Housing economics experts did not agree on much at the Oct. 29 Construction Forecast Conference in Washington, and reactions from the plastics industry were as varied as the forecasts.
``There was a kind of a take-your-pick thing,'' Jim Quinn, market research manager for Sidney, Ohio-based Alcoa Building Products, said by telephone after he attended the conference. ``I think [the National Association of Home Builders] tends to set them up that way.
``My takeaway was positive,'' he said. ``No matter what happens, the housing market will be fundamentally strong. At least it will be more stable than it has been in the past. I didn't read anybody being really negative.''
One conference attendee from the plastics industry said most of the economists were taking a cautious approach.
``I think they are frustrated by the fact that they're in uncharted waters,'' Jeffrey Bayley, business development manager of Canplas Industries Ltd. of Barrie, Ontario, said after he attended the conference.
Bayley noted that most housing-start graphics presented at the conference did not show a lot of movement.
``They don't have a clue what the economy is going to do and don't want to be too wrong,'' he said.
Experts did agree that recent building booms will be subsiding in the Southeast and Midwest, while California and New England are pegged to start minibooms of their own.
Such market gyrations could affect several sectors of the plastics industry — especially rigid PVC building products such as siding, windows and pipe.
``Sixty-five to 70 percent of PVC production goes into long-life applications like siding, windows, pipe and wire coatings,'' Robert Burnett, executive director of the Society of the Plastics Industry Inc.'s Vinyl Institute, said in a telephone interview from his Morristown, N.J., office. ``Construction certainly is a key end-use market.''
But looking only at housing starts does not paint the whole picture as far as the PVC building products industry is concerned, Burnett said.
``When new-home starts are down, rehabilitation and remodeling go up,'' he said. ``That's an area where, if anything, vinyl is even stronger.''
Recent resin statistics don't show any signs of a downturn starting this year, Burnett said.
Numbers released by Washington-based SPI show resin use for window and door products in the year-to-date in August was up 43.5 percent so far in 1997 compared to the same period in 1996. Figures for siding show a 6.9 percent increase by August, while pipe was up 2.8 percent.
Any upturn in California's housing market could be seen as a good opportunity for vinyl siding companies, which traditionally have had a tough time selling to that market, Alcoa's Quinn said.
``We could get an opportunity [to develop the market] with some of the new construction leading the way,'' he said.
Because of regional market differences, most vinyl siding plants are located east of the Mississippi River, Quinn said, noting many companies in his industry prefer to produce siding near their end markets.
``Some of our competitors with the best position [to exploit a California boom] have production in the western Canadian provinces,'' he said.
The pipe industry could be most affected by regional housing shifts because shipping costs induce many manufacturers to make their products close to where they are used.
But a small change in housing starts probably will not have much impact on pipe, said Stan Price, an industry consultant based in Houston.
``I would doubt it would spur anyone in the water-main or sewer-main piping business to move,'' Price said. ``It could in the smaller diameters, where the product would be an integral product of the house.''
Production cost variables would be a prime factor in any company's decision to relocate to a growing area, Price said.
``It takes such a larger amount of money to relocate plants that make water mains and largerdiameter pipes,'' he said. ``But with the smaller-diameter drain, waste and vent pipes, all they have to have is an extruder and a back door.''
Injection molders have different concerns when it comes to shifting business patterns, according to Canplas' Bayley. Canplas produces a variety of injection molded products for the construction industry.
``What works for an extrusion guy doesn't necessarily work for an injection molding guy,'' said Bayley. ``There are more economies of scale in injection molding than extrusion.''
Canplas also is anticipating a building revival in California, Bayley said.
``We're expecting big things out of California,'' he said. ``It's really been at a depressed level for so long.''