As I write this column, the U.S. is on the verge of a historic overhaul of its tax system that, according to some Republicans, will unleash GDP growth of 3 to 4% each quarter. This is based on the proposed cutting of corporate tax rates to 21% which, in theory, will spur investment in new technology, products, and ultimately growth.
I hope they are right.
Naysayers trumpet doom and gloom because they believe the tax cuts will add trillions of dollars to the national debt.
I hope they are wrong.
The fact is, if this passes, HVAC contracting firms stand to get some much needed relief from their tax burden. That certainly could be a great start to 2018.
Also on a positive note, our friends at Dodge Data and Analytics recently released a report that called for 2018 to be a solid year for the overall construction industry. The report predicts that total U.S. construction starts for 2018 will climb 3% to $765 billion.
Robert Murray, chief economist for Dodge Data & Analytics writes that 2018 “will likely see gains for residential building, up 4%; and nonresidential building, up 2%.”
His predictions are based partially on an overall increase in jobs in the U.S. In fact, a report issued on December 8, 2017 from the U.S. Bureau of Labor Statistics says the American economy added 228,000 jobs in November 2017, 10 percent of which were added in the construction industry.
For the HVAC Industry this is great news
In addition, the Dodge report predicts:
- Single family housing will rise 9% in dollars, corresponding to a 7% increase in units to 850,000 (Dodge basis)
- Multifamily housing will retreat 8% in dollars and 11% in units to 425,000 (Dodge basis)
- Commercial building will increase 2%, following a 3% gain in 2017
- Institutional building will advance 3%, maintaining its upward track after 2017’s 14% jump.
Now is the time to get inside customers’ homes and do what you do best: improve their comfort, save them energy dollars, and keep them safe.
All of this is to say that 2018 has the makings for a great year by HVAC standards, especially for those in the Performance-based contracting segment.
Now why do I say that?
Simple – Performance-Based Contractors have a real leg up because they provide customers — commercial and residential — real solutions based on measurement and proof. In other words, the systems they deliver, whether new installations or retrofit/renovations, perform as promised. Customers are willing to pay a premium for that.
According to the U.S. Bureau of Economic Analysis, consumer spending has increased 3.3% in the second quarter of 2017, two thirds of which is on services including housing and healthcare. Today’s consumer spending trends point researching more (thank you Internet) and buying the best for the dollars they spend.
With that in mind, 2018 looks to be a solid year for your business. Now is the time to get inside your customers’ homes and do what you do best: improve their comfort, save them energy dollars, and keep them safe.
Now if that isn’t fun, then I have no idea what fun is. Happy 2018 everyone!