.0% -14.0% 8.0% 12.0% 8.0%

Note: Included in the total are additions, alterations, and major replacements. Excluded are maintenance, repairs, and outside additions/alterations

Total Residential Improvement Expenditures

(Billions of Dollars) Excluding additions and alterations to properties outside of structures
$150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Billions

Year
Source: History: U.S. Bureau of the Census, Harvard Joint Center for Housing Studies (LIRA) Forecast: Ducker Research Company, Inc.

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Manufactured Housing Shipments

Manufactured Housing Shipments to Dealers by Geographic Region 2003 - 2012F (Thousands of Units)

Year
2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Total 131 131 147 117 96 82 65 70 75 80

Northeast 10 10 10 8 7 5 4 5 5 5

Midwest 25 20 17 13 10 8 7 8 8 9

South 70 73 90 71 61 56 41 44 47 51

West 25 27 30 25 17 13 12 13 14 15

Existing Home Sales

The National Association of Realtors publishes data on existing home sales, segmented at a national level into single family versus condominium, or co-op sales. Existing home sales declined for the third consecutive year to slightly under 5 million units. This represents a 13.1 percent decline from the 5.6 million homes sold in 2007. Condominiums and co-ops were harder hit and declined by over 21 percent. Inventory has declined, but remains at a very high historical level and a 10.5 month supply of homes exists in the marketplace. Distressed sales, such as foreclosures, are also accounting for a significant volume of existing home sales. Sales of existing homes are expected to gradually improve throughout 2009, but an overall decline of 2.5 percent is expected.
Existing Home Sales 2003 2012F (Thousands of Units)

Year
2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F

Single Family Condo/Co-Op Sales Sales 5,443 732 5,958 820 6,180 896 5,677 801 4,939 713 4,350 563 4,241 549 4,728 612 5,224 676 5,489 711

Total 6,175 6,778 7,076 6,478 5,652 4,913 4,790 5,340 5,900 6,200

Annual Percent Change Total 9.7% 9.8% 4.4% -8.5% -12.8% -13.1% -2.5% 11.5% 10.5% 5.1%

Source: History: National Association of Realtors Forecast: Ducker Research Company, Inc.

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Prime Windows
The residential window market is classified into four main categories based on the predominant frame and sash materials: wood (including clad wood), vinyl, aluminum and fiberglass. A fifth category, other windows describes all other plastic materials including ABS plastics, cellular vinyl, and PVC/wood composites. The drastically declining new construction market coupled with the drop in remodeling expenditures continues to take a significant toll on nearly all the segments and regions of the residential window market. In total, the residential window market declined by over 18 percent. New construction applications declined by 27.1 percent from 2007 to 2008, while remodeling and replacement applications dropped by 11.8 percent. The conventional window market does not include an additional 3.8 million units used in light commercial and manufactured housing applications, which brings the total residential-type prime windows to 52.2 million units. Within this other segment, the light-commercial market declined by 7 percent and units for manufactured housing declined by an additional 15 percent.

Total Shipments of Conventional Prime Windows by Year

2003 2012F (Millions of Units)

75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 2003 2004 Wood* 2005 2006 2007 2008 Vinyl 2009F 2010F 2011F 2012F Other Fiberglass

Aluminum

Source: Ducker Research Company, Inc.

*Includes vinyl clad and metal clad wood units.

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Prime Windows
Marginal share shift continued in the total market away from wood and aluminum to vinyl, but much of this is an impact of overall application mix between new construction and remodeling and replacement. Vinyl windows declined by nearly 17 percent in aggregate. Aluminum products showed the steepest rate of decline at 26.6 percent, while wood windows declined by an additional 21.4 percent. Fiberglass continues to grow despite the downturn, showing a 6.2 percent rate of growth as this product becomes more available to and accepted by consumers and builders. Other windows also showed some growth on the remodeling side and this category grew by 3.4 percent in aggregate. The growing volume of foreclosures impacting both the resale and new construction housing market has created some uncertainty regarding the impact of recently announced incentives for new home buyers and tax credits for energy efficient window replacement. Replacement windows may receive the most direct boost in the short term, however the long term and indirect effects of the program remain challenging to forecast due to the unprecedented macro economic environment. Preliminarily, the market is expected to continue to decline by an additional 23.9 percent in 2009, but show marked improvement from 2010 to 2012.

