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How Will it Affect Us?


Mar 1, 2001 12:00 PM,
Nathaniel Hecht, editor

THE PREDICTIONS ARE IN: ANOTHER YEAR OF GROWTH IN 2001, WITH theconstruction industry expanding in virtually all sectors for nearly adecade now. While this is good news, it is also the third year in a rowshowing a decline in the rate of growth, now down to only 1% accordingto the research of the McGraw-Hill Construction Information Group. Itis impossible to predict based upon this recent economic trend if areduction or reversal of a decade of growth is imminent; but for 2001,McGraw-Hill predicts significant increases in many market segments richin opportunities for sound and video contractors including:

  • 3% in institutional buildings (includes schools)
  • 2% in religious building construction
  • A whopping 9% in manufacturing building construction
  • 6% in public works sector construction
  • 2% in income properties
  • Continued FAA support of airport capital improvements through2002

On the down side, federal lenders have tightened standards, whichshould result in a slowing of purchases in multifamily, business andincome-producing properties. Furthermore, amusement buildingconstruction (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 toall of this? First, do not believe everything you read. In early 2000,some in our industry were grousing about growth opportunities in theconvention and sports facility segment. The current analysiscontradicts this assertion. Interpretation of data can be a stickybusiness when predictions of growth are concerned.

Do not be fooled when looking at statistics. A bit of readingbetween the lines is necessary when it comes to interpreting data. Takethe residential market, for instance. Since the market is tightening,the quick assumption is for growth in audio and video contracting tobegin a decline. Failure to acknowledge that when homeowners can notmove they often upgrade by adding structured wiring, home theater andother entertainment enhancements could cause you to miss this business.Drastically altering your business plan because of poor interpretationof the data could be a costly mistake.

Although our new president is fond of talking recession whenever thepress is around, past experience has shown that there will still beplenty of people who need to be entertained and even more who must keepup with changing business technology. Considering the projected federalbudget surplus, our strong GNP and the careful way our money leadersare regulating the economy, we may end up avoiding “the Rword” altogether. We at S&VC will continue to report onindustry developments and business trends to help you profit fromthem.

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