Issue link: https://read.dmtmag.com/i/155946
CLFMI summer meeting attendees get construction, steel, health care updates from top segment leaders The Chain Link Fence Manufacturers Institute held its summer meeting July 10-12 at the Allison Inn & Spa in Newburg, Ore., with a program that included an in-depth picture of what the near-term future will hold in several key areas. Regarding the outlook for the critical end use markets, members heard from leaders in both the residential and commercial/public construction fields. From the supply side, a leading steel industry executive talked about the outlook for availability and costs over the next few years. Finally, in a critical cost-control area, an expert in employee benefits gave an up-to-the-minute report on how to form a company strategy to deal with the latest changes in the Affordable Care Act, which impacts all U.S. employers. Speaking as both a regional homebuilder and a member of the National Association of Home Builders leadership team, Justin Wood provided a "cautiously optimistic" outlook on the residential market. He noted that part of the reason for the optimism is the fact that the Consumer Confidence Rating is the highest it has been in four years. Homebuilder confidence is up even more, reaching a 6-year high, as housing prices are returning to normal. He noted that there are some things that are still on the "cautious" side of the equation, too. One factor is the trend toward home buyers needing a much higher credit rating than the general public, making mortgages still tough to get. There is also a growing shortage of skilled workers coming into the marketplace. Finally, foreclosures remain high (although concentrated in a few states) and appraisals are still troublesome, with almost all homebuilders reporting having lost at least one sale due to below cost appraisals. He concluded by saying that there is a trend toward smaller houses as an aging population is downsizing. In the commercial, industrial and public construction segments, there is still a flat market, according to Wayne Drinkward, CEO of Hoffman Construction, Portland, Ore. Hoffman is one the largest designbuild firms in North America, with annual billings of over $2 billion. His firm is active in both the public and private markets, and has built projects from airport additions to skyscrapers to power plants. Drinkward noted that government work has been slowing down in recent years as stimulus money dried up and many state and local governments are tightening their budgets. While overall nonresidential construction has been recovering somewhat in the past few years, it is still nowhere near what it was prior to the 2008 economic downturn. He pointed out that mid-sized projects have slipped the most, with most projects trending toward very large or very small. Part of this has been brought on by the aging of the industry, as small and medium-sized family owned businesses are being sold to larger companies. These larger firms have a competitive advantage because of their ability to invest more in the fixed costs of technology. Since the entire industry is operating on lower margins, larger firms again have an advantage. He closed by describing the way his firm is working with subcontractors and suppliers, and why he thought that this type of relationship would be a trend in the future. "Manufacturers will have to be more closely tied to specific project requirements," he said. "Early engagement in projects will be a necessity, and there will be more pressure for higher warranty expectations and outcome assurances. Project owners and managers will not be able to tolerate on-site fabrication and delays caused by sloppy work or jobsite injuries. "More products will have to be brought to the site pre-fabricated and ready to install, and green processes and enhanced safety will be the norm," he said. "Companies that can meet these requirements will find willing partners and plenty of work." Turning to the materials cost part of members' businesses, Michael Obermire, vice-president of sales and marketing for USS-POSCO Industries, talked about the steel industry outlook. He reminded attendees of the shift in the world steel production market over the past 12 years, when China's market share has risen from 15% to over 56%, and the U.S. is still a net steel importing country. He noted that one indication of future projects, the Architectural Building Index (ABI), has shown some improvement in the past few years but still has a way to go to get back to its historical peak. He said that scrap prices have continued to rise, even though there has been a recent slight downturn. Regarding the future, Obermire says that there is still underutilization continued on next page