Swimming or sinking in 2009

Treading water.

That’s the image that comes to mind as folks in the rural building/post-frame industry talk about the year that’s just ended.

In fact, not a lot of people seem eager to comment on the year at all. It’s as though everyone was just happy to see 2008 end.

No wonder. When fuel prices made motorists gasp and most vehicles began to look like voracious guzzlers, drivers  tried to tame the fuel beast that was swallowing wallets in a single gulp. Many people simply made fewer trips.

Now that gas prices are down to a more reasonable level, everyone’s just hoping that crisis is over. But like swimmers on a beach that had a shark attack recently, it might not be safe to go too near the water just yet.

On the upside, many people learned valuable lessons about fuel consumption. It was a mixed blessing that people learned how to cut their mileage, found ways to avoid making some trips and reconsidered their overall budgets, both in business and in their personal lives.

Builders felt and will continue to feel the sting of rising prices, the drop in the construction market, the rising tide of unemployment. Indeed, there are companies in this industry and most industries that are forced to cut spending and find new ways to economize.

Asking the hard questions

As the year was ending, Rural Builder e-mailed questionnaires to a few dozen folks who had contributed to articles in the past year, and put the same questions on the web site, Constructionmagnet.com. It asked for responses to questions such as:

• How do you characterize the business climate of 2008?

• Do you feel you made progress in ’08, held your ground or slid backward?

• What factors played a role in where you stand today?

And we asked folks to go out on a limb over the old swimming hole and take a look at 2009. Hopefully, this exercise didn’t make people feel as though they were being forced to “walk the plank” and plunge into an icy sea.

A few hardy respondents were brave enough to share their views of the year that ended and the year that has just begun.

Kicking and paddling

Water — literally — played a role in the way Kim Gee, president of Gee Building Systems in Iowa viewed the year. She said the ag market was fabulous, and that farmers who made money spent it improving their buildings.

However, after a wetter than normal spring, delayed plantings and decreases in bushels per acre yields, farmers also got hit with out-of-line prices on chemicals, anhydrous ammonia and seed.

Fellow Iowan, Chris Spaeth of EPS Buildings in Graettinger, used a different metaphor in describing the year. He called it a roller coaster where raw materials prices were concerned, but rode the coaster as some markets gained and some lost.

Overall, he feels his company held its ground.

Tim Little, president of Little Construction in Mount Holly, N.J., says he held his ground, too, although he called the year “lean.” “The ‘fat’ times are gone,” he says.

Little Construction is “in a safe position because we don’t spend wildly and we always put something away for slow times,” says Little. He’s looking to weather the rainy days that continue to be in the forecast because, he says,  “Our reputation — 27 years in business — aids in allowing customers to feel comfortable doing business with a company that has been around for a long time and won’t fold up in the middle of their project.”

On the supply side, Randy Ridenour, Atlas Bolt & Screw in Ohio, said the year was good until Thanksgiving. Then, with the turkey ready for the table, the market turned into a turkey, too. Still, with more than three quarters of the year logged onto the positive side, Ridenour said Atlas gained market share in ’08, thus gaining ground.

The key to growth for Atlas, Ridenour says, is the sales team’s ability to communicate why it is a good business decision to do business with Atlas.

Still, Ridenour says, the company is preparing for reduced volume in ’09 and is being cautious about all its spending. He predicts that the year will be a tough one, with the first quarter alone being “off” by as much as 40 percent. He admits he’s not looking for improvement until 2010.

Economic recovery, in Little’s view, too, is going to take awhile. “I can’t see this situation clearing up very soon,” he says, and that the long slow climb will force change. However, he doesn’t see that as all bad. “Correction was necessary and it will take some time,” he says.

He mentions that it’s been a consumer’s advantage recently, with some would-be customers feeling they’re in a position to dictate how much they’d be willing to pay for a project.

In a couple of further observations on the economy, Little says the (1931) Davis-Bacon Wage Act (requiring paying prevailing wages on public works projects and calling for the hiring of local workers) needs to be rescinded, but he’s in favor of instituting government work projects for the benefit of the country and to “get things going.” But, he says, without mandated wage reform, he doesn’t see government work projects as beneficial.

Heads above water

While they don’t entirely agree on the ’08 picture, all express optimism. Or more precisely, a refusal to sink into pessimism.
Spaeth says it’s time to diversify products and compete aggressively. The new year “is a time to build the systems for long term needs,” he says. His strategy includes keeping costs down while building solutions.

“We need to  create new competitive jobs and new products,” he continues. He says EPS is doing what it has always done: finding a way. “The path has many curves,” he says. “Many may not survive, but the ones that do will come through stronger and better.”

Gee doesn’t like the gloom-mongering news media and thinks that’s hurting the economy, but she is optimistic about a new administration in Washington and is hopeful that some help will come from that direction. “Getting steel prices lowered will help, too,” she says.

To keep afloat, though, Gee says her company is watching expenditures carefully, making no major purchases unless they’re necessary and studying new sales avenues. But, she says, they will keep their employee level steady.

Little makes note of the gloom peddlers, too. “ I believe we need to somehow make concerted efforts to shut off the doom and gloom rhetoric and focus on the positives to help restore consumer confidence, “ he says.

Little’s  philosophy? “Stay a lean, mean fightin’ machine. Chase any and all work. Shop overhead and stay positive.” RB

Editor’s note: Readers who wish to add comments may e-mail them to renee.russell@fwmedia.com. We’ll consider comments for publication in upcoming issues of Rural Builder. Or access the same questions these respondents answered at http: www.constructionmagnet.com/article/2009forecast/

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