Cost increases, supply disruption put garage door industry in a jam

The increase came in early March – a 22% bump in the price of garage doors, effective the first of April.

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The amount was bad enough. What made it worse was it wasn’t the only one in the past 14 months. Ryan Lucia of Aaron Overhead Doors in Buford and Milton, Ga., said that since January of 2021 he saw monthly price increases, some of them 23% or 24%. The series of increases led to the price of garage doors doubling; in years prior, increases had averaged 2%-3%.

“I’m friends with roofers, HVAC, electrical folks,” Lucia said in a recent interview with ServiceTitan. “They have issues and price increase issues, but nothing like the garage door industry. I have a hard time understanding how they’re justifying the price increases to 100% over the year because nothing else went up that high.”

That cost exacerbates the supply-side challenges for all the trades, more specifically in the home-building industry. The situation is so dire that in November 2021 the city of Sacramento enacted a temporary rule that allowed builders to sell homes with boards serving as temporary garage doors. The idea: Don’t make new homeowners wait to get into their property because of a component that eventually will arrive.

“I bought doors that sat on my shelf that were increasing in value faster than bitcoin,” Lucia said. “I don’t think I’ve ever heard of that in the materials business.”

Lucia is deeply involved in materials. In addition to his garage door installation and repair shop for commercial and residential applications, he also founded the digital marketing agency Such n Such Media and hosts the Torsion Talk Podcast and the YouTube series Committed to Culture.

He’s experienced a lot, but nothing like the increase in price on garage doors, and delays in getting the product. Doors that used to take eight weeks now take 16 to 20 weeks, depending on the type of door. Delays cause a ripple effect of rescheduling work, especially with home builders also dealing with a shortage of skilled workers. The research firm Zonda found in November of 2021 that 90% of home builders surveyed were experiencing supply disruptions, up from 75% in January.

Jerry Konter, Chairman of the National Association of Homebuilders (NAHB) said in a February 2022 statement that disruptions in production lead to many builders waiting months to receive garage doors, cabinets, countertops and appliances

“These delivery delays are raising construction costs and pricing prospective buyers out of the market,” Konter said. “Policymakers must make it a priority to address supply chain issues that are harming housing affordability.”

The New York Times reported that one North American builder said it takes 20 weeks to get a garage door, or as long as it used to take to build a house. Rick Palacios Jr., the director of research at John Burns Real Estate Consulting, told the Times that garage door issues “are the worst right now.” 

In some ways these supply issues should not be surprising. A ServiceTitan survey in September 2021 showed that garage doors were among the hardest hit by the supply chain crisis. One possible reason: Garage doors require a lot of moving parts and components—from springs to tracks to rollers. John Burns Real Estate Consulting said garage doors have a more complex supply chain than windows, HVAC and plumbing fixtures.

“Essentially anything that came from China or was built with American steel was super difficult to get,” Lucia said.

The importance of garage doors has grown, especially since the pandemic. For some, the garage door is the front door, the main entry point to the home. Different styles add to the curb appeal, and the security measures ensure the home is safe. In short, garage doors matter.

But when costs increase they are passed on to customers, which contributes to the inflationary spiral. If businesses don’t raise prices when their costs go up, they won’t be in business for long. But extra costs don’t please consumers, especially with the median sales price of a new home in January of 2022 at $423,300, according to the St. Louis Federal Reserve. Compare that to January of 2020, before the COVID-19 pandemic throttled the country. At that time the median sales price was $328,900. In two years, the median cost to consumers has jumped 28.7%.

For those like Lucia who maintain and install garage doors, increased prices do not mean increased profits.

“We have so much money tied up in inventory that we can’t use for marketing and growth and hiring,” he said. “We have $250,000 in doors waiting to go in because we just now got the OK on the sites. One door that’s essentially a $20,000 door we’ve had for almost a month. The site is just not ready for us.

“At other sites, homeowners can’t get occupancy because we can’t get the doors in time.”

There is some thinking that the garage door industry needed to retool itself. The use of technology in the sector is not commensurate with the times, which leads to systems and processes being dated. 

Some in the industry also feel that before the pandemic garage doors were underpriced, that the cost did not match the value consumers were receiving. Almost nobody, though, envisioned this massive correction.

Lucia even paints a near-nightmare scenario when it comes to parts for repairs.

“For a while we couldn’t get springs, then it was drums,” he said. “We can’t get in touch with people we used to buy rollers from. Instead of buying in bulk and getting bulk pricing and discounted shipping, we’re now buying a palate and paying basically retail for those springs—plus we pay proportionally way out of whack for shipping.

“All that means springs cost four-to-five-times what I was paying a year and a half ago.”

What solutions exist? Lucia had a couple of suggestions, starting with keeping extra product in stock— if the business has the space and the money.

“If you were willing to pay stupid money to get the material, you could get it,” he said. “That’s essentially what I did. I made sure we had what we needed to take care of customers.”

Lucia said he has adjusted his processes, even with small jobs. In the past, he did not have to do much project management. The door would be ordered, it would arrive and Aaron Overhead would install it. 

“We now have to hire additional people, and build systems and processes around the door taking three months to arrive,” he said. “It’s gone from two weeks to three months, and it’s definitely cost us more even though we’ve increased our prices with every increase.”

He also has started using a software called Monday (Monday.com) that automatically contacts customers to notify them of the status of an order and when the material is coming. The regular text updates seem to help minimize customer anxiety.

“That’s played a huge role,” he said. “Customers who were willing to wait really appreciated constant communication where they didn’t have to reach out to us to get updates.”

Lucia hopes builders won’t balk at price increases. He said a smaller business has no choice but to pass on the increased costs and hope builders will be sensitive to the situation.

His most important suggestion?

“Honestly, overstock,” Lucia said. “I don’t see the price of anything going down. Whoever has the material wins.”