On the Upside

by Jonathan McGaha | 6 August 2012 12:00 am

Since 2008, the goal of every business in the construction industry has been to survive. We’ve all made the hard choices forced by reduced revenues. Shrink the budget. Reduce workforce. Shutter locations. Identify new sources of capital. For those that moved aggressively to get their business models in alignment with the new reality, now seems to be a time to breathe just a bit easier.

A recent report from FMI, a management consultancy that also provides investment banking and research services for the engineering and construction industry, points to a 3 percent growth of the construction put in place by the end of 2012 along with an additional 7 percent in 2013. That means more schools and hospitals and hotels and offices, which is good news for our readers, our advertising partners and-frankly-us.

Everyone has been hit hard during this downturn, and those who had heavy holdings in residential construction have been hit the hardest.

But those of us who are still around are the survivors, and while we may feel guilt about the demise of our longtime partners who didn’t get to this point, we should also take a moment to breathe in, relax momentarily and gather our wits for what is sure to be a new surge of pressures.

I hate to try to predict the future. In the past, I have made rather public and incorrect predictions, so perhaps I should be more wary. Still, I am comfortable in saying one thing with certainty: As our industry recovers, we will find it increasingly difficult to anticipate the new challenges. Consider this:

A very rapid acceleration in construction activity will stress our supply chain, making it more difficult to produce products and control costs.
Further increases in medical costs could drive up labor costs.
Turmoil in the Middle East could threaten the availability of energy and alter our cost structure again.
Continued constriction on the availability of capital could force the creation of exciting, new sources of capital.

All we know is uncertainty, and all we can do is prepare for the worst-case scenario. A successful business friend of mine often said, “Take care of the downside, and the upside will take care of itself.”

I believe that’s true, and now more than ever I think that is the kind of planning our businesses in the metal construction industry require.

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