The Sky Is Falling, but the Sun Is Still Shining

According to a survey of HARDI manufacturers and representatives in September 2008, there was a significant discrepancy between economic reports in the national news and the health of HARDI businesses during the previous nine months. While the media was reporting a steady stream of bad news about the housing industry throughout 2007 and the first part of 2008, many HARDI members surveyed were still doing relatively well.

This disconnect between what was observed in the news versus what was happening in different markets around the country is partially due to the national media's proclivity to search out the dark side of a story for dramatic effect. Another reason is that this is a vast economy, and the housing downturn was slowly and relentlessly moving across the country, affecting different markets at different times.

In defense of the media, there was bad news to report in 2007 — from the rapidly rising number of foreclosures and falling home prices to the first round of collapsing industry giants. It was a time of uncertainty, and over the next 12 months, concern was intensifying daily. As the days wore on, America braced itself for a bone-crunching economic collision.

By early spring of 2008, those involved with the construction of homes and commercial buildings were expecting business to grind to a halt. But in the northeast markets, most HARDI members had yet to experience a dramatic downturn. Distributors had gone through a quiet round of layoffs and a few branch closings at the start of 2008, but personally, I was puzzled. It felt like we were dodging bullets while the southern United States was getting shelled.

A few months later, there had still been no great changes in our business volume, and I was on my way to the HARDI Regional meeting in New Jersey. It was there that I found a solution to this riddle.

I heard the answers in two seminars. Alan Beaulieu, Institute for Trends Research, reaffirmed his expectation that the U.S. economy was past the peak of this business cycle and was in for Phase “C,” or the downhill section of the curve. He stressed that hard times had hit some markets, and they were barreling toward the rest of them. Joe Ellers, Consulting Associates, gave the other seminar. Joe talked about how to keep a positive attitude despite negative news reports. (I guess he missed Alan's seminar.) To paraphrase Joe, “The U.S. economy is big. Don't base your business strategy on the national media reports. Ask the people in your market exactly how their businesses are doing so you can make decisions based on the health of your local markets.”

The idea of asking my customers directly made sense, but the problem was getting accurate information from privately held corporations. It came to me that if I expanded the survey to include all HARDI members, it would give me a good snapshot of the entire country while giving the respondents the confidentiality they needed. I turned to Kim O'Neal at HARDI and Mike Dungan, the HARDI Reps Committee chair, for help.

As the vice chair of the HARDI Reps Committee, I had conducted a survey about the relationship between manufacturers' reps and distributors a few years earlier. As with that previous survey, Kim and Mike fine-tuned the questions that I had developed, and then Kim sent the survey out to HARDI reps and vendors, and relayed the raw data back to me. Finally, I could test my hypothesis.