(L-R): Jeff Selander and Jerrod Marshall of H & M Precision Concrete LLC in Greenviulle, Ohio, learn about the New Wacker Neusom SW 28 skid steer from Jeff Little.
For the concrete construction industry it is the lollapooluza…the main event….the show you don’t want to miss this year. World of Concrete 2015 (WOC), which was recently held in Las Vegas, was definitely a doozy — the largest it has been in six years.
World of Concrete 2015 exceeded the organizer’s expectations across the board. The signature event for the concrete industry drew 55,779 registered attendees, up from just over 48,000 in 2014. It featured 1,459 companies exhibiting across more than 675,000 net sq. ft. of space, an increase of more than 100,000 net sq. ft. from 2014. The show spanned across the three large halls of the Las Vegas Convention Center and filled the huge outdoor “front yard” parking lot with exhibits, tall cranes and large machines, and demonstration areas.
The show was impressive to see and foot-blistering to walk its entirety, but the real question is what can it tell us about market and economic expectations for 2015? Is the recovery real? What are the exhibitors and attendees saying?
With more than 35 years experience of industrial economic analysis, Ed Sullivan, chief economist and group vice president, for the Portland Cement Association (PCA) is known to offer a sober and accurate annual marketplace forecast. This Chicago Federal Reserve-honored economist was the feature speaker at the PCA press conference held at WOC.
“We have reason for optimism in 2015,” Sullivan said. “If you walk the aisles of World of Concrete today there is unprecedented, unbridled optimism that has been absent for a decade. And there are palpable reasons for this.”
Sullivan cited “Job creation, job creation and job creation!” as the three biggest factors fueling the current economic recovery. He went on to summarize that the following factors put things into context for the 2015 economic outlook:
• Job creation exceeds 3.0 million net new jobs 2015 to 2017, which results in stronger household formation.
• Strong job growth in context of sub-6 percent unemployment suggests pressure on wages.
• Consumer confidence/sentiment has improved significantly and will continue.
• Low oil prices add 20 to 30 basis points to economic growth. Although there may be regional disruptions among energy producing states.
• Inflation remains low, interest rates expected to only gradually increase, slower increases in home prices and stronger increases in rents.
• New home affordability remains favorable in absolute terms and against rents.
• Lending risks subside and lending standards ease.
• Economic recovery moving into higher growth phase in the years ahead.
Sullivan wasn’t the only one at WOC feeling rosy.
“We’re looking at perhaps ten percent growth this year and we’ll likely be purchasing additional equipment,” said contractor Mike Lipps, chief estimator/construction manager of Duit Construction Co. Inc., Edmond, Okla. “We’re hoping the highway bill passes — we’re ready to take advantage of the opportunities it will afford.”
Representatives of trade associations have good national perspectives by virtue of the diversity of their membership.
“We’re hearing good things for 2015,” said Gerald F. Voigt, P.E., president and CEO of the American Concrete Pavement Association. “We anticipate some strong geographic pockets and overall we’re hearing from our members nothing but good news regarding their business expectations for the year.”
Beverly Garnant, executive director of the American Society of Concrete Contractors, St. Louis, Mo., said, “An indicator for us that things are improving is an increase in members and higher attendance at the programs we offer. During the recession, contractors cut back, but now we’re seeing renewed interest in investing in their profession and their future. Our number of members is surpassing what it was prior to the recession.”
Manufacturers and service suppliers exhibiting at the show also reported positive expectations for the year.
“We have an early order program — our EOP — which is a good indicator of what our market will be doing for the year,” said Gregory S. Smith, marketing communications manager of Allied Construction Products LLC, Cleveland, Ohio. “We’ll have a better idea toward the end of February whether our initial sense that the market is improving can be confirmed once the early order results are solidified. Another indicator we look at are trade shows, like World of Concrete, which for this show seems to be indicating higher orders than last year’s show.”
For Steve Warfle, product manager of InSite Software Inc., a construction layout and GPS modeling software developer based in Rush, N.Y., the new business expectations for the year are very positive.
“We’re anticipating a record year in sales. The construction economy has improved and contractors are replacing their obsolete software.”
Going back to Ed Sullivan’s expectations for the year, he had some observations about housing starts — a traditional indicator of economic and construction industry growth.
Sullivan expects that a growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to rev up in 2015 while a growth in renters will keep the starts mix trending toward multifamily. He expects new home prices to rise at rates above the inflation rate. He also anticipates that constraints to construction — such as labor shortages and project availability — are assumed to be temporary and will be fixed by the market.
World of Concrete 2015 was not only jam-packed with the latest equipment, ideas, and services, it also was filled with expectations and anticipation of an improved market.