It’s no secret that 2020 was a year packed with challenges for the PHCP-PVF supply chain. Some areas of our industry, such as the residential construction and remodeling markets have flourished. No matter the market sector, distributors have entered 2021 with high hopes and are searching for answers when it comes the state of the industry.
Shifts in the housing market
ASA’s Chief Economist Dr. Chris Kuehl gave his last ASA 2020 economic update webinar on Dec. 16. Kuehl noted the housing market will remain robust. “A generational change is getting close, which will affect the PHCP industry,” said Kuehl. “There are a lot more existing homes on the market today as Baby Boomers are not leaving homes to the younger family members like they used to.”
Kuehl explained Millennials and Gen Z are becoming less intrigued by multifamily housing in big cities and are looking for single-family homes in rural areas. “Some states are paying people to move into certain areas; if they can do their job remotely, people are willing to move out of larger cities,” he said. “For example, in Tulsa, there’s a program giving people $10,000 to move to the area, and I’ve seen a number of other areas doing similar things.”
Bob Mucciarone, chief operating officer, F.W. Webb said the company expects business to get back to normal by the beginning of 2021. “Business in 2020 migrated more toward smaller jobs. Since many people have been spending more time at home, we have also seen more repair and renovation projects.”
Environmental and public health
Mucciarone explained there is a high demand for environmental services. “Throughout the pandemic, we have experienced high demand within our environmental services division. They have been very busy providing decontamination services for the COVID-19 virus. At the end of 2020, larger jobs seemed to be opening as long as strict safety protocols were in place.”
Kuehl spoke to the expectations and implications of the COVID-19 vaccine release. “In order to be in a position to go back to normal, we’ve got to get to a heard immunity threshold – around 230 million people immune,” he said.
With the detailed vaccine distribution priority plan, Kuehl expects the country won’t reach that immunity threshold until late summer.
Political landscape and trade
There has been plenty of discussion about the 2020 election outcome and its effect on the industry. Mucciarone believes the more moderate legislation Congress can keep in place, the better for the PHCP supply chain. “We believe the incoming administration will roll back many of the policies that have been beneficial to our industry, including the easing of regulations, our non-reliance on importing fuel and tax cuts.”
When speaking to global impact of the new administration, Kuehl said to expect better trade relations with the European Union, especially Canada. “The USMCA will finally get into high gear, focusing heavily on Canada,” he noted. “Japan will be a highly sought after ally as a counter weight to China.”
Kuehl said the tariffs with China, particularly ones dealing with steel and aluminum, are likely to stay in place and it is unlikely they will be reduced. “There may be some relaxation on tariffs when it comes to allies (Canada, Japan, etc.),” he noted.
Mucciarone said F.W. Webb’s business has remained strong, but there are some concerns for 2021. “There are signs of shortages in some commodities, which could potentially cause inflation later in the year,” he said.
Kuehl explained there are some who think the economy will follow a “V” shaped recovery, and some who expect a “U” shaped recovery. “V-shaped recoveries are becoming less common, and U-shaped recovery means we go down and take some time getting back up to where the economy was before.”
Kuehl said he expects a more up-and-down recovery. “We have four million small businesses that went out of business this year; we won’t feel the repercussions of that all at once,” he said. “We will have periods of economic growth followed by some small crashes.”
The good news, Kuehl noted, is that witch each crash, we are able to come back up and recover quicker and quicker.
Report Abusive Comment