Masonry Magazine January 1975 Page. 35
THE YEAR AHEAD
# Concrete Masonry Industry
By PAUL LENCHUK, President
National Concrete Masonry Association
Arlington, Virginia
In view of the fact that every major economist and construction forecaster was wrong in prognostications about the economy and construction activity as they relate to the the year 1974, it hardly seems reasonable to expect those less professionally trained, such as association executives, to predict with any greater accuracy. But since we have insights into trends in our own industry which even the experts do not, we can talk with some certainty on those trends without getting too far on the limb with product-use predictions.
The concrete block industry is in an irreversible grip of growing smaller in numbers of plants yet growing larger in amount of product produced. That means that the block producer has the twin devils of survival and at the same time-growth-jabbing at him. He will perish if his timing is incorrect with either of these devils.
The numbers of block plants have diminished from 5,500 in 1946 to 1,500 in 1974, yet production has soared from one-half billion units to 3.7 billion units in the same time span. It appears that in 1975 this trend will get an unexpected acceleration. The collapse of the home building market, the very tight money conditions of late 1974, and the emptying of the pipe line of backlog of work in architects' and engineers' offices will test all block plants in their ability to survive in 1975.
Yet those survivors will be tested once again in late 1975 when it is expected that government policies will loosen the stranglehold on construction activity in the U.S., and suddenly there may develop a demand in late 1975, and if this demand begins, it will continue growing into 1976 and 1977.
The year 1974 was a good one overall for the block industry although pockets of severe demand deflation occurred, especially in those markets served by block plants which catered to home building. Since a lot of the West (excluding Arizona) did not depend on its volume in home building, many plants registered gains over the record-breaking year of 1973. But since the greater volume of block is made in the East, the losses there offset the gains of the West. Overall it was a standoff. Last year we predicted a very small gain.
For 1974 we predict a loss since the upswing in activity in late 1975 will be too late to compensate for six months or more of losses in the home building and commercial markets. We believe block production will drop from about 3.3 billion units to 3.2 billion units, and, because this will also affect pricing, total sales will remain at just one billion or slightly less dollars. However, with the expected dise of more than 100 concrete block plants, the survivors will share at least the same amount of dollars as they did in 1974.
As always happens in a period of decline, concrete block will go after new markets and new uses for its product with far more aggressiveness than it has for the past few years.
# Brick Industry
By RICHARD W. OTTERSON, Executive Vice President
Brick Institute of America
McLean, Virginia
Many groups and individuals in the masonry industry are concerned about the supply of materials. This is a vital concern and they should be given answers as to what to expect in the next year or so.
The brick industry has more than an adequate supply of brick in inventory. There is no shortage of brick and no shortage is expected during 1975.
Several years ago the brick industry addressed this problem in reverse. A disparity between supply and demand was apparent and the industry, as rapidly as possible, increased production, modernized plants and in 1973 produced 9,000,000,000 (9 billion) units.
Just as 1970 produced one of the worst years in a decade, 1974 saw a return to shortages of mortgage money and concomitant high interest rates and government policies that have depressed construction. To expect changes in these policies, in a short term, would not be wise. There is no magic formula that can be applied.
While a shortage of brick now or through all of 1975 will not exist, there are still several factors that can lend to better service to the building industry:
-Most situations can be relieved even when inventories are high by ordering brick well in advance of actual need. This assures the customer of getting that particular brick, color and texture desired without waiting.
-A second factor, one to which all of us in the construction industry should undertake, is to convince the federal government that policies that cause fluctuations in the building industry result in not only a long list of problems but a start-up, close-down situation that causes the major disparity between supply and demand.
The third, and perhaps most important, is the energy problem. This is and never has been a short-term problem. This affects all of us-management, labor and suppliers. It affects producers of other building materials also. Right now, public agencies tend to under-rate the importance of our product and as a result assign to brick producers relatively low priority ratings for energy consumption. This results in the brick industry being among the first to suffer when reductions in energy consumption become necessary. We are trying to change this situation and will continue to do so.
Brick is available. It will be in good supply during early 1975 and with an upturn during mid-1975, the brick industry is well prepared to service its customers.
We suggest the problems of supply and demand can, in part, be controlled by proper planning and ordering of material early. We are experiencing serious energy problems and these will continue to affect all of us now and in the future.
The brick industry expects and hopes for an upturn in housing in mid-1975, but, even if such an upturn occurs, supplies of brick will be adequate to meet the demand through all of 1975.