I used to think I had these downturns figured out. From my perspective as a contractor in California they appeared pretty predictable. They ran on a cycle of about eight to 10 years of good times, fell into a substantial slump for two to three years and then pulled out for another eight to 10 only to fall back into the same rut for two to three years and so on. The on/off switch seemed to flip back and forth (at least in the California market) just as suddenly as a light switch on the wall. It was a repetitious cycle of feast or famine.
Having begun my drywall career by taking a summer job as a finisher in 1968, and ultimately being licensed and in business by 1976, I’ve seen at least four economic downturns and witnessed them from both the tradespersons as well as businesses person’s perspective. Hands down, the one we seem to be pulling out of (keep your fingers crossed) is the worst I’ve witnessed. I don’t have any problem agreeing with the title “The Great Recession.” In my view, whoever coined that phrase was spot on.
By the Way… Let me get this said, for those of you who may be less familiar, having spent less time in the trade or business than I. It is slightly off topic with my intentions for this article but way too important to let any opportunity to mention it, slip by. Lesson #1: Put plenty of money away during the good times or your life and business will be a financial train-wreck when hard times hit. Remember: It’s “when,” not “if,” hard times hit.
If you are relatively new to the trade or business, say five or six years, you may be asking, “What good times?” Understandably so; however, if past history turns out to be any indication of what to expect going forward, good times will return. When they do, take advantage of these lean years by turning them into a grim reminder to be certain that you stash plenty of cash away in preparation for hard times. Learn to expect hard times with certainty and prepare for them. Make that a priority, if you intend to survive in the construction world.
I have determined and deem it so: The more you learn, the less you know! Well anyway, going into this downturn I thought that it would be similar to what I’ve experienced in the past. When I heard predictions of the downturn lasting into 2013–2014, I didn’t want to believe it. Six or seven years of ugly were a little too much to accept. However, as has been said, perhaps a little too often, hindsight is 20/20.
Looking back, having had plenty of time to ponder and experience the situation, I think my crystal ball is a little less cloudy now and the forecast going forward is a little clearer to me. But, I’ve already admitted to being wrong before. So then, I humbly present what follows as my theory. You might call it my best guess, but it is an educated guess. I’ve spent nearly 45 years in the drywall school of hard knocks and never missed a class.
Proportionate. Just hold that thought for a few moments or maybe even a month or so … . What I neglected to consider going into this downturn was the unusual length of the upturn that preceded it; it was longer than usual. Rather than the typical eight to 10 years, this time it ran 11 to 13 years. In our residential market in California—and I believe this to be true nationally, the upturn began around 1993–1994 and lasted through 2006–2007—about 13 years. From 1990 to 1993–1994 we experienced a typical and significant downturn followed by an upturn that lasted about 30 percent longer than usual.
I want to reemphasize the word that I think sums things up when it comes to this cycle that we are currently (or at least appear to be) pulling out of: Proportionate. As I see it, there reason why the downturn has lasted longer than the norm is that the time span of both the upturn and the downturn is necessarily proportionate. The downside is longer because the upside preceding it was longer. Both of them will ultimately prove to be proportionate to one another when compared with past economic cycles.
Furthermore, the word proportionate can be applied to our current situation in one more way. Nobody disputes the fact that this is the worst downturn since The Great Depression. If we’ve heard that once, we’ve heard it 100 times over the past few years. What you may not have heard is that the upturn will also be proportionately worse than past upturns. The upturn we are (hopefully) facing will also be the worst upturn since we pulled out of The Great Depression.
The worst upturn? How can an upturn possibly be bad? I’m glad you asked!
I’ll answer that in a minute … no actually it’s going to take me another month. Just don’t forget proportionate. Hopefully you’re beginning to grasp the concept I’m trying to convey.
So what’s on the other side of ugly? Ugly! Well, let’s call it the ugly side of beautiful.
Doug Bellamy is president of Innovative Drywall Systems Inc. dba Alta Drywall, Escondido, Calif., where he is known for his proactive, innovative approach to our changing industry, and use of modern technology and cutting edge products and services.