The recent recession seems to be more drawn out than others in recent memory. Past recessions have been followed by strong economic growth, but not this time—not yet, at least. Things have taken time, but there are positive signs—at last. Many of the distributors I’ve talked to over the last few weeks say business in January and February has been stronger than expected.
One contributor to a slow recovery was the fact that businesses held off on spending capital. As economist Joseph V. Kennedy points out in his article, “How Much More Can We Handle,” corporations have been sitting on roughly two trillion dollars in accumulated capital. As for consumers, it seems they may have finally broken through and are beginning to spend again. (Black Friday sales in 2011 were a record-high $11.4 billion.) With any luck, the business world is on the heels of consumers.
If GAWDA members are any indication, businesses may be ready to spend in 2012. In the Welding & Gases Today 2012 Business Forecast, 59% of distributors said they plan to build new or expand existing facilities; 46% will hire new employees. Mike Taylor, owner of All Gas & Welding Supply (Monticello, NY), told W>, “If you have access to capital, it’s a good time to invest in your business.” Their customers, too, are beginning to spend once again. Lefeld Welding & Steel Supplies President Gary Lefeld says, “The customer base is more optimistic and ready to release money on needed repairs and projects. There’s movement in the pent-up demand.”
Although certain industries, construction in particular, are not back on their feet, there are new, emerging markets, and it’s up to distributors to go after these prospects. Energy in particular is showing positive signs with the growth of industries like shale and LNG. As Bob Garland writes in “The Shale Effect,” “The recovery, production and delivery of shale gas have a positive economic impact not only on the core oil and gas industry, but also on the indirect suppliers (supply chain) and the induced suppliers (consumers)…For gases and welding distributors, this means a new and expanding market.”
That said, some distributors are still feeling the strain of the recession. “We have many faithful customers who are buying only what they need. No one is stockpiling inventory,” says Ann Clay, president at Tri-State Oxygen (Ashland, KY). But overall, distributors are positive, with 98% predicting 2012 sales to be the same or better as 2011.
What do you think? Will recovery come in 2012?
Find out what industry suppliers and distributors in your region are planning for 2012 in Welding & Gases Today’s Business Forecast.
