Manufacturers and installers of windows in the Northland could get a welcome boost thanks to new tax credits that are part of the federal economic stimulus package.

If you install new energy-efficient windows in your home this year or next, you may qualify for a tax credit equal to one-third of your investment, up to $1,500. That's a considerable improvement from the past window credit, which topped out at $200.

"I think it will help tremendously," said Tony Wasbotten, manager of retrofit installations at Heritage Window & Door in Superior.

Amid a wave of foreclosures and economic bad news, sales of new houses have stagnated in many markets. But there has been a small upside.

"Instead of buying new, people are fixing up their old houses and making them more energy efficient," Wasbotten said, adding: "Our retrofit business has really taken center stage lately because of the housing crunch."

Largely because of this activity, Wasbotten said Heritage has managed to avoid layoffs, and the company continues to employ 16 people.

Fentech Inc., a custom window manufacturer in Superior, has been less fortunate.

"Our employment has gone down substantially," said Mike Mirau, president, CEO and owner of Fentech, which currently operates with a staff of 38 people. A few years ago, the company employed more than 80 people. Mirau noted that Fentech has automated some of its operations, but he said that even so, the business probably would employ 50 to 60 workers if orders returned to past levels.

"Things are very slow right now," Mirau said. "I think that a lot of people are waiting because of the fact that a lot of housing markets in the Midwest are hurting. And the severe winter this year has contributed to slower sales, too."

As for the prospect of the credit, Mirau said, "There's no question that having a bigger tax incentive is helpful, but I'm rather skeptical it will really turn things around."

Tracey Cook hired Heritage to install new windows in his 100-year-old Hunters Park home last year and had planned to replace more in the coming year. While no fan of the stimulus plan as a whole, Cook said the credit probably will make it possible for him to tackle a few more windows than he originally planned.

Besides replacing windows last year, Cook also installed a new high-efficiency furnace and said he managed to cut his monthly fuel bills by about $200.

"That's money that would have gone into the air before," he said. "When you've got a drafty house, it really is like throwing money out your window all winter long."

Cook said that besides saving him money, his new windows have improved the warmth and comfort of his home.

Randy Sylvester, co-owner and president of the Walsh Co., a window manufacturer in Duluth, said demand for upper-end high-efficiency windows, such as those with triple panes, has grown dramatically, particularly after fuel prices spiked last winter.

"We probably produced more of our high-performance insulated windows in 2008 than we did in the last two years combined," he said.

As Walsh has specialized in custom-building windows, it has found a niche in the replacement business. Sylvester estimates that about 80 percent of the company's sales are into the replacement market, with the remainder going into new construction. As a result, the company has been able to hold its own, continuing to employ about 15 people.

Sylvester said Walsh appears better positioned to weather the housing downturn than many of his larger competitors.

"All the big dogs are focused on new construction," he said.