Weather-related damage helped Malarkey Roofing stay on top of its game during 2008, according to President Greg Malarkey. “Without that infusion of business, I have no doubt that our industry would truly have suffered greatly in 2008,” he said.
The price instability of raw materials and transportation in 2008 presented major challenges to manufacturers, and in many cases damaged their bottom line, Malarkey said.
“There were a few ‘mothballed’ plants that were restarted to take advantage of the storm related demand,” he said. “In the West - especially in California, Nevada and Arizona - the industry was struggling, and I understand that the tile folks were hit very hard. (But) this makes sense, as they are mostly new construction driven.”
Malarkey said the outlook for 2009 will not be much better than 2008, if at all.
“With the slower economy and the continued reduction in new home starts, I suspect that without another major assistance from the weather, 2009 will be very slow for the business,” he said. “While there are always ways to sell in a down market, much of the roofing industry does not sell but services their accounts. As such, I expect a marked downturn in shipments and installation of roofing products from the 2008 levels.”
Price and availability of raw materials such as asphalt - always important for contractors - will be a concern in 2009, Malarkey predicted.
“I do not expect that we will see the wild spikes in raw materials in 2009 that we did in 2008,” he said. “But nor do I expect things to return to the ‘old’ ways.’”
Instead, Malarkey expects continued pressure on asphalt pricing due to changes in the refinery’s business practices.
“They will not be making as much asphalt,” Malarkey said. “Additionally, the impact of cokers will diminish the supply of asphalt as well. I expect that there will be quality, quantity and pricing issues with asphalt.”
Malarkey believes contractors need to be aware that business is more than just price. “I would suggest that they invest in selling and not pricing,” he said. “I would also suggest that they focus on service and customer relations. I think that contactors need to focus in on their core business practices to assist them in dealing with the slowdown.”
Still, Malarkey is quick to point out that he believes things are not as bad as some would think. “There are pockets of good economic activity, and even in down markets people need roofs,” he said, noting that “the impact of storms and other weather events” could change the tide in 2009.
“I think asphalt roofing - being the low-cost roofing in the market - is in a very strong position,” Malarkey said. “I also believe that in certain sectors the ability to sell high-end product will fare well.”
Other topics Malarkey offered opinions on:
- Labor: “I continue to see problems with a qualified workforce.”
- Insurance: “Less risk will be taken; this should affect torch applications, especially residential.”
- Prices: “Slightly higher, but not outlandishly so.”
- Safety: “An area that needs ongoing attention and a place where good contactors can hold their costs down. A bad safety situation will be very, very costly, especially in the current market.”
- Product availability: “Fairly good. But there may well be constraints in some markets due to the changing asphalt situation.”
- Materials prices: “Slightly higher, but again, not any big jumps.”
- Oil/fuel prices: “Higher than today’s prices, but not as high as last summer.”