At the beginning of each year, we welcome the chance to establish new goals, both business and personal. Setting achievable business objectives requires gathering information at every level of the business so a strategy can be put into place to produce the best results. At Kawneer, we look at several indicators to determine our goals and map out our strategy. One of the most essential pieces of the puzzle is the market. What did it look like last year, and what are some projections for this year? As we are well into the first quarter, I thought this would be a good opportunity to share our view of the market outlook for the year.

The U.S. economy is expected to grow at roughly the same pace as 2012, with the latest consensus gross domestic product (GDP) estimate for 2013 showing a 1.9 percent gain. And while the election and fiscal cliff are over, there continues to be uncertainty regarding the economy due to debt ceiling negotiations. One concern is that the indecision will hinder growth due to businesses holding off on investments until the government’s budget issues are resolved.

Against that backdrop, there is moderate optimism regarding growth expectations for nonresidential buildings. A main driver of nonresidential construction is residential housing, which recently had the best three-month performance since the recession ended. Home prices have stabilized and mortgage applications have risen; a clear indicator that buyers are coming back to the market.

Commercial construction drivers, such as manufacturing activity and retail spending, have fared better in the past year – a positive for the nonresidential industry in 2013. Leading indicators of the nonresidential market like the Architectural Billings Index and construction starts also point toward positive momentum. Commercial construction starts have begun to recover, and the institutional side of the market should stabilize. However, state and local governments, the primary drivers of institutional construction, continue to be plagued by fiscal constraints due to lower tax receipts and tight credit standards. Like with the economy, the substantial uncertainty with the fiscal ceiling and spending cuts poses a risk to the nonresidential market.

Though economic uncertainty and market challenges remain, Kawneer continues to work toward our goals with optimism. We have many exciting developments planned for 2013 and will keep you posted on our progress. I look forward to what the remainder of the year has to bring as we work to deliver products, systems, information and solutions that can help contribute to your overall success.

 

Diana Perreiah
Vice President,
Alcoa Building and Construction Systems
President,
Kawneer North America