Brian Beaulieu 2015-09-11 06:39:53
The Economy is Experiencing Some Weakness THE ECONOMY is experiencing some weakness. ITR Economics is forecasting that there is business cycle rise ahead. We are beginning to see some early signs of rise in several reliable leading indicators in the U.S. and in Europe. As yet, the leading indicators for China, Canada and Brazil are not indicating that an upturn is nearing just yet. The weakness in the U.S. is evident in capital-good new orders running below year-earlier levels. It is not just the oil patch contributing to the softness in new orders. However, the economic softness seems to be mostly of a business-to-business nature. The consumer is spending a lot of money and employment is growing with more gains on the horizon. The world’s economy would be in a lot more trouble right now if it wasn’t for the ongoing capability and desire of the U.S. consumer to spend money. The tentative improvement in the U.S. leading indicators and in those of Europe means we will likely see business cycle improvement in North America and in Europe in 2016. As these two economies accelerate in their respective growth rates, we will see upside business cycle changes occurring on a lagging basis for Canada, South America and Asia. An upturn in these latter economies will likely be tied to a rising trend in commodity prices in 2016 as global demand slowly improves, forming a positive feedback loop for South America in particular. There is a period of business cycle rise coming for Asia, led by China and Japan. However, the onset of rise will follow that of the U.S. and Europe. Don’t look for growth rates in the region to be as strong as what occurred over the last several business cycles. Both China and Japan are experiencing structural economic problems in the form of debt, demographics and a reliance on the outside world. You will likely find easier, more profitable opportunities in North America than you will in Asia through the coming year unless you are gaining market share. WEAKENING U.S. DOLLAR The U.S. dollar (USD) will likely be in a new trend for 2016. The need for safety in the form of holding the USD will diminish as business cycle gains become more the norm for the global economy and as the fear of deflation dissipates. A weakening of the USD in 2016 will give exporters some price relief but it will also create an environment in the U. S. more prone to inflation percolating in segments of the economy. The latter situation will give the U.S. Federal Reserve license to increase interest rates. We expect the rising trend in interest rates to initially be gradual. A gradual ascent is not going to have an immediate, detrimental impact on the economy. However, if interest rates keep rising beyond 2016 and if the rising trend escalates, the cumulative effect will likely be adverse for residential construction with a normal downside rippling effect following through the rest of the economy. The business cycle rising trend of 2016 won’t be evenly felt across countries or across markets within countries. Cyclical rise will create stresses within businesses unless you, your vendors, or your customers are prepared for the upturn. Chances are some part of the supply chain or the end-user will create stress points stemming from upside business cycle activity. Now is the time to ask yourself if you have enough people (a resource that will be in an ongoing short-supply situation), capital and equipment. STAY TUNED Stay tuned to see how the leading indicator and market trends develop both here in the U. S. and abroad so that you can effectively grow your bottom line. Industry Awards to be Presented at Network2015 2015 FRED V. KEENAN LIFETIME ACHIEVEMENT AWARD AT NETWORK2015 IN CHICAGO, the association will recognize past ASA President Joel Becker, of Waterbury, Conn.- based TORRCO, as recipient of the 2015 Fred V. Keenan Lifetime Achievement Award. The award is presented to individuals with a long history of service and dedication to the PHCP and PVF industry. To be considered, individuals must have exhibited strong influence on the current status of the industry, project a positive industry image, be responsible for positively affecting the industry in general and have provided a history of dedicated service to the American Supply Association. Previous award winners include: Fred Keenan, for whom the award was named, Karl Neupert, Ed Felten, John McDonald, John Martin, Frank Finkel, Nick Giuffre and most recently, Morris Beschloss who received the award in 2012 in Orlando. “When many in the industry were outwardly expressing doubt that ASA would not survive as a national association, it was Joel’s drive and vision nearly 10 years ago that put in motion the changes that needed to be made to culminate in ASA once again leading the industry,” ASA Executive