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38th Annual MCN Contractor Survey

In spite of the industry battling a labor shortage, the market continues to grow and metal contractors are excited about 2019

Mcn Cont Survey Mar19 1

For the last few years, what we have mostly heard about in the construction industry has been the shortage of skilled labor, and rightfully so. Especially among trade workers, we face a dire scarcity of people to do the work. The shortage is the result of a combination of issues, as we addressed in our industry summit last March and reported on in our special issue in July 2018. But the gulf between the available work and the available workforce grew even greater in 2018 because the industry has been in a robust expansion.

Our 38th annual survey of contractors reflects that as most overall construction numbers increased in 2018, even those specific to metal construction (metal roofing, metal walls, metal building systems, etc.) also went up.

Just in December, the construction industry created 100,000 new job openings, and the ratio between unemployment and job opening rates in the industry is 1.32. In other words, for every unemployed worker in construction, there are 1.32 job openings.

The lack of skilled workers does not affect architects directly, but it does mean that general contractors and trade contractors are being more careful about the work they take on, and probably bidding work at higher costs. (That said, wage growth in the U.S. economy still has not grown as steeply as economists have feared, especially at the lower end of the wage pool, and inflation has been kept in check.)

The industry is in a strong position going into 2019. That is in spite of fears over the affect the steel and aluminum tariffs would have on both rising costs and building product material availability. Both concerns may have been overblown. Our report in April 2018 revealed that many economists in the construction industry were worried that the tariffs would cause the contraction of the industry to come a little sooner.

The 2019 Dodge Construction Outlook from Dodge Data & Analytics, New York City, predicts U.S. nonresidential construction will match its 3 percent increase from 2018 in 2019 in spite of a decrease in commercial construction of about 3 percent. Offsetting those declines will be gains in institutional, industrial and manufacturing.

According to the National Association of Home Builders (NAHB), single-family starts will increase 4.7 percent to 927,000 starts in 2019. By 2020, starts will increase to an annual rate of 979,000. However, the good news in the single-family market is offset by a cooling in the multifamily. After a rise of 7.6 percent in 2018, topping at 356,000 starts, there will be a downturn over the next two years. NAHB predicts a 4.4 percent decline in 2019 and another 0.5 percent decline in 2010.

The residential home improvement market has been on a tear for the last several years, clocking in at over 5 percent annual increases and topping at nearly 7.5 percent increases in the last several quarters. The Joint Center for Housing Studies at Harvard University forecasts a slowing in the increase of activity. After hitting 7.5 percent growth in 2018, the Leading Indicator of Remodeling Activity shows a slowing to 5.1 percent growth. That still represents more than $350 billion in remodeling activity.

Average Square Footage Increase by Metal Building Product

General Statistics

Our respondents to the survey report that the total revenue for their construction companies topped out at $8.78 million in 2018. Compared to last year’s survey respondents, this is a considerable increase that probably reflects more of a difference in people responding than overall changes in the marketplace. Of the total construction revenue in 2018, survey takers report that $2.72 million was derived from projects in the metal construction industry. In other words, metal building systems, metal roofing, metal wall panels or light-gauge steel framing.

Of those reporting, more than 40 percent were general contractors. Our next largest group of respondents identified as metal building contractors (19.5 percent), followed by roofing contractors. Combined, roofing contractors and self-identified metal roofing contractors totaled 17.5 percent of the respondents.

About 43.3 percent of our survey respondents say they use design-build contracts, but that varies considerably by region. Companies in the East are far more likely to use design-build (55.3 percent), while South and West companies were both below 38 percent.

Just over 56 percent of respondents say they worked with architects in 2018, and they report that will not change significantly in 2019.

(Percentages may not add up to 100 percent doing to rounding.)

Company Location

Type of Firm

Average Annual Gross Contracting Sales Volume

Average Metal Project Sales Volume

Breakdowns of Metal Construction Contracts

Amount of Metal Construction Projects Involving Architects

Metal Buildings

Of those taking the survey, nearly 70 percent say they were engaged in metal building system construction. That could be many different roles, including as a general contractor, dealer or erector. Companies based in the South were more likely to do metal building work (78.3 percent), but, no matter what region, the respondents don’t anticipate much change in 2019. In other words, if a contractor was doing metal building construction in 2017 or 2018, he or she is likely to be doing it into the future. As we’ve noted in previous years, there is considerable investment in developing the knowledge and staff to take on such projects, and contractors can’t simply add metal building contracting as another service in their repertoires.

While companies may add these services, those doing them report that the number of projects they do annually increased from 2017 to 2018, and projected into 2019. More than 30 percent of respondents report doing more than 15 metal buildings in 2017. However, 38.9 percent of survey takers said they did more than 15 metal buildings in 2018, and many more (50.4 percent) anticipate doing such projects in 2019.

