There is one thing manufacturers and industry leaders agree on as 2009 gets under way - it won’t be “business as usual” for the roofing industry this year. The economic environment is unprecedented and the uncertainty created will likely force the residential and commercial roofing sectors to become more efficient and innovative.
Roofing Contractor talked to representatives of some of the industry’s leading manufacturers, distributors and associations to get their insights on how the market performed in 2008 and what to expect in 2009 for the State of the Industry report sponsored by GAF Materials Corporation.
Respondents also shared some words of advice to help contractors prepare to meet the challenges in the year ahead.
Planning for an Uncertain Future
Many are preparing for a tough start to the year. Some industry veterans wonder if some highly leveraged contractors will be able to survive.
“It will definitely not be ‘business as usual,’ and owners will seek out both manufacturers and contractors who bring the highest value and can help them optimize their building assets over the long term,” said Fred Stephan, Vice President and General Manager of Johns Manville Roofing Systems. “We believe that differentiators such as service, quality, innovation, and consultative engineering all contribute to value-based buying decisions. And financial strength is imperative when an owner evaluates a 20-year roofing guarantee, for example.”
“The outlook for 2010 and beyond is more optimistic,” Stephan said. “Saving energy will become a greater part of our national DNA, resulting in a higher demand for roofs with more insulation.”
Stephan said the use of cool roofs would also become more prominent in certain parts of the country. “It’s important that leaders in our industry strive for this outcome in order to prosper into the future,” he said.
Geoff Stone, owner of MetalForming, said the roofing industry cut equipment spending in the second half of 2008, which hurt business. But he expects a rebound in the next two years.
“We expect a difficult year for capital spending from the industry in 2009,” Stone said. “Contractors must look intensely for ways to improve productivity and lower costs in 2009.”
Stone said a significant loosening of credit or a significant government stimulus package would help the industry. He also noted that while the industry is in a state of change, metal continues to gain market share. “On site roll-forming continues to grow,” said Stone, who noted, “Materials prices should also fall significantly in 2009.”
“This market will grow very strongly over the next years,” said Stone, who added a qualifier. “The roofing industry must become a key player in building integrated photovoltaics (BIPV).”
Sheree Bargabos, President of Roofing and Asphalt for Owens Corning and President of the Asphalt Roofing Manufacturers Association, said even contractors who have been in the industry for a short time know that the industry is always in a state of change. “Windstorms, shortages of raw materials or an ever leaner economy have made change a consistent feature of our industry,” Bargabos said. “Economic times like the ones we are currently in help contractors learn how to fix broken systems and operate even more effectively. Contractors who are smart about their business have developed good relationships with clients to keep referrals coming - even when times are tough.”
Bargabos said property owners are buying smarter. Examples of this include increasing investments in better wind protection and quality systems as well as enhanced curb appeal of the home. “In residential, look for continued increases in lifetime and high-performance shingles, including impact-resistant shingles and products that help contractors increase installation efficiency and reduce callbacks,” she said. “Also anticipate better aesthetic roofing options ranging from color, thickness and pattern options as homeowners leverage one of the largest exterior features of their homes.”
Jeff Carpenter of Owens Corning Roofing and Asphalt said economic conditions make it likely that homeowners are going to be more frugal and will want to make sure they make the right purchase with the right contractor.
“Spending a little extra time to give them confidence in the purchase they’re making and helping them truly understand how they can make their roof more durable and their total roofing system perform more efficiently will benefit everyone in the process,” he said. “It’s also the chance to make sure you’re clear and concise about the full value you bring to them as a contractor to help you keep the sale and avoid losing it to a lower cost competitor who may not provide the same level of service.”
Given the weather and firestorms the U.S. has faced over the past several years, awareness of and the desire for more durable products that stand up to wind, hail and fire continue to be strong, Carpenter said.
On the commercial side, Rob Reale, Manager of Marketing Communications for Carlisle Construction Materials, expects that thicker membranes should continue to gain market share in 2009. “Roofing manufacturers have seen the trend from thinner membranes and 10-year warranted systems decline in favor of thicker membranes with 15- to 20-year options,” he said. “Architects and building owners are seeing a better return on investment by thickening the roofing membrane.”
For example, an upgrade from a 45-mil to a 60-mil membrane adds approximately 5 percent to the total installed cost, Reale said, while adding 33 percent more thickness and is eligible for longer warranty coverage.”
