Precast Inc. - March/April 2008 - (Page 30)

Chasing Down the Rest of the Year Here’s a snapshot of what to expect in the construction economy for the rest of 2008, based on a review of the 2008 economic forecasts from the U.S. Census Bureau, Reed Construction Data, McGraw Hill Construction and Associated General Contractors of America. • Forecasts for construction spending in the United States in 2008 range from a decline of 2 percent to an increase of 3.8 percent. NPCA is predicting a decline of 0.5 percent in 2008. • Residential housing will likely not rebound until sometime in 2009 and will continue to be the main reason for a decline in overall construction spending. • The recovery in residential construction will be highly regional in nature. In areas where residential construction experienced substantial declines, the recovery will be slower. California, Arizona, Florida and other Sunbelt states are expected to recover more slowly than states where the decline has not been as steep. • Commercial construction and institutional construction are likely to cool and will not experience the double-digit growth experienced in 2007. Increases will be in the 4 percent range. The second half of 2008 looks slower, as lending for commercial projects tightens. • Public works projects, which also continued strong growth in 2007, will also slow down but still remain stable – and could increase in the range of 2 percent. At least half of the states are reporting budget deficits, however, and state-funded construction such as transportation and some infrastructure rebuilding may face uncertainty in states with serious deficits. • Cost of materials most common in precasting will likely slow. Cement prices are not likely to increase in most regions due to a glut of cement. Consumption of cement is down double digits in some markets, and many cement suppliers have held back on cement increases as a result. Imports of cement have fallen in key regions like Florida. Rebar and steel mesh prices, which rose 12 percent in 2007, will likely level off in 2008 and may even retreat slightly later in the year. • Markets critical to the underground precast industry, such as sewer and water construction, will continue slow growth through 2009. Ty E. Gable, president of the National Precast Concrete Association, believes the precast concrete sector of the construction industry is better equipped to weather an economic slump than most other sectors. With hundreds of product lines covering above-ground and underground construction in the residential, commercial and public works sectors, the precast industry as a whole is more recession-resistant than some other industries. "Rarely do we see all three construction sectors decline at the same time," Gable said. "We saw housing go into a major decline in 2007, but the commercial and public works sectors had record-breaking years. We are now seeing a slight cooling off ahead in commercial and public works that will likely reach into 2009. By mid-2009, though, we would hope to see housing start to rebound in many regions." Precast manufacturers who continue to diversify their product lines, focus on high quality and find ways to add value to their product lines are generally much better equipped than those who are more narrowly focused, Gable said. “While the construction industry looks flat in 2008, there is still more than $600 billion worth of opportunity out there, and the companies that understand their local markets and are able to adjust to the prevailing conditions should be fine,” he said. Gable offers his top five tips for managing in a down market – or any time. • Know your costs and control you costs • Look for new market opportunities and diversify your product lines • Find ways to add value to your products • Train, retain and reward your employees •Shore up your relationships with customers – both old and new “These are common sense things that are part of the culture of the leading edge companies,” Gable said. “It sounds simple, but it’s a formula that works.” 30 MARCH/APRIL 2008 | PRECAST INC. altered dreamstime.com http://dreamstime.com

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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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