Rich Walker, president and CEO of the American Architectural Manufacturers Association talks about The American Recovery and Reinvestment Act and prospects for economic recovery.
RC: Is AAMA satisfied with the amount of tax credits allowable under the new legislation ($1,500 with no subcap for windows), or were you hoping for or expecting something different?
Rich Walker: Fifteen hundred dollars is certainly an improvement over the paltry $500 tax credit offered in the last bill. Our industry was hoping for something closer to $2,000.
RC: What would you ideally like to see: an annual tax credit for energy-saving improvements in the home? Something else?
RW: An annual tax credit is an excellent incentive. Rather than proposing alternative incentives, it would be more effective to extend the tax credit to a longer period, such as three to five years. A longer time frame would allow manufacturers and homeowners to better understand and plan for the value of the tax credit.
RC: Did changing the qualification for tax credits from Energy Star to .30/.30 for U-factor and solar heat gain coefficient surprise you? Was AAMA expecting that?
RW: We just assumed that the legislators or the drafters of the bill would check with Energy Star first before they put values or goals in.
RC: In your view, do the new criteria for determining eligibility take regional considerations sufficiently into account?
RW: Different climates require different performance parameters to be considered energy efficient. Windows, doors, and skylights intended for installation in a cooling-dominated climate are not as effective ? and in some cases can use more energy ? in a heating-dominated climate. Fenestration products are sensitive to both the transmission of hot and cool air and the absorption and reflection of sunlight energy. They are nothing like other Energy Star products, such as hot water heaters, that perform the same, regardless of climate.
RC: Why are the new .30/.30 criteria less satisfactory to your members than Energy Star?
RW: Prior to the American Recovery and Reinvestment Act, Energy Star ratings served as the basis for tax credit qualification. The Department of Energy process for establishing Energy Star values has been open and interactive and strives to involve all stakeholders.
The DOE process is also built upon extensive trend and opportunity analyses, which provide both scientific and market justifications for proposed changes in product-qualification values. AAMA will continue to work together with the DOE to exchange information and establish reaching realistic energy-efficiency targets, as opposed to imposing arbitrary values inappropriate for different regions of the country.
The industry says: Bring back Energy Star.
RC: Is AAMA continuing to try to change the qualification standard for tax credits back to Energy Star? How likely is that to happen?
RW: We are still trying. Actually, the heavy lifting is really spearheaded by some of our larger member companies who have lobbyists working on it. Thus far we have met with little or no success. The prospects of changing it right now are fairly bleak. But it is still being worked on.
RC: The tax credits and stimulus bill are expected to increase sales of remodeling by $6 billion in 2009 and 2010. Do you see windows having a significant share of that?
RW: The answer is twofold. We are already seeing a positive effect on window sales. For instance, several of our larger members are calling back workers, based on demand. On the other hand, windows could probably be a much larger piece of the $6 billion if the values for tax credits fell in line with Energy Star.
RC: Do you see companies re-opening plants and re-hiring laid-off workers because of an economic turnaround, or simply because the selling season is here?
RW: I would say it's a combination of the two. Usually the selling season precedes this time of year by a month or two. So I think you could really attribute it both to the stimulus and to some heightened demand due to seasonality.
RC: Will we see a general economic uptick, including an increase in window sales, in 2009?
RW: I have gone from being pessimistic earlier this year to guardedly optimistic right now. I think we will see a gradual recovery.
RC: This year?
RW: Probably a better chance to see it in the second half of this year, toward the fourth quarter.