Despite troubling and difficult conditions throughout much of the U.S. economy, the boiler industry will experience modest growth in 2008, Randy Rawson, president of the American Boiler Manufacturers Association (ABMA), predicted during the association's Annual Meeting, held Jan. 11-14 in Indian Wells, Calif.
“Any economic slowdown in 2008 will not appreciably affect this industry,” Rawson said in his annual report. “The boiler market will continue to benefit from customers' burgeoning need for new boiler systems to assure reliability, greater efficiency, ongoing productivity, and low emissions in the boiler room.”
Rawson said the boiler industry can expect at least some growth this year, which puts it in a good position, considering the state of the economy.
“Slow growth is still growth,” Rawson said.
Add to that an economic-stimulus package that provides incentives for capital spending, and the boiler industry may be on track for a healthy 2008, Rawson said.
ABMA members in almost every boiler and burner sector “are seeing sales and inquiry volumes not seen in years,” Rawson reported, adding that a leaner, more competitive boiler industry arising from the last recession is better positioned to meet the market challenges ahead.
The boiler industry continues to grapple with problems caused by an ongoing skilled-labor crisis, Rawson noted, saying the shortage is contributing to increased lead times for equipment design and fabrication.
Rawson challenged the boiler industry's customer base, saying: “Legislative and regulatory uncertainty is no longer a defensible excuse against capital investment in the powerhouse. There are just too many good business reasons to make systems replacement and optimization a high priority right now.”
Rawson highlighted several key drivers — from volatile and high fuel prices to an evolving alternative-fuels industry that requires boiler-generated steam and hot water — of business' and industry's renewed interest in new boiler systems and technology. Also, he praised the green and sustainability aspects of boiler technology.
“The fact that boiler-generated steam is still the most efficient method of heat transfer for most applications, and because the design and fabrication of boilers is one of the most sustainable practices going today — using recyclable heavy metals that evolve into equipment and systems that last for decades when operated and maintained properly — boilers and boiler-generated steam and hot water are in the vanguard of the ‘greening’ of America,” Rawson said.
LOOKING FARTHER AHEAD
Alan Beaulieu, principal and economist, Institute for Trend Research, predicted that by early 2009, the U.S. economy will fall into a recession that will extend into the first three quarters of 2010.
Beaulieu said inflation is developing into a worldwide problem and that Federal Reserve Board Chairman Ben S. Bernanke is fueling inflation in the United States by cutting interest rates. The Federal Reserve Board has cut key interest rates four times since September 2007, with economic experts expecting more.
Beaulieu implored ABMA members to take several steps as they plan for the future:
Raise the price of their products when possible.
Keep close tabs on inventory over the next 18 to 21 months.
Consider increasing exports because, “A weak dollar is your best friend.”
Be careful about hiring nonessential workers, especially those who require high salaries.
Tout their competitive advantage.
“Even though you'll have some growth in '08, you can prepare for a slowdown and still be profitable,” Beaulieu said.
Beaulieu painted an especially bleak picture of the future economy and present living conditions in China. While China has experienced phenomenal growth in recent years, Beaulieu said, the country is headed toward a recession that may last three to five years.
Living and working in China can be tough to the point of being fatal, Beaulieu said. An estimated 400,000 Chinese died from polluted air in 2007, and more people die on the job in one day in China than in an entire year in the United States. Additionally, crime and violence are on the rise, Beaulieu noted. From 200,000 to 400,000 Chinese are forced into re-education camps, which are forced-labor prisons where those considered to be political foes or those accused of petty crimes are sent to be persecuted.
Meanwhile, Beaulieu said, Vietnam is developing into a stable country with solid economic growth, while Brazil is becoming a strong industrialized nation.
Back in the United States, Beaulieu predicted, the next president will serve two terms because he or she will take credit for the economic recovery expected to occur in 2011.
ROOM TO GROW
Welch Goggins, president of Cleaver-Brooks Inc., who was re-elected chairman of the ABMA's board of directors, told attendees that the aging fleet of boilers in operation represents ample opportunity for the boiler industry to grow. More than 70 percent of the commercial buildings in North America have boilers that are more than 25 years old, meaning they are low-efficiency and high-emission units, he said.
The rising cost of energy and emphasis on green and sustainability has created additional opportunities, as new products are more efficient and emit dramatically less, Goggins said.
“Boiler upgrades and replacements offer significant energy gains,” Goggins said. “New boiler packages are outfitted with low-emission burners.”
In addition to Goggins, two were re-elected officers by the board of directors: G. Scott Lewis of Chanute Manufacturing, ABMA vice chairman of the board, and Vernon Eriksen of Nooter/Eriksen Inc., ABMA secretary/treasurer.
Appointed to the association's executive committee were Goggins as chairman, Lewis, Eriksen, Blake McBurney of McBurney Corp., and Jack Rentz of Rentech Boiler Systems Inc.
Incumbent board members re-elected to terms ending in January 2011 were David Breckinridge of Alstom Power Inc., McBurney, Rentz, and Goggins.
MARK YOUR CALENDAR
The ABMA's 2008 Summer Meeting is scheduled for June 20-23 in San Diego, while its 2009 Annual Meeting is scheduled for Jan. 16-19 in Weston, Fla. For more information, visit www.abma.com.