Shipments of Prime Windows

2003 2012F

(Millions of Units)
New C onstruction Wood Aluminum Vinyl Fiberglass* Other Sub Total Remodeling & Replacement Wood Aluminum Vinyl Fiberglass* Other Sub Total Total Construction Wood Aluminum Vinyl Fiberglass* Other Total 2003 9.9 5.1 13.8 0.6 0.2 29.5 2003 10.0 2.6 20.0 0.2 0.5 33.3 2003 19.9 7.7 33.8 0.8 0.6 62.8 2004 9.5 5.9 15.2 0.6 0.2 31.4 2004 10.3 2.4 22.2 0.3 0.5 35.7 2004 19.7 8.3 37.4 0.9 0.7 67.1 2005 9.2 6.5 17.4 0.8 0.2 34.1 2005 10.0 2.4 23.2 0.4 0.5 36.4 2005 19.2 8.8 40.6 1.1 0.8 70.5 2006 8.3 6.1 16.8 0.8 0.2 32.3 2006 9.0 2.2 22.4 0.4 0.5 34.5 2006 17.3 8.3 39.2 1.21 0.8 66.7 2007 6.2 4.4 13.2 0.8 0.2 24.9 2007 8.9 1.9 22.5 0.5 0.5 34.3 2007 15.1 6.4 35.7 1.28 0.7 59.1 2008 4.3 3.1 9.7 0.8 0.2 18.1 2008 7.6 1.6 20.0 0.5 0.6 30.2 2008 11.9 4.7 29.7 1.36 0.8 48.4 2009F 2.5 1.7 5.6 0.6 0.1 10.5 2009F 6.5 1.3 17.4 0.6 0.6 26.3 2009F 8.9 3.0 23.0 1.2 0.7 36.8 2010F 3.4 2.0 8.0 0.9 0.2 14.5 2010F 6.9 1.3 19.0 0.7 0.6 28.6 2010F 10.3 3.3 27.1 1.6 0.8 43.1 2011F 4.6 2.3 11.0 1.2 0.2 19.3 2011F 7.8 1.4 21.8 0.8 0.7 32.5 2011F 12.4 3.6 32.8 2.0 0.9 51.8 2012F 5.3 2.4 12.8 1.5 0.3 22.3 2012F 8.4 1.4 23.5 1.0 0.7 35.0 2012F 13.6 3.8 36.4 2.5 1.0 57.3

* Due to rounding, totals may not equal the sums of individual values.

Source: Ducker Research

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Storm Doors
Shipments of storm doors decreased to approximately 4.4 million units, which was an 18.5 percent decline over 2007. Significant decreases in new construction and remodeling activity influenced the decline. A 25.5 percent decline in the market is expected for 2009. Conditions are expected to improve in 2010 through 2012, but increasing energy efficiency of entry doors and continued trends toward decorative entry doorlites may temper overall growth.

Storm Door Shipments

2003 - 2012F (Millions of Units)
Doors Aluminum Other* Wood Total 2003 4.4 1.7 0.1 6.2 2004 4.4 1.8 0.1 6.3 2005 4.4 1.7 0.1 6.2 2006 4.3 1.5 0.1 5.9 2007 3.9 1.4 0.1 5.4 2008 3.2 1.1 0.1 4.4 2009F 2.3 0.9 0.1 3.3 2010F 2.7 1.2 0.1 4.0 2011F 3.2 1.5 0.1 4.8 2012F 3.4 1.8 0.1 5.3

*Other defined as vinyl or metal cladding over wood, wood composite or foam core.

Residential Type Unit Skylights

Residential skylights saw a decline of over 22 percent from 2007 to 2008. The higher than expected decline was driven by sharp slowdowns in new construction and remodeling activity. As builders looked for ways to cut costs, discretionary products like skylights saw a more significant drop than entry doors and windows. For 2009, the market is expected to continue to decline by roughly 28.6 percent. As the market rebounds in 2010, shipments are expected to increase by over 21 percent over 2009 levels and the market should regain strong growth through 2012.

