2012 forecast: What are your expectations?
The float perspective
Scott Thomsen, president, Guardian Flat Glass Group
"A fitting description for the activity in the global glass industry today is ‘volatile,’ and we don’t see that leveling off much, at least not in early 2012. On the residential side, monitoring key North American economic indicators such as new housing starts, construction permits, automotive new build rates, and replacement and remodeling indicators have us expecting little to no growth in glass in 2012. Many factors—such as unemployment, housing backlog, and financing—are holding back growth in the residential market. We are also planning on flat demand for the remodel and replacement sector for residential windows. The same holds true for commercial construction. New construction appears to be flat. Recent initiatives announced by President Obama to improve the energy efficiency in government buildings could result in an increase in retrofit projects. The question will be how long until the funds are available and what is the time lag until spending occurs in the channel. It’s important to keep in mind that glass is a cyclical business. It has a five-to-six-year industry cycle related to new assets coming online and glass supply and demand."
Bowie Neumayer, vice president, sales and marketing, Cardinal Glass Industries
"We should just change this to ‘what is your best guess for 2012?’ My best guess is that we will see some growth in both new construction and remodel starting in the second quarter: probably around 5 percent growth this year. As a footnote, most people were guessing 5 percent to 7 percent growth last year, and the market was probably off 9 percent."
Jon Hughes, director, Marketing & Programs, AGC Glass Company North America
"AGC has three main glass businesses in North America: Building, Automotive and Solar. With the global economic uncertainties, it is challenging … to predict the markets. We think that, at best, building will show very little growth, automotive in low single digits, and unfortunately, solar will shrink significantly enough to impact major investments."
The fabricator perspective
Kelly Schuller, president, Viracon
"We anticipate that the 2012 economy will be very similar to 2011; that in essence we are ‘bouncing along the bottom’ of what has been a very significant contraction in construction spending. We also see some chance for growth in U.S. construction activity in the latter part of 2012 if current global economic issues resolve themselves. At Viracon, we are taking advantage of this slower period to plan and prepare for our inevitable cyclical recovery in the near future."
Nick Sciola, president and owner, Hartung Glass Industries
"The sectors of our industry that we pay particular interest to are the residential and commercial markets. Residential is typically tied to housing starts, and since home equity has declined dramatically, the remodel market isn’t nearly as strong as it used to be. In housing starts, we’ve see some strength in the multifamily sector because more people are renting rather than buying. The forecast is for between 3 percent to 5 percent growth for housing starts in 2012, which translates into 600,000 starts next year compared to 2 million in 2005, 1.8 million in 2006 and 1.3 million in 2007. … Once hiring begins in earnest and unemployment drops below 6.5 percent nationally, we should see a greater increase in housing demand.
"With regards to commercial construction, which includes public and private projects, we believe 2012 will be a flat year, similar to 2011, which was relatively flat except for a few large public projects. Financing remains the problem. Even if the architects are getting work to design new projects, developers still need financing. There is just so much uncertainty and much higher roadblocks to financing now. So even if you see an uptick in the ABI, a lot of that work doesn’t necessarily come to fruition as a start to the project, or at least there is a lag."
The supplier perspective
"Though we saw economic recovery gradually gain traction throughout 2011, we expect the nonresidential building construction market in North America to decline moderately in 2012. Unfortunately, this looks to be the fourth consecutive year of market decline. The primary leading indicators of nonresidential building construction – McGraw-Hill’s New Contracts Awarded and AIA’s Architecture Billings Index –point toward a relatively stagnant market in 2012. Moreover, due to the impact of the escalating crisis in Europe, economic uncertainty in North America and volatility in the financial markets, we expect the market will continue to experience significant pressure in 2012. Sector-specific constraints are also likely to further erode construction spending in 2012. State and local governments, the primary drivers of the institutional buildings sector, continue to restrain spending due to low tax receipts and high debt burdens. In the commercial buildings sector, mortgage delinquency rates have not abated. So with commercial real estate debt maturities likely to reach $1 trillion-plus during 2011-2013, financing and refinancing commercial projects will remain difficult."