Pella Corporation

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Pella Corporation

102 Main Street
Pella, Iowa 50129
U.S.A.
(515) 628-1000
Fax: (515) 628-6070

Private Company
Incorporated: 1925 as Rolscreen
Employees: 2,000
Sales: $400 million
SICs: 2431 Millwork

Pella Corporation was the second largest manufacturer of wood windows and doors in the United States in 1995. Based in Pella, Iowa, the company operated three manufacturing plants in its home state. It sold its premium building products primarily through a chain of about 80 independent distributors throughout North America, but was expanding into national retail outlets. Pella changed its name from Rolscreen in 1992.

Rolscreen was founded by P.H. “Pete” Kuyper and his wife Lucille. They purchased a small company in 1925 that, one year earlier, had started manufacturing unique roll-up windows. In 1926 they moved the company to Pella, their home town, and set up shop. The original operation consisted of a three-person work force headed by Kuyper. The company was soon forced to expand as a result of surging demand for its “Rolscreen” window screens. Kuyper’s manufacturing operations more than doubled by the end of the 1920s.

Despite economic hardship during the Depression era, Rolscreen continued to grow. In 1934, in fact, Kuyper introduced his second product; high-quality Venetian blinds. Three years later he started selling his patented deluxe casement window, a steel-framed casement with a wood interior, divided win-dowpanes, exterior wash feature, and removable insulating glass. As demand for all of Rolscreen’s premium products swelled, the company expanded nationwide. By the mid-1930s Rolscreen had established sales offices in 24 U.S. cities and 15 foreign countries. During the late 1930s Kuyper’s sales were particularly brisk, mostly because of orders for its unique casement windows. Rolscreen eventually sold more than one million of those units.

Rolscreen shifted gears beginning in the early 1940s, switching from private-sector manufacturing to building windows for defense-related construction. Government purchases during World War II proved a significant boon to the company, and the postwar housing shortage kept its factories running at full tilt. Demand was so great, in fact, that a temporary mill was established in Pella during 1948 and 1949 to process raw lumber. As the postwar economy and population boomed during the 1950s and 1960s, company sales climbed rapidly as architects and builders increasingly turned to the manufacturer for high-quality building components.

Rolscreen met surging markets with a flurry of new products. In 1950, for example, the company created the Pella multi-purpose window, which could be used as either a casement or awning. Likewise, Kuyper introduced the Pella wood folding door in 1952. That was followed in 1957 by the Pella twinlite window, one of the first window systems to offer efficient, insulating glass as an option. Among other new products, Pella introduced the first removable wood windowpane divider in 1958, the first of many new industry products for the company.

Also during the late 1950s, the popular Pella wooden sliding glass doors were introduced. By the early 1960s those items emerged as a popular design element in many newer homes. Significant product introductions during the 1960s included: folding wood partitions; patented double-hung windows that pivoted for easy washing; wood casement windows; and the first low-maintenance aluminum clad window, which enjoyed immediate acceptance in the homebuilding industry. One of Rolscreen’s most important innovations was its “Slimshade” blinds—which featured blinds positioned between the exterior and removable interior glass panes, thus reducing cleaning and maintenance requirements.

The company’s growth—even during the Great Depression— was due to a steady stream of product innovations as well as Kuyper’s quality strategy. Indeed, from the company’s inception Kuyper displayed a commitment to his goal of producing the highest quality products available. Although Pella windows and doors were often more expensive than competing brands, Kuyper found a ready market amongst designers and builders of quality homes. The company eventually earned a reputation as one of the top window and door producers in the United States. “Our philosophy was, if you built a better product, then somebody would come buy it,” explained a company representative in Fortune in 1993.

The Pella brand sustained its reputation for quality while the company continued to broaden its distribution network and introduce new products. In 1970, for example, Rolscreen introduced its successful line of low-maintenance clad casement windows, which included later add-ons like pivoting windows and clad sliding glass doors. The organization also introduced popular French sliding glass doors in 1979 and a line of sun-rooms and skylights in 1980, reflecting a trend toward more openness and natural lighting in homes.

As a result of savvy innovation and quality strategies, Rolscreen enjoyed solid long-term profit gains. Following World War II and through the most of the 1980s, the company increased sales at an average rate of nine percent annually while relying on internal financing and a minimal debt load. The company’s employees were rewarded with a generous profit-sharing plan and virtually no layoffs. Although a downturn in construction hampered growth in the late 1970s, housing markets recovered in the 1980s and the Pella brand continued to boost revenues.

Pella’s gains were also a result of its strong distribution network. It focused on the high-margin, top-end of the construction industry. Through its network of about 80 distribution centers, the company focused on upscale homeowners, professional designers, and builders of high-quality homes, rather than on the lower-profit mass consumer market. Pella profited from the support of independent distributors that were motivated to sell its products, and Pella distributors benefited from being the primary local suppliers for some of the best products available.

