2007 was certainly an interesting year. There’s no need to once again recap how developments on the finance, mortgage and supply/demand fronts are affecting the housing markets and, by extension, the construction trades, in the West and elsewhere.   
    The results of the 2007 Reeves Journal Western Trends Survey reflect an almost startling slowdown of activity for plumbing contractors in new residential construction. That’s the bad news. The good news is that more than 40 percent of respondents to this year’s edition of the survey said the level of Commercial/Industrial/Institutional plumbing in our region has posted increases over the past year.   
    Here is a taste of this year’s results:

Residential Snapshot

During the past 12 months, has Residential construction in your area...

Respondents to this year’s survey painted a fairly gloomy picture of the residential construction market. Nearly half—49 percent—of respondents reported a decrease in residential construction in their areas during 2007, compared to the 33 percent of respondents to the 2006 survey.  
    For 2007, this leaves 36 percent of respondents reporting residential construction in their areas stayed the same and only 15 percent reporting an increase. The good news is that among the 15 percent who said residential construction has increased during 2007, the majority said they’d seen increases of 20 percent or more.  The bad news is that fully 52 percent of respondents who reported a decrease in residential construction said the drop-off is 25 percent or more.   
    The rather grim performance of the residential construction sector in the west during 2007 was foreshadowed by the 2006 survey, in which a total of 71.6 percent of respondents predicted performance on the residential front would “stay the same or continue to slow.”     
    Predictions for 2008 on the residential side are still grim, in that fully 82 percent of this year’s respondents predict 2008 residential construction will stay the same or decrease.

Rosy Commercial Picture

During the past 12 months, has Commercial/Industrial/Institutional (CII) construction in your area...

While the residential side of the construction business faltered for plumbing contractors during 2007, good news was found on the Commercial/Industrial/Institutional side.   
    Some 41 percent of respondents to this year’s survey reported seeing an increase on CII construction in their respective areas. This is eerily similar to the predictions made by respondents to last year’s survey, in which 40.7 percent said they were anticipating an increase for 2007.  
    Other figures on the CII side reported for the 2007 survey were almost spot-on reflective of the predictions made by respondents in the 2006 survey. For example, 52 percent of 2007 respondents reported CII construction had stayed the same in their markets. During 2006, 45.6 percent predicted CII would be about the same in 2007. Similarly, only 7 percent of 2007 respondents said CII construction had decreased during the year. Back in 2006, however, 13.9 percent were expecting a decrease in CII construction.   
    This year’s respondents, when asked to predict CII performance for 2008, expressed cautious optimism, with 34 percent predicting an increase during 2008, 50 percent opining CII work would remain at 2007 levels, and 16 percent predicting 2008 CII work would see a decline.

Who and How Much?

What do you estimate your 2007 total gross annual sales to be?

Service and repair contractors were well-represented in the 2007 Western Trends Survey in that some 43 percent of respondents claimed that type of work as their specialty. New construction (CII) contactors made up 21 percent of respondents and 36 percent was made up of a combination of new construction (residential) and remodeling and renovation specialists.   
    A respectable cross-section of businesses was represented this year in that 24 percent of respondents said their estimated 2007 gross sales were on track to be less than $250,000 and 20 percent revealed their companies were going to post gross sales of $5 million or more for the year. The median gross sales figure (half of respondents reporting more; half reporting less) was $800,000.   
    It was a better year, gross sales-wise, for some respondents. Among the 39 percent who expect to see an increase in gross sales for 2007, nearly all expect the increase to be slight, reporting “somewhat higher” figures. About the same number—40 percent—said gross sales for 2007 would be “about the same” as 2006, while only a combined 21 percent said 2007 gross sales would be either, “somewhat lower” or “much lower” than the year-ago period.  
    In predicting gross annual sales performance for the upcoming calendar year 2008, 51 percent said they anticipated bringing in “about the same” gross sales figures as 2007, while a combined 36 percent said their gross sales for 2008 would be either “somewhat higher” or “much higher” than 2007. Only 13 percent said they were anticipating gross sales for 2008 to be less than 2007’s final numbers.

Methodology

For this year’s survey, 1,500 questionnaires were mailed to active, qualified Reeves Journal contractor subscribers who reported holding the job title of Owner/Partner, President/Officer or Manager.
    Questionnaires were mailed Sept. 21 and 184 usable forms had come back by Oct. 23, the deadline to return the questionnaires. This produced a 12 percent response rate.
    To order your very own copy of the entire 2007 Reeves Journal Western Trends Survey results, which includes far more interesting data than could ever be presented here, visit the Clear Seas Research Web site at www.clearseasresearch.com, and click your way to the “Syndicated Studies” page. Or call Beth McGuffin at (248) 786-1619.