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Industry Prepares for Another Year of Modest Construction Spending

Post Time:Mar 26,2012Classify:Industry NewsView:247

 

The latest market data through February only reinforces what the industry has been feeling for a while and what the Architecture Billings Index has already foretold, according to Oliver Stepe, senior vice president at YKK AP in Austell, Ga. "Specifically, overall we should be prepared for another modest year of construction spending or possibly even another downturn," he says.

 

According to information from the McGraw-Hill Construction, new construction starts in February dropped 7 percent from the previous month at a seasonally adjusted annual rate of $376.0 billion. Nonresidential building, at $127.6 billion (annual rate), dropped 7 percent in February.

 

"Certainly there is some noticeable drop in the demand based on the McGraw Hill report," says Jeff Leone, CEO of Trulite Glass & Aluminum Solutions, headquartered in Deerfield Beach, Fla. "There are a couple of important trends here: clearly, the amount of public money being spent is dropping and is non-existent in some parts of the country. However, there's a positive trend in that the projects that are beginning are financed by private money. I think that's encouraging and it's a solid indicator of the future."

 

All is not gloom and doom, Stepe agrees. "Looking deeper, you will find that some positive signs remain," Stepe says. "The traditionally larger segments of the market, such as store and office construction, are seeing some gains, and if these sectors hold pace it will offset declines in the public building segment by far and support stronger recovery for the glass industry over the next 12 months."

 

Additionally, with trends toward the increasing use of higher-performance products to support energy conservation, the glass and facade industry holds a unique position in the construction market space, Stepe says. "By increasing the sophistication level of facade systems, we have the powerful ability to deliver a direct and immediate positive impact to the bottom line for building owners, while creating more desirable spaces for building occupants," he says. "The opportunities for innovation are boundless and from that standpoint the market conditions are what companies choose to make of them. It is truly a dynamic, pivotal and exciting period for the glass industry and we are at the cusp of a transformation on our role and importance in the built environment."

 

The other market opportunity is in refurbishing, Leone says. "There [are] lots of buildings and commercial real estate that needs to be refurbished," he says. "There will be a lot of those. At Sun Capital, we own restaurants and many retail stores. Those chains are starting to do things, and that's an important indicator. We're seeing some store refurbishment; some of the retail guys are starting to put new stores in and starting to spend money. That's encouraging."

 

Felix T. Munson, president of Anchor-Ventana Glass in Round Rock, Texas, says he's seeing more renovations on existing properties. "The commercial side of the business is flat to negative," he says. "Until the existing properties get absorbed and the lending standards get better, we won't see an overwhelming change. A lot of public works, such as schools and state facilities, won't improve. On the other side of the coin, there are some valid retrofit projects going along with the absorption of properties. There [are] some private projects going up."

 

The idea is to not get discouraged and keep your chin up, industry professionals agree.

 

"Guardian takes a longer, broader view of construction data," says Earnest Thompson, director of corporate marketing and brand management for Guardian Industries Corp. in Auburn Hills, Mich. "We continue to take care of business even if the construction data aren't always on a vertical or straight line. We are continuing to introduce the products, provide the tools and programs that position us and our customers for today and the future."

 

Leone expresses a similar view. "We all need to continue to focus on processes and our customers," he says. "The industry will recover and we need to be prepared for that. We're all going to struggle with collection to make sure our contractor customers get their money. It's very important for the industry."

 

Source: http://www.usgnn.comAuthor: shangyi

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