This time last year, I sat down to share my thoughts with you on the outlook for the construction market in the coming year. After reading more than a half-dozen reports and attending a forecasting meeting, I predicted that 2003 wouldn't be the turnaround year everyone was hoping for. The numbers just weren't there. And as we close the door on 2003, I think most of you will agree this year's events support that prediction.
So here we are one year later, and it's time for me to once again don a silly hat and cape, hold a stack of reports to my forehead, and imitate the Great Carnack. Unfortunately, I don't think many of you will enjoy this routine. The story seems pretty much the same. Once again, the market projections remain relatively flat for 2004.
McGraw-Hill Construction Dodge forecasts total construction starts will edge up 1% to $509 billion in 2004. But their 2004 forecast calls for a slightly different mix in growth markets this year.
According to their forecast, even though federal and state budgets are tightening, the public works sector is projected to see a modest increase (2%) after suffering a 10% decline in 2003. After struggling for several years, the income property sector is also projected to rebound at a healthy clip (9%). And although the level of plant construction remains very weak, the manufactured buildings sector is projected to rise (9%) as the economy improves and the capacity glut recedes.
The report goes on to project the single-family housing, electric utility, and institutional markets will fall off their 2003 levels. After riding high for many years, the single-family housing market is projected to finally lose a little steam and fall back (-2%) from its record levels of the last few years as interest rates starts to rise. As was the case this year, the electric utilities market is again projected to suffer another double-digit decline (-19%) as this sector tries to work through its excess power plant inventory. And although the strength of the single-family housing market continues to help push the institutional sector, a reduction in state and municipal budgets is projected to contribute to a reduced pace for school construction, which translates to a downward projection (-1%) for the institutional market segment.
So here we are one year later, and the story remains pretty much the same. Some markets will be up and others will be down, which translates into a modest strengthening of the overall market. My advise? Get used to it. The glory days of construction in the late '90s and early 21st century may never return. The key to growing your business today is positioning your company to take advantage of the latest “hot” markets. And the only way you can do that is by staying well informed.
To that end, the staffs of EC&M and Electrical Wholesaling (EW) have poured over the latest forecast data and assembled comprehensive regional reports specifically for you to use in charting your course for 2004. For a look at the market from a design and construction standpoint, turn to page 26 and read Staff Writer Amy Fischbach's article, “Slow Road to Recovery.” For a look at the market projections through another set of eyes, visit the EW Web site at www.ewweb.com to see what experts in the electrical distributor market have to say about the year ahead.