Business Leader Sees Uncertainty, Increased Costs In Health Law
ROBERT SIEGEL, HOST:
There are many uncertainties in business these days: the future of Fed policy and leadership, the fiscal outlook in Washington, the effects of Obamacare, inflation, employment. Well, how does all this look to someone who's running a business? We're going to ask Pat Meyer right now. He's the CEO of Pella Windows and Doors in Pella, Iowa. That's a privately held company that employs some 6,000 people. We talked back in 2011. Good to talk with you again, Mr. Meyer.
PAT MEYER: Well, thanks for being here.
SIEGEL: How does the immediate future look to you right now?
MEYER: Well, it's kind of a mixed bag right now. There's opportunities in single-family new residential, and multi-family, which are up over 20 percent versus 2012. So that's very positive. The one area of concern is replacing windows and doors. That is soft in the first half of 2013, but definitely picking up.
SIEGEL: Obviously, the business of doing windows and doors is very closely related to construction - you're tied into that.
SIEGEL: The season of the year, is this typically a slow time, a hot time, what would you - how would you describe the fall and winter?
MEYER: You know, this is very busy. You know, in the custom home area, people are trying to get them buttoned up for the winter. And then anybody thinking about replacing their windows or doors or finishing up a remodeling project is very busy. So our factories - we have 10 U.S. factories and they're all very busy right now, Robert.
SIEGEL: Well, of all the big question marks that hang over economic policy in Washington, which ones are important to you, and which ones you want to see answered quick?
MEYER: Well, I would say health care. There's a lot of confusion with that right now. We're - we have to sign our employees up this month for their new health care decisions in 2014. It's been very confusing. And bottom line, it's going to increase cost to everyone.
SIEGEL: Have you found that the group policy that you would sign up your employees for is much more costly? Or are there more benefits? How would you describe the change?
MEYER: Well, a couple of things. We're self-insured, and so we pay an administrator. But what we've done is create more plans for employees to make choices. So more higher deductible plans to try to improve their ability to afford health care at different levels.
SIEGEL: Does that put a - such a higher cost on every worker that it would slow down the pace of your hiring up? Or is that determined really by how much demand there is for windows?
MEYER: No. Our hiring would be determined on demand. But it is impacting their wallets and their disposable income. So it's something that we're very concerned for our employees.
SIEGEL: How much are you concerned by interest rates and prospects of inflation?
MEYER: Well, inflation seems to be in check. I mean, there'll be pockets that we are concerned about - wood for our wood windows. But overall, inflation seems to be in check. Interest rates are always a concern. They are at historic really low rates right now. And so the ability to - if you can get finance this, the rates are very positive right now. Some of the requirements to get a mortgage are very difficult, and I think that's limiting the ability to buy a new home or an existing home.
SIEGEL: The federal budget is up in the air. I mean, it's a concern to all of us. Does it have any impact on the Pella Corporation and what you do?
MEYER: Well, it just creates uncertainty. And uncertainty is very difficult for people to make big decisions, like building a house or putting a big discretionary durable, like replacing their windows. And so we'd like to obviously get beyond that and have a plan that is fiscally responsible. We'd like to see a good balanced plan, so people can have the confidence to buy their dream home or replace their windows with Pella.
SIEGEL: Well, it sounds like in Pella, Iowa, you're looking out the window at some good prospects but concerned about uncertainties. Fair enough?
MEYER: Yeah, fair enough. I think the economy just continues to plod along. And I think if we could get the balanced budget and some direction there, it would give us some confidence to move forward more aggressively.
SIEGEL: Mr. Meyer, thanks for talking with us once again.
MEYER: Thank you very much, Robert.
SIEGEL: Pat Meyer is CEO of the Pella Corporation which makes windows and doors, and employs about 6,000 people.