By Brent Dezember | Chairman, National Precast Concrete Association
If you think back to the beginning of this century – just 14 years ago – you may remember being amazed at how much our world was changing as we crossed into the new millennium. We were in the middle of the dot.com bubble, and out here in Central California we were close to the epicenter of it all. The Y2K computer systems crash that was supposed to vanquish the world didn’t happen on Jan. 1, 2000. And while we all breathed a sigh of relief that our businesses didn’t come to a halt, it did throw a spotlight on how interconnected we were and how dependent we had become on technology.
But that seems like the stone ages compared to our world today. In 2000, Facebook wasn’t even an idea. Google was a 15-month old fledgling that had just barely outgrown the garage in which it was founded. YouTube didn’t come around until 2005. And in 2000, the idea of getting emails on your phone was just a novelty for most precasters. Why would anybody want a phone that gets emails?
Even if you don’t use Facebook or Google or YouTube in your business or personal life, you can see how they have continued to alter our world. But we’re not just connected through technology. Seismic shifts happen that impact our precast concrete businesses, and if we’re not constantly scanning the environment and peering over the horizon, we could disappear faster than Netscape (anybody remember Netscape?).
Here’s an example of how something seemingly far removed from the precast concrete industry can actually impact your bottom line. Exploding college tuition and student loan debt are topics that have been in the news for the last several months. If you have children in college, you know all about it. But what’s that got to do with precast?
Think back about 18 months. Some economists were forecasting a strong rebound for the construction industry after the Great Recession. After four years of stagnation it looked like 2013 was the year when the housing recovery would lift the construction economy to growth of 6% or more. There was pent up demand in the housing market. People who stayed on the sidelines during the Great Recession were going to start buying houses. New developments would spring up, and there would be demand for septic tanks, pipe, curbs, paving stones and all sorts of other precast materials. Commercial developments would follow closely behind, and other infrastructure to service those new developments would keep our plants humming – just like recoveries in years past.
But while renewed housing demand has pushed the construction industry on an upward trend and some precasters are doing quite well, the big picture is that the big housing recovery is not as robust as expected, so the pace of the recovery is slower than expected. Why? Because many of those 30-year-olds who are in their prime first-time home buying years are still on the sidelines. They’re delaying marriage or living with mom and dad until they can pay down their student debt. And the job market they’re looking at does not have near the promise of the job market when many of us entered the workforce a generation ago.
Of course there are many other contributing factors, but more and more economists are pinning at least part of the blame for a slow recovery on the collective $1 trillion in student debt that young people are struggling to pay down.
So even if student debt is not a problem in your family, it could still be impacting your business. It’s just one of the many examples of how we’re more connected than ever and how, as business owners and managers, we need to constantly be aware of what is happening in the world outside our plants.