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With 2017 now behind us, it’s time to look forward to everything 2018 has to offer. Tom M. Brown and Steve Letko discuss the optimism in the PVF industry, and all the things to look forward to in the New Year.
Tom M. Brown: Steve, Happy New Year! Now with Christmas and the holiday season over and 2017 in our rearview mirror, we are all looking forward to 2018. The economy has made significant strides — stock market is at an all-time high, unemployment is the lowest in 10 years, and consumer confidence soaring — do you see these positive trends continuing?
Steve Letko: Happy New Year to you, your colleagues and readers. The year 2018 looks very promising for the PVF market segment of the U.S. economy with energy being the engine of growth.
North American project restarts scheduled for 2018 are currently exceeding $20 billion and will increase as the year progresses.
Capex momentum is building for the steel mill industry with Nucor and U.S. Steel Corp. for 2018 as both are planning on expanding capital spending increases. U.S. Steel is spending more than $1 billion in revitalization plans for existing mills. Nucor will be building two new steel rebar micro mill plants during 2018. These are Nucor’s first new plants since 2013.
The Mid-Atlantic region is scheduled to see nearly $50 billion in new starts in 2018 with the power industry leading with $20.5 billion in project start value. Industrial manufacturing follows with $16.7 billion in scheduled starts.
The West Coast region is looking at $38 billion in scheduled project starts for 2018 with the energy industry leading the way with $13.7 billion planned starts that include the dismantling of the San Onofre Nuclear Generating Station and the building of solar and photovoltaic solar farms. The industrial industry follows with $9 billion in scheduled project starts.
Consumer confidence coupled with confidence being generated in the manufacturing segment by tax and regulation reform are being reflected in the positive trends in the stock market.
This degree in confidence is generating an increased demand for new single-family housing, durable appliances, new manufacturing facilities, new equipment purchases, and for skilled labor.
TMB: During Thanksgiving week, oil prices spiked to over $59 per barrel, which has tremendous impact on the PVF market. What are your thoughts on oil pricing in the near future and what worldwide dynamics come into play?
SL: Restraint of oil production by members of OPEC and 10 cooperating nonmembers is to continue through 2018. The original agreements were to have expired at the end of June, but were extended in May to July of 2018. The new agreements keep the restraints in effect through year end 2018.
Khalid A. Al-Fatiha, Saudi Arabia’s Minister of Energy, Industry and Minerals and President of the OPEC Conference, is quoted as saying, “The extension is right. All-in-all, market stability has improved and the sentiment is generally upbeat. The re-balancing trend has accelerated and inventories are on a generally declining trend.”
China is now importing record levels of U.S. crude and the demand remains strong. With strong demand in China continuing and the restraint agreements remaining intact, the price of oil should continue in the range of mid $55+ (WTI) and low-to-mid $60s (Brent Crude).
Please keep in mind that an international incident or turmoil in the Saudi royal family could happen abruptly and disrupt the supply and demand oil equation.
TMB: Natural disasters, floods, hurricanes and wildfires disrupted the U.S. in 2017, causing major problems for the PVF industry companies in California, Texas, and in the Gulf Coast. How much will the economic picture in these areas be affected in 2018?
SL: The re-building of the infrastructure related to the devastating effects of the hurricanes of 2017 are impacting the demand for building materials, plumbing fixtures, pipe, valves, fittings, electrical supplies, lighting and labor markets.
The same applies to the West Coast as recuperation from the devastating 2017 fires begin. Demands emanating from all sectors of the market including the PVF sector, building materials, electrical equipment, durable goods and labor will remain strong and strain available resources that are already strained from previous fires.
The economic impact of the East and Gulf Coast disasters has had an effect on the GDP figures generated during the third quarter; however, it was not as devastating as originally expected. Both the third and fourth quarters registered a strong growth rate.
TMB: The fall PVF Roundtable meeting was the largest ever with record attendance and Terry Bradshaw was outstanding and perfect for the crowd.
SL: The October PVF Roundtable meeting was a resounding success with an attendance of more than 600 participants for a dinner meeting with Terry Bradshaw as the keynote speaker. Ferguson has Bradshaw under contract for promotional events and Joe Costanzo (Wolseley Industrial Group and PVFRT Board of Directors Member) was instrumental in convincing Ferguson management to allow Bradshaw to address this group.
He proved to be a tremendous draw for the October meeting, as previously mentioned, that resulted in a record turnout.
Bradshaw quickly related to the audience and our industry with his blue-collar background, as well as his father being a welder. He recognizes the industry’s need for skilled labor and supports the efforts to develop the necessary training programs needed to meet the demands of the future.
Bradshaw commended the work and contributions of the PVF Roundtable to the industry through the scholarships awarded to the trade schools. He empathized that there are individuals that college is not suited for, for various reasons. Those who choose to enter the trades can make a very lucrative income. They can and should be proud of their achievements and of their chosen trades.
TMB: Steve, I was honored to formally recognize Rob Braig as the 2017 inductee into the PVF Hall of Fame. He is a wonderful gentleman and a very deserving recipient.
SL: I have known Rob Braig for many years and found him to be a gentleman with integrity and talent. He is blessed with a wonderful family that gives him the support needed for his success.
Braig has the visionary qualities and leadership skills that have allowed him to build the industrial supply business of Ferguson, Plc., known as The Wolsely Industrial Group (WIG), into a major group contributing to the success of Ferguson USA.
Braig has risen from the ranks to become vice president of the WIG and continues to provide the energy and leadership to propel the company to become a major factor in the industrial PVF industry.
Excellent choice for the PVF Hall of Fame.
TMB: The Roundtable scholarship fund is growing and many college students as well as trade school students are benefitting. Ferguson Enterprises has stepped up big time not only by sponsoring Terry Bradshaw, but with major contributions to the fund.
SL: Tom, The PVF Roundtable is very proud of the achievements made in providing charitable scholarships for both academic institutions and trade schools.
The PVF Roundtable is driven by the efforts of volunteers that unselfishly commit their time and energy to achieve the corporate goal of providing these scholarships for the betterment of the PVF industry of the future. The PVF Roundtable does not have a paid staff.
The scholarships announced at the October meeting amounted to $175,000 and were distributed as follows:
TMB: Also in the fall, you attended the ASA meeting in Nashville and specifically IPD. How was the attendance and the business climate?
SL: The ASA Network was held at the Omni Hotel in the great city of Nashville, which is on fire as related to new construction with construction cranes dominating the skyline.
An excellent selection to reflect upon the optimism of the business outlook for the coming year 2018.
The meeting was well attended, as were all of the events. Retired quarter back of the Washington Redskins, Joe Theisman, gave an excellent presentation that captivated the audience. He even gave a Cleveland Brown’s fan a look at something he would never see: A Super Bowl Ring!!!!!
Theisman spoke so long that he extended his talk at least three times running the program overtime. He was having a great time and so was his audience.
The IPD Breakfast and Networking cocktail hour were well attended and the optimism for 2018 was definitely evident.
The absence of manufacturers of industrial valves, welding fittings and forge steel flanges at the IPD meetings was noticeable and concerning.
TMB: Happy 2018!