Plumbing forecast for 2009
BY PETER SCHOR
Showroom specialist
During 2008, I wrote monthly showroom columns, such as January’s “33 ways to increase your sales and gross profits, save time, increase productivity and improve your showroom.” I know, and was told by my readers, that many of these 33 ways are adaptable in today’s economic conditions in all areas of PHCP distribution. In April 2008, my column had great tips in “The keys for you in these times of slowdown.” You can access these columns on The Wholesaler website, www.thewholesaler.com.
I was asked to write this column on the current economic forecast for 2009 and what it will bring to us. I could just discuss the current statistics and news, but these will be altered shortly. It seems that many experts on economic conditions are waiting to see what is going to happen in January, when our new president officially takes charge.
In this difficult economic climate, companies sometimes panic, which doesn’t solve anything. It is not going to change the economy, and it will only make your employees nervous. Instead, it’s important to remember what your core competency is and to work it diligently. You have to be willing to adapt as changes happen around you and to constantly ask yourself, What does my customer want in these tougher times? Then you have to be able to give them what they want.
You’ve got to keep moving ahead in 2009. You have to launch new products, and you need to take risks -- acquire products that can round out your portfolio. There are many opportunities to make money in market segments such as globalization, which is creating great opportunities for U.S. bath, kitchen and phcp manufacturers outside the country. The hotel industry in the U.S. is still booming. Hotel projects in progress are fully funded through 2009. While the kitchen and bath industry has softened, there are still some great opportunities. While the residential home buying market is weak, the demand for apartments has risen. There are many other niches for you to tap into.
Kitchen and bath
Edward S. Pell, the master market researcher in the k&b industry, who has 35 years experience in this segment, said, “For all of the scare headlines, 2008 turned out to be a decent year for kitchen and bath remodeling. Kitchen remodeling projects slumped about 6% to 7.1 million jobs, but high-end projects returned, causing spending to climb more than 25% to over $121 billion. Bath remodeling jobs dipped nearly 7%, to just over 10 million units, but spending on those jobs was up slightly less than 1%, to $71 billion.”
Home building
On November 26, the nahb urged Congress to move forward in a lame-duck session to enact a second economic stimulus package. The provisions that the nahb urged include a 10% home buyer tax credit, up to a maximum of $22,000, depending on the fha loan limit in a given market and an interest-rate buy-down on conforming loans for families purchasing a home through the end of 2009.
The U.S. Commerce department released October statistics indicating that new home and apartment construction has dropped to an annual rate of 791,000 units, a 4.5% decrease from September. Home prices are down 20% nationwide since their peak in July 2006. Economist Noriel Roubini of New York University, who accurately predicted the housing slide and credit crisis, expects another 20% decline in home prices in “some markets” in 2009. Home prices will bottom out as early as the middle of 2009, and housing will start to rebound.
Lessons to learn
Perhaps we’ll have learned some lessons from the economic downturn and the bailouts. Just because someone is offering to loan you money doesn’t mean that you should take it. Don’t assume lenders and regulators will look after your interests. Before you sign a contract, read the fine print. Since neither job security nor rising equity is guaranteed, stick with fixed-rate loans. Don’t live beyond your means. Pay your bills on time and keep enough cash on hand to pay for at least six months of expenses. Think of your house primarily as shelter, not as a cash machine.
And finally, don’t despair. Remember that markets are cynical; the bigger the binge, the worse the hangover. We’ll have to suffer this one for months, and even years, to come. But if we learn not to over-indulge, we all wind up healthier in the long run.
Many reasons to be thankful
Optimism still reigns. Despite the gloomy news, the U.S. remains an optimistic nation. Hopefulness and being American go hand in hand. Even now, surveys confirm that the times have not altered the basic proposition. According to a usa Today/Gallup Poll shortly after Election Day, almost 69% think that America will be better off in four years. As that time frame suggests, much of the optimism is driven by the fact that president-elect Barack Obama is about to take charge. As I saw on cnn Headline News recently, Obama’s economic team offers, “sound judgment and fresh thinking.” Regardless of your politics, this all sounds refreshing. Yes, all presidents fail in some ways, and Obama will undoubtedly falter at times, as well.
Housing is becoming affordable. Home prices are down in some places by quite a bit. That might not seem like good news, particularly to those trying to sell and tap equity. In many ways, this is harmful to the overall economy. By the end of the housing bubble, however, there should be, at the very least, a silver lining. The American Dream is affordable again in some of the nation’s priciest markets.
Gas prices are way down. According to the American Automobile Association, the national average for regular gasoline as of 11/26 was $1.89. That’s about a dollar less than what it was going for just a month before and half the $4-plus that people endured in the early summer. Americans use about 390 million gallons of gasoline every day, making the $1 drop just since October the equivalent of a $140 billion stimulus program over the next year. Throw in the cheaper heating oil, jet fuel and other petroleum products, and the economic stimulus is close to $300 billion a year. On the downside, falling fuel prices make it hard for us to break the oil addiction and give automobile manufacturers and utilities less incentive to devise green technologies. I hope not!
So take some action to take new positions in your marketplace, while working your core values. Have faith in America. Let us all move from fear into knowing that this great country of ours will flourish. We are Americans, you know, and it is in our tradition!
Peter Schor, president of Dynamic Results Inc., is an educator, motivational speaker, consultant, coach and writer in our industry and many diverse others. For the past 17 years, he has conducted 100 educational programs yearly, including 34 industry conventions. Schor has great expertise in the field of showrooms and has won many industry awards. He also works with manufacturers in the field of sales, marketing and public relations. Schor can be reached at 1491 Ivy Arbor, Lincoln, CA 95648, by phone at 916/408-5346, by fax at 916/408-5899, by e-mailing pschor@dynamicresultsinc.com or on the web at www.dynamicresultsonline.com.