One of the hallmarks of the construction industry and contractors in particular is their abiding optimism. In the face of that optimism, 2021 tossed escalating building product prices—especially steel—supply chain shortages, labor shortages and the continuing effects of a pandemic that is now stretching into its third year. Still, metal builders, roofers, wall panel contractors and light-gauge steel contractors all report that 2021 was better than 2020 and they anticipate 2022 being even better.
Across the board, metal construction projects increased in number and size from 2020 to 2021
Last year, in its annual construction outlook, Dodge Data & Analytics anticipated a 4% increase in construction starts for 2021, which seemed low as the industry came off the devastating effects of the economic shutdown in 2020. As it turns out, there was a 12% increase and 2021 closed with total starts at $893 billion. For 2022, the expected increase is 6%, which represents a slight cooling from the growth of the industry, but still very strong. The increase will translate to anticipated total starts valued at $946 billion.
For 2021, the red-hot residential market again outstripped the overall 6% increase in construction activity with single-family starts up 14% and multifamily up 16%. The expectation is that the market will cool a little bit in 2022, but still be strong with single-family starts up 3% and multifamily up 2%.
The National Association of Home Builders is more pessimistic about single-family housing starts, anticipating only a 1% increase, but more optimist about multifamily starts, expecting a 6.3% increase in 2022.
In the MCN 41st Annual Contractor Survey, we see a similar robust market environment in the metal construction industry as in the overall construction market. Our respondents report metal building construction increased 12.9% in 2021, with optimism across the board, with respondents expecting a 12.9% increase, metal roofing 9.3% increase, metal wall panels up 2.5% and light-gauge steel framing up 9.5% for exteriors and 3% for interiors.
Our respondents this year again reported increases in both overall contracting revenue and metal construction revenue. In last year’s survey, respondents said their overall contracting revenue averaged $8,322,776 nationally and on metal projects (metal building systems, roofing, wall panels and light-gauge steel framing) the 2020 total sales number was $5,327,987. Both of those were significantly higher than the previous year, and respondents reported another big leap in 2021 with total contracting revenue at $11,746,063 and metal project revenue at $6,987,318.
Part of the reason for the increase is actual increases in revenue, though such large jumps are hard to balance against the more modest increases reported on the number of projects completed. Other mitigating factors are a change in the survey takers with more larger firms participating this year as well. Historically, these revenue numbers are closer to the ones we’ve seen in previous surveys.
Every year, the South is over represented in the respondents to our contractor survey. Last year, they made up 30.4% of survey takers, and this year they accounted for 31.4%. Year after year, this region is the biggest, and year after year, the East is the smallest. (19.6% in 2021 and 19.8% in 2022.)
It’s also not unusual for companies in the South to be larger than the other regions of the country, but this year, the scales have shifted slightly. In fact, for annual contracting gross sales, the South actually has the lowest revenue per company at $9,849,760, while the West took the top spot at $13,879,279. Those are compared to a national average of $11,746,063.
When looking at projects involving only metal building products, the story is slightly different. Companies in the East have average revenues of $4,271,538, below the South’s average of $6,396,396, which is very close to the national average of $6,987,318. Again, the companies in the West garnered more revenue from metal projects than the other regions at $9,470,840.
For further comparison, in 2020, about 64% of the revenue our respondents generated in construction activity came from metal projects. In 2021, that percentage was about 60%. Over the last seven years, the percentage has been on average 53.2%, which was pulled down by two very low years in 2018 and 2015.
The types of contractors who historically respond to our survey have remained remarkably consistent. General contractors always make up the largest portion, hovering between 35% and 40% of the total with this year’s portion coming in at a smidge over 40%. We had higher participation from metal building erectors this year (11.6%) than in previous years, when it has been about 7%.
In many ways, our respondents are a niche within the construction industry, but when it comes to the type of work they do, they are a strong indicator of the overall construction industry. We ask them if they predominantly do design-build, new spec or retrofit projects. And every year for the last 10 years, their percentages have been remarkably consistent with this year 46.5% of respondents saying they did design-build work, 35.1% did new spec work and 16.3% did retrofit/remodel projects.
(Percentages may not add up to 100% due to rounding.)
Our survey takers this year were far more likely to do metal building projects than the previous two years, but the 79.1% who said they did metal buildings was more in line with the over 70% who have said so in most of our annual surveys. It should be noted that the percentage of respondents who said they did metal buildings in 2020 was the exact same percentage as last year and projected for 2022. There also was, for the most, equal representation regionally, although companies in the Midwest were more likely to do metal building projects than the other regions.
