Precast Inc. - March/April 2008 - (Page 26)

Precasters offer their strategies for survival during uncertain economic times. By Bob Whitmore R un lean. Know your costs. Find new opportunities. Get close to your customers. And by all means, follow up aggressively on your bids. Those are some of the key strategies precasters around the country are following as the new construction season unfolds in a year of uncertainty. After 2007 brought the first decline in overall construction spending in the United States in 15 years, forecasts for 2008 pointed to a flat year with NPCA predicting a decline of 0.5 percent in new construction spending in 2008. Other forecasts for construction spending in the United States range from a decline of 2 percent to an increase of 3.8 percent. The construction market dipped about 8 percent in 2007, dragged down by the subprime lending crisis that gutted the residential market. The good news for most precasters is that the commercial and public works sectors kept humming along in 2007, and that’s where many precast companies do the majority of their work. Signs of a slowdown are ahead in 2008, though, as credit tightens for commercial work and state budget deficits threaten to shelve public works projects. In the transportation MARCH/APRIL 2008 | PRECAST INC. sector, funding remains a mishmash of uncertainty. Precasters around the country have a variety of strategies for coping with a trough in the U.S. construction economy. Kurt Burkhart, president of Arrow Concrete Products in Granby, Conn., saw residential construction declining in other regions and knew it was headed his way. So Burkhart and his team looked for ways to supplement a projected downturn in their residential business and added additional products in their stormwater line. “With new regulations that are coming out continually, we feel there will still be money spent in stormwater,” Burkhart said. “By pushing that effort we will compensate for housing. When housing rebounds we’ll be in position to handle it, and we do see that happening in mid2009.” While material costs are expected to moderate in 2008, Burkhart hasn’t seen that in his region. “We’re still in a cycle of escalating raw materials. I think steel will stay up, but cement will eventually go down,” Burkhart said. “You just have to adjust on the fly, but it is a lot tougher to do business in this climate when price increases are coming at you. If you push more toward government or municipal work and your contracts are out there longer, you’re kind of taking a risk, unless you can get an escalation clause in your contract.” Clauses to protect the precaster in the event of rising material prices are rare and difficult to obtain in a competitive bidding market, Burkhart said. Burkhart added that follow-up on quotes is more important than ever when the forecast is uncertain. “I think you have to go through the jobs you’ve been quoting – really search them out and then follow them up. Before, when there was plenty of work, you may not have followed up on everything as much as you’re going to have to in the future.” Double whammy Steve Rodgers, general manager of Contractors Precast Corp., Davidsonville, Md., has never seen the double whammy of rising material prices during a downturn in the construction economy. “I’ve been in this business 40 years and I’ve been through these things before, but this is the first time during these downturns that we’ve still got all kinds of price increases. Steel is going 26 istock.com http://istock.com

Table of Contents Feed for the Digital Edition of Precast Inc. - March/April 2008

Precast Inc. - March/April 2008 Contents Technically Speaking Concrete Repairs Return-to-Work Programs Marketing in a New World Building Confidence Risk Management Culture Bloquea La Energia – Es Tu Vida! Lock It Out – It’s Your Life! Fiber Optics in Countertops MCPX Wrap-Up Product Profile People & Products Advertisers Index NPCA Calendar

Precast Inc. - March/April 2008

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