I am certain you have read the forecasts, spoken to your peers, or just noticed a difference in your bottom line but as you well know, the concrete industry is facing some hard times. While contractors in some areas of the country still have a consistent amount of commercial and residential jobs, others do not have the luxury at the moment.
I spoke with a number of contractors at this year's World of Concrete, and more recently at ConExpo-Con/Agg this past March, and many of their comments confirm the broad range of economic conditions that currently exist. Fortunately, some of you had the foresight to predict the economic hiccup by diversifying your business and branching out into niche areas of the industry. The contractors who are finding business in decorative concrete is one example. Other contractors have focused on implementing a more conservative approach to their business planning and spending.
However, the main question I hear from contractors these days is “how long will this economic condition last?”
I posed the same question to Ed Sullivan, chief economist of the Portland Cement Association during ConExpo-Con/Agg. Sullivan confirmed the current construction conditions, mentioning that based upon current supply of housing, recovery for the residential side of the industry may not be evident on a national level until mid-2009. Meanwhile, the current state of commercial construction remains moderately healthy; however Sullivan expects the commercial segment to feel the sting as well if it hasn't already. Every sector of the concrete construction industry has been affected in some capacity, and there are fewer and fewer places for a contractor to hide.
As a comparison, while at ConExpo-Con/Agg I also listened to a speech from Ken Simonson, chief economist for the Associated General Contractors of America. Even though Simonson painted broader strokes in terms of the country's economic and construction conditions, he reported that while residential construction-related spending may be down, commercial, industrial, and government-related spending are still expected to see a percentage of growth in 2008. Hospitals, schools, and highways also were mentioned.
On the other side of the industry, equipment manufacturers remain optimistic when it comes to the recovery of the U.S. construction industry.
Despite the roller coaster ride the construction industry has been through the past few years, the general long-term outlook remains very positive. Fueled by population growth and the eventual recovery from the current housing conditions, contractors should stay optimistic. The construction market is cyclical, and many of you have been through these conditions before. One indication of recovery is a drop in housing prices, possibly as soon as this summer, which will lead to the eventual decline of inventory over the next 12 months. Once the housing supply meets the five-month inventory level, builders will pick up their tools and the residential market will be back on its feet.
Editor in Chief