Residential-Type Skylight Unit Shipments

2003 - 2012F (Thousands of Skylights)

Application New R&R Total

2003 813 917 1,730

2004 799 910 1,709

2005 798 832 1,630

2006 670 815 1,485

2007 555 707 1,262

2008 400 580 980

2009F 220 480 700

2010F 310 540 850

2011F 430 630 1,060

2012F 500 700 1,200

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Residential Patio Doors

Patio door shipments continue to correlate closely with the overall broader window market. The 2008 total patio door market declined by 18.1 percent from 2008 levels. The new construction market bore the brunt of the largest decline of 26.4 percent, while the remodeling and replacement market declined by 11.4 percent. During this time period vinyl products declined by 15 percent, while wood and aluminum doors declined by 21.3 and 25.8 percent respectively. These products are traditionally manufactured by window manufacturers, while steel and fiberglass products are made by traditional door manufacturers. The steel market declined by nearly 17 percent, while fiberglass products dropped by 10 percent. The 2009 market is expected to remain weak for both new construction and remodeling and replacement resulting in a 24.4 percent aggregate decline. This decline will likely impact all material types. Conditions are expected to improve in 2010, resulting in a forecasted 18 percent growth over 2009 levels. Shipments for 2010 are expected to remain significantly below recent historic levels of patio door shipments, but mark the beginning of a steady growth trend lasting though at least 2012.

Shipments of Patio Doors

2003 - 2012F (Thousands of Units)
New Construction Wood Aluminum Vinyl Steel Fiberglass Other Sub Total Remodeling & Replacement Wood Aluminum Vinyl Steel Fiberglass Other Sub Total Total Construction Wood Aluminum Vinyl Steel Fiberglass Other Total 2003 842 431 677 267 65 18 2,300 2003 593 284 974 483 85 22 2,440 2003 1,435 715 1,650 750 150 40 4,740 2004 893 426 802 260 90 20 2,490 2004 607 274 1,058 470 110 30 2,550 2004 1,500 700 1,860 730 200 50 5,040 2005 915 466 875 244 92 23 2,615 2005 615 284 1,095 456 118 32 2,600 2005 1,530 750 1,970 700 210 55 5,215 2006 810 380 860 220 93 22 2,385 2006 587 235 1,130 439 128 33 2,550 2006 1,397 615 1,990 658 221 55 4,935 2007 670 290 695 180 82 18 1,935 2007 575 215 1,091 379 118 32 2,410 2007 1,245 505 1,785 560 200 50 4,345 2008 480 200 530 130 70 15 1,425 2008 500 175 985 335 110 30 2,135 2008 980 375 1,515 465 180 45 3,560 2009F 275 110 310 80 50 10 835 2009F 430 140 870 290 100 26 1,855 2009F 704 250 1,180 371 150 36 2,690 2010F 390 125 445 110 68 12 1,150 2010F 465 145 960 315 107 28 2,020 2010F 855 270 1,405 425 175 40 3,170 2011F 530 135 615 140 85 15 1,520 2011F 530 150 1,100 355 120 30 2,285 2011F 1,060 285 1,715 495 205 45 3,805 2012F 605 145 720 160 105 20 1,755 2012F 575 155 1,200 380 133 32 2,475 2012F 1,180 300 1,920 540 238 52 4,230

Source: Ducker Research Company, Inc. Wood segment includes vinyl clad wood and metal clad wood units. Due to rounding, totals may not equal the sums of individual values

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL

Residential Entry/Interior Doors

Steel continues to be the most widely used exterior door material; however, its share of market has fallen to 60 percent of entry doors in 2008. Fiberglass share continues to grow and is anticipated to continue to do so, though at a somewhat slower pace. Wood doors have found a niche in high-end construction which has slowed its loss of market share to fiberglass.

Entry Doors
Residential Entry Doors 2008 Wood 12% Residential Entry Doors 2012 Forecast Wood 12%

Fiberglass
28%

Steel 60%

Fiberglass 30%

Steel 58%

Volume = 10.4 Million Units

Volume = 11.0 Million Units

Little change in the segments for interior door material types is expected over the next five years. Residential interior door volumes include both passage and closet doors.

