December 2022 Industry Update
By Randy Reimer
Director of Sales and Marketing
Uncertainty and Optimism
As we look ahead to 2023, a common theme among our customers is “uncertainty.” There is a lot of concern about recession, but also signs that it may not be a deep or extended downturn, but more of a slowdown or a soft landing.
Rising interest rates have cooled the residential housing market, which is a leading indicator. When housing demand softens, commercial development often follows suit. There is less infrastructure to put in the ground and less demand for concrete pipe and related products. Some of our customers have had jobs put on hold as developers pause to see where the market is headed. Richard Branch, chief economist at Dodge Construction Data, projects 0% growth in 2023. If we go into recession, Branch believes that number could turn negative.
However, even with a flat forecast, there is still plenty of room for optimism. Most producers that we talk within the pipe and precast industry still have healthy backlogs and have product in the yard ready to ship. It’s just that now, we’re hearing in certain markets, contractors and owners putting projects on temporary hold. When projects from the massive infrastructure bill start to ramp up later in 2023, there will be plenty of opportunity for pipe and precast producers in the U.S. Of this we are certain.
On the input side of the ledger, steel pricing has eased somewhat in North America, but that’s an anomaly. The war in Ukraine and related sanctions on Russia are creating energy and supply line issues that will keep input prices high in Europe and may eventually spill over to North America.
Turning the Corner
At Hamilton Kent, we have experienced the same supply line issues that plagued manufacturers throughout the pandemic, but the good news is that we have managed our way through those issues.
We turned the corner in 2022, from a company that was facing a significant backlog and supplying customers mostly on allocation, to now being a company that is building our stock and preparing to launch some exciting new products in 2023. Stay tuned for more on that.
One of the ongoing problems plaguing all construction sectors has been finding and retaining a strong labor force. At HK, we have been hiring aggressively. As the supply lines opened and we were once again able to acquire the raw material necessary to address demand, we ramped up production at our Winchester plant and have nearly doubled our production team.
The increase in production has enabled our sales team to shift from managing allocations to focusing more on customer service.
So, while the status of the economy looks a little fuzzy right now, we are experiencing a normal shoulder season for the first time since 2019 and are busy preparing for the 2023 construction season. We are laser focused at Hamilton Kent on supporting our customers, launching innovative new products and continuing to provide world-class gaskets and sealing products for watertight infrastructure. At HK, we are excited about what’s in store for our industry in 2023 and how we will contribute to our customers’ success.Get in Touch