CONSTRUCTION INDUSTRY GROWTH
Mar 1, 2001 12:00 PM, Nathaniel Hecht, editor
THE PREDICTIONS ARE IN: ANOTHER YEAR OF GROWTH IN 2001, WITH the construction industry expanding in virtually all sectors for nearly a decade now. While this is good news, it is also the third year in a row showing a decline in the rate of growth, now down to only 1% according to the research of the McGraw-Hill Construction Information Group. It is impossible to predict based upon this recent economic trend if a reduction or reversal of a decade of growth is imminent; but for 2001, McGraw-Hill predicts significant increases in many market segments rich in opportunities for sound and video contractors including:
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3% in institutional buildings (includes schools)
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2% in religious building construction
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A whopping 9% in manufacturing building construction
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6% in public works sector construction
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2% in income properties
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Continued FAA support of airport capital improvements through 2002
On the down side, federal lenders have tightened standards, which should result in a slowing of purchases in multifamily, business and income-producing properties. Furthermore, amusement building construction (includes parks, arenas, theaters and convention centers) is expected to drop by around 11% according to the study.
How are we as contractors and business planners supposed to react to all of this? First, do not believe everything you read. In early 2000, some in our industry were grousing about growth opportunities in the convention and sports facility segment. The current analysis contradicts this assertion. Interpretation of data can be a sticky business when predictions of growth are concerned.
Do not be fooled when looking at statistics. A bit of reading between the lines is necessary when it comes to interpreting data. Take the residential market, for instance. Since the market is tightening, the quick assumption is for growth in audio and video contracting to begin a decline. Failure to acknowledge that when homeowners can not move they often upgrade by adding structured wiring, home theater and other entertainment enhancements could cause you to miss this business. Drastically altering your business plan because of poor interpretation of the data could be a costly mistake.
Although our new president is fond of talking recession whenever the press is around, past experience has shown that there will still be plenty of people who need to be entertained and even more who must keep up with changing business technology. Considering the projected federal budget surplus, our strong GNP and the careful way our money leaders are regulating the economy, we may end up avoiding “the R word” altogether. We at S&VC will continue to report on industry developments and business trends to help you profit from them.
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