Tag Archives: construction

It’s a double-edged sword for the building products industry today.

The production and demand slump during the pandemic has turned into a boom. Residential and commercial building is on a high.

Yet, challenges still exist for the building products industry as it navigates these uncertain economic times.

While each company has its unique issues, our team of subject matter experts have compiled the most common challenges we’re seeing for the building products industry today, and share productive solutions we’re recommending to our clients to tackle them.

In this eBook you will learn how to overcome the following:

These strategies will help you get started on combating industry challenges and carry you through these uncertain economic times. If you need more in-depth help or would like to discuss specific issues you are experiencing, give us a call today. We listen first and then advise on how we can make your operations more efficient.

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It’s easy to forget that, connected though they may be, building materials and construction are two distinct industries.

That said, they almost always experience similar economic challenges or act as augurs to one another’s success or failure. While one might think building materials would inform construction more often than the other way around – changes to a product, after all, could greatly alter how a user uses it – in many ways the reverse is just as true.

What current construction trends will impact how building materials manufacturing performs this year?

U.S. economy stabilizes and takes off in 2017
Simply put, if people are building, the building materials industry can expect good sales numbers.

According to the American Institute of Architects, construction will soon overcome the stagnancy it struggled against at the tail end of 2015 and throughout 2016. This year, spending on construction is projected to grow by 6 percent, with a majority of investment coming from the public sector (government and residential). In theory, this comports with current events in Washington, D.C. The Hill reported the Trump administration plans to wheel out a “massive rebuilding package” in the president-elect’s first 100 days in office.

The AIA stipulates, however, these increases depend entirely on good performances from volatile variables such as moderate job growth, continued housing market recovery, and both national and international confidence in American manufacturing. Estimates from Metrostudy show about three new construction jobs were created for every house built in 2016, so the success of building materials as fed by construction may be somewhat self-sustaining as far as the job market is concerned. After all, with larger construction workforces, contracting teams can take on more projects and require more supplies to do so.

Housing too should see a good year in 2017, with many economists predicting more than 6 million existing home sales, according to Gord Collins, as well as the creation of 160,000 new homes. The latter figure should carry on annually to 2024. That’s huge for construction and building materials – as Value Line noted, residential housing represents about 60 percent of all domestic construction spending.

Can construction take its services online? And can building materials manufacturing keep up?

Tech disruption may push construction out of pace with manufacturing
Widespread, cross-industry innovation and tech adoption throughout the private sector have only highlighted how little and how infrequently building materials and construction upgrade. Perhaps the resistance to change has something to do with the timelessness of these trades.

Nevertheless, the numbers don’t lie: In its 2016 industry digitization index, McKinsey rated construction the penultimate least digitized industry, one step ahead of “agriculture and hunting.” As the U.S. government plans to repair its crumbling infrastructure to boost the GDP, construction will have to rise to the challenge and implement new, tech-savvy methods for managing large-scale projects.

In turn, the building materials industry should ready itself for a big change. It is, after all, generally easier to upgrade the service sector than it is to upgrade means of production. Distribution too will factor heavily into the interplay between construction and building materials. As more contractors use the internet and apps to price shop, manufacturers must be ready to balance traditional brick-and-mortar channels with omnichannel logistics, all while keeping consumers happy and their brand value high.

Out of all other home goods manufacturers, the plumbing fixture sector has perhaps the strongest ties to the economy. What does the current U.S. economic status spell for plumbing, and how can businesses prepare for what’s to come?

Housing market pain points shared by home goods manufacturers
It should come as no surprise that the residential housing market has seen better days, even in recent years. Homeowners are still very reluctant to invest considerably in home improvement projects, let alone purchase actual real estate. According to the Joint Center for Housing Studies of Harvard University, data from 2014 shows remodeling is down more than 40 percent when compared to “pre-recession levels.”

In a $300 billion industry representing nearly 2 percent of the entire U.S. economic picture, that’s a substantial loss for many home goods manufacturers, especially those in plumbing. After all, while bathroom and kitchen renovations can add a great deal of value to a home, they typically represent extensive projects with high costs. And when the housing market is unstable, not even the financially savvy homeowners want to stretch their budget and take the risk.

Successes in the housing market and plumbing fixture industry go hand in hand.

Recovering housing market a boon to plumbing if manufacturers can keep up
That said, things are turning around. Not only are more people investing in home rebuilds in the last two years, but general recovery in the housing market has led to a doubling of single-family starter home purchases (when compared to 2008 recession lows) and a drop in interest rates for 30-year mortgages, as reported by The Wall Street Journal.

Both are good signs for plumping, so long as the industry can position itself for increased demand. With fewer families renting and more buying, the plumbing fixture industry should prepare itself for higher production levels. The need for operational readiness is further compounded by attractive financing options providing first-time homeowners with extra cashflow to invest in repiping their “fixer-uppers.” For these reasons and more, estimates from The Freedonia Group indicate 6.3 percent demand increases in the plumbing fixture and fitting industry annually between now and 2019.

Where should plumbing fixture manufacturers focus to plan effectively for the future?
How quickly can your fixture manufacturing facility respond to consume trends? How long is your average project lead time? Those are the kinds of questions that will keep this industry ahead of the curve.

For example, many homeowners and commercial property owners alike see great potential in low-flow fixtures, which conserve water and save on heating costs. No doubt wary homebuyers who finally took the plunge will still look for opportunities to cut costs long after much-needed renovations. If manufacturers can update their more popular goods to meet sustainability expectations created by consumers – and the government, don’t forget them – they’re liable to win out when the housing market returns to its former glory.

Broadly speaking, facilities should continually improve their abilities to predict consumer trends and develop actionable strategies, for profiting but also for planning and hopefully preempting future challenges. Tankless water heating systems, for instance, are gaining popularity. Differing from tanked water heaters, these units reside right at point of use and forgo traditional distributed hot water plumbing. As a result, many new homeowners looking to inject a little energy efficiency into their property may choose to go tankless rather than stick to conventional plumbing. Has your business targeted this consumer yet? Are your products compatible with tankless systems? Do you have a plan for the day when everyone has a tankless system?

So, where are the blockages in your pipeline? Take a look at the operations necessary to turn an idea into a salable plumbing product, focus on what slows things down and use data to streamline efficiency. Only then will your facility be ready to raise to new challenges in a post-recession economy.