VOL. 34 NO. 13


Editor's Comments The Rise of Residential


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One of the best performing segments in the construction industry right now is residential. In the metal construction industry, we have survived over the last few years in large part because of investments in the transportation and aviation as well as education segments. But as we speak, our market is beginning to shift. Residential construction, both new home and remodeling, is seeing signifi cant increases in expenditures


and construction. Home buyers are accelerating buying because they see prices beginning to rise and fear that interest rates may go up as well. Those two increases are enough to create a sense of urgency and motivated people who have been sitting on the sidelines. In addition, movement in the existing market has begun to drive more remodeling activity as people prepare their homes for sale. And, for both, rising consumer confi dence is helping create more activity. This is good news for our industry and for the economy as a whole. I’ve seen estimates that the housing


market accounts for about 16 percent of our total GDP. For the last year, Metal Construction News and our sister publication, Metal Architecture, have been running a supplement on the residential construction industry called Metal Home Digest. As we’ve been researching this market, we’re discovering a little issue rising in the new construction


segment. Home builders and their suppliers are facing shortages of labor and materials as well as increasing material costs. This isn’t really surprising since the labor force had the snot knocked out of it during the last downturn and mostly moved to new markets. Meanwhile, manufacturers shuttered plants and cut back on production—often by more than 80 percent—and as demand has increased they have not been able to increase supply quickly enough. They also held prices down to capture whatever market share they could even to the point where manufacturers were swallowing price increases in raw materials. Now, they’re passing those along to their customers. The effect in the metal construction market of these movements could be two pronged. First, for those


serving the residential market, you’re likely to see home builders, who have shut down systems during the downturn, struggling to meet the demand for the product. They don’t have systems in place because they gutted them, and they can’t fi nd trades or workers to meet the new demand. This can create havoc in a supply chain as well as slowdowns for home deliveries. Workers in metal construction, suppliers to the industry and everyone in the supply chain will see increasing stresses because of the stresses in residential construction. The second element is the demand for labor. We all remember the huge labor shortages we faced in


the 1990s and early 2000s, which was fueled by a number of things, not least of which was a demographic change of one generation—Baby Boomers—leaving the blue-collar workforce while another generation— Gen-X—was too small a cohort to replace the workers leaving. Even increased reliance on immigrant labor didn’t cover the gap. Such a labor shortage is coming again, and in the metal construction industry we will face competition from


the residential side for our workforce. Perhaps, as activity picks up over there, labor costs may accelerate faster than ours, and we could see some of our workforce drift away. And, let’s face it, some of our existing workforce came to us from the residential side, and would be unsurprising if they were to return. I raise these issues for one simple reason. Now is a very important time to be diligent in our manage-


ment of our labor force. We need to ensure that we are being competitive without letting our costs spiral out of control. If you are not surveying your employees, you should start. It’s the best thing you can do to keep your fi nger on that pulse. And, you might also consider expanding your services into the residential market if you have the right prod- uct or service and the people motivated and trained to take advantage of this increasing demand.


Paul Deffenbaugh Editorial Director pdeffenbaugh@moderntrade.com


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www.metalconstructionnews.com December 2013 METAL CONSTRUCTION NEWS 3


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