Are there either
Lyons: I don’t know about specific product types, but in terms of con- struction market segments, I think you’ll see greater spending in education— both private and public— and there is pent-up demand for hospitals. I would think you’d see 5% to 10% growth in those segments in the next few years, whereas the other areas will likely be flat, at best.
threatening trends for
specific market segments
or product types at
should be looking? Spe-
cifically, for which types
of products or services
do you predict a heavy
demand increase or
decrease in the coming
year and beyond?
Baker: In terms of seg- ments, our ABI, coupled with direct comments from member architectural firms, indicate that residen- tial projects show moderate growth, whereas commer- cial, industrial, and institu- tional have slowed across 2016. And, as noted, the healthcare confusion may hold down medical con- struction for the short term.
Sobolewski: Builders are reporting strength in the single-family number as they continue to see in- creased demand in the first-time buyer and move- up segments.
How do you see
2017 shaping up
region by region? Where
are the especially promising or worrisome geographic areas?
Lyons: We have four sales regions at Schneider Electric in the United States: East, South, Mid- west, and East. You’ll likely see growth in areas where the residential industry is performing well. The South and the West are doing better than the Midwest and East in this area. The Midwest will con- tinue to struggle as long as agriculture prices stay low and people keep moving out of the middle of the country. The South and the West will continue to grow, and the East will likely stay neutral.
Baker: Only the South (including Texas and Okla- homa) is reasonably strong. The ABI shows the West as approximately neutral, with the Northeast slipping and the Midwest slipping even more.
What are the big
wild cards that
you think exist for
Baker: One of the most important unknown factors is the question of just what President-elect Trump is most serious about and how he will set his policy priorities. How will he ap- proach his campaign issues of trade and tax policy?
What about financial re- form and the modification of Dodd-Frank That could have an impact on both corporate and construction finance.
Lyons: Data centers cause variability in de- mand for our business. We can’t say for certain what the spend of the web giants will be over the next five years. The industry capacity is certainly a wild card.
Sobolewski: I agree with Kermit Baker. There is uncertainty about the items he mentions, as well as about just how the infra- structure package will take shape. But the impact won’t likely end even there. For example, immigration re- form and a reassessment of current labor force orders could impact workforce supply, trade (including po- tential changes to taxes on foreign materials) import/ export of construction ma- terials, and the economics by which global companies make decisions on these matters. Regulation changes (including a reassessment of current environmental regulations) may drive new opportunities and chal- lenges alike; and taxes could impact companies’ net cash flows, which in turn could impact compa- nies’ ability and willingness to increase investments in new technologies and ap-
petites for acquisitions. All of this is amplified by the fact that, while the Republicans do have a majority in Congress, they lack the necessary 60 votes in the Senate to block filibusters. The construction indus- try appears to be in a “wait and see” mode: eager to engage, optimistic by what they hear, but cautious to conclude until more details around strategy and fund- ing are provided.
In Conclusion And there you have it. Or as Walter Cronkite used to say at the CBS evening news wrap-up, “That’s the way it is.” The way it is is not bad, at that. Generally good news with the poten- tial for very good news is a state of affairs we devoutly wished for during some of the dark years of the re- cent past. The election-day surprise has left us facing an uncommon potential for change and will cause uncertainty until more is known. So we march into 2017 broadly optimistic, with our hopes tempering our fears and our fears tem- pering our hopes. Seven- teen may be a very good year. ;
Sullivan helps electrical distributors across the country
work successfully through
tough situations. He can be
reached at 972-463-1125 or
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