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/95501
MANAGEMENT (continued from page 51) of new residential construction is speculatively built for sale, the remainder being built by or for landowners, or built as rental property). Moreover, the inventory of new single-family homes for sale remained at a record low level of 141,000, which helps account for the spurt of new permits issued in August and September. Before leaving this brightening picture of the housing market, it is worth repeating that both the quantity and quality of garage doors per new dwelling continues to increase. One of the reasons that the Garage Door Index did not fall to the depths of new home construction indicators in 2009 and 2010 was the rapid increase in value per door unit. Even with a few exceptions, the average value of doors installed in new houses has increased by over 28.0 percent across the last thirty months. This refl ects both price increases and dealer success in selling the importance of upgrading construction specifi cations for garage doors. Additionally, fewer new houses are being built without parking facilities and nationally, nearly 21.0 percent have three or more garage spaces. Non-Residential Construction As is usually the case toward the end of the calendar year, total non-residential construction moved downward as projects are concluded. However, total spending for commercial construction remained about 9.0% above the same period one year ago. Historically, non- residential construction lags behind the overall economy by one to two years (remember the peak of commercial activity was in 2008, long after the general economy had begun its downhill slide). General economic conditions are brightening, with consumer confi dence growing and expanding residential construction as noted above, thus the current slowing should not be viewed as the beginning of a trend. Two factors may be contributing to a slowing of non-residential construction. First, infl ation-adjusted Gross Domestic Product (GDP) growth was reduced to a 1.3% seasonally adjusted annual rate from the previously reported 1.7%. 52 Among the factors infl uencing this reduction is a slowing of new capital investments by tax-strapped States and municipalities. The second factor weakening new non-residential projects is the prolonged drought affecting much of the central U.S. While the drought effects should be temporary, they have conspired to postpone school and healthcare projects that are property tax dependent, and some agriculture construction that is redundant in light of poor crop yields. Regional Variations Virtually any current report on the state of the U.S. construction industry uses the term "mixed" at some point in the dialogue. Some areas are experiencing vigorous construction activity (e.g., Washington-Arlington- Alexandria and Nashville); some are rebounding with modest construction growth (e.g., Charlotte and Denver), and some continue to be plagued by unemployment and excess workspace capacity (e.g., Memphis, Tampa and Phoenix). As a consequence, door dealers in different locations feel quite differently about the state of the economy. Although it sounds simplistic, those areas with strong employment opportunities will thrive, while those with limited jobs and depleted industry resources will continue to struggle. From a sheer growth percentage standpoint, construction in the energy producing areas of the North Central U.S. (North Dakota, Eastern Montana, etc.) continues to be attractive. However in terms of total dollars of activity, Washington, Houston and Boston remain out in front. Overbuilding during the construction boom (including projects of dubious long-term value) has left some markets with excess capacity problems that will take many years to resolve. Markets such as Las Vegas, Phoenix and Orlando will struggle to revive their construction economies until local conditions produce the jobs and investment capital necessary to stimulate a revival of building activity. Of course, even in weak construction markets some activity develops, and it is often the result of aggressive dealer actions. International Door & Operator Industry™ Aggressive Marketing of Retrofi t Doors Yes, we have argued the point in previous columns, and yes, some dealers are tired of being exhorted to market their product, but the fact remains that most garage doors, both residential and commercial, are subject to improvement by replacement. Nearly 70.0 % of door-relevant non- residential Value-Put-in-Place (about $225.2 billion) is comprised of "additions, alterations, conversions, expansions, reconstruction, renovations, rehabilitations, and major replacements". In short, most non-residential activity is retrofi t activity. In locations where the value and functionality of buildings can be enhanced by replacing and upgrading doors, docks and operators, aggressive dealers have worked with owners and contractors to develop improvement plans. In short, such dealers are participating actively in the formative stages of redevelopment, not simply waiting for the phone to ring. As 2013 begins, there is tempered, but real anticipation of prolonged improvement in construction activity is most areas of the United States. Certainly a general construction recovery will benefi t the garage door industry. However, focusing on retrofi t markets and a continual upgrading of product quality and value have already led door dealers and manufacturers to a recovery that has been quicker than construction activity as a whole. John E. Zoller and David H. Bowen comprise Zoller Consulting, Inc. of Wooster, Ohio. Zoller Consulting provides consultation of managerial effectiveness and fi nancial performance of construction related businesses. They also offer customized seminars and training sessions. In addition, Zoller Consulting provides acquisition management, including fi nding 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.