The Future of Fiberglass Pool Manufacturers: Who Will Survive?
This article is simply the result of the many, many email inquiries I've received in recent weeks from our readers regarding the future financial stability of fiberglass pool manufacturers. With the 'troubles' of Ocean Reef and San Juan Pools mentioned in the news recently, quite a few future fiberglass pool owners are now thinking much harder about the manufacturer they choose to do business with. This is absolutely understandable considering a fiberglass pool warranty is a 'manufacturer warranty', not a 'pool builder warranty'. In other words, if a fiberglass pool manufacturer goes out of business and you have one of their pools in your backyard, you're out of luck in terms of any warranty issues down the road.
Obviously, no one wants to make the wrong decision when choosing the pool of their dreams. When it comes to choosing a fiberglass pool, the consumer must make two important decisions: 1. The Manufacturer 2. The Builder. Up to this point, I've talked almost at nausea about the latter so it's time we discussed what's going on with these pool manufacturers.
Let me also say here that this article is purely my opinion based on what I'm seeing within the swimming pool industry. I've got many, many sources that have contributed to my thoughts here. That being said, this article is only meant as a guide to your pool purchase, and no more.
Where the Problem Started
You see, the reason why so many fiberglass pool manufacturers are now suffering is simple. In the early 2000s, the swimming pool industry had never seen such a high. This was especially true in 2005 where just about any pool company and manufacturer had more than enough work to keep themselves busy and pay all their bills without really having to doggedly work for it. As we all know too well, this was a time period of easy credit and skyrocketing home values. Just after being in a home for a few months homeowners had enough equity to borrow against for such items as additions, boats, pools, etc. Looking back at this time period, it amazes me just how easy it was for homeowners to buy a swimming pool. Simply put, it was the perfect confluence of events that culminated in a swimming pool explosion throughout the United States.
Around this same period, fiberglass pools were gaining a large portion of the market share within the United States. Although this trend had occurred years before in other countries around the world such as Australia, the United States didn't truly come around to fiberglass as one of the staples of the residential pool industry until the 2000s.
With all lights flashing green and all signs saying 'grow', fiberglass pool manufacturers sprung up across the country and also many already established manufacturers built more plants in key areas of the country to cut down on shipping costs to builders and also keep pace with production demands.
The Bubble Bursts
As I mentioned, this growth period culminated in 2005 and 2006, and it is now this same period which is putting some manufacturers under a mountain of debt and financial losses. Simply stated, many manufacturers were not intelligent with their business models and got too big for their own britches as they overestimated the economy's ability to maintain such unrealistic numbers.
I'm not saying here that the collapse in the economy was an easy thing to see, because it wasn't. Heck, even our own government was mostly aloof to the disaster that so quickly occurred. Notwithstanding, this boom and bust period was handled better by some fiberglass pool manufactures, and builders, then others.
In order for a fiberglass pool manufacturing facility to break even, it needs to produce(in most cases) about 600 pools a year. The ideal number though for financial stability is 700+. Of course, this number can vary depending on the facility and its ability to cut costs while still staying above water. Here is a list of the main fiberglass pool manufacturers in the U.S. and their production facilities during the 2000-2007 period:
- Viking Pools (includes Composite Pools, Crystal Palace Pools, Liberty, etc, etc, etc): 5 facilities: West Virginia, Florida, North Carolina, Texas, and California
- San Juan Pools: 3 facilities: Florida, Arizona, and Indiana
- Blue Hawaiian: 2 facilities: Florida and North Carolina
- Aloha Pools: 4 facilities: Texas, California, Georgia, and Tennessee
- Trilogy Pools: 1 facility: Tennessee
- Leisure Pools: 1 facility: Texas
- Sun Pools: 2 facilities: Florida and Kentucky
- Alaglass Pools: 1 facility: South Carolina
If you count the number of facilities between these manufacturers, you come up with a total of 19. This doesn't even include some of the smaller companies. This being said, the industry needed to produce, at least among the top manufacturers, at least 11,400 fiberglass pools to come close to breaking even during the good years. Such was possible at that time but the sad reality is 10,000 fiberglass pools will not even be purchased in the United States in 2009. In fact, the more likely number will be around 7000. As you can see, the consumer demand does not meet the manufacturer overhead demand, which is why we are now seeing so many issues. This is also why the number of facilities now in production is less than the 19 mentioned above. Like all other businesses, manufacturers are doing what it takes to cut costs, and closing plants is often times the easiest way to make a big difference with monthly expenditures.
What Does This All Mean?
Now I'm not going to delve into here which of the above manufacturers have closed facilities. I'm also not going to predict (although I've certainly got an opinion) which ones will foresee major issues down the road. Notwithstanding, I will make this statement:
It is my opinion that the strongest fiberglass pool manufacturers in the coming years will be the ones who have less plants/facilities yet still have the ability to reach high production levels if necessary. Having a plant that can produce 2000 pools during the good times but at the same rate has the ability to turn a profit at 650 pools during the bad times is a much more sound business model then having multiple smaller plants that must be constantly fed when times are the toughest but also reach a certain production limit in the best of economic conditions.
Note: I do realize there are many more factors that will dictate a company's success, so let's just assume we all agree on those important variables.
So what am I implying with all of this? No, I'm not saying necessarily that Viking is in trouble yet a company like Trilogy will have no problems in the future. What I'm doing is making a simple analysis of the current state of the fiberglass pool market and where I think it's headed, which will hopefully give you, the consumer, enough food for thought to lead you in the right direction when it comes to choosing the manufacturer of your fiberglass swimming pool.
An Invitation to All Manufacturers
I also want to give manufacturers a chance to respond to this blog below regarding your company. If you'd like to discuss the stability of your company and its current direction, I absolutely invite you to do so in the comments section. Whether you agree with my synopsis or not, I'd still be inclined to hear your thoughts.
Note: 3 weeks after this article was written, Viking Pools filed for chapter 11 bankruptcy**