Why 2013 Looks Promising
Several signs indicate 2013 has the potential to be relatively strong for integrators, especially when compared to previous years.
So when we look at the massive amounts of data pouring in about the economic outlook for 2013, we are able to make some educated predictions. Overall, it looks like the year has the potential to be relatively strong for integrators, especially when compared to previous years. Here are the reasons we are optimistic.
Solid 2012 Revenues: According to our annual State of the Industry report, in 2012 a typical integration company’s revenue rose by a median of 5 percent. It’s nothing to throw a party about, but it’s an increase over the previous year nonetheless.
Double-digit Growth Predictions: CE pros always tend to be an optimistic bunch. Even in the midst of the Great Recession, more than half of integrators predicted revenue growth year over year. But for 2013, dealers are almost universally excited. First, more than nine out of every 10 dealers believe this year will be either up or flat. Second, they predict a substantial 12.6 percent jump in revenues this year.
Residential Investment GDP: This might seem like an oddball piece of data, but it has been very accurate as a leading indicator for integrators. According to the government, the amount of Gross Domestic Product (GDP) spent on “residential investment,” which means everything from new housing to remodeling, was up 15 percent through the first three quarters of 2012 vs. 2011. (Q4 data was unavailable at press time.) This is important because that figure actually started dropping two years before the Great Recession hit. It foretold the residential crisis two years in advance. After a virtually flat 2011 (-1.3 percent), it’s up in 2013 (to 13.7 percent). If this continues to be a good leading indicator, it means this year, and certainly next year, will be strong ones for residential spending.
Housing Starts Up: Though not yet the year-end numbers, the Department of Commerce (DOC) is showing that new home construction was trending upward an incredible 42 percent in 2012 vs. 2011. (894,000 starts vs. 630,000). Even though CE pros have diversified to target existing homeowners over the past five years, a busy new home construction market is sweet music to their ears. Predictions from several sources, including the Consumer Electronics Association and the UCLA Anderson School of Management, are for 1.1 million starts in 2013 (and 1.4 million starts in 2014).
Housing Equity/Remodeling Up: To sustain remodeling, homeowners have to be confident that their home values will increase. Data from the DOC shows home equities rose 3 percent in 2013. That doesn’t sound like a lot, but it is amazingly positive given recent years. Meanwhile, actual remodeling spending is predicted to be up 16 percent by Q2 of 2013, according to the reliable Harvard Joint Center for Housing Studies gauge.
All of this data points to one thing: Integrators will be busier this year with work coming in from builders, consumers, interior designers and architects. It’s time to run growing businesses again. Good luck.
State of the Industry Report 2013