This month’s issue of Roofing Contractor contains a look ahead from some of the movers and shakers in the roofing industry. Their insights are infinitely more astute than mine, but I just cannot resist jumping in.
There was so much anticipation and emphasis placed on the coming of Y2K, looking forward to 2001 seems almost anticlimactic. My first prediction is that 2001 may be every bit as raucous as 2000 was for the roofing industry and for the economy in this country as a whole — but in a different way.
In 2000, we witnessed the skyrocketing price of raw asphalt and polymer products. All this as the price for a gallon of diesel fuel went out of sight, further adding to the cost burden of everyone in the material supply chain, from manufacturers to distributors to contractors. What most of us in that chain did not notice in 2000 was a major impact on our bottom line.
That could be the most significant change roofing contractors have to face in 2001.
The easiest thing about doing business in this country is dealing with the basic premise of supply and demand. It is this simple concept that has kept the high cost of oil-based raw goods from biting down on most of us. Manufacturers, whose lives depend in a large part on scale, have simply been unable to pass on their added costs. While easy to understand, the law of supply and demand can be hard, even fatal to businesses or even whole industries.
My prediction is not that the pendulum will swing in 2001 with material prices going through the roof. In fact, I think it may continue to be difficult for manufacturers to pass along cost increases. If the political situations in oil exporting nations mellows out a bit, the price of a barrel of oil would likewise subside. If this were to coincide with an improving market, it might allow roofing manufacturers to return to a more profitable status while holding the line on the price of the goods they bring to this market.
Those are two of the biggest “Ifs” I’ve ever proposed.
The more likely scenario is that roofing manufacturers, being so tight on price now, will leverage any strength in the market to take an increase in price. My suggestion to you roofing contractors is simple: Just play the conservative game all you can. Supply and demand drives the market you sell in. Be very careful, however, about lofting prices out there without some kind of inflationary language, if at all possible.
This is a year to get down to basics. Operate your business to make a profit. Keep an eye on the world beyond the roofing industry to try and stay in step with events that can later translate into increased costs in your business. Roofing prices may or may not go up this year. But for gosh sakes, be aware of the pressures that already exist for them to do so, and be on the lookout for signals of change.