LAS VEGAS Metal business owners should ignore negative depictions of the current U.S. economy and expand their operations while the economy is still growing, Copper and Brass Servicenter Association (CBSA) head economist Alan Beaulieu said March 27.
Brass and copper business owners should invest in their business before an expected recession in 2019, Beaulieu told delegates at the CBSA Convention in Las Vegas.
The United States is not in recovery. I really get annoyed when I hear officials use the word recovery. Were seeing record high levels of (gross domestic product), record high levels of industrial production; this is growth. ... The United States is in a really good place right now, he said.
Chances are 40 percent of the people who work for you still think were in recession, and you wanna make sure you knock that out of them. Its important to their psychology to know were in growth and not recovery. You plan differently when you realize youre in growth; people respond differently when they know were growing at record high levels.
Business owners should immediately start borrowing money under todays interest rates, Beaulieu said, reiterating his assertion from the 2013 conference (amm.com, April 15).
My big fear is that we are so hesitant that we miss this opportunity. This is one of those sweet spots before inflation starts where interest is low and bankers want to lend, he said.
In a recession you buy, so you need to start saving cash now so you can buy in 2019, Beaulieu added. Youre going to buy other businesses, youre going to buy real estate, youre going to hire great talent and expand into new markets while things are cheap.
However, Beaulieu cautioned that wage growth over the next few years will also put further pressure on margins.
Inflation is not going to give you a way to move up prices until the second half of 2015. That means your margins are eroded, so you have to drive efficiencies, he said.
Meanwhile, macroeconomic factors were unlikely to have any impact on copper prices going forward, with Beaulieu forecasting an average 0.3-percent drop in prices in 2014 compared with last year.
Chile overproduced and theyre cutting back some, but theres plenty of product out there and demand should remain stable, so prices should remain stable as well, he said.