By Diane M. Calabrese / Published December 2021
What’s next? A simple question that carries different meanings depending upon the inflection…
At a happy celebration where one activity follows another, it could be imbued with good cheer. At a meeting with a long agenda, it could be a simple statement to gain a reference point. On a difficult day in which calamities keep coming—the frozen water pipe, the breach, and the ensuing flood, it’s most definitely a cry of exasperation.
When we look toward 2022, the “what’s next” question is best tackled factually.
Yes, there’s hope and apprehension at the same time. Yet for manufacturers, distributors, and contractors, the only way to proceed is to assess what is. Then, deal with it.
As we write in October, uncertainty regarding the nation’s finances (and their impact on economic activity) defines the day. Joseph Daniel, CEO of ITD Chemical LLC in Tucker, GA, gives a perspective shared by many.
“It’s difficult to make predictions about the future when so much now depends on the actions of an overreaching federal government,” says Daniel. “If they continue to build a welfare state in which we have to compete with the government for labor, then there will continue to be labor shortages and supply chain delays.
“If they choose to pump another $3.5 trillion of unneeded stimulus into the system, then I’m sure the economy will be overheated, and inflation will continue as it is now,” continues Daniel. “If our democracy can come to its senses by returning to a smaller federal government and we correctly rely on the private sector to balance the supply and demand of its resources, then we might just be able to make predictions based on reality instead of based on the unknown future actions of our controllers.”
It matters not where we are anchored. All of us understand the implications of severing the tie between income and labor. In almost every part of the nation, business owners are having an extraordinarily difficult time hiring employees.
The labor participation rate has remained in the narrow range of 61.4 percent to 61.7 percent since June 2020, according to a press release from the U.S. Bureau of Labor Statistics on October 8, 2021. Many people who left the workplace have not returned.
The same BLS press release cites six million people who are identified as wanting jobs but not looking for jobs. Some are not looking because the sector in which they worked has shrunk (e.g., hospitality), and they do not want to switch sectors. Others continue to fear the workplace environment. It’s a tangle and one that does not seem likely to be put straight soon or quickly.
For now, then, it seems that the year 2022 will begin much the same way that 2021 is ending. In one sense, that’s helpful to know. Whatever strategy has worked in dealing with the business climate in 2021 should be continued in 2022.
Make that continued and amplified. “It’s our goal and our challenge” to get and keep supply chains moving, says Curtis Braber, owner of BE Power Equipment, headquartered in Abbottsford, BC, Canada. “We’re forecasting nearly 12 months out” to keep things moving. “We have to put extra energy in.”
Braber, like our other sources, is realistic. There’s still much to be done.
“Coming out of the initial year [of the pandemic] in 2020, there was a drop in orders,” says Braber. “Then demand took off like a rocket. There are lots of good parts to demand and lots of challenges.”
Many of the challenges are linked to the supply chain. And Braber cites the difficulties in getting shipping containers for one. He explains a considerable amount of energy must be expended to keep things moving.
None of the challenges diminish the positive outlook Braber has. “We’re still very optimistic for the pressure washer industry in 2022,” he says.
Even with optimism, of course, there is the need for a measured view. We talk to contractors, distributors, and manufacturers who need employees on quite a regular basis.
Without individuals to pilot ships, move cargo at docks, and drive trucks, the supply chain will continue to be sluggish. And the slower the chain moves, the more of an impediment to commerce it becomes.
“As we continue the march toward 2022, it is becoming quite evident to me that there is no way the supply chain of the world can be fixed,” says Dave Hildebrand, manager at Barens Inc. in Seneca, PA. “When you consider all the products that either are sitting on the various oceans waiting to be delivered, plus the orders that have been submitted in the past year that have not been filled yet, there is no way to catch up.”
Note the demand is there. The orders are there, but movement must occur.
“The lack of sufficient shipping containers and truck drivers will continue to be a major problem worldwide in 2022,” says Hildebrand. And unfortunately, it will not be the only issue.
“The cost of raw materials, if you can get them, will continue to climb, meaning increased consumer pricing and inflation,” says Hildebrand. “This could lead to what is now a robust environment for our business soon hitting the proverbial wall. That leads to lost business and layoffs.” Hildebrand encapsulates his assessment with one emphatic statement. “I hope I am wrong,” he says.
Alas, money supply fluctuations, labor shortages, supply chain disruptions, and price increases for raw materials make 2022 look like a less-than-easy year. Add environmental regulations, and you can be certain the year will test every business owner’s mettle.
Robert M. Hinderliter, an environmental consult to our industry based in Burleson, TX, takes a philosophical view. “I do not expect anything new for environmental regulations for wastewater, just stricter enforcement based mostly on complaints.”
In other words, members of our industry have already become immersed in environmental rules and are following them scrupulously, but they still must be prepared to respond when complaints are made.
Manufacturers and contractors may also expect some changes within their jurisdictions related to total maximum daily loads (TDMLs) of pollutants that public water companies must not exceed. New limits may be set with stricter enforcement in play.
With the “what’s next” question resolved with an overarching answer, “Whatever comes in 2022, fortitude will be required,” we ask, “what else?”
Strength and resilience will serve all parts of our industry well, given there are likely to be a steady number of new regulations and reinforced regulations coming. A quick visit to the Regulations.gov website, which tracks pending rules, demonstrates the point.
On September 14, 2021, the U.S. Environmental Protection Agency (EPA) announced Plan 15 in its progression in analyzing and reducing effluents. It is preparing to revise effluent limitations and pretreatment standards for organic chemicals and metal finishing (and more).
On August 9, 2021, the U.S. Department of Energy (DOE) announced its focus on assessing commercial and industrial pumps as part of a program to set energy conservation standards for certain commercial and industrial equipment. The DOE and preceding EPA example suffice to show that a complex year will be busy in every way.
The Congressional Budget Office (CBO) provides regular updates to its ten-year economic outlook publications. It published an update in July 2021. Some highlights follow.
The deficit projected for 2021 is 13.4 percent of gross domestic product. It is the second largest since 1945 (relative to the size of the economy). The largest since 1945 was 14.9 percent, recorded in 2020. (Note that the deficit does not include the possible new spending that may be as much as $3.5 trillion plus $1.2 trillion, but those amounts will likely be shifted entirely to the 2022 budget ledger.)
The CBO’s July update puts a positive spin on the economic outlook. It predicts a rapid growth in employment through the end of 2021. It also predicts that after inflation rises sharply, it will moderate.
CBO puts inflation at two percent for 2022. It puts the interest rate on a 10-year Treasury note as continuing low, but then rising slowly to 2.7 percent by the end of 2025. And it asserts the effects of social distancing (on restaurants, recreational, arts, and civics venues) will decrease.
The CBO also predicts stronger economic growth in 2022. It bases the prediction on government-funded projects it expects to get underway and the infusion of cash from federal disbursements to individuals designed to counter effects of shutdowns in 2020 and 2021.
Oddly enough, many states are running budget surpluses in late 2021. The governor and legislators in Maryland are currently dis-agreeing over what to do with a $2.5 billion (yes, two and one-half billion) surplus, all attributable to an inflow of federal rescue dollars.
It seems incongruous that businesses could be closing their doors in record numbers in a state (as in Maryland) while there is simultaneously a budget surplus. In combination with comments and examples in the preceding text, it drives only one conclusion: 2022 will be an interesting year.