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Monday, January 10, 2011

New year, new adventures

Happy New Year to one and all. Now, will it really be a "happy" new year for our industry? Personally and professionally, I do think by year end, we will look back and note that things have turned the corner. However, there are a few landmines that have popped up recently ... that could affect the positivity. Silver: it just hit a 30-year high, and predictions are that it will keep going higher. In fact, I have seen stories talking about silver going up to anywhere from 60 to even 86... (It's sitting now at 28/29). Silver is a pretty important player in a lot of what our industry provides, so a massive price increase will have effects.

In addition, the cost of lumber has been growing as well. I think everyone would love to get materials on returnable and reusable steel racks, but sometimes that's not possible. Major increases in wood also will take a toll. And last on my doomsday opener here: gas. Yep, I have been whining about gas prices for years... and now the predictions are $4 and $5 per gallon gas in the future. Yikes. All in all though I am still positive... it's a great new year ahead and we'll work through all the landmines thrown at us.

Elsewhere...

  • If you missed my year in review, you can find it here.
  • Also, if you missed it, the ABI did have a nice finish to the end of the year. Congrats to those of you in the Northeast; man, it looks pretty promising your way.
  • This week is the International Builders Show. I am hoping to get there for one quick day. As always, it will be interesting to see the attitude on the floor. That show sometimes can be a pretty decent indicator of the year ahead.
  • Did you happen to see the article on China Glass Holdings' expectations that their energy-related products will make up half of their sales by 2012? Right now, that segment is only 10 percent of their work... so of course my thought is at least China is getting and grasping the need for value-added, energy-related products. Also in that article, a very ominous line: "I'm a little worried about new supply in the glass market in 2011. Glass prices will be under pressure this year, although perhaps demand will help keep the falls capped," said Haitong International Securities analyst Zheng Zhihao. Wow, when the Chinese are worried about capacity... that really makes the mind race.
  • The fine folks from the Window and Door Dealers Alliance put out a piece here explaining the new tax credit rules for residential windows. I know most people who read this blog are commercial folks, but this question does sometimes cross over, and heck, it's good just to know.
  • Also for 2011, I started yet another phase of a lifestyle change... otherwise known as a diet. Since I am now bigger than most offensive linemen in the NFL, and more importantly, I am running out of clothes that fit, I had to get back on the wagon. So much fun just eating like crazy.... Oh well. So with that news, if you have stock in Domino's or M&M Mars, you may want to sell... because their biggest customer is now off the market for awhile.
  • Registration is open for Glass Week and BEC. Some very good pieces yet again on tap for that event. If you have never gone or haven't been in a few years, give it a go. It is worth it on several levels.
  • Funniest thing I saw during the holidays? When I was in L.A., I saw a van advertising a local plumber. His motto was in all seriousness: "The Smell Good Plumber."  I never, ever associated my need for a plumber with the smell he might leave behind.
  • By the time many of you read this, the BCS National Championship will have passed... but so I am on record... I am going with Oregon.... I think it's a close first half, but Oregon wears 'em down in the second. Final score: Oregon 41, Auburn 24. 

Read on for links and video of the week... 

Max Perilstein is chief marketing officer for Vitro America, Memphis. Write him at mperilstein@vitro.com.

The opinions expressed here are those of the individual author and do not necessarily reflect those of the National Glass Association, Glass Magazine editors, or other glassblog contributors. 

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Monday, January 3, 2011

Taking the bad with the good in 2011

In anticipation of the coming year, I polished my crystal ball, hoping for a clear picture of what 2011 would bring personally and professionally. Unfortunately, the picture was a bit blurry, clouded by a stagnant economy and cautiousness among forecasters regarding the year ahead. While most agreed the economy would grow, few completely ruled out the possibility of a "double-dip" recession. While they said total construction starts would rise, they also cited a number of variables that could affect those predictions. Overall, I got the distinct impression that everyone was hedging their bets in regards to 2011. It seemed the only sure thing was that recovery would be slow, for the economy, the construction market and, consequently, our industry. 

In times like these, it would be great if economists could tell us exactly what to expect so that we could prepare. Wishful thinking aside, we do have the opportunity to familiarize ourselves with the economic and construction forecasts, and prepare for the future in the way we're most comfortable. With that in mind, the January 2011 issue of Glass Magazine features articles on the overall economy; the nonresidential, housing and remodeling markets; as well as the fabrication segment.

Some highs and lows for the year ahead:

First, the good news. For the construction industry, "the worst is over," according to Keith Fox, president, McGraw-Hill Construction, New York. Following four years of decline, total construction starts are expected to move in a positive direction in 2011, increasing eight percent over 2010 to $446 billion. See "The slow climb."

The bad news: Both nonresidential and residential construction starts will remain far below pre-recession peaks this year, leaving the construction segment with a long way to go before we can rest easy. There is also the lag time between construction starts and spending to consider. Construction starts typically lead construction spending by at least a year, explains Gary Danowski, vice president, PPG Industries, Pittsburgh. "Because glass is one of the later expenditures in the construction cycle, it will take a while for expected growth to positively impact the glazing industry," he says.

The good news: For retailers, the remodeling market shows potential in 2011, with homeowner spending expected to increase 12.8 percent this year, according to Harvard University's Joint Center for Housing Studies. The recovery began in fourth quarter 2010 and should pick up steam going into 2011, buoyed by low financing costs and a wave of previously foreclosed homes coming back on the market and in need of renovation, according to Kermit Baker, director of the JCHS Remodeling Futures Program. See "Delayed reaction."

The bad news: For those offering window replacement services, tax credits—or the lack thereof— could affect business this year. On Dec. 4, 2010, the U.S. Senate rejected a proposal by Sen. Max Baucus (D-Mont.) that sought to extend and modify the existing home retrofit tax credit for windows that qualify toward energy-efficient home improvements, according to a release from the American Architectural Manufacturers Association.

The good news: Fabricators are taking advantage of slow market conditions to reevaluate their business plans and product mix, according to Glass Magazine's informal survey. Nearly 70 percent of those surveyed said future expansion plans included adding new products. That said, a significant percentage of fabricators are taking a “wait and see” approach to 2011, with 25 percent of those surveyed reporting they had no expansion plans in place.

 

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