The construction industry had a banner year in 1998.
Housing unit starts probably will hit a 12-year high when government statisticians release the final figures Jan. 20. The Census Bureau also figures consumers spent more on remodeling than in recent years, somewhat of a bonus in a strong new-home market.
A mild early winter boosted construction jobs, according to the most recent national employment report of the Bureau of Labor Statistics, so consumption of plastic construction products for November and December are likely to remain on pace.
The hot market in 1998 means 1999 could be a strong construction year, but still show negative comparisons to its predecessor.
The National Association of Homebuilders in Washington predicts a downturn in housing starts for 1999: 1.52 million compared with the 1.61 million it expects for 1998.With the slight dip, NAHB's latest prediction still would make 1999 the second busiest year for home builders since 1987, when the industry cranked out 1.62 million units.
``The outlook for things is not bad,'' said Brad Mattson, executive vice president of CertainTeed Corp. of Valley Forge, Pa. ``Last year was an excellent year. We don't expect growth to be as strong, but we do expect continued growth.''
The financial quakes in Asia, Russia and elsewhere seemed to dissipate by the time they hit North American shores, he said.
``The international environment looked shaky and seemed like it would damage consumer confidence and in turn damage our business. But it didn't happen,'' he said.
Lee Meyer, president of vinyl siding company Variform Inc. of Kearney, Mo., concurs with NAHB's outlook.
``Housing starts will be down slightly, about 10 percent, and manufactured housing also will be down some, from 363,000 in 1998 to 342,000, or about 7 percent,'' he said. ``In terms of the overall siding market, we look to grow in the 1 percent range this year. It will be relatively flat.''
Meyer predicts double-digit growth for his own firm, a division of Nortek Inc. of Providence, R.I.
``Variform will continue to grow because we've been taking market share from our competitors,'' he said. ``We see it being a very good year because  was a good year. We ourselves are going to grow significantly.''
Remodeling expenditures also will stay strong, according to NAHB. The group expects 1999 figures to remain close to the estimated $125 million consumers spent in 1998 improving or maintaining their homes, which was a 5.9 percent jump over 1997 spending.
That bodes well for the vinyl window business, which can thrive on sales to remodelers even when its new-construction market stumbles.
``The replacement window business is going to be up over last year,'' said Gary Acinapura, executive vice president of windows for Jannock Inc. of Pittsburgh.
``Remodeling will be strong as people increase their wealth in the stock market. Investing and interest rates remain low. That increases people's ability to finance remodeling projects and take that risk,'' Acinapura said.
Recent frigid weather also may help make up consumers' minds about plunging into a remodeling effort.
``Nothing like a cold wind blowing in to make people think about replacement windows,'' he said.
Pipe extruders like their prospects for 1999.
``Based on the forecast for new-home construction, we see a continuing healthy economy,'' said Tony Radoszewski, director of marketing for Advanced Drainage Systems of Columbus, Ohio. ``New homes mean new roads and storm sewers. Plus, construction of shopping centers, schools and hospitals, all the things a city needs, also means storm sewers.''
ADS makes corrugated high density polyethylene pipe for sewer, drainage and irrigation. Radoszewski noted plastic piping has gained increasing acceptance in the civil engineering field — at the cost of concrete.
``The [HDPE pipe] industry will grow as the design engineering community, the specifiers and the construction community gain confidence in our product and with the validation of time,'' Radoszewski said.
Other, relatively new plastic products should do well in 1999.
CertainTeed is selling more fence and deck products along with its traditional staples such as vinyl siding, pipe and windows.
``The outlook for plastic fencing is fairly strong because it's a fairly new product,'' Mattson said. ``Not that many people are in the business. There are all kinds of applications for it, but not structural. We're involved with decking also, and that looks good. We're just developing products, so it's hard to say.''
Another uncertainty is the price of resin, which dropped drastically in 1997. Some manufacturers celebrated higher margins associated with the lower raw material costs.
``Resin pricing has been a benefit to all siding producers this year,'' Variform's Meyer said. ``That has allowed us to maintain our margins in a price-competitive market. It hasn't hurt us.''
But some markets like PVC pipe witnessed cutthroat pricing combat, which hurt smaller producers that don't have resin production built into their family tree.
Resin pricing ``on balance has been a negative for the pipe industry,'' CertainTeed's Mattson said.
The battles also have left scars on resin producers, who may not want to take too many more hits on their profit margins.
``The resin guys are hurting,'' ADS' Radoszewski said.
``They've got to get their act together and regain health to their business. The pendulum always swings back, and they have to raise their prices.''