After record highs in 1998 and 1999, the cyclical construction market will finally take a downward turn in 2001, according to some forecasters.
The slowing economy in 2000 is the trend everyone can expect to see in 2001, said Doug Duncan, chief economist and senior staff president of Mortgage Bankers Association of America.
So, what are the specifics for the year ahead and how will they affect construction?
For housing starts, there will be a slight decline of 4.7 percent, said Stanley Duobinis, director of forecasting for the National Association of Home Builders.
"If you look at the level of housing starts, we're coming down," Duobinis said. "But it won't feel really awful."
In 2000, housing starts were at 1.6 million, said Duobinis. For 2001, housing starts are predicted at 1.52 million. In 2002, starts will rise to 1.56 million.
For the remodeling sector, 2001 will witness a slight decline of 0.5 percent; however, the figure will rebound in 2002, he said.
In fact, as NAHB predicts, the economy should remain steady during the next few years with some decline in 2001 but not anything near recession level, Duobinis said.
And do not expect mortgage rates to be an issue this year, he said.
"There are no rate changes coming. There may be a gentle decrease," he said. As far as a further interest-rate hike from the Federal Reserve Board, NAHB reports that it is unlikely through the beginning of next year.
Although there will be an increase in the rate of inflation, it will be very modest, Duobinis said.
As for vinyl building product manufacturers, most remain generally optimistic, focusing largely on the less-volatile and cyclical remodeling segment.
Columbus, Ohio-based Crane's Plastic Siding is revamping its entire company look to emphasize its portfolio of products, said Jim Ziminski, vice president of sales and marketing. The company is one of six divisions of Crane Plastics Holding Co.
Although he could not disclose the figure, Ziminski said the company is investing substantially in sales and marketing for 2001.
"We feel we can position ourselves for the future with this strategy," he said. In a market where acquisitions are the norm, independently owned Crane's wants to maintain its entrepreneurial edge, he said.
"We think next year is going to be a great year," he said. "We think we're going to take significant share."
The company is releasing new wood-replacement products that can compete with cedar and fiber cement, Ziminski said.
For Cleveland-based Gentek Building Products Inc., a focus on remodeling sales will sustain it through any changes 2001 brings, said Darvin King, senior vice president of sales, marketing and distribution.
"Certainly, there's a risk in the economy as we see it," he said. "But we're optimistic. Because of the value propositions and numerous customers we've attracted, I feel we're somewhat buffered."
Economic slowdown and a slower-than-expected start this year has publicly held Royal Group Technologies Ltd. anticipating 10-15 percent sales growth. Previously, the Woodbridge, Ontario-based firm had expected 15-20 percent growth. The company announced Dec. 18 that it expected to report fully diluted profit per share of $1.75-$1.90 for fiscal-year 2001; its previous estimate was $2.05-$2.15.
"We're proud to be achieving double-digit sales growth in many of our product lines when the industry is showing less robust growth," said Mark Badger, vice president of corporate communications. Those product lines include custom profiles, siding, indoor storage items and patio furniture and the Royal Building System.
Especially when industry data shows a shrinkage of 1.3 percent in total PVC demand, Badger said Royal's sales increased 21 percent for fiscal year 2000, and the firm continues to benefit from growing demand.