Following seven years of slow and uneven growth in demand and pricing, 2015 will be the strongest year yet for cold-formed steel and related products, according to Kathryn Thompson, CEO of the Thompson Research Group (TRG) and leading industry observer. In a forecast prepared for the Steel Framing Industry Association, Thompson notes that although the overall picture is improving there also are markets and segments that will be clear winners, as well as structural changes that will require companies to adjust.
“The main economic indicators certainly point to better days ahead, but the improved outlook or cold-formed steel framing really began in 2014 when there was a significant change in the pricing trends,” Thompson says. “Since 2009, every attempted price increase was followed by an equal or greater pricing decline. Pricing stabilized in 2014, and increased production volumes have established a platform for growth in 2015.”
Thompson reports that these market conditions have created a sense of optimism among many who manufacture, distribute and install cold-formed steel framing. The monthly TRG Building Products Survey, which is a finger on the pulse of the industry, finds that contacts are confident that steel stud manufacturing and demand for construction products will be up nearly 10 percent for the year.
Looking into 2015, Thompson expects that demand will be the strongest in markets that felt the worst effects of the Great Recession, states where energy is a key economic component, and coastal areas that can benefit from major projects outside the US, like the Panama Canal expansion. New construction will be the key driver in both residential and non-residential construction markets, with growth between 5 and 10 percent. She also expects that the strong showing in multifamily that started in recent years will continue.
One of the most important trends that Thompson forecasts will gather steam in the coming year is a shift in corporate cost structures. “With the great recession and the uneven recovery still fresh in managers’ consciousness, companies are reluctant to load up on fixed costs, opting to rent rather than own and outsource work rather than expand staff,” she says. “Look for companies to also keep the focus on lowering costs through production and energy efficiencies, as well as shifting operations to states where the tax and labor laws are more favorable.”
“While we don’t see explosive growth in 2015, it should be a year when everyone finally has reason to believe that the recovery from the Great Recession is underway,” Thompson says.
Larry Williams, Executive Director of the Steel Framing Industry and host of the forecast adds “The prospects of real growth in 2015 presents to all those who manufacturer, distribute and install steel framing with the best opportunity in nearly a decade to increase the use of our products. I’m confident that SFIA and its members will continue to work as the driving force for the industry.”
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