Precast Concrete Plant Survival in a Challenged Economy
By Ty Gable, President, National Precast Concrete Association
We’re in the midst of an economic hurricane that has been spinning around for years now.
A recession is like a hurricane, because both have three phases. In phase one of a hurricane, high winds, rains and coastal flooding wreak havoc. Phase one of this recession – the tail end of 2007 through 2009 – was a bruising battle to be sure. A 40% to 60% drop in demand is about as bad as it gets, and we haven’t exactly seen a whole lot of improvement since then.
Phase two is the eye of the storm, which is where we are now. In the eye there is an uneasy calm, with an emphasis on the uneasy part. Despite some slow gains, a continued upward trend is in no way ensured at this point. The European debt crisis, concerns over rising fuel costs and a languishing housing market are making sure of that. Some economists even argue that the 15 years of prosperity we enjoyed were the “bubble” and that this is reality.
In this stage, business owners tend to freeze up because things aren’t getting any worse, but they don’t seem to be getting any better either. Right now we’re just sort of hanging in the balance, which makes it a hard time to take decisive action. However, that’s precisely what we need to succeed going forward.
Positioning your company for future growth, particularly in an economy unlike anything any of us have faced in our lifetimes, is not easy. Timing decisions and determining when, where and how much to invest will not be simple or painless. Going back to the hurricane metaphor, though, we are now headed toward phase three of this recession – the most dangerous phase of all.
It is the trailing end of a hurricane that often does the most damage, when the storm surge produces devastating winds and flooding rainfall. In a recession, the danger comes when companies board up the house in phase one, sit tight during phase two and then stall during phase three, making no plans to start the rebuilding process once the storm passes. Caution is commendable, but it can’t come at the cost of innovation, diversification and customer education and acquisition. There has to be anticipation of a recovery and a plan to adapt to the new business landscape in order to capitalize on it.
There are at least three certainties to plan for as you’re considering the post-hurricane economy. Despite the thinning of the herd, count on the paradox of increased competition; prepare for customers who demand new products, higher quality and more value; and recognize the absolute necessity of a well-trained workforce.
This protracted down cycle in construction is going to continue to reduce the number of competitors, leaving fewer contractors and precasters, with most survivors learning the importance of diversification. They’re not specializing like their fathers or grandfathers, but generalizing by manufacturing new products, bidding projects farther from home and aggressively going after new work.
Also, when private and public construction buyers do have money to spend, they are going to want proven sustainability benefits along with their quality and value demands. Thanks to the internet and the way it has opened the door to information, they are going to be more demanding and educated than ever. You need to be there to reach out to prospective buyers on the benefits of precast wherever they choose to go for information. If you haven’t done this type of marketing before, we offer many educational and informational resources on our website.
Lastly, you know as well as I do that good employees are, and will continue to be, hard to find. Unfortunately, some talented and experienced people have left our trade and found places in other industries. This means you’re going to have to search harder because attracting and retaining top talent are more important than ever in tough times.
Like a hurricane bearing down on the coast, change is inevitable and can’t be stopped. But if you embrace the post-recession economy by adapting and sowing some seeds now,
it will help you reap the benefits down the road.
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