Hope on the Horizon

Kristin Smith

When Mike Taylor, executive director of the National Demolition Association (NDA), spoke with Construction & Demolition Recycling magazine a year ago, he said economists are indicating that business will pick back up for the industry in 2011 and that 2012 should be a good year.

“We actually saw glimmers of that,” says Taylor in a recent interview. But, he also notes, everything “headed south” once President Barack Obama and Congress began discussing the debt ceiling during the summer of 2011. “Any confidence anybody had, any guys discussing projects—that all disappeared.”

With 2012 being an election year, it could mean more uncertainty and a “wait and see” mentality as businesses and governments hold off on decision-making until election results are in.

“I think the market will continue to stagnate until the election,” Taylor predicts. If Obama wins, he expects the economy to improve in the first or second quarter of 2013. If the Republicans win, Taylor predicts more (temporary) political uncertainty means economic improvement won’t be seen until the third quarter of 2013.

Despite this, Taylor has made observations about demolition activity that provide some optimism. “We are seeing in certain parts of the country, increased volumes of work.” He says demo contractors in the Upper Great Plains and the Pacific Northwest regions have been busy.

EPA (U.S. Environmental Protection Agency) and OSHA (Occupational Safety and Health Administration) have also experienced significant budget cuts, so there aren’t as many compliance initiatives or mandates that could delay projects from moving forward, adds Taylor. And finally, he notes the scrap industry is performing well, with many foreign countries buying steel scrap and driving up prices.

As 2012 begins to unfold, certainly all eyes will be on Washington, but hopefully the onset of an election year will not stop the small improvements that are already happening from continuing.

An increase in demand for welding equipment in the construction sector was a focus of a recent study by the Cleveland-based research company, the Freedonia Group. The study forecasts U.S. demand for welding equipment and consumables will increase 6.4 percent per year to $7.1 billion by 2015. The report, titled Welding Equipment & Consumables, says gains will be driven by continued recovery from the economic recession experienced between late 2007 and 2009 in major manufacturing and construction markets. Growth will also be fueled by the increasing number of applications in which various types of welding can be used, the study says.

In addition, the study attributes construction activity as driving demand to $750 million in 2015, or nearly 11 percent of the welding product market total, the report says.

There is no way of knowing whether construction and demolition activity will pick up in 2012, but some signs are pointing to recovery not being too far away.