A business owner reflects on the state of the economy amid its 'soft landing'
SCOTT SIMON, HOST:
Interest rates are higher than they've been for more than two decades, and yet the economy continues to grow - at 3.3% rate, at last count. The Federal Reserve Bank says that it is too early to say. The U.S. has avoided a recession, but consumers have kept spending, and businesses have kept growing. We've called up someone who owns a medium-sized company. Paul Marvin is the CEO of Marvin Windows, a 112-year-old family-owned company in Warroad, Minn. Mr. Marvin, thanks so much for being with us.
PAUL MARVIN: Thank you. It's my pleasure.
SIMON: What have the last three years been like for you and your company?
MARVIN: Well, I think it's been a whirlwind, like it has been for most of the country and many, if not all, businesses. It's been a time of some incredible challenges, first starting with the pandemic and then the ensuing supply chain bottlenecks that wreaked havoc. But through it all, there was still incredible demand.
SIMON: I didn't know a lot of people were buying windows during the pandemic.
SIMON: I guess they're looking at them more than usual.
MARVIN: Well, you know, kind of a joke, but it's actually - it's really true. There's a couple of factors going on. Certainly, people were spending more time in their home for the - you know, in ways that they never had. So absolutely, people started investing in their homes. And that drove an incredible amount of demand. And underlying it all in our industry, in the housing industry, are some fundamental dynamics where we are undersupplied across the country.
SIMON: Well, let's ask about the challenges, though, if that's all right with you, to help us understand what you've overcome.
MARVIN: The challenges were we had these incredible orders coming in, just massive orders, and a supply chain and manufacturing and operating system that wasn't capable of absorbing that much demand. So what used to take three or four weeks to get ended up 16 weeks, in some cases 24 weeks. So those were real challenges, exacerbated by labor challenges. Certainly, we - there were a lot of people switching jobs, a lot of baby boomers retiring a little bit early. But as I said, we have been able to overcome those, return to historic, or near-historic, lead times, and all the while keep our 7,500 employees employed and busy.
SIMON: You're putting up a new manufacturing plant in Kansas, which I'm told will cost an estimated $70 million. Why are you doing that when the interest rates are so high? How can you afford to do it?
MARVIN: Well, on the affordability piece, because we prefer to be in a position to make our investments debt free, we are in a financial position to invest because we have the capital to do it. The why behind it is because we know we're going to need this capacity down the road, so we can look over a short-term blip. So we're hitting this - you know, hopefully hitting this soft landing appears likely. But even with a slowdown, we would just plan for that knowing that we're playing the long game. And there is no scenario in which we won't require more capacity.
SIMON: Are you concerned that potential customers, though, are worried about the interest rates, which are for loans that have to take out to redo their homes, including put in wonderful new windows?
MARVIN: Yeah, absolutely. It's - you know, we certainly saw, I'd call it a muting of demand across the industry. And so there was - you know, I use the word muting because there's still all this unmet demand from a housing perspective at every price range in this country. And then on the other hand, we spoke about the pandemic and the home as a sanctuary. Some some economists are talking about the golden age of remodeling that is upon us. Many people will choose to stay put in part because of the interest rates, but in part because there's not enough new homes to move into. And so that'll be a healthy sector and segment for us for years to come, we believe.
SIMON: What's your biggest worry, Mr. Marvin, for the country, the economy, as well as your own business?
MARVIN: You know - well, for the company - and I say this with as much humility as possible - I don't have ones that keep me up at night. If you forced me, I would say labor is the thing we're focused on most. We're tackling that with automation, with new technology, with lean and better ways of doing things and becoming more efficient to become a little less reliant on people. But we are a people business, and we'll always need people.
In the short term, we've got to get through an election year that will be very tumultuous for the country. Every election year is like that, but I think we're headed towards another historic one that will suck the air out of a lot of different areas, including the business world. But I have full confidence, like we always do in this country, we come out the other side. That's not to say that I don't think about the distraction that that will provide over the course of the coming months.
SIMON: Paul Marvin is the CEO of Marvin Windows, 112-year-old family-owned company in Warroad, Minn. Thanks so much for being with us, sir.
MARVIN: Thank you, Scott. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.