International Door & Operator Industry

JAN-FEB 2018

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.

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Page 46 of 142

MANAGEMENT 44 International Door & Operator Industryâ„¢ Construction activity, which had shown signs of weakness early in 2017, was up by 2.0% at the end of September on a year-over- year basis (the latest available data at time of writing). As reported by the U.S. Census Bureau (USCB), Total Construction Spending was $1,219.5 billion (Seasonally Adjusted Annual Rate), with private construction (77.3% of total) being up by 3.1%, while public construction (22.7% of total) was down by 1.6 percent. The drop in public spending was due largely to declining street, highway and other infrastructure projects. Of greatest importance for the garage door industry is spending for residential construction and improvements, and for commercial, industrial and institutional buildings. Total residential construction (new plus renovation) was up by 9.5% (dollars, not units), while non-residential building construction was down by less than 1.0 percent. The non-residential number warrants some additional explanation. The most important sub-category from a garage door perspective is "commercial buildings", which includes warehouses, service facilities, stand-alone stores and similar buildings, all of which require multiple entry systems. In the September Construction Spending numbers (SAAR), the "commercial buildings" category was up by 11.7 percent. However, some other non-residential building categories were down, most notably manufacturing structures by over 20.0% and office buildings by 7.4 percent. (continued from page 42) Early 2018 New Residential Construction Forecast Population growth continues to be quite small (less than .7% annually), as is new household formation rate. While growth is not the only driver of new-home construction demand, these factors mitigate against any rapid increase in the market for residential garage doors. As of mid-November 2017, 1.232 million new house completions were projected for the year (single- family plus multi-unit dwellings). We initially predicted that the number would decline to less than 1.16 million for 2018, reflecting the large decrease in the multi-unit sector (apartments, condominiums, etc.), that began in mid 2017. However, unexpected events plus the late 2017 acceleration of home prices has caused us to re-examine our expectations. Some of the expected increase in new single-unit dwelling construction is the combination of fire and hurricane disasters that hit central California and both Texas and Florida in late summer. It is difficult to predict how rapidly destroyed properties will be rebuilt or replaced, since both insurance claims and actual construction inevitably take longer to resolve than anticipated. If home-owners in seriously impacted places such as Monroe County, Florida (Key West) and Sonoma and Napa 58.9 94.1 100.0 112.5 128.8 137.8 132.5 121.5 108.8 104.5 104.6 107.3 120.8 130.9 134.4 135.1 137.2 139.3 20 40 60 80 100 120 140 160 180 200 Index Value The IDA Garage Door Activity Index Base Year = 2003 Designed, calculated and maintained for IDA by Zoller Consulting, Inc. Copyrighted material. May not be reproduced in whole or part without express written permission of the International Pre- Recession Residential Construction Peak Non-Residential Construction peaked as Residential Construction faltered Renovation arising from hurricane and fire disasters helps spur a late 2017 demand surge ahead of modest optimism for continued increases in average GD values & construction growth in 2018 Commercial construction benefitting from e-commerce logistical requirements to move inventories closer to demand ... Increased residential construction beginning to reflect increased home prices (continued on page 46)

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