-- Posted Thursday, 19 June 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Thursday, June 19, 2008
“Phenomenally accurate forecasts”
With residential building in a state of near-collapse, we tend to think that the construction business in general is depressed. While this largely true, there are evidently some niches within the industry that are doing quite well. This point was driven home yesterday in the Rick’s Picks chat room by a commercial builder and subscriber, John D., who occasionally drops in during trading hours. He bore news that Ainsworth, the largest wood panel supplier in America, was on the ropes because of the depressed housing market. Bondholders have taken over the company’s day-to-day operations at the request of the family that has owned and operated Ainsworth.
John’s firm has been feeling the pressure of recession as well. Profits are down and margins are tight – “just like on Wall Street” -- and three large projects in which the company was involved have been put on hold due either to the lack of a tenant or of financing. Even so, he notes, there is construction business to be had if you can provide certain specialized services. Such as? In the case of John’s firm, the services include retrofitting structures so that they can use solar energy. “We are trying to hook up with solar companies to provide engineering and roof structure reinforcement for buildings,” he notes. “It is a wide open market. Costco is going solar on many of its existing buildings, and structure reinforcement is an emerging market.”
John says that many big-box retailers besides Costco are “going solar,” and that this has driven him to try and market his firm’s services nationally. But such projects take considerable know-how. Most existing structures cannot handle the additional loads that solar panels add, John explains, and the engineering is not simple. “A good engineer can save big bucks on the reinforcement of the structure, but there are only a few engineers who can do this work, especially on the steel-bar joist. We are one of them and are in the loop with the number one [solar] guy.”
Holding Down Costs
“An engineer who knows what he is doing is able to keep the reinforcement to a minimum,” John continued, “but if he does not, then the cost can get out of hand in a hurry. We just completed a Toys R Us. It was not for solar, but they were moving into a building that was not designed for what they wanted to hang from the structure. They could not find anyone to engineer and do the work. We teamed up with an engineer we know and completed the job in two weeks, including engineering. No one else could do this.”
John thinks solar work is likely to continue to receive tax credits over the next several years. If so, the continuing success of his business could be a bright spot in a generally depressed industry. Whatever happens, we wish him well as his firm finds ways to stay on the cutting edge in these very challenging times.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 19 June 2008 | Digg This Article | Source: GoldSeek.com
