Housing starts hit another record high in 2003. Commercial construction, though weak in 2003, is expected to start creeping back in 2004. When other industries showed lackluster performance, residential construction has stayed charged as one of the key growth areas during the past two years, encouraged by low interest rates and consumer demand.
But that construction comfort zone should be cause for concern, General Electric Co.'s Jeff Immelt told attendees during the 2004 International Builders Show, held Jan. 19-21 in Las Vegas.
``You're probably feeling good right now, but the time when you're feeling the best is the time when you ought to be the most paranoid,'' the chairman and chief executive officer of Fairfield, Conn.-based GE said during his Jan. 20 keynote address. ``Good things always come to an end. Just when you think you're on top of the world, I can guarantee that someone is going to kick you in the butt.''
Immelt, who took over as CEO when Jack Welch retired in 2001, highlighted five trends that will affect the way businesses perform in any market: excess capacity, the changing nature of global competition, consolidation in distribution channels, changing demographics and a world filled with more volatility and risks, especially since the Sept. 11 terrorist attacks.
``There's still a fair amount of excess capacity, which will put pressure on pricing, no matter what industry you're in,'' he said, which means the focus for the future has to be on innovation and differentiation.
Immelt called the aging U.S. population an ``unstoppable trend that's going to impact every business.''
As for the nature of global competition, Immelt gave this advice: ``Go visit Shanghai,'' he said, emphasizing the importance of familiarizing oneself with global markets and competitors.
``In an election year, you can pick up a newspaper every day and read about the jobs and the issues around globalization,'' he said. ``This is not so much about cheap labor; it's about access to technology. That's the nature of the world today, and so it means that we have to be more innovative and creative in this country to create jobs.
``Nobody is going to hand us the future. This is about going out, creating the future and making it a better place. You have the benefit in the last few years of a market where average people can do well.''
GE's plan includes ensuring operational strength, linking with customers, investing in innovation and technology, being dedicated to service and understanding globalization.
The firm's units include consumer and industrial, plastics, consumer and commercial finance, infrastructure, transportation, energy and equipment services.
``Every element of the business has to be focused on growth,'' he said. ``Every great company in the world stands for competitiveness. We are spending more money today in new product innovation ... to have a constant flow of new ideas.
``If you're not an innovation and technology leader, you're going to be crushed. If you're not out touching the marketplace with great frequency, you can't survive.
``In a global marketplace, no one guarantees anything to anybody.''