Pella continued to benefit from its established distribution network during the 1980s. In addition, it opened the first Pella Window Store to sell its products to upscale retail buyers. The chain proved extremely successful and spiraled to about 370 in number by the early 1990s. The company also continued to introduce new products and to improve internal operations. It expanded its production facilities with a new plant in Carroll, Iowa, and brought out new products such as: vented skylights; specially coated, energy efficient windows; and stronger wooden doors that closely simulated solid wood.

With thousands of workers churning out windows and doors in high volume, Pella’s manufacturing plants in the 1980s barely resembled its shops of the 1930s and 1940s. But the company’s goal was to ensure that every component that left the factory had a handcrafted look. Pella continued to manufacture most of its own hardware and fittings, and even manufactured many of its production machines. Quality and productivity were achieved with high-tech manufacturing and quality control systems. For example, new designs were tested with optical (laser) equipment to ensure that they matched perfectly with blueprints.

Because of its superior quality, Pella had firmly established itself as a top producer in the door and window industry by the late 1980s. The U.S. economy began to slow in 1988, however, and the high-end market tailed off. Pella’s profits flattened. The company had experienced market downturns before, but management—Kuyper had since retired—sensed that this slowdown was different. Indeed, the building supplies distribution market began shifting during the 1980s to favor producers that could market lower-priced products geared for the larger mass consumer market. As a result, Pella’s customer base became increasingly narrow compared to the overall building supply market.

Of paramount concern to Pella management was the rapidly proliferating market comprised of home renovators, small contractors, and do-it-yourselfers. Those segments had grown rapidly, particularly during the late 1980s, and were expected to supply the majority of growth in home construction markets through the end of the century. Most of those customers didn’t buy through Pella Window Stores or through Pella’s chain of independent distributors. Instead, they often bought from various low-cost suppliers, including the many rapidly growing home and hardware supercenters that were opening up around the nation. Even many of those that were familiar with Pella viewed its products as unaffordable.

Recognizing the need for a major change in its strategy, Pella hired a consulting firm to study its dilemma and make suggestions. The analysis contended that Pella had become too complex, and that it was manufacturing too many products for too small a market niche. The study suggested that the company broaden its target market to include the giant middle-market. To do that, it would have to reduce the complexity of its offerings and focus on reducing production costs so that it could compete with other manufacturers on price.

Between 1990 and 1993 Pella spent $35 million restructuring its operations and reshaping its marketing and distribution strategy. The company reevaluated each of its products and jettisoned those that didn’t contribute significantly to the bottom line. Pella also redesigned many of its major products in an effort to make them simpler and more cost-effective to manufacture. It rearranged the products into three groups, or series: Designer, Architect, and Proline. The Designer Series consisted of Pella’s more contemporary offerings, while the more expensive Architect Series was comprised of traditionally styled items. Both were sold through Pella Window Stores and wholesale distributors.

The Proline series represented Pella’s attempt to penetrate the blooming renovation/do-it-yourself market. Proline windows and doors were designed to be marketed through the proliferating giant home-supply chains such as Builder’s Square and Home Depot. Proline components offered fewer options and were designed to be easier to understand and install. They were generally priced at about 10 percent to 20 percent less than components sold in the designer series. Although they were less expensive, the company said that the components were similar in quality. To ease distributor’s fear of competition from the Proline Series, Pella gave them a percentage of all Proline products sold in their territory. Pella also trained them in servicing and installing Proline goods.

In addition to reorganizing its product lines, Pella instituted a number of measures aimed at further improving productivity— Pella’s Carroll plant had already been recognized as one of the nation’s most efficient manufacturing facilities by Industry Week Magazine. For example, Pella adopted a Japanese worker-management process known as Kaizen events. Among other benefits, the process served to quickly and continually reconfigure areas of the shop floor to achieve maximum efficiency. It also broke some of the work force down into crews of 12 in hopes of increasing communication and cooperation. The fallout of the efficiency efforts was that the time necessary to fill orders at the company dropped from ten to five days, while productivity in some areas increased 25 percent.

Partially as a result of strong home construction markets, Pella’s Proline series was extremely successful. The line generated twice as much revenue as Pella had expected. Between 1990 and 1993, in fact, Pella’s sales vaulted from $250 million to $400 million. “We’ve virtually redefined who we are and what we are about,” explained Pella Chief Executive J. Wayne Bevis in Fortune in 1993. Going into the mid-1990s, Pella maintained its status as the second largest player in its industry and continued its legacy of product innovation, particularly with new goods geared for the renovation markets.