We are now five years past the peak of the construction industry, and folks, things are still not looking that great. One indicator this week provides a ray of hope for 2012, but you’ve got to squint to see it. The American Institute of Architects announced that it has trimmed its forecast on nonresidential construction for 2011 and expects the sector to lose 5.6% this year. For 2012, AIA is forecasting a 6.5% gain. In other words, with a little luck, we’ll recover what we lost this year and maybe add 0.9% to that meager figure.
Construction spending has continued to lag across the board, but it has been steadily down this year on the public side, where so many precasters make a living. We are now at an 11-year low, which puts the industry roughly at the level of 1999-2000. According to Ken Simonson, AGC chief economist, highway construction is down 11.3% this year. Oh, and since Congress failed to reauthorize the Federal Aviation Administration, an additional 70,000 construction and related jobs are at risk this summer, along with $2.5 billion in airport construction projects.
My point? The tail of a construction recession is always a desperate time for manufacturers, and this recession has a very long tail. We’re still bumping along the on the bottom, and if our source for optimism is a forecast that shows us clawing back 0.9% in 2012, it’s a serious sign that we’re in for a long, slow slog. There’s a lot of fear and outright panic in the industry. It’s understandable. But this not the time to abandon your core business principles. Quality, safety, intense knowledge of costs and appropriate pricing are more important than ever, and those companies that continue to pursue lean manufacturing without compromising those core principles will survive and be well positioned for the future.
President, National Precast Concrete Association