June 4, 2008
Turning Point

When I flipped the page on my calendar from 2007 to 2008 last January, I had every expectation that this would be an important year. But for entirely different reasons than the circumstances we face today.

Few could foresee how the race for the White House would take such unique - and even historic - twists and turns. Last Fall, many prognosticators were still forecasting that the housing market would recover in the third quarter of 2008. Folks I know are still shaking their heads over the run-up in material prices (not just steel!). And while all of these affect us in one way or the other, I think that soaring energy costs are the most pervasive issue and will have the greatest long-term implications.

Where I live, a gallon of gas costs $1 more than it did this time last year. And unless someone has suspended the law of supply and demand, I do not believe this is a temporary phenomenon. We hear a lot about the explosion of the Chinese economy, including questions about whether such growth is sustainable. Even if it isn’t and that country’s energy requirements slump, we also can’t ignore the rapid industrialization of India which has its own ravenous appetite for petroleum, natural gas, and coal. Supply will also remain an issue. With a profit of more than $100 for every barrel of oil they extract, combined with sustained demand from China, India and the rest of the industrialized world, OPEC has no incentive to increase crude production in a meaningful way. Even if the politics allowed the development of U.S. oil reserves, these supplies would not be available for refinement until 2018. And despite what might be available through wind, geothermal, and solar power, real alternatives to carbon-based sources of energy are decades away from the market.

Aside from the obvious consequences to consumer spending, the impact on industry is demonstrated when the cost-efficiencies of a centralized manufacturing operation are negated by the high cost of shipping the finished product to the customer. What sort of advantage does this present to a manufacturer who can finish and ship products from a site that is closer to the customer? I believe this will have an impact on customer targeting and marketing efforts. And how will this effect capital investment in facilities and equipment? If consumer behavior is re-shaped by the pain at the pump, then it would likely drive current trends toward higher-density housing, and the re-urbanization of society. Even bedroom communities would probably end up developing a more vital commercial core.

And then there’s the “sustainable construction” movement which somehow ends up part of nearly every conversation I have these days. For the record, I believe that a responsible society must continually strive to improve its stewardship of the earth’s resources. But are we prepared for the negative consequences of such an intense focus on defining what is a “green” building? Energy efficiency standards and rating systems have been in place for a long time, but there now is a “gold rush” mentality driving government, industry groups, code bodies and others to develop new standards or increase the stringency of standards in an effort to capture the “green” high ground. The pace at which these standards are evolving and growing, however, leaves little room for critical evaluation of the technical basis for the assumptions underlying the standards. This in turn raises the questions: will they produce real efficiency benefits? And, are there are any economically or technically viable solutions to what may be imposed by rules that inevitably become legislation.

So far, 2008 has been an interesting year and perhaps a real turning point in our economy and society. This could produce opportunity for those who correctly anticipate events, or hurt those who don’t see what’s coming. At the Steel Framing Alliance, we continue to monitor all of these trends, defending the interests of the steel framing industry, helping to shape trends that affect our members, and targeting opportunities in the market. If you would like to know more about the trends in the market and what we’re doing on your behalf, please let me know. We also encourage you to share your own thoughts and observations.

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June 3-5, 2008
2008 Commercial Construction Show
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June 17, 2008
CFSEI West Chapter
Meeting and Presentation on “Changes from the 1997 UBC to the 2006 IBC for Lateral Design with Cold-Formed Steel"
San Diego, CA More
June 18, 2008
CFSEI West Chapter
Meeting and Presentation on “Changes from the 1997 UBC to the 2006 IBC for Lateral Design with Cold-Formed Steel"
Los Angeles/Orange Co., CA More
June 19, 2008
CFSEI West Chapter
Meeting and Presentation on “Changes from the 1997 UBC to the 2006 IBC for Lateral Design with Cold-Formed Steel"
San Francisco, CA More
June 19, 2008
CFSEI Atlanta/Southeast
Chapter Meeting and Presentation on “It’s All Green. Are You?”
Atlanta, GA More
June 23-27, 2008
SkillsUSA National Competition
Kansas City, MO More


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Brought to you by the Steel Framing Alliance (SFA) on the first Wednesday of each month, Framework Online arms you with the latest news and commentary on the steel framing and construction industries. In addition to industry headlines, trends and project profiles, Framework Online provides information and ideas that will better enable members to increase their participation in the residential and commercial construction markets.