Interior Doors
Residential Interior Doors 2008 Other 3% Residential Interior Doors 2012 Forecast Other 3%

97%

Wood

97%

Wood

Volume = 44.6 Million Units

Volume = 53.6 Million Units

2008/2009 U.S. National Statistical Review and Forecast

NONRESIDENTIAL

Steel is anticipated to remain the primary material used for entry doors in the nonresidential market, followed by aluminum, including aluminum framed storefront doors, which represent slightly more than one-third of the overall market.

Entry Doors
Nonresidential Entry Doors 2008 Other 3% Wood 6% Nonresidential Entry Doors 2012 Forecast Other 7% 3%

Wood

Steel 52%
39% Aluminum

36% Aluminum

Steel 54%

Volume = 3.3 Million Units

Volume = 2.9 Million Units

Nonresidential construction has slowed somewhat in 2008, tempering demand in the nonresidential entry and interior door categories. In 2008, wood sales were flat overall versus 2007, whereas steel volumes declined somewhat, thus increasing woods share of the 2008 market. It is important to note that interior passage doors are defined as all door applications within a building or structure, excluding closet/bifold, service, and other special purpose doors. Nonresidential interior doors include both interior passage and closet doors.

Interior Doors
Nonresidential Interior Doors 2008 Other 2% Aluminum 25% Wood
43%

Nonresidential Interior Doors 2012 Forecast Other 3% Aluminum 25% Wood 42%

Steel 30% Volume = 8.7 Million Units 10

Steel 30% Volume = 7.9 Million Units

2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL/NONRESIDENTIAL

Door Shipments and Forecast

Weak residential new construction starts in 2008 had a major impact on the residential entry door market and are expected to continue to have a significant impact in 2009. The residential replacement and remodeling market also experienced a decline in 2008, though to a lesser extent than new construction. Unit volume decreased by 18.1 percent to 10.4 million entry door units in 2008. Residential interior and passage doors also showed a decline of 20.9 percent over the past year. Entry and interior doors are expected to decline by approximately 16 and 22 percent respectively in 2009. Nonresidential door volumes have begun to experience a slight decline, decreasing by approximately one percent over 2007 for interior doors. A weakening of nonresidential activity is expected to slow door demand through 2011.

Shipments of Doors by Material and Application

2003 2012F (Millions of Units)
Reside ntial Entry* Steel Wood Fiberglass Subtotal Reside ntial Interior** Wood Other Subtotal Nonresidential Entry Steel Aluminum Wood Other Subtotal Nonresidential Interior** Steel Aluminum Wood Other Subtotal 2003 9.9 2.0 1.9 13.8 2003 57.9 2.6 60.5 2003 1.7 1.1 0.2 0.1 3.1 2003 2.2 1.9 2.9 0.6 7.6 2004 10.0 2.0 2.5 14.5 2004 61.7 2.6 64.3 2004 1.8 1.2 0.2 0.1 3.2 2004 2.3 1.7 3.2 0.6 7.8 2005 10.0 1.7 3.5 15.2 2005 65.5 2.0 67.5 2005 1.7 1.3 0.2 0.1 3.3 2005 2.5 2.2 3.3 0.2 8.2 2006 9.4 1.6 3.7 14.7 2006 63.0 1.9 64.9 2006 1.8 1.3 0.2 0.1 3.4 2006 2.7 2.2 3.4 0.2 8.5 2007 7.9 1.4 3.4 12.7 2007 54.7 1.7 56.4 2007 1.8 1.3 0.2 0.1 3.4 2007 2.7 2.2 3.7 0.2 8.8 2008 6.3 1.2 2.9 10.4 2008 43.4 1.2 44.6 2008 1.7 1.3 0.2 0.1 3.3 2008 2.6 2.2 3.7 0.2 8.7 2009F 5.1 1.1 2.4 8.6 2009F 32.8 1.0 33.8 2009F 1.6 1.1 0.2 0.1 3.0 2009F 2.4 2.0 3.3 0.2 7.9 2010F 5.6 1.2 2.7 9.5 2010F 39.2 1.2 40.4 2010F 1.5 1.0 0.2 0.1 2.8 2010F 2.2 1.9 3.2 0.2 7.5 2011F 6.1 1.3 3.0 10.4 2011F 46.7 1.4 48.1 2011F 1.5 1.0 0.2 0.1 2.8 2011F 2.3 1.9 3.2 0.2 7.6 2012F 6.4 1.3 3.3 11.0 2012F 52.0 1.6 53.6 2012F 1.6 1.0 0.2 0.1 2.9 2012F 2.4 2.0 3.3 0.2 7.9

