Perhaps no segment of an industry has its finger
on the pulse of the market quite like its distributors. With strong connections
to both their manufacturing partners and the contractors they serve,
distributors have a firsthand look at both the local and national level.
Perhaps no segment of an industry has its finger
on the pulse of the market quite like its distributors. With strong connections
to both their manufacturing partners and the contractors they serve,
distributors have a firsthand look at both the local and national level.
Bob Feury Jr., CEO of Allied Building Products, was pleased
with last year’s results. “On the residential side, this was due to a high
level of storm activity, as well as the effect of inflation,” he said. “The
commercial sector was stronger than most anticipated. All in all, 2008 turned
out better than expected.”
There’s no way of predicting
exactly how the market will react this year, said Feury, so it is wise to brace
for the worst. “Housing starts are expected to be lower,” he said. “Without
storm activity, residential business could be down - I believe ARMA predicts it
will be down 15 percent. We could also have deflation, which would cut into the
gains made in 2008. Commercial business is expected to be off 7 to 10 percent.
The industry is in for a challenging year in 2009.”
Asked if
any events besides storm activity might improve business conditions in 2009,
Feury replied, “The big question is whether any of this federal money will help
construction in the next 12 months. With lag time, and permits, the answer
might be no. If it’s yes, the back half of the year we could see a turnaround
in the economy if the money is there and credit loosens
up.”
He advised contractors to concentrate on business
fundamentals, including managing their finances. “Number one, contractors have
to watch their overhead and their costs,” he said. “Be diligent about watching
your costs and managing your cash flow. It could be tougher to collect money,
and contractors’ lines of credit could have more restrictions in
2009.”
Allied has business training programs designed to
give contractors the business tools they need to succeed, as well as an array
of product and application training options. “Helping contractors run their
business has been our focus,” Feury said. “Our contractor training in the last
six to nine months has stressed business training over product training. The
last seven years have been pretty good. Managing a business in a down economy
takes experience and business training.”
He had these words
of advice for contractors who haven’t been through tough economic times before:
“Plan for the worst. You can always gear your business up. You have to
anticipate that it can be worse than you think and plan that
way.”
Feury pointed to increased awareness of green products
on both the commercial and residential side as hopeful trends, especially in
states that subsidize them. “In 2008, we saw two trends continue,” he said. “TPO
continued to gain market share, and the move towards environmentally friendly
products continued to gain momentum. We’re just on the cusp of some technology
changes. We could see a lot of innovation in the next year or two. Hopefully
the recent drop in oil and energy prices will not derail that, and people will
still do the right thing by the environment.”
Distributors Can Help Contractors Prepare for Challenges