Analyst warns glazing execs of forecasted recession
While the U.S. economy will grow through 2008, glass company managers need to prepare for a downturn in 2009 and 2010, according to Jeff Dietrich, senior analyst for the Institute for Trend Research in Concord, N.H.
Dietrich spoke to almost 100 attendees at the day-long Glazing Executives Forum, held Sept. 18 at the Las Vegas Hilton in conjunction with the GlassBuild America tradeshow.
“High energy prices, inflationary prices and higher interest rates are going to put the breaks on for consumers and businesses,” Dietrich said. “The recession we’re forecasting is going to be across the board, affecting all regions of the country in all markets, and everyone needs to be alerted.”
While glazing executives won’t be able to avoid the downturn, Dietrich said they can prepare for it and lessen its effects by diversifying business into several sectors of the nonresidential construction market.
Overall nonresidential construction will experience gains through the end of 2008, with some sectors continuing strong into early 2009, Dietrich forecasted. Retail construction will experience the first declines as consumers stop spending money.
Government construction, public and private education building, and health-care construction will fare best through the recession, he predicted.
“These sectors aren’t recessionary proof,” Dietrich said. “But if you don’t put all your eggs in one basket, you’ll be able to mitigate the effects of the downturn.”
Fred Perfetto, vice president and chief financial officer for Accurate Glass Works Inc. in Boca Raton, Fla., says managers also should take into account the needs of their specific geographic market while diversifying.
For us in Florida, the elderly care market is not going to go away, even in a recession,” Perfetto said. “You have to keep track of where the spending is going and follow those trends.”
To further prepare for a downturn, Dietrich said glass company executives should:
- Find and sustain a strong labor force that can deal with any challenges during a downturn
- Develop an energy policy to reduce consumption and save on fuel costs
- Invest in tools and technology that will increase efficiency
- Eliminate unnecessary expenditures and “don’t create overhead you won’t be able to afford later.”
See the October issue of Glass magazine to read about the other presentations during the forum.
This was the first annual GEF, developed by the Architectural Glazing Committee of the National Glass Association of McLean, Va. To learn more about the program, or to provide recommendations for next year’s forum, contact NGA Vice President of Association Services David Walker.