July 12, 2011
The Recession is Over: Now What?
I recently had the pleasure of listening to Brian Beaulieu, an economist for ITR and Chief Economist for Vistage International. While I can’t say Mr. Beaulieu’s outlook on the economy is all positive, it did give me a chance to think about what has changed in the construction industry since the beginning of the recession. While many of us in the industry have had to look at the marketplace differently since the start of the recession, what should we be doing now that the recession is over? Below are five highlights I took away from Mr. Beaulieu’s presentation and what I believe businesses need to be doing in the “new economy”:
- Be prepared for another recession. While it does not look like the recent bad employment news (up for the third straight month in June) is the sign of another recession, it does make us all a little nervous as to whether or not we are actually in an economic recovery. According to ITR, there are signs of another recession coming – and not in the too distant future. Plan now as if the economy is going to come to yet another decline.
- Now is the time to be investing in understanding the needs and opinions of your client and prospect base. Be well poised to strengthen your organization if another recession is coming. The best way to do that is understand – from your clients – what you do well and where you need to improve.
- In many professions and trades there is a lack of qualified workers. With unemployment at 9.2 percent, how could we possibly have a lack of qualified workers? In our case, being an electrician is a very skilled craft that takes years of training and the right skill set. You cannot train one overnight. With the recession and falling housing prices, people today more than ever are tied to where they live. They do not have the ability to move because they can’t afford to sell their home. This has required human resource efforts to be creative in how to recruit and retain talent.
- If you are in the housing market, don’t expect anything to happen too quickly. Mr. Beaulieu predicts that new housing starts will not get to the 2006 level again until 2023. Yes, 12 years away! While there are going to be new residential homes built in the next 12 years, it is going to continue to be slow. Be careful how you invest your money and resources into this market.
- Lastly, get ready for a strong 2012 – relatively speaking of course. It does appear that we are going to have some additional recovery in 2012 making it better than 2011. If you are a contractor, look carefully at what work you are going after the rest of this year – margins should improve moving into next year and you want to have the resources to go after the higher margin work.
For many of us this is the worst economic time we have seen in our lives. To further challenge us, the recovery seems to be dragging along very slowly. It is up to each and every one of us to instill confidence in those around us – and find creative ways to kick start our economy. What are you doing to help our recovery? What do you see as the critical factors in getting our economy running at full speed again?