Rural builder trends: Builders and suppliers weigh in on today’s industry issues

– b y O l i v e r W i t t e –

“Slow and steady wins the race.” —Aesop’s Fables—

Thank you, Aesop, but that’s no fable; it’s true, as rural builders are discovering as they dig out from the Great Recession. The surge in orders that they had expected for post-frame buildings has not materialized. Business is improving – gradually, to be sure – but at a pace that appears to be sustainable. This is good news because it makes planning easier than it would be in a climate of fits and starts.

A survey of building industry leaders in August reveals few complaints about shortages of basic components such as wood, steel, labor and money. Costs appear to be holding steady and inventories are being replenished.

Of course, generalizations require qualification. Differences may be found in building types and in locales. Laws, regulations and code requirements seem to get ever more onerous. Competition spreads out the available work and cuts into profits. Some parts of the country are recovering faster than others. And not everyone agrees about prospects for the future and what challenges lie ahead for rural builders. 

“Guardedly optimistic,” was the way Terry Burrow, president of Burrow Post- Frame Supply in Gibson, Okla., looks at the future. Burrow’s business is part manufacturing, part distribution and part lumber yard.

 “Things are going well,” Burrow said. “We’re still working off a pent-up demand from as far back as 2008.”

 Burrow said he is building inventory, cranking in more overtime and trying to get comfortable with the latest extension of city building codes into rural areas. He is finding that the current crop of owners are needing larger buildings. This results in bigger orders, especially of steel, with more orders passing through steel service centers, which he described as a short-term fix. Some problems with lumber are being eased by working with alternative suppliers.

Labor problems also are on the mind of Steve Eversole in Lancaster, Ohio. “We kept a good core of people, but now we are having a problem getting qualified people who can pass a drug test,” Eversole said. “A lot of people left the industry during the latest downturn. But there’s no magic bullet. We’re passing on some work that we can’t get to. I’d rather do quality work than to let the quality slip.”

  Other issues cited by Eversole included government regulation, storm water, zoning and architectural review.

  “They run the cost up greatly,” he said. Jeff Henry, who has his ear to the ground as president of the National Frame Building Association, said he is hearing about changes in the building type segmentation. Henry agreed with Burrow that the demand today seems to be for fewer but larger buildings. The growth is coming primarily in residential and commercial buildings, he said.

  Symun Systems, Flushing, Mich., agreed with previous comments about larger buildings, especially for agricultural purposes, but suggested that the impression of growth might come simply from the fact that larger buildings make a bigger impact than smaller buildings and thus generate more buzz. Most of the comments about large buildings, Symun said, were coming from builders in the West, especially Montana, Wyoming, Idaho and the Dakotas, in part because of the boom in shale oil. Housing, which took off early in the year, went cold by midsummer, in part because of rising interest rates. Home owners are putting their money into renovation and remodeling. Most lumber yards, which are an important customer for Symun, were described as doing extremely well, except for those that live on residential construction. Symun cited one large chain that was reinventing itself as a pole-barn builder. The key point was that Symun was not being asked to modify its designs to compensate for shortages or price surges. Symun System publishes software for designing and estimating post-frame buildings and stud-frame garages and decks.

 Steel is not in short supply either, according to Adam Haynes, marketing, Central States Manufacturing, Lowell, Ark. The company manufactures metal building components for east of the Rocky Mountains.

“Growth is mostly a matter of finding qualified installers and getting people trained,” Haynes said.

 Weyerhaeuser reports a balance between supply and demand. The surge in building activity during the first quarter has leveled off at a growth rate described as “sizable” by Neal Shunk, marketing manager for the forest and wood products company. Multifamily and light commercial buildings have been the most active market segments, Shunk said. Prices are rebalancing at higher levels in anticipation of incremental growth next year.

 Builders should expect some volatility as the economy continues to recover from the recession, Shunk said.

Nor is plywood in short supply, according to Joe Elling, director of market research for APA, in Tacoma, Wash. Plywood production was up 3 percent and OSB production was up 6 percent during the second quarter of this year, compared to the same period a year ago. Elling attributed the gains to increased demand.

 Elling said he was seeing positive numbers in building for the lodging industry, mostly because it had been so depressed during the Great Recession. Office building also shows improvement, he said. The biggest decline is in educational building and government building, especially at the state and local levels, as they cut back on spending and staffing.

Builders are searching for better-quality materials, said Brent Leatherman, design engineer for Timber Tech Engineering of Kouts, Ind. Leatherman said he is seeing more demand for machine stress-rated products and for laminated veneer lumber used for beams and headers.

“Both are related to the reduction in design values for southern pine that went into effect June 1,” he said. Southern pine is not as stiff or strong as it used to be. Gains also were reported in the demand for alternative foundations, especially Perma-Column and Sturdi-Wall brackets, as opposed to embedded pressure-treated columns.

 Leatherman also noted an increase in building sizes, especially for agricultural purposes. Farm machinery is getting bigger and more expensive, he said, and that creates a demand for shelter, which requires larger buildings with wider and taller doors.

 “We’re also seeing an increased demand for buildings for beef cattle,” he said. “They are really cattle shelters but they must be open for air flow, which creates a challenge for lateral stability.”

 The view from the architectural perspective was similarly upbeat. Kevin Miller, AIA, a principal in Miller/Watson, Columbus, Ohio, praised the truck storage building featured in the May issue of Rural Builder. It is a showpiece of post-frame construction. Comparing wood vs. steel, he described post-frame as a “slam dunk” for spans up to 80 feet.

A renewed emphasis on energy conservation and fire safety is driving design decisions by members of the Metal Building Manufacturers Association. Charles E. Praeger, Cleveland, general manager of MBMA, agreed that activity coming out of the recession has been slow by steady.

 “The drop-off was significant, but we’re starting to make real progress, although we still have a long way to go to get back to where we were,” Praeger said.

“The construction market won’t fully recover to pre-recession levels until 2016 or 2017.”

 Energy markets are spawning much of the current growth. He described the healthcare building market as “viable,” although picking one market over another is difficult because of regional variations. “It’s still a challenge to get credit and financing,” Praeger said. “We are very puzzled about the direction of the economy due to political issues. It is affecting owner decisions to build.”

Nevertheless, Praeger saw no shortages of materials, labor or any other parameter that might hold back the growing demand for metal buildings or construction as a whole. He described the growth as “slow and steady.”

 “Spurts are what puts pressure on the supply chain, but we haven’t seen any of that,” Praeger said. “MBMA has been investing heavily in technology and research to develop high-performance energy approaches because we know that energy codes are becoming more restrictive.”

He also sees the current business climate as favorable for growth. “I expect a slow and steady recovery – if there are no electric shocks,” Praeger said.

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