The economic recession in the latter part of the last decade hit most industries hard, and the construction building products sector was far from immune. Fortunately, things turned around, and many in the industry were able to live, tell about it, and, most importantly, re-gain momentum in the current construction uptick.
Friday at the 2016 Dodge Outlook Conference in Washington, D.C., Dodge senior economist Richard Branch moderated a panel of leaders in the building products industry to give insight on how they’ve leveraged the upturn in the economy.
The panel began by looking back at the recession. Ted Hathaway, chief executive officer of Oldcastle BuildingEnvelope® (OBE), said that unlike any past decline, “this was remarkably accelerated. … It became very obvious by 2009 that this was not just a cyclical downturn.” With the decrease in demand, he added, “we had to re-think how we do business. … It really was a wake-up call.”
John Medio, managing director, Americas, at Chicago Metallic/Rockfon, said that in 2009, “We also had to make some deep, decisive decisions quick. During that time, we focused a lot on productivity and efficiency.”
Norm Chambers, president and CEO of NCI Building Systems, further drove home the point. He said his company scaled down its manufacturing “to be successful and get some leverage with the jobs that we had,” he said. That resulted in focusing more on particular geographic markets that were doing better than others. “Then we looked at new products, started to develop a manufacturing approach which would lead us into business of insulating metal panels,” he said.
Things have bounced back in a big way since then, as the construction industry continues on an upward path and is gradually approaching what economists consider “normal.”
Over the past decade, new technologies and practices have worked their way into the building industry, something all the panelists said are important to embrace.
“In the new cycle, we’re more focused on the design-build process,” said Ken Freeman, senior vice president of demand creation at Legrand North America. “We’re getting more involved with BIM, etc.”
Hathaway added that BIM is helping the industry develop a more “uniform language,” and that it “really is an opportunity to become much more efficient, much smarter.” OBE, he said, has been “deeply committed to BIM over the last seven years.”
Chambers added that the connection of manufacturing and design has really improved and is “a huge opportunity to bring our cost down. That’s where technology is focused.”
The panelists also discussed the continued rise and implementation of green building.
Medio pointed out that the concept of green building now goes well beyond the simple recyclability of a product. “It goes into lighting, the heating system and everything else,” he said. “We’re focused on interior comfort. It also comes down to what materials we’re using. They what to know how much power you’re using to make products, how it is being shipped, the materials it is packaged in, etc.”
Hathaway brought the conversation back to technology.
“We’re moving into another level of analytics,” he said. “More owners are interested in energy modeling—before the building is built, not after.
“And the building envelope has a direct and significant impact on energy consumption in the building.”
He added that there is great software, as well as “great analytical minds,” that can simulate these things. “The technology is already there,” he said. “It’s just a question of getting everyone going in the same direction.”
Branch later moved the discussion to opportunities in acquisitions and asked Hathaway about its purchase of C.R. Laurence.
“We’re all looking for strategies that make sense, and the strategy to grow has to be based on the customer,” he said. “For us, we were doing external envelopes. CRL sells hardware to be used internally… Buying CRL was a strategic platform to go inside the building.”
With OBE and CRL sharing the contract glazier and glass shop customer base, he said OBE “had an opportunity to establish a stronger relationship with our customers.”
Later in the panel, they discussed the increase in competition for skilled workers. “The war for talent is real,” said Hathaway, adding that his concern is “hiring the best people and keeping the best people.”
Medio added that the millennial generation approaches the workplace differently than past generations, noting that they have a tendency to want a job that allows them to do different tasks on different days. He said they’re also very hands-on learners.
“They need opportunity,” he said. “They want to learn on the job … and they don’t always want to do the same thing.”