Vice President Michael Adelizzi said. 2015 PLUMBING DIVISION AWARD OF EXCELLENCE Also at Network2015, the 2015 Plumbing Division Award of Excellence will be presented to past ASA President Randy Tice of APR Supply Co., Lebanon, Pa. In 2012, ASA’s Plumbing Division Executive Council established the award to recognize outstanding achievements specifically related to the plumbing sector of the industry. Those who have been honored with the award have projected a positive industry image and have been responsible for positively affecting the industry as a whole. Previous award recipients include: Wally Gumm of Embassy Group, Rick Schwartz of WinWholesale, Joe Poehling of First Supply, and Joe Maiale of InSinkErator. Earl Zarbock, who served on ASA’s Executive Committee with Tice, stated: “Randy was fully dedicated to anything that he was involved in. In the early years, there were a lot of skeptics regarding some major decisions that were being debated, and much doubt that they would pan out. Because of Randy’s spearheaded mindset, we had success and accomplishments and industry advancements were achieved.” 2015 ASA Member Safety Recognition Awards THE 2015 ASA Member Safety Recognition Awards will also be presented to three wholesalerdistributors and two manufacturers at Network2015. “This year, we saw another increase in participation in the awards program, showing once again a heightened sense of awareness that safety in the workplace is critical,” said ASA Safety Committee Chairman Michael Place of the Dakota Supply Group.“Recognizing companies that excel in their employees’ safety is a great motivator to maintaining a safe work environment.” The award was created in 2012 and recognizes distributors and manufacturers based on their company’s total man-hours. This year includes two first-time award winners and three previous winners. Since the awards’ inception, participation by ASA member companies has doubled. ASA Members Tops Among 150 AMERICAN SUPPLY ASSOCIATION distributors are proud to be leaders in the PHCP and PVF industry. The May 2015 Supply House Times listing of the Top 150 Distributors finds ASA representing 92% of those distributors eligible for membership in the association. FIVE YEAR GROWTH Over the past five years, the percent of membership in the Top 150 has grown as distributors are finding greater value for their membership dollars and increased desire to give back to build a stronger industry. FOR INFORMATION For information on joining ASA, go to asa.net/Membership Newly-Revised Industrial Valves Training from ASA University THE INDUSTRIAL VALVES© COURSE from ASA University has recently undergone a thorough revision to reflect the most current information in the industry. The newly-updated comprehensive course, formerly a three-course set, takes employees to the next level with their knowledge and ability to work with a wide range of industrial valves. Employees learn the types, designs, and functions of values, how to identify and solve common valve problems, how to interpret manufacturers’ literature, and how to speak confidently with customers. This is an in-depth program requiring a basic knowledge of pipe, valves and fittings. FIND OUT MORE The Industrial Valves© course is one of many specialty product training courses offered through ASA University. Find out more by visiting asa.net/store. 2015 OPR Shows Increases Across the Board THE AMERICAN SUPPLY ASSOCIATION’S Operating Performance Report (OPR) is the most comprehensive compilation of financial data for the PHCP and industrial PVF wholesale-distribution industry. For 33 years it has served as the basis for comparing one’s own company performance with industry comparatives across product emphasis and sales volume size. This year’s report reflects data reported from 181 different firms. PLUMBING SUPPLY FIRMS reported a 5.7% sales gain in 2014 compared to an 8.2% increase in 2013 and a 3.4% advance in 2012. PVF FIRMS showed a 6.4% sales increase in 2014 vs. a flat, 0%, change in 2013 following a 10.2% gain in 2012. PLUMBING SUPPLY & PVF FIRMS experienced an 8.1% sales gain in 2014 compared to an 8.0% increase in 2013 and a 5.7% increase in 2012. Among all survey participants overall, AFTER TAX RETURN ON NET WORTH was 13.1% in 2014 having been 13.0% in 2004, 16.3% in 2005, 15.5% in 2006, 10.3% in 2007, 7.8% in 2008, 2.3% in 2009, 6. 1% in 2010, 8.0% in 2011, 9.5% in 2012 and 11.4% in 2013. TO LEARN MORE Visit BUSINESS INTELLIGENCE at asa.net to learn more and view sample pages from the report as well as replay the presentation and download the slides from the Aug. 12 webinar. Tom Noon, principal at Industry Insights, reviewed the highlights, answered questions and offered suggestions on how to get the most from the results of this year’s study.
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