A
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Component Manufacturing dverti$er
Todd Drummond
Don’t Forget! You Saw it in the
Adverti$er
June 2019 #11239 Page #22
Expect Margins and Lead Time to Decrease in Most Markets
M
any of us have been in the industry long enough to clearly remember the pain of the ‘08 crash. Before the crash, everyone was very optimistic about their own growth potential because the building economy was on fire, which gave everyone a reason to expand their manufacturing capacity like crazy. Today, most economists are optimistic about the new building economy based on multiple factors, such as a shortage of housing versus the growing population in most markets and a healthy economy keeping inflation at bay for the near term. However, I would like to throw a cautionary warning that what you experienced in 2018 for the good margins and long lead times may not be what you will be seeing this year and in the coming years. For those of you in the wood truss and wall panel world, 2018 should have been a banner year for your net profits. It was a year when many rightly stated that, if they had greater capacity, they could have had even better sales and, therefore, larger total net profits. The natural result of such good times is that everyone expands their capacity. Most equipment vendors are 9 to 12 months out for new orders. More than a few component manufacturers are not only purchasing new equipment but are building brand-new manufacturing locations to provide even greater capacity, rather than just adding equipment to their existing locations. The capacities to create more wood trusses and wall panels are expanding at a tremendous rate for, at least, this year and the next. This should be a concern for all of you, as it concerns to your bottom line.
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