2022 was another strong year for the metal building component industry. Sales in terms of dollars remain high with many industry participants recording record numbers.
The industry strong, but we still face challenges in 2023
As 2022 wound down, members reported a returning sense of normalcy in the industry. After an extended period of volatility in pricing and the supply chain, raw material prices are decreasing or have stabilized. Backlogs in the supply chain largely have been resolved, there is abundant inventory in the pipeline and the supply chain seems capable of meeting existing demand.
This isn’t to say that there aren’t remaining challenges. High inflation and high interest rates continue to influence the market. Labor, transportation and high (but stable) material costs remain critical concerns. Fortunately for businesses, we appear to have avoided the potential strike of the rail unions.
Looking forward, 2023 is inspiring both optimism and trepidation. Many member manufacturers enter the new year with project backlogs sufficient to carry them through the first half of 2023.
Looking forward, 2023 is inspiring both optimism and trepidation. Many member manufacturers enter the new year with project backlogs sufficient to carry them through the first half of 2023. Though the inflow of new projects is mixed, most members with whom I have spoken suggest the volume of projects remains high and that they are maintaining their backlogs.
Nevertheless, there are clouds on the horizon, and the industry is keeping a watchful eye on the general economic conditions and forecasts to assess the severity of the storm approaching. Many industry-leading indexes suggest a downturn in building construction. The Architectural Billings Index (ABI), an American Institute of Architects measurement of expected nonresidential construction activity, took a sharp downturn in October, the first decline since January 2021. The potential of a recession, the war in Ukraine and its resulting European energy and material supply crisis, continued inflation and high interest rates and continued labor shortages all contribute to a note of caution. Component manufacturer budgets have been scrutinized with many forecasting flat or conservative projections for growth.
This new year is likely to bring a change in the project mix fueling industry growth. The Infrastructure Investment and Jobs Act and the Inflation Reduction Act will create opportunity. Significant investment will be made in retrofitting commercial, residential and institutional buildings to improve their energy performance and resiliency. Metal building components are well positioned and should play a significant role in the improvement of the buildings. The growth in renewable energies and e-vehicle production and use will drive the need for new facilities. The focus on sustainability and the buy American requirements again positions metal to have a significant presence.
As an optimist, I believe 2023 will be another solid year for the architectural metal building industry. Though challenges with labor shortages, transportation costs and high-interest rates will continue, they are not specific to our industry, nor are they likely to be overburdensome.
Member project backlogs extend into mid- to late year. The rate of new projects may slow, but the quantity will be sufficient to extend through year-end. The growing emphasis on the retrofit of buildings creates opportunity for contractors and component manufacturers alike—and the need for new facilities in the manufacturing, warehousing, transportation and energy sectors will sustain the industry.
Jeff Henry, MBA, CAE, is the executive director of the Metal Construction Association. He leads MCA’s staff in supporting industry members and elevating the use of metal in construction. For more information, go to www.metalconstruction.org.
