The Southern states were hit later by the economic crisis than much of the country, but industry members below the Mason-Dixon Line say the decline has caught up.
“Construction is way down in the South,” says Mike Echols, Pentair Water Pool and Spa’s regional manager for the Southeast and Mid-Atlantic. “When the downturn began in 2008, we were still unaffected. But since then it has gotten progressively worse. We were hit just as hard as other regions, and are hoping to see a change soon.”
While the South faces many of the same conditions as other regions of the country, there are a number of challenges that also are unique to the area.
Hurricane Katrina got the ball rolling five years ago, setting the stage for a decline in the Gulf states before the historic financial downturn.
“Katrina put countless pools out of commission and destroyed a lot of service routes,” says Charles Elfert, owner of Pleasure Pools by Charles Elfert in Mandeville and Metairie, La. “So those [techs] added pool construction. Basically everyone in the pool business decided to be a pool builder.”
In addition, several large landscaping businesses also entered the industry, further diluting the market.
Once the recession hit, the competition problem was compounded by the devastated Florida market. In an effort to stay solvent, many Sunshine State builders moved their businesses north, which further reduced already low margins due to the sheer number of bidders on any single project.
“We’ve had a large glut of pool builders come in,” says Parker Ewing, vice president of Ewing Aquatech Pools in Baton Rouge, La. “The market’s changed, and there are a lot more sharks in the water than ever before.”
In addition, one of the coldest winters on record meant there were even fewer pool projects in the works, leaving many with no other option than to slash prices lower than ever before to compete.
“When builders realize that giving a pool away is not good for anyone, maybe we’ll see things look up,” says Dick Covert, executive director of the Master Pools Guild in Richmond, Va. “But the margins aren’t getting any better.”
The recent oil spill in the Gulf of Mexico hasn’t helped prospects either. Those hoping to survive by branching out to commercial work have been hurt by dwindling tourism. Because of that, most vacation destinations are holding off on renovations, and certainly have no need for new pools.
And making matters worse is the fact that the economic slowdown has disproportionately affected the lower-end market — a sector that’s been strong in the South historically. The region, with its smaller average incomes, has long been a haven for vinyl-liner builders. But the current credit market has meant that a consumer who would normally buy a lower-end vinyl pool can’t get financing.
“Many vinyl-liner dealers have gone out of business,” says Shawn Still, general manager of Olympic Pool Plastering, which is based in Atlanta and serves five Southern states. “The lower-priced gunite builders have also slipped further in sales than the custom builders.”
There’s still not much activity with home builders either. Although some Southern states have seen an increase in home construction permits, Still says most of those are for properties under $300,000, which typically do not include new pools.
Others agree. “There was a time when we would do half of our jobs at new home constructions,” says Brian Worley, president of Everclear Pool & Spa Co. in Chattanooga, Tenn. “These days, maybe one a year.”
But the region does have a number of bright spots.
Fortunately, like much of the United States, the South is still holding on in the pricier side of the market.
“There’s been an up-tick in construction for the high-end pools,” says Jeremy Brouillette, a PoolCorp regional manager on the Gulf Coast. “I think we’ve bottomed out on that front.”
Builders in the South estimate that sector could be up 8- to 10 percent from last year, or at worst remain flat.
“They’re buying now because they can negotiate really good deals [on high-end pools],” says Covert, who also notes that no Master Pools members in the area have gone out of business. “These [consumers] had the money, but they were waiting for the right time to spend it, and because of the number of people bidding, that’s beginning now.”
Thankfully, summer 2010 has been as hot as ever, negating some of the effects of the preceding winter and giving builders a much-needed spike early in the season.
Although most say business has been uneven and unpredictable throughout the summer, March and April were relatively busy, and some saw an increase in calls at the end of August. Because of the heat,fiberglass pools also are growing in popularity, creating more diversity in the market.
“Fiberglass pools are definitely up this year because of the hot summer, with people wanting quick resolutions,” Echols says.
Fiberglass fits the niche for consumers that may be able to afford a higher-end pool but want to swim right away.
Also, the intensity of the season has popularized solar-powered pool products, according to Elfert, and states like Louisiana offer rebates that make such products more accessible.
Despite all these boons, recovery is still patchy, even within each state. It seems that some suburbs may have begun to rebound, while metro areas still suffer. Atlanta, for example, is one of the largest housing markets in the Southeast. But because homes there were overbuilt and overvalued during the boom, it took a bigger hit when the economy imploded. Outlying areas remained more stable.
The future may be uncertain, but the majority of builders in the South remain optimistic, and feel that attitude may be key in their market’s revival. Most agree, at least, that the bleeding has stopped.“I do think the South is without question a generally positive place,” Ewing says. “People like to live here a little more. They’re happier, looking to hang out with family and friends.” And hopefully, they’ll soon be doing that in a new pool.