STAFDA News, August/September
STAFDA Directors' Mid-Year Reports
At STAFDA’s summer Board meeting, Directors reported on business conditions in their regions. The full reports are on STAFDA’s Web site, but here’s a synopsis:
Region 1: Dan Steier, Duo-Fast Northeast: Record-setting winter storms resulted in hundreds of collapsed roofs and buildings. Spring rains delayed the building season. Nevertheless, Region 1’s economy is steady with signs of improvement. The “new normal” involves managing slower and smaller annual growth, leaner inventories, higher fixed costs and downward pressure on profits.
Region 2: Matthew Botts, Stronghold Supply: According to S&P/Case-Schiller, national home prices hit a new recession low in Q1 2011. Washington, D.C., was the only city in a 20-city study where home prices increased 4.3% on an annual basis. Foreclosures continue to drive down home values while adding unwanted inventory to a slow market. Today’s home builder won’t break ground until they can turn a profit.
Region 3 (outgoing): Robert Devers, A-JAX Co.: D.O.T. projects had been a bright spot in Q1 with a good bit of Buy American Act material being required. OSHA has stepped up enforcement of fall protection regs, giving those companies an opportunity to move product. The industrial market has also slowed. The bright spots are alternative energy sources.
Region 3 (current): Nils Lindbloom, The Tool Shed: I contacted distributors representing a cross-section of businesses. Their comments: In some areas affected by natural disasters, insurance rates have increased over 400%, so people are reluctant to rebuild; There’s a lot of margin pressure stemming from competition; Unless customers need the product, they aren’t investing any more than the minimum in replacement tools.
Region 4: Kramer Darragh, Darragh Co.: Gains in construction employment in Texas (4.1%) the past year haven’t resulted in a stronger commercial construction market. Oklahoma and Louisiana had gains of 3.7% and 1.2%, respectively. Oklahoma seems to be the strongest regionally, while Louisiana is holding its own. During the same period, Arkansas saw a loss of 5.7% in construction employment, and Dodge Report numbers are off 37%.
Region 5: Tom Gleason, ELFCO: While unemployment was around 11% in Chicago this time last year, April ‘11 improved to 8.7%. Manufacturers continue to push USA-made products, and new hospital construction has remained fairly strong in ‘11. Unfortunately, home sales fell in Chicago for the 11th straight month.
Region 6: Rick Stelzer, Merlin Stelzer Co.: Major construction projects are limited and smaller contractors are living job to job. Residential remains a sore spot with national starts almost 25% below last year’s numbers and permits down 42%. The few large-scale projects are inundated by area suppliers, keeping margins thin.
Region 7: Rick Lamb, Frank’s Supply Co.: New Mexico’s unemployment has risen to 8.5% due to slow residential and commercial construction and a depressed natural gas industry. Residential housing starts have fallen 80% since 2008. Recovery for residential construction in Arizona remains bleak. Employment in New Mexico’s construction industry dropped 3.4% in March and ranks 36th in construction job creation. The oil field business is strong with the rig count holding steady.
Region 8: Mike Kangas, Alaska Industrial Hardware: Alaska’s construction spending is up 3% from 2010 with the biggest increases in health care, utilities and education. Environmental review delays add to uncertainty surrounding most large-scale oil projects. In Idaho, construction employment is at the same level as 1994 and construction spending is expected to decline another 6% from ‘10. Montana’s outlook for ‘11 is flat. Utility infrastructure construction should stay strong and federal dollars for base realignment continues to create jobs. Oregon is seeing improvements but Washington’s woes continue with a 5% decrease in construction employment.
Region 9: Rod Gowett, Bay Tool & Supply: With California unemployment at 12.2% and Nevada at 14.8%, it remains an uphill battle in the west. California’s state budget is 64% of where it was in 2004. Hotel and casino projects in Nevada are very slow. Residential housing hasn’t changed much the past 24 months – foreclosures and short sales are holding up new construction. On the commercial and industrial side, there are a lot of empty buildings with few tenants willing to fill them.
Region 10: Harry Oblak, Grip Clinch Canada: The next few months will determine where Canada is headed. Consumer debt is outpacing income gains by almost 1%. Energy costs 25-35% more than a year ago. Retail sales are flat. Household debt is at the highest level. Provinces relying on manufacturing are possibly recovering. Housing should see about 19,000 new homes built in 2011.
In addition to the complete reports in the July Trade News at www.stafda.org, readers are encouraged to learn about STAFDA’s upcoming Convention & Trade Show, member services, and membership. For more information, please contact Catherine Usher, Member Services Director, at 800/352-2981; e-mail: cusher@stafda.org.
CONTRACTOR SUPPLY MAGAZINE
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