After a decline in the size of metal buildings from 2019 to 2020 (-4.8%), which we reported last year, the growth in building size is back on track in 2021. Compared to 2020, the size of metal buildings our respondents reported increased 12.9%.
Every year, our respondents are more likely to use metal buildings for commercial projects than any other building type. That is true this year with 86.7% of respondents doing commercial projects. There was, though, a significant change in three categories compared to last year’s and previous years’ surveys. Institutional (18.7%), transportation (12%) and retail (20%) all saw declines in 2021 compared to our reporting on 2020 projects. That tracks with the overall industry decline as a result of the pandemic, when all of those types of projects saw declines as a result of a decline in economic prospects.
In our last year’s survey last year, we saw a large increase in respondents who said they did metal roofing projects than previous years with 48% saying they did that type of project in 2020. In this year’s survey, we saw another jump this year with 55.8% of our respondents reporting they did metal roofing work in 2020. Interestingly, that group reported a decline in doing metal roofing projects in 2021 and only about half of them project doing such work in 2022.
The size of the projects also grew from 2020 to 2021. Those who did metal roofing projects said the average size of a roof was 18,537 square feet in 2021 compared to 16,965 square feet in 2020, which is a 9.3% increase.
We can also get a sense of the size of the companies reporting this year by looking at the number of projects they take on annually. In 2021, about a quarter of the companies said they did more than 25 metal roofing projects annually. That is up from 16.6% of respondents saying they did more than 25 metal roofing projects in 2020.
Roofing contractors, who represent about just under 20% of our respondents are more likely to take on roofing on new non-metal buildings (metal building contractors and/or erectors also do roofing work on metal buildings). But 25% of our respondents reported doing this kind of work. The difference of 5% can be accounted by general contractors or other cohort that periodically do a metal roof on a non-metal building.
The size of roofs being done on non-metal buildings increased from 11,699 square feet in 2020 to 12,111 square feet in 2021, which is a 3.5% increase. Those roof sizes are significantly smaller than overall metal roof projects, which might be an indication that many of these contractors are doing residential work.
Metal Wall Panels
Half of our respondents this year were involved in metal wall panel construction, which was an increase from just over 40% last year. Surprisingly, these companies projected that next year they are less likely to do wall panel projects, suggesting this year was a bit of blip on the radar. Still, all of those percentages are higher than last year, and higher than most of the previous years, where typically about 35% of respondents did metal wall panel construction.
The average size of the projects that respondents reported this year was 29,526 square feet, which was a 2.5% increase over what the same group did last year (28,811 square feet). The 2021 respondents did smaller projects—about 20,000 square feet—and they also reported they saw a decline in project size from 2019 to 2020. As we see more and more warehouse projects and fewer retail projects, which most construction economists predict will be happening for the next few years, it’s reasonable to expect the size of projects will increase.
The number of projects any company did was relatively evenly distributed with about half doing more than 10 and half doing fewer. Nearly 20% of companies said they only did one metal wall project in 2021. Looking to 2022, the numbers shift upward with companies more likely to take on more projects. Only 13.5% will do only one project and about 55% expect to do more than 10 projects.
Commercial projects are the mostly likely for these contractors to do, with 83.7% saying they did a commercial project in 2021. Nearly 30% said they did a metal wall panel project on a retail building in 2021, which compares reasonably with the 25% of metal roofing projects done in retail. About 20% of companies doing metal buildings did retail projects.
Light-Gauge Steel Framing
This year, we had a far greater percentage of respondents to our survey who indicated they had completed light-gauge metal exterior framing projects in 2021 (50%) as compared to those who responded last year and reported on numbers for 2020 (20.9%). Again, 2021 looks like a blip for many companies since the percentage anticipating doing this kind of work in 2022 will drop back down to just over 20%. Part of that may be due to supply chain issues as companies needed to expand services during downtimes.
For interior projects, the involvement followed the same pattern with about a quarter doing the work in 2020 and nearly half doing it in 2021, then going back down to a quarter in 2022.
Notably, the number of respondents who anticipated doing more than 50 projects in 2021 jumped from 11.8% to 27.8%, while the other cohorts for both exterior and interior framing held essentially steady.
The explanation for these numbers can also be