Not only are we seeing an increase in the metal building projects, which is not surprising given the growing construction economy—we see an increase in the size of projects. From 2017 to 2018, the size of metal building projects reportedly increased 10.8 percent, with the West region seeing the largest jump (17.6 percent) and the East the least (5.8 percent).

Number of Respondents Involved in Metal Building Construction

Average Number of Metal Buildings Completed per Those Involved

Average Square Footage of Metal Buildings Completed

Percentage of Contractors Involved in Metal Building Project Types in 2018

Metal Building Projects Completed, According to Building Size

Metal Roofing

As with metal building participants, the number of respondents involved in metal roofing construction held steady in 2017 at 42.7 percent. Respondents anticipate no significant change to that in 2018, and project similar results for 2019.

Nearly three quarters of the companies involved in metal roofing projects completed fewer than 10 in 2017. In the last year, the percentage doing fewer than 10 projects inched up slightly to over 78 percent, but our respondents anticipate they each will take on more projects in 2019. One notable difference between 2017 and 2018 is that the percentage of companies doing more than 50 projects increased by nearly a third, and they report they expect to see similar numbers in 2019.

Most respondents are involved in commercial roofing projects, with 72.7 percent reporting working on such buildings, whether new or retrofit. This year, nearly 30 percent of survey takers say they were involved in residential construction, which is a slight increase from last year’s survey.

What is interesting, though, is that the average square footage of a project reported in this year’s survey increased compared to last year’s survey. And survey takers this year report the size of their metal roofing projects increased more than 12 percent from 2017 to 2018. With the increase in companies doing smaller residential roofing projects, the size increase must have been made up in significantly larger commercial and industrial projects.

We divide out new metal roofs on non-metal buildings in our survey. Those projects tend to be smaller, coming in at 19,200 square feet in 2017. That increased 6.6 percent to 20,463 square feet. About 20 percent of our respondents are engaged in this kind of work.

Number of Respondents Involved in Metal Roofing Construction

Average Number of Metal Roofs Completed per Those Involved

Average Square Footage of Metal Roof Projects Completed

Percentage of Contractors Involved in Metal Roofing Types

Percentage of New Metal Roofing on Non-metal Buildings

Average Square Footage of New Metal Roofs on Non-metal Buildings

Metal Wall Panels

In 2017, 43.5 percent of survey takers did metal wall panel projects, and they averaged 17,300 square feet. Last year, the percentage of respondents involved in those projects increased to 45.7 percent and the size of the projects jumped 8.6 percent to 18,784 square feet. The percentage of respondents who report they will be taking on metal wall panel projects in 2019 will actually decrease to 43.9 percent, which is effectively the level in 2017.

Companies are far more likely to be involved in commercial projects using metal wall panels (78.7 percent) than any other type, although a heavy number are doing industrial projects (53.3 percent). The rest of the construction markets sees fewer. Two regional differences stand out. Companies in the East are far less likely (5.9 percent) to do residential metal wall panel projects than any other region, and are well below the national average at 22.7 percent. Also, companies in the western states are far more likely to do governmental projects (54.6 percent) than other regions or the national average.

As with metal roofing, the vast majority of companies do fewer 15 projects annually, although we do see increased in the percentage of companies doing more than 50 projects. That may indicate some burgeoning consolidation of the market, although it is still incredibly fragmented.

From 2017 to 2018, the size of metal wall panel projects increased 8.6 percent, although the companies in the South report a sharp decline in project size, with an 8.4 percent decline.

Number of Respondents Involved in Metal Wall Panel Construction

Average Number of Metal Wall Panel Projects Completed per Those Involved

Average Square Footage of Metal Wall Panels Construction

Percentage of Contractors Involved in Metal Wall Panel Construction Types

Light-Gauge Steel Framing

Last year’s survey takers report about 20 percent of them were involved in light-gauge steel framing projects, whether exterior or interior. This year, respondents who were involved totaled more than a quarter in 2017 and 2018. Unsurprisingly, that same level of participation will likely hold steady into 2019.

Also differentiating this group from companies doing metal buildings, metal roofing or metal wall panel construction is the likelihood that they will take on large numbers of projects. None of the participants report doing more than 50 projects, either exterior or interior, during any of the years we ask about. In fact, only about 15 percent of our respondents handled more than 15 light-gauge steel framing projects in 2017 or 2018. They report those percentages will hold true in 2019.

While the size of exterior framing projects decreased from 2017 to 2018 (1.8 percent), the average square footage of interior projects jumped 13.5 percent from 6,665 square feet to 7,564 square feet.

umber of Respondents Involved in Light-Gauge Exterior Framing

Average Number of Light-Gauge Exterior Framing Projects Completed per Those Involved

Average Square Footage of Light-Gauge Exterior Framing Projects

Number of Respondents Involved in Light-Gauge Interior Framing

Average Number of Light-Gauge Interior Framing Projects Completed per Those Involved

Average Square Footage of Light-Gauge Interior Framing Projects