Source: Ducker Research Company, Inc *Excludes patio-designated units. **Interior door volume includes both passage and closet/bifold. Volume is counted by individual leaf, thus a single bifold door includes 2 units while a double bifold includes 4 units

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2008/2009 U.S. National Statistical Review and Forecast

RESIDENTIAL/NONRESIDENTIAL

Insulating Glass Usage

The use of sealed insulating glass is a standard offering in residential and nonresidential window units with the exception of parts of southern Florida and other regions in the Southwestern U.S. No significant changes in the overall market penetration were seen in either the residential or the nonresidential market over the past year, but share shift continues in the types of spacer products used. Additionally, continued penetration of insulating glass is not expected going forward, but edge seal technologies continue to change to meet higher energy efficiency standards. The use of triple glazing is also expected to continue to grow. Within the residential market, non-rigid warm edge spacers continue to gain share against aluminum, as well as rigid warm edge products. The nonresidential market continues to use primarily aluminum spacers, but the use of warm edge products within this market is growing.

Insulating Glass Historical Penetration

2003 Residential Nonresidential 93% 88% 2004 94% 88% 2005 94% 88% 2006 94% 88% 2007 95% 89%

Insulating Glass Forecast Penetration

2008 Residential Nonresidential 95% 89% 2009F 95% 89% 2010F 95% 89% 2011F 95% 89% 2012F 95% 89%

Residential Insulating Glass Penetration (Percent of Total Market)

Nonresidential Insulating Glass Penetration (Percent of Total Market)

100%

100%

75%

75%

50%

50%

25%

25%

0% 1998 Insulating 2003 2008 Other

12

0% 1998 2003 2008 Other Insulating

2008/2009 U.S. National Statistical Review and Forecast

NONRESIDENTIAL

Nonresidential Construction
Contract awards reflect activity related to new construction and major additions to existing structures. Actual fenestration demand (shipments) for nonresidential building activity typically lags contract awards by up to one year or more. This cycle can shorten or lengthen tremendously depending on the complexity, size of a building, and also when the specific building product is installed during the construction cycle. The 2007 contract award total of 1,424 million square feet was up marginally from 2006 totals due primarily to strength in the manufacturing and warehouse category. This represented slight growth of 0.5 percent over the 2006 total contract awards. In contrast, 2008 contract awards declined significantly by 13.5 percent and this is expected to adversely impact the 2009 nonresidential window market. The Office/Hotel/Institutional category dropped by 4.0 percent in 2008 after a decline of 1.1 percent the prior year. Manufacturing and warehouse contract awards increased by 17.9 percent from 2007 to 2008 after a sharp uptick in growth of 12.2 percent in the previous year. The store and mercantile segment will be the hardest hit, declining by 26.2 percent from 2007 to 2008 after a decline of 3.4 percent from 2006 to 2007. Contract awards are expected to continue this decline in 2009, dropping by an additional 11.3 percent before beginning a gradual uptrend from 2010 through 2012.

Nonresidential Contract Awards

2006 2012F (Millions of Square Feet Floor Area)

1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 2006 2007 2008E 2009F 2010F 2011F 2012F Manufacturing/Warehouse Office/Hotel/Institutional Store/Mercantile

Note: These categories have been established by structural types that reflect the largest floor to vision area ratios according to the July, 1998 AAMA/WDMA Study of the U.S. Market for Windows and Doors prepared by Ducker Research.

