Happy 2013! The publication of this issue of Precast Inc. magazine must mean that the world didn’t end on December 21 and we didn’t fall off the dreaded “fiscal cliff”! Hopefully folks in Washington can work together to make some decisions that will truly benefit our economy, get people back to work and create more security for our future.
If you follow the economic outlook forecasts for the construction industry, you’ve likely seen a variety of predictions for 2013, most calling for a decent growth rate of about 6% this year. If you track manufacturing, you’ll note the outlook is a little more mixed. As precast concrete manufacturers, we have a stake in both of those sectors. So, how do we look at 2013 and the near-term beyond?
The formula for success in the precast business these days is learning to keep your ears and eyes open to the prevailing conditions and be prepared to adapt as needed. Even though the construction sector may be heading toward recovery (assuming the fiscal cliff issues are settled for now), the precast industry may not necessarily find great opportunity on that bandwagon. We’re still adapting to a somewhat unsettled market rather than one in early recovery.
Because much of our business is often based on governmental infrastructure work at the federal, state and local level, our segment of the construction market is a little bit different. States, for example, tend to go into a recession later because they’re working from the previous year’s tax revenues. They come out of a recession later because it takes a year of recovery to boost the local economy and increase tax revenues for the next year’s budget. So we’re seldom working with real-day dollars.
So it goes in the precast industry. When the housing bubble plunged the construction industry into a steep recession starting in September 2007, many of us didn’t feel it until at least a year later, because we were working off contracts from the previous year. An optimistic 5 to 6% growth for the construction industry most likely will result in a recovery closer to 2 to 3% for the precast industry. It’s not bad news, just a little more tepid than the overall construction segment of the economy.
Your company’s situation may not mirror this macro view of the precast industry, of course. Within our industry, every company is unique and precast concrete manufacturers are endlessly entrepreneurial and infinitely innovative. Many precasters have found product niches that take their business in a completely different direction. Many companies have evolved from underground product providers into full-service providers of architectural products, prestressed products, large landscaping components and a growing array of proprietary systems for paving slabs, foundations, walls and bridges. As the world continues to change around us, we’ll continue to be innovative and adapt as necessary!
Yes, the recovery may be slower than most of us would like, but there are now signs that it really is starting to recover. As long as precast manufacturers continue to adapt to the market’s needs and provide outstanding service and quality, we should find plenty of opportunity in a construction economy that generates nearly $500 billion of business in North America every year.
As always, I’m interested to hear your perceptions of the precast industry and your experiences doing business in these challenging times. Please feel free to contact me at [email protected].