John B. Hickman is Chairman of the Board for the W.P. Hickman Company and the President of SPRI, the association representing sheet membrane and component suppliers to the commercial roofing industry. He thought 2008 was a pretty good year, despite a sharp drop in business in the last two months. He predicts the market might be down 10 to 15 percent this year as businesses and building owners worry about the economy. “Expect economic fluctuations to influence roofing purchasing decisions in 2009,” he said. “Contractors should expect less new construction, tight credit, instability in their markets and delays in payment from property owners. I don’t see any quick fix; it could be worse than expected. Weather events or promulgation of further regulation could have sudden consequences.”
Meanwhile, Todd Nathan, Contractor Marketing Manager for Johns Manville Roofing Systems, believes there will be more opportunities for preventive maintenance in 2009 and other interim programs until owners are in a better position to consider reroofing their properties.
“We believe building owners will reward those contractors who understand their individual roof portfolios and who work with them for the long term,” Nathan said. “Especially under these extremely challenging economic circumstances.”
“We anticipate that commercial roofing contractors will face a much tighter and aggressive bidding market with more competition on every project,” he said. “Successful contractors will offer not only material solutions but an array of services that will add value to the owner.”
Green Means Go
“Green” is the word everyone is hearing this year, but in this case roofing professionals are quick to point out that the term refers to environmentally friendly and energy-efficient roofs as well as vegetative systems. Most of our respondents believe green products should make a lot of news in 2009.
The growth in green products could make up for the loss in asphalt products, said Bob Delaney, Chief Operating Officer for Firestone Building Products.
“The market for environmentally friendly products and systems continues to have strong growth,” he said. “Firestone continues to focus on the environmental impact of the roofing products we manufacture. As the ‘green’ movement continues to evolve, how manufacturers address issues like VOC’s, recyclability, Title 24, LEED and others are extremely important and will have a significant positive impact on our industry.”
Greg Malarkey, President of Malarkey Roofing, said there’s still “a lot of hype” about environmentally friendly products.
“There are some major problems that those products face, especially in a tight market,” he said. “As more and more products are pitched at the green market, the consumer will become aware that many traditional products can and should make ‘green’ claims. Many of the so-called ‘green’ products are priced too high for major market acceptance, and many so-called ‘green’ products have not created enough value to justify their ‘greenness.’”
Keith Lowe, Vice President of Sales for IKO, said since more residential customers are conscious of environmentally friendly products, he expects more attention given to the movement.
“The key issue will be discerning real issues and advantages versus ‘greenwashing’ on any and all products,” Lowe said. “IKO has set the standard in marketing a true green product by being the first shingle manufacturer with independent certification as to recyclable content in our Cambridge shingles.”
Chris Salazar, Vice President Sales & Marketing for Karnak Corp., pointed to green products as a top-shelf issue in 2009. “Green is in, but sustainable will be the all-encompassing term in the future,” he said.
Jay Butch, Director of Contractor Programs for CertainTeed, affirmed that despite the downturn in the economy, the emphasis on sustainable products and systems was unmistakable in 2008, and he expects the green trend to continue to swell.
“We are seeing increased interest on the residential side of the roofing business this year, especially compared to ’07, when awareness was much lower,” he said. “Everyone is asking about it, and we have tools to help educate them, including brochures and our CertaSpec program, which does LEED calculations.The green market will continue to grow and grow, including solar reflective roofs for commercial and residential buildings, photovoltaic roofing products, the whole nine yards.”
Deborah Tripod, CEO of Englert, maintains that the roofing industry has to work to convince architects and specifiers to specify a roof design that will provide a financial and ecological payback over the short and long term.
“Despite the overall economy, architects are still specifying environmentally friendly products for residential and commercial applications and metal roofing systems are perfectly positioned to capitalize on this trend,” she said. “Metal roofing materials are in and by themselves environmentally friendly and more importantly provide the platform for another layer of technologies that contribute to energy and resource contribution. Solar photovoltaic laminates and crystalline panels, solar thermal systems and rainwater harvesting products work better with standing seam metal roofing than any other roofing materials. As a result, architects looking for ways to offer their customers short- and long-terms savings will find a pivotal platform in metal roofing. And contractors who embrace these integrated technologies will be able to differentiate themselves from competitors when they are seeking business in a tough economy.”
There are indeed strong segments out there for contractors to tap into, said Kate Baumann, marketing director for Mule-Hide Products Co. Inc. “The winners will focus on segments of the industry that are stronger - non-residential roofing - and will take advantage of the niche markets out there that are growing, including sustainable and cool roofing,” she said. “I think you’ll see more contractors who haven’t already done so moving into heat-welded single plies and getting away from flames and fumes in order to tap into that growth, moving into products that are environmentally friendly.”