SEATTLE — Stocks tumbled last week after a key U.S. manufacturing index fell further than expected to its lowest level since the Great Recession.

But if the plunge startled investors, it didn’t come as a surprise at the Redmond headquarters of Genie.

Genie, which makes the bright blue construction lifts that are nearly ubiquitous in booming regions and is a major employer in Moses Lake, has long served as an informal leading indicator for the construction business, which in turn is a key driver for the global economy.

And for much of 2019, says president Matt Fearon, the company has seen “softening” demand from its key customers — the big rental firms that buy fleets of Genie-built boom lifts, scissor lifts, and other “aerial work platforms” and lease them to construction firms.

“We feel like we’re in for a rough 12 months, 12 to 18 months,” Fearon said in a recent interview.

Although Genie isn’t in the recession-forecasting business, Fearon said the pullback by rental firms may indicate that the big construction firms are themselves worried that the current building boom is fading, especially with the worsening U.S.-China trade war.

“There’s a growing amount of uncertainty with our customers” in North America and Europe, said Fearon, 58. He’s been president since 2013 and now oversees a $2.6 billion global operation with 4,000 workers, including 1,192 in Redmond and another 733 in Moses Lake.

Genie isn’t the only outfit worried about the construction sector.

Last month, the American Institute of Architects reported a significant drop in its monthly index of architect billings, which tends to lead construction spending nine to 12 months in the future.

The good news, both for the economy and for Genie, is that the company doesn’t foresee a construction downturn anywhere near as bad as the Great Recession. “We see a temporary, a short dip, not a major recession,” Fearon said.

Still, Genie is bracing for a slowdown. Although the construction industry has plenty of current projects to complete, Fearon said, “the question I would ask is, how does it look 18 to 24 months out?”

Genie, which was founded 1966, has operated on the leading edge of the construction business since the 1980s, when an emerging equipment-rental market became the firm’s most important business.

Construction firms loved the rental model because it cut equipment expense. (Today, for example, one of Genie’s most popular models, the GS 1930 scissor lift, lists for $21,675, but can be leased for a four-week rental for around $800.)

But the rental market also brought huge benefits to Genie, not least an early peek at market trends. Because rentals make it easier and cheaper for construction firms to try out new lift models or to use lifts in new ways (in place of scaffolding at building sites, for example, or to move wellhead equipment in oilfields), Genie often has been an early beneficiary of emerging construction activity.

That’s one reason Genie saw a surge in orders starting in 2017. As the global construction sector ramped up, Fearon said, “rental companies bought an incredible amount of equipment.”

But the reverse has also been true. In early 2019, many of those Genie customers started worrying about a construction slowdown and began curbing equipment purchases.

Some of that pullback was inevitable. Many economists believe the current construction-growth cycle, now in its eighth year, is due for a correction. “We’ve been through that before,” said Fearon, who joined Genie in 1994. Indeed, it was just such a downturn that led Genie to be acquired in 2002 by Terex, a holding company that has specialized in construction and material-handling brands.

But Fearon said several factors make this cycle different.

One is trade politics. Many economists now fear that a global recession is more likely thanks to the worsening trade war between China and the United States.

Those concerns have led some rental companies to put off buying new equipment and to say, “maybe I’ll just keep the fleet I have and ‘age’ it,” Fearon said.

Trade politics have also affected Genie’s internal operations.

Although 70 percent of Genie’s global output comes from its four U.S. factories — Redmond, and Moses Lake in Washington, Oklahoma City, and Rock Hill, S.C. — the company also manufactures in Italy and China, and imports much of its raw materials, such as steel, from China.

U.S. tariffs on Chinese goods have raised Genie’s production costs, while also giving foreign competitors a huge price advantage. Although Genie has rerouted some of its supply chain outside of China, the costs and risks of larger changes to the supply chain are daunting.

“We’re getting it under control, but it’s definitely hurt out business in ’18 and ’19,” Fearon said.

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