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2008/2009 U.S. National Statistical Review and Forecast

NONRESIDENTIAL

2008 Nonresidential Contract Awards

(Based on Millions of Square Feet Floor Area)

Northeast 12.3% South

47.5%

19.2%

Midwest

21.0%

West

2012F Nonresidential Contract Awards

(Based on Millions of Square Feet Floor Area)

Northeast
11.7%

19.3%

South
45.9%

Midwest

23.1%

West

Source: History: U.S. Bureau of the Census Forecast: Ducker Research Company, Inc.

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2008/2009 U.S. National Statistical Review and Forecast

NONRESIDENTIAL

Regional Nonresidential Construction

History and Forecast of Nonresidential Contract Awards By Selected Building Types and Region 2006 2012 Forecast (Millions of Square Feet Floor Area)

Manufacturing/Warehouse 2006 2007 2008E 2009F 2010F 2011F 2012F Office/Hotel/Institutional 2006 2007 2008E 2009F 2010F 2011F 2012F Store/Mercantile 2006 2007 2008E 2009F 2010F 2011F 2012F Total Nonresidential 2006 2007 2008E 2009F 2010F 2011F 2012F

Northeast Midwest 28 58 36 68 24 57 25 47 27 55 31 58 31 59 Northeast Midwest 89 142 73 140 89 125 74 115 70 113 75 120 80 128 Northeast Midwest 50 87 46 83 40 54 34 51 39 58 44 68 47 74 Northeast Midwest 167 155 152 133 136 150 158 287 291 236 213 226 246 261

South 113 125 112 92 96 109 113 South 311 327 329 296 296 320 338 South 185 183 144 122 131 155 169 South 609 635 585 509 523 584 621

West 64 66 49 44 53 59 61 West 169 162 132 124 129 140 153 West 120 114 77 69 76 88 98 West 353 343 259 237 259 287 312

Total U.S. 263 295 242 208 231 257 264 Total U.S. 711 703 675 609 608 656 700 Total U.S. 442 427 315 276 304 354 389 Total U.S. 1,416 1,424 1,232 1,093 1,143 1,267 1,352

* Due to rounding, totals may not equal the sums of individual values

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2008/2009 U.S. National Statistical Review and Forecast

NONRESIDENTIAL

Window Usage in Nonresidential Construction

The nonresidential glazing continued growing in 2008, largely due to the continued growth of the curtainwall category. The overall market reached 542 million square feet, representing a growth of 1.2 percent over the 2007 total market of 536 million square feet. Curtainwall products grew by 18 percent, while storefront and other site fabricated products declined by 4.4 and 4.2 percent respectively. Shop fabricated windows grew by 2 percent during this time period. Looking forward, the market is forecast to decline by more than previously expected due to the sharp drop in nonresidential contract awards. The overall market is projected to decline by 15 percent in 2009 over 2008 levels. An additional decline of 12.7 percent is also projected for 2010. Due to weakness in office and particularly retail construction, storefront and site fabricated products are forecast to decline by 18.3 and 18.0 percent in 2009. Curtainwall is also set to decline by 16.5 percent after several consecutive years of double digit growth. Shop fabricated, or true architectural, windows are projected to decline by the smallest margin of 5 percent as institutional categories, such as schools and public buildings, are expected to remain the most resilient during the downturn. Growth is expected to resume in 2011 and is forecast to increase by 4.9 percent over 2010 levels. The market is forecast to show a more significant rebound in 2012, which is forecast to grow by 11.2 percent when compared to 2011.

Window Usage in Nonresidential Construction

New Construction and Major Additions* (Millions of Square Feet Vision Area)
80

Replacement (Millions of Square Feet Vision Area)

120 100

70 60 50 40

80 60

30

40
20

20

10 0

0 2006 2007 2008 2009F 2010F 2011F 2012F Site Fab Windows Shop Fab Windows Curtain-wall Store Front

2006

2007

2008 2009F 2010F 2011F 2012F Site Fab Windows Shop Fab Windows Curtain-wall Store Front

*New construction and major additions also includes remodeling

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2008/2009 U.S. National Statistical Review and Forecast

NONRESIDENTIAL

Window Usage in Nonresidential Buildings

2006-2012 Forecast (Vision Area, Millions of Square Feet)
New Construction and Major Additions* Region/ Year Northeast 2006 2007 2008 2009F 2010F 2011F 2012F Midwest 2006 2007 2008 2009F 2010F 2011F 2012F South 2006 2007 2008 2009F 2010F 2011F 2012F West 2006 2007 2008 2009F 2010F 2011F 2012F Total 2006 2007 2008 2009F 2010F 2011F 2012F Replacement Total

Site Fab Shop Fab Curtain- Store Site Fab Shop Fab Curtain- Store Site Fab Shop Fab Curtain- Store Windows Windows w all Front Total Windows Windows wall Front Total Windows Windows wall Front Total 21 21 19 18 15 16 18 21 21 20 15 14 15 16 44 45 45 39 33 35 39 29 32 30 21 19 21 24 115 119 114 94 81 86 97 12 12 12 13 12 11 12 11 11 12 10 10 10 10 10 11 12 12 11 11 12 5 5 5 4 4 4 5 37 40 41 39 37 36 38 15 17 19 18 15 15 18 14 15 18 14 12 13 15 27 31 38 34 28 29 34 19 23 27 19 17 19 21 75 86 102 85 71 76 87 20 20 18 16 14 14 16 22 21 20 15 13 15 16 46 46 46 40 34 36 40 27 29 27 19 17 19 21 114 116 111 91 78 84 94 68 71 68 64 55 57 63 67 68 70 55 48 52 57 127 133 141 125 106 110 124 79 90 89 64 57 63 71 341 361 367 308 266 282 316 7 7 6 6 5 5 6 7 7 7 5 4 5 5 14 14 15 13 11 11 13 9 10 10 7 6 7 8 37 38 37 30 26 28 31 21 22 21 22 20 20 21 19 20 20 17 17 17 17 19 20 21 21 20 19 20 8 9 9 8 7 8 8 66 71 72 68 64 62 67 2 3 3 3 2 3 3 2 3 3 2 2 2 2 4 5 6 5 4 5 5 3 4 4 3 3 3 3 12 15 17 14 12 12 14 9 9 8 7 6 6 7 9 9 9 7 6 6 7 20 20 20 18 15 16 18 11 13 12 9 8 8 10 49 51 49 40 35 37 41 39 40 38 38 34 34 37 37 38 38 31 29 30 32 56 60 63 57 50 50 56 32 36 36 26 24 26 29 164 174 175 152 136 140 154 28 28 25 24 20 21 23 28 28 27 20 18 19 21 58 59 60 52 44 46 52 38 42 39 28 25 28 31 153 158 151 124 106 114 128 32 34 33 35 32 31 33 29 31 32 27 26 26 28 29 31 34 33 31 30 32 13 15 15 12 12 12 13 103 111 113 107 101 98 105 18 20 22 21 17 18 20 16 18 21 16 14 15 17 31 36 44 39 32 34 39 22 27 31 23 19 22 25 86 100 118 99 82 89 101 29 29 25 23 20 21 23 31 30 29 22 19 21 23 65 66 66 57 49 51 58 38 42 39 28 25 28 31 163 167 160 131 113 121 135 107 111 106 102 89 90 100 104 107 108 86 77 82 89 183 193 204 182 155 161 181 111 126 125 91 81 89 100 505 536 542 461 402 422 469

* Remodeling activity within nonresidential windows is nearly always represented as a major addition to an existing structure ** Due to rounding, totals may not equal the sums of individual values

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2008/2009 U.S. National Statistical Review and Forecast

Geographic Division of the United States

In various sections of the U.S. National Statistical Review and Forecast, reference is made to U.S. Census Regions. These regions are illustrated on the map below.

Northeast West Midwest

South

Copyright 2009 Co-published by:

American Architectural Manufacturers Association (AAMA) 1827 Walden Office Square, Suite 550 Schaumburg, Illinois 60173 Tel: (847) 303-5664/Fax: (847) 303-5774 www.aamanet.org

Window & Door Manufacturers Association (WDMA) 401North Michigan Avenue Chicago,, Illinois 60611 Tel: (312) 321-6802 www.wdma.com

Researched and edited in March 2009 by: Ducker Worldwide, LLC 1250 Maplelawn Dr. Troy, MI 48084 (248) 644-0086 www.ducker.com

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