Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.
Issue link: https://idoi.epubxp.com/i/105596
MANAGEMENT (continued from page 51) to third quarter, which bodes well for accelerating construction demand. In private nonresidential activity, the largest category, power construction, including oil, gas and other energy projects, rose 1.6% for the month of October and 19% over 12 months. Manufacturing construction grew 3.6% compared to 2011. Commercial construction (retail, warehouse and farm structures) rose 1.2% in October and was up 9.5% for the year. Optimism for 2013 We are optimistic that some accommodation of the "fiscal cliff" issues will have been made before serious economic damage occurred. Additionally, we expect to see a continuing methodical growth of GDP, which will support a 6.2 to 6.8% increase in overall construction spending during 2013. We are not as ebullient about a dramatic upswing in housing production as the National Association of Home Builders, which is forecasting an increase of nearly 20.0% to a level of 900,000 new completions in 2013. Housing demand remains tied to employment and salability of existing dwellings, and both, while improving, remain problematic. At the prevailing mix of residential and non-residential garage doors, every $1.0 billion of garage door relevant construction (including residential) generates approximately $4.12 million of garage door demand (at value of manufacturers' shipments). Thus, a $2.0 billion drop in construction (assuming all of it was garage door relevant) would reduce door demand by $8.24 million, or about four-tenths of one percent. Although this seems like a very small impact, the problem becomes one of momentum. Once construction activity begins to wane, there is a tendency for impending projects to be postponed. In considering the relationship between garage doors and total construction, it must be remembered that home building was the primary victim of the recession, and doors are a larger dollar component of residential construction. With the demand for retrofit doors growing faster than demand for new houses, that relationship is even greater now than in 2006-07. However, it is more encouraging to look at the relationship of garage door demand and total construction activity in a positive light. If aggregate activity increases by $40 billion across the next 7 to 10 months, it will add almost $162.0 million of garage door demand. If that $40.0 billion is heavily weighted toward home building and replacement doors, demand could surge by nearly $200.0 million. For non-residential construction, continued development of energy resources in the upper west-central part of the country will translate into significant increases in door demand. The industrial and commercial sectors, particularly in places such as North Dakota, Montana, much of the Northwest and the Canadian Province of Alberta, will continue to expand at perhaps two to thee times the national rate. Business growth related to power, energy and manufacturing will run ahead of the rest of the economy in Texas, Oklahoma, Louisiana and the Coastal Southeast (except Florida). Retrofit activity will remain strong in both the residential and commercial sectors for all of the reasons we have reiterated over the last several two years, particularly the fact that an upgraded garage door delivers a substantial and conspicuous "bang for the buck". John E. Zoller and David H. Bowen comprise Zoller Consulting, Inc. of Wooster, Ohio. Zoller Consulting provides consultation of managerial effectiveness and financial performance of construction related businesses. They also offer customized seminars and training sessions. In addition, Zoller Consulting provides acquisition management, including finding buyers or sellers, locating funding sources, transaction structuring, and negotiating and organizing the transition to new ownership. Contact Zoller Consulting, Inc. at 330.262.8500 or John@zollerconsultinginc.com. 42 International Door & Operator Industry™