Process integration and investment in human resources has seen Puerto Rican producer of aluminum windows and doors Air Master Windows and Doors become the leading producer in the Caribbean region. Paul Harris reports on how the company has harnessed modern business practices to turn a family firm into a market leader.
Process integration is how Air Master Windows and Doors has obtained an edge in the increasingly competitive windows and doors market in Puerto Rico and the Caribbean. The company bought enterprise resource planning (ERP) software from Friedman Corporation two years ago for about US$2 million that has helped it reengineer many operational functions. “This software integrates all the processes of the company: finances, billing, logistics, orders, manufacturing and everything we need. So far it has really increased our efficiency and helped us shorten our lead times and lower our costs,” says company President Nicolas Megwinoff.
Efficient process integration is important in a business that draws inputs from different sources and supplies final products through a variety of different distribution channels. Supplies are drawn from around the globe.
In terms of distribution, Air Master sells direct to construction contractors and project developers, to hardware stores such as Home Depot in the wholesale channel, and the retail market. “Americans know the retail channel as the high end. This is a channel demanding more sophisticated and expensive products,” he says.
With increasing competition in the Caribbean region, Air Master Windows and Doors is also beginning to export to Central America and the U.S. About 5 percent of production is currently sold to regional markets and the company aims to increase by 25 or 30 percent. “We are opening new channels to increase our sales by focusing on construction contracts in Florida, Central America and other Caribbean islands.”
Air Master Windows and Doors (www.airmasterpr.com) has changed profoundly since it opened for business in 1964 as a subsidiary of Air Master Jalousie when it only served the wholesale channel. Its modern growth trajectory can be traced back to 1979 when Nicolas Megwinoff Sr., the current president’s father and CEO, bought the company when it was in poor financial shape. At the time it had just seven employees and sales of just US$500,000.
Megwinoff Sr. saw the opportunity to meet the needs of an increasing sophisticated windows and doors market by providing product variety, on time delivery, innovation, quality and service. However, it was not until 1990 that growth began in earnest after the founding of a new projects department, and in 2000 Air Master bought another company to beef up its market size.
Up until 1997 the company operated three plants that it rented from the government, but then it bought a 200,000-square-foot building located on over 90 acres of land from Union Carbide in Barceloneta, an area known as La Ciudad de las Piñas or “Pineapple City” because of its extensive pineapple plantations. “We primed it to adjust it to our needs and to consolidate the three plants under one roof, and we have space to keep growing,” he says. From its humble beginnings the company has grown to over 570 employees and sales of US$52 million.
The growth of the aluminum windows and doors market has attracted other competitors to the extent that there may now be oversupply. In Puerto Rico alone Air Master has seen the addition of smaller niche players gone to the five big competitors it had a few years ago. “There are many small players so I see that there is a lot of offer but not enough demand,” says Megwinoff.
Technology has been one way Air Master has sought to stay ahead of the competition, which has seen it invest in technology to streamline operations and processes. “We have managed to tighten our delivery times so that they are really short. We are the fastest company to fulfill an order with a top quality product and that is why we are the market leader,” he says.
The technology the company uses includes powder coating machinery from Spain, glass and crystal cutters from Italy, and hydraulic presses and dies that are mostly American, and a preventive maintenance program ensures that equipment remains in the best operating condition. “We also have a metrics program that is a key performance appraisal system in all the different areas of the business,” says Megwinoff, so that performance can be measured and improved.
Investment has not just been directed at leading-edge technology but at the company’s human resources so that it can count some of the best people in the industry on its payroll. Part of the investment in human capital has been focused on reengineering the structure of the company to give more individual responsibility and flatten its hierarchy.
“We have invested in the people we work with. We have people that not only have experience but are really qualified for the job, the best of the best, and we consider this an asset as they have helped us get where we are. Before the company structure was really vertical but it is now more horizontal so there is a better communication,” says Megwinoff.
Improved communication has helped increase quality and response times through the prevention and resolution of problems, and this, combined with changing the company structure has also helped Air Master differentiate itself from competitors that generally retain a traditional family business model. “I understand that we are the only company in Puerto Rico in this business that is completely and 100 percent professionalized as the other companies are still
run by their owners with a very vertical structure,” he says.
The company says that it also offers some of the best employee benefits in Puerto Rico such as providing a production bonus twice a year, a competitive health plan, and an on-site and subsidized lunch cafeteria. “We try to keep the staff motivated because we understand that a motivated crew is more efficient and works harder,” says Megwinoff.
Air Master has capacity to manufacture up to 15,000 units a week of residential and commercial windows and doors on a single shift basis. A second and third shift could be added to bring production to 45,000 units a week. The company says it is the leading producer not just in Puerto Rico but in the entire Caribbean region.
The ERP software also has manufacturing and logistics modules that help with material resource planning so that when the levels of materials fall to a predetermined level, the system automatically generates an order so the firm never runs out of any supplies. This has provided very tangible stockholding savings. “We have increased our stock rotation to almost double what it was before which is reflected in better cash flow,” he says.
Innovation and recognizing the opportunities that present themselves is the key to success for Air Master Windows and Doors. “We are constantly working on creative approaches to develop opportunities and satisfy our customers.”
To contact an Air Master Windows and Doors representative in Puerto Rico please
call 1(787) 623-1800 or visit our website at www.airmasterpr.com