Housing starts are at their lowest level since home construction data has been recorded.
The credit markets have tightened up, consumer confidence is low, rising unemployment is leading to about 2 million foreclosures a year, which only adds to the glut of inventory, and there are about 1.5 million more vacant homes than the typical supply.
If you're looking for good news, you won't find it in what the National Association of Home Builders had to say at its economic outlook news conference, in Las Vegas. You also would not have found it in the dwindling crowds at the International Builders' Show, where NAHB's news conference took place.
The show, held Jan. 20-23 in Las Vegas, was a jam-packed event before 2008. Show attendance this year was down about 30 percent to about 60,000 attendees, from about 90,000 at 2008's noticeably slower show in Orlando, Fla.
According to NAHB chief economist David Crowe, housing starts are expected to fall 29 percent and overall home sales, to drop 14 percent.
The recession will be long and deep, said Frank Nothaft, chief economist at Freddie Mac. Unemployment, which is leading to foreclosures and the housing inventory problem, is expected to rise from 7.2 percent to 8.7 percent by fourth-quarter 2009, he said.
None of the news bodes well for plastic building products makers in 2009, some of whom have forsaken the idea of profit and are simply trying to survive.
``Unless the business climate changes significantly and soon, the construction sector will continue to experience the kind of devastating job losses and crippling declines in business activity that will undermine efforts to end the recession,'' said Stephen Sandherr, chief executive officer of the Associated General Contractors of America, in the Arlington, Va.-based group's annual forecast.
According to AGC's forecast, released in January, activity is expected to decline in every type of construction market. About 92 percent of building contractors and 93 percent of road builders have declining business. More than 83 percent of utility contractors expect 2009 declines.
The picture is not so bleak for companies more closely tied to repair and remodeling markets, but that industry is a complete unknown at this point.
``I don't think anyone knows for sure what the future holds in remodeling,'' said Stu Kemper, president of Columbus, Ohio-based Crane Building Products. ``There's a side that says people will travel less, spend more time at home, and that they will invest in their home. The counter-argument to that is the lack of available credit as homeowners' equity has dried up.''
Because plastics typically are used as a replacement material, some of the end markets under the building products umbrella do seem to be faring better than others. Cross-linked polyethylene pipe is one of them.
``We've been pleasantly surprised with how strong the PEX business is,'' said Patrick Sauer, sales and marketing vice president for PEX and radiant heating systems at Commerce, Texas-based Zurn Industries LLC.
In time for the Builders' Show, Zurn added 2-inch-diameter pipe to its portfolio, which is considered a large diameter in the PEX world and is used mainly in plumbing, radiant floor heating and fire protection systems.
Uponor Inc., with North American operations based in Apple Valley, Minn., is the only other PEX maker in the U.S. with 2-inch tubing.
The green building movement to more energy-efficient products is having a positive effect on Milwaukee-based cellular PVC extruder Gossen Corp., said Bob Simon, senior vice president.
``What we've seen so far is that our replacement-window business is still very strong,'' Simon said at the Builders' Show. ``I think a lot of that has to do with customers looking for more energy efficiency.''
The same is true for Kansas City, Kan.-based Da Vinci Roofscapes, where 80 percent of sales are for reroofing projects, said marketing manager Wendy Bruch.
John Polidan, president of Jacksonville, Fla.-based fence, deck and railing extruder Enduris Inc., said he sees the upside, particularly for cellular PVC decking.
``I've hired six people in the last four weeks,'' Polidan said at the recent Fencetech trade show, Jan. 13-16 in New Orleans. ``We're seeing the glass as half full. There's definitely a trend in decking to PVC. That's a positive for us.
``Companies that give quality service and products at a reasonable price they're the ones that are going to be survivors.''
Joe Brooks, CEO of Springdale, Ark.-based Advanced Environmental Recycling Technologies Inc., thinks it will take more than a recent trend for deck makers to survive.
``Elasticity of demand is what it's all about,'' Brooks said.
Pricing is going to be the determining factor in who survives, and who does not, he added. Wood made a comeback in decking last year, due to the price spread between it and various plastic alternatives.
``If you're charging $4 per linear foot, you're not going to be around long,'' Brooks said. ``You better figure out how to get costs in line and give value to the consumer.''
President Barack Obama's economic stimulus plan remains the sole source of hope for most building products companies, yet economists are not optimistic that the home building industry will benefit.
It will get some unemployed Americans back to work, and help others retain jobs, but that will only mitigate the nation's foreclosure problem, not jump-start the stagnant building industry, economists said.