WMA Headlines May/June 2023June 14th, 2023 by Nathan Hobbs
Sailing Uncertain Seas: Industry Leaders Must Navigate Change and Challenge
By Dan Barber
The residential housing and renovation markets are essential industries that provide shelter and comfort to millions around the world. However, they’re currently facing numerous setbacks that require strategic approaches to overcome. Let’s explore how industry leaders could plan for those challenges.
As we know, the global economy has experienced significant fluctuations in recent years, with many countries facing a decline in economic growth. One of the most significant challenges that business leaders in the residential housing and renovation markets face is how to maintain profitability in the face of a declining economy and rising inflation. To overcome this challenge, leaders need to focus on cost reductions, revenue generation and strategic pricing to remain competitive.
The residential housing and renovation markets are heavily dependent on credit, so rising interest rates can significantly impact market growth. To cope with these changes, businesses must keep a close eye on the interest rate environment and develop strategies for managing the impact of rising rates on their businesses. This might include revisiting financing structures, negotiating favorable loan terms and considering alternative financing options, to name a few.
There is a significant shortage of labor in the marketplace, so businesses need to develop techniques for attracting and retaining employees. Some suggested strategies include investing in training programs, offering competitive wages and benefits, and providing safe and engaging work environments. This could include looking at flexible hours and unconventional schedules. Today’s workforce may have to look different than we are used to seeing.
Not only are construction and renovation activities heavily reliant on labor, but they also rely on labor-intensive products. For this reason, business owners must do more than just find and keep workers; they also must develop strategies for managing the impact of rising labor costs in general, by automating tasks, developing more efficient production processes and exploring alternative sourcing options.
At the same time, construction and renovation activities are subject to environmental regulations and global events that can impact market growth. For this reason, companies must stay informed of any news in these areas and develop strategies to manage how changes could impact business. Sustainable technologies can help, along with adopting environmentally friendly practices and developing contingency plans to manage geopolitical risks.
Domestic and foreign trade policies and levels of competition all have the potential to impact growth and profitability. We need to remain updated and informed, aided by our trade associations, so we can develop strategies to manage the impact of changes as they affect our businesses. We can do so by exploring new markets, developing competitive pricing strategies and investing in product innovation.
When it comes to any and all of these challenges, business leadership in the residential housing and renovation markets must be prepared to navigate whatever we may face.
Beyond water, food, air and health care, humans will always need shelter. In this way, our industry plays a role in sustaining us all.
Dan Barber is executive vice president for Barnett Millworks Inc. and past chairperson for World Millwork Alliance.
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