In a tight economy, diversification can be a good idea, and
Mike Schwarz, Manager of Pricing and Merchandise Analysis for ABC Supply, said
distributors can help contractors expand their range of offerings as they keep
them apprised of pricing issues.
In a tight economy, diversification can be a good idea, and
Mike Schwarz, Manager of Pricing and Merchandise Analysis for ABC Supply, said
distributors can help contractors expand their range of offerings as they keep
them apprised of pricing issues.
“In 2008, residential new
construction was way down, and I don’t think people realized how bad it was
going to be,” he said. “Storm and hail activity at the end of the year sort of
offset the lack of new construction. If you were in the right spot
geographically, it might not have been so bad.”
In the
commercial sector in 2009, financing could become an issue, along with building
owners’ budget constraints, according to Schwarz. “A number of commercial
projects could be put off,” he said. “Expect another year of slow to no growth,
possibly contraction in some areas. It’s dependent on how things go. With the
new administration, road and bridge construction could be increased, and that
could put pricing pressure on asphalt. Transportation costs have come down,
helping a bit, but asphalt prices have not. Commodity prices are ping-ponging around
- aluminum and steel have dropped significantly.”
Working
with distributors can help contractors stay on top of price fluctuations, noted
Schwarz. “We always try to keep everyone informed about 60 days ahead about
pricing issues,” he said. “We keep looking ahead at pricing, and it’s critical
to communicate with our customers.”
He had this advice for
contractors: “If things are tight on a cash basis, keep the distributor
apprised and explore financing options.”
Diversifying can be
a good strategy in this economy, said Schwarz, and distributors have
manufacturer-sponsored training programs designed to help them make the
transition. “Distributors can help contractors expand into other product areas,
including areas they might not be familiar with,” he said. “We’ve seen a lot of
roofing contractors expand into other areas - siding, windows, gutters, decks.
We see them doing a lot more work, and they’re trying to do even
more.”
There will be some regional variation in the economy
in the coming year, according to Schwarz. “One of the things that will give an
indication of how quickly or how slowly the economy will turn around is the
amount of new home inventory. Until that moves, there could be slow to no
growth in residential new construction. Each section of the country is feeling
it at different points, depending on how overbuilt it is.”
Distributors Can Be A Valuable Resource for Contractors