Low interest rates are boosting home improvement suppliers like Atlanta Aluminum
With the coming of spring, the thoughts of the young turn to love. But in aging societies like Quebec, people's attention is just as likely to turn to lawn care and home improvement. And that doesn't bother Frank Palmitano one bit.
Palmitano is co-owner of Atlanta Aluminum, a St-Leonard based company that manufactures aluminum and PVC windows and doors. And when the snow starts melting, his phone starts ringing.
"People spend a lot of time in their houses. So if they make them a little nicer, the investment is worth it," Palmitano said. "In any case, when you put in new windows or doors, you (often) get your money back when you sell the house."
Home improvement and renovation businesses like Atlanta Aluminum have been on a tear in recent years, as aging boomers, cocooning in their houses, are laying out more cash to make them comfortable and attractive.
That trend has been accelerated by low interest rates, which make material purchases cheaper and while boosting resale house prices. That can make upgrading a home more attractive than trading up, and almost guarantees that the costs will be recuperated when the house is sold.
It hasn't always been this easy for Palmitano, who has been with Atlanta Aluminum for most of his working life. His father Frank Palmitano senior, started the company in 1978, building the business gradually by catering to Montreal's Italian and ethnic communities.
But by the late 1990's the older Palmitano's health was deteriorating, and sales were languishing due to Quebec's grim post referendum environment. Palmitano senior decided to give half the company to his son, and to sell the other half to Spezio.
The partnership between seems to be working well. Since Palmitano and Spezio took over Atlanta in 1999, the company's revenues have more than doubled to about $6 million, and the pair expect another big jump this year.
The partners began to change their business model almost immediately after taking over. One of the first steps they took was to start selling more of their products directly to the public, bypassing the dealer network.
"When your dealing with a distributor, all he cares about is price," Palmitano said. "But there's always someone cheaper. That's no way to build your business."
"My dad taught me that even if you sell a half million dollars less a year, you're still better off than if you are working for no money," Palmitano said. "I'd rather shut the plant for a couple of months during the slow season, than take jobs at a loss and risk the company's future."
According to Palmitano, one of Atlanta Aluminum's key selling points is service.
"Price is important, Palmitano said. "But what's the point in saving a few dollars buying a window or door, if the installer doesn't seal the edges properly, or doesn't put in the enough insulation? In that case you may as well keep your old windows."
According to Palmitano, Atlanta's policy of paying its installers by the hour instead of by the piece, helps ensure that the job is done right.
"If my installer is paid by the hour, he can take the time he needs to handle any problems or questions that might come up," Palmitano said. "When an installer is paid by the job there is too much incentive to rush the job or to cut corners."
Another big move that Palmitano and Spezio made was to increase their efforts in selling to builders, just as the industry was heading into a growth spurt. According to one of Atlanta's long time contractor clients, the company's renewed focus on the new construction market came at the right time.
"Building activity has increased tremendously over the last few years," said Sam Scalia, president of Samcom, a company that builds between 200 and 250 condominium units a year. "They always bid on our jobs, and we give them work (regularly)."
Scalia agreed that service was a key Atlanta selling point. "They make a quality product, particularly their aluminum and casement windows," Scalia said. "But more important they back it up. If there is a problem they take care of it right away.
But despite Altanta's success, the partners aren't finished yet. The two are once again studying their distribution system, and are floating the idea of opening franchises to handle off island markets such as the South Shore and Laval, keeping the Montreal market themselves.
Another key priority is moving out of their Pascal Gagnon street plant. The building is located in an industrial part of St-Leonard, far out of view of the general public.
That was fine when Atlanta was marketing its product mostly through distributors, but with the company selling directly to the public, Palmitano would prefer a more high traffic area, that would increase the company's visibility and generate more walk-in business.
Photo caption: According to Frank Palmitano, shown here with his partner Joe Spezio, low interest rates are giving a big boost to home improvement products manufacturers such as Atlanta Aluminum
Sidebar: Getting ahead
o Frank Palmitano has been in the aluminum window and door
industry for most of his working life. In 1999, along with his
partner Joseph Spezio he took over Atlanta Aluminum from his
father, whose health was declining.
|© 2002 Peter Diekmeyer Communications Inc.|