In our continuing Industry Forecast series, we talk with Peter Orler, Strategy Director, Viega, on topics such as the short-term economy, supply chain issues, and lessons learned over the course of the pandemic. Here is our exclusive Q & A with Viega.
MH: We’ve all experienced supply chain shortages recently in one form or another. Do you project a turnaround soon or within the next 6-12 months for certain materials that relate to your specific company?
Orler: We’ve started to see some recovery in raw material availability early in 2022, but we expect to see shortages continue to pop up over the medium term. Labor availability is a huge driver of this—even where raw materials are available, it’s difficult to staff a complete workforce to fill production lines. The situation has really forced us and other manufacturers to adapt and become more flexible with our operations.
MH: We are in the midst of some of the highest inflation rates since the early ’80s. Do you think that higher inflation becomes a “newer normal”? Explain.
Orler: Inflation may settle at higher rates than we’ve seen over the past two decades or so, but we don’t believe the current level of inflation represents a semi-permanent new normal. The economic situation over the past two years has been out of the ordinary for a number of reasons (e.g., COVID, supply chain disruptions, labor policies). In the past (e.g., late 70s) when we saw inflation reach these rates in the US, it has been for a period of 2-3 years before settling at a lower level. Monetary policy levers could bring it down faster as the Fed has signaled that quantitative easing will be phased out and interest rate increases are likely on the way.
MH: In general, how do you see the economy short-term? Give a few examples of how you draw that conclusion?
Orler: We focus mostly on commercial, multifamily, and institutional construction starts as our markets. 2021 saw a remarkable year-over-year increase (18% per Dodge) that brought us back to near 2019 levels. We’re seeing things even out to near normal (4% to 10% year-over-year increase in 2022 starts forecasted, depending on segment). Given our focus on pipes, valves, and fittings at Viega, we’re also paying particular attention to the impact of public investment funding on water infrastructure.
MH: Where are you seeing signs of positivity, if any?
Orler: We continue to see strong construction project volume, particularly focused in mid-size metropolitan areas. A few sectors stand out – healthcare starts have been impressive, warehousing and logistics facilities continue to grow as e-commerce demand remains high, and retail and office continue to work their way back from lows during the early part of the pandemic.
MH: How do you as manufacturers work with customers who are dealing with longer lead times and/or higher prices? Is it a matter of open lines of communication?
Orler: We’ve been as transparent as possible with our customers. One thing that we’ve found through this is that our customers care a lot more about reliability than speed. It’s been critical that, once we set an anticipated date and quantity, we deliver on that promise. Our customers have been understanding on both longer lead times and price increases as long as we clearly explain the drivers behind why it’s happening and deliver to what we promise.
MH: It seems that in today’s employment landscape, it’s hard to find good labor, whether it’s truck drivers, waiters at restaurants, etc. In our industry, how do we continue the fight to highlight the trades as a great career choice?
Orler: It starts early—we need to ensure that students know that the trades are a strong option for their future. Our plumbers and mechanical contractors solve complex problems, deliver excellent customer service, and leave their mark on their communities. We partner closely with a network of trade schools to help promote the trades as a career and ensure these benefits are well known. We then work with plumbers and contractors throughout their careers—from apprentice to master—to meet their professional goals and become models to the next generation for what’s possible in the trades.
MH: In spite of COVID, people must move on. How has your company evolved—or continued to march forward—over the past two years, and talk about any new initiatives, expansions, etc.
Orler: COVID has helped us rethink how we engage our customers. A prime example of this is how we train customers to use our products – early in the pandemic, we designed the concept for ViegaWorks sessions which are remote engagements led by one of our very talented technical consultants. This started as a way to be there for our customers even when we couldn’t be on-site, but it has evolved into a tool that we’ll continue to use to deliver remote support even as we engage with more customers in-person.
We’ve also evolved our approach to customer outreach. In the past, we were able to rely on our boots-on-the-ground to reach every job site and contractor in their area. As job sites closed off and engagement moved remote, we found that marketing and inside sales could be a valuable approach to make sure we’re reaching every customer that would benefit from Viega press technology even with job sites closed to us. We’ve ramped up our promotions, including working with RIDGID and Milwaukee to offer press tools to contractors to introduce them to pressing.
As we’ve started coming back to in-person engagements, we’ve really tried to maximize our touchpoints with our customers. We were excited to see everyone at AHR and took the occasion to launch our new Viega valve lines live and in-person.