This past month our fearless leader, Tim Schauer, was asked to contribute an article to the Vancouver Business Journal. They asked him to share his thoughts regarding the economic outlook for our industry in the coming year. The article is below.
At the turning of the year, as we reflect on the road our businesses just traveled while attempting to forecast the road ahead, I’m struck with the ever-present truth that the only certainty is uncertainty. I suggest that your willingness to plan for uncertainty is the biggest influencer for any economic forecast. The economy is recovering with some vigor, but it’s a different economy. Businesses and their employees are spending money differently – from advertising, to borrowing, to organization participation. The old economy isn’t coming back. Like a successful new year’s diet (keyword: successful), the necessary changes can’t be temporary until you feel better. To stay successful, behavior has to evolve permanently.
Now, if you are a business owner entrepreneur like me, I’m betting you are an optimist like me too. I think you have to be an optimist to be an entrepreneur. What else could you be? Along with optimism though, entrepreneurs must have some appetite for risk. But I believe this is where entrepreneurs begin to segregate ourselves. Some conservatively sip from the hot cup of risk in front of us while some gulp from it to quench our optimistic thirst and ask for a refill. The amount of risk you have an appetite for will make the biggest difference for you in 2015. My philosophy on risk has tempered. Since the recession, I’m willing to risk some profit, but not so much that we risk our ability to earn a living and meet our obligations. The following is my forecast seasoned with my perspective on the uncertainties I perceive.At MacKay Sposito, our business focuses on three core market sectors related to construction – all involving varying degrees of uncertainties. The three sectors of our business are land development, transportation and energy. We have experienced growth in all sectors in 2014, and we expect that trend to continue into 2015 and beyond.
In our 40 years in business, land development has been a consistent component of our work and there are a lot of project opportunities right now. In other words, if you are bullish and aggressive in pricing there is as much growth here as you are willing to chase. We are choosing to be more conservative in this market opting for selective growth by looking for long-term clients rather than just more projects and revenue in the short-term.
The transportation market is another story. We expect to see growth, but there are fewer opportunities given the severely stunted funding for transportation since the recession. In general, this market will continue to struggle until our community, state and nation decide to invest in our rapidly deteriorating infrastructure that was so generously provided to us by the sacrifices and investments of our grandparents. That said, I believe the transportation sector will eventually be a deep and robust market for several years once we all decide on a funding solution for our transportation system’s priorities. Unfortunately, the longer it takes for us all to embrace the necessary investments to at least maintain what we have, the bigger the bill will be. In others words, the transportation market sector will eventually be big, just not in 2015.
The energy sector has been strong for several years and good to us. Most of our growth has been related to the economy surrounding energy. Whether it is wind farms, transmission and distribution lines, gas pipelines, oil, LNG or hydro power, if you can carve out a niche within this diverse and broad market it should be a stable line of business for many more years.
So, are we willing to be optimistic and take risks in this new economy? Yes! Should you? If you have done your homework and understand the uncertainties in your market sectors, you can develop a plan to mitigate the uncertainties and succeed. I wish you all the success. For an optimistic entrepreneur like me, seeing others embrace their risks and succeed is all I could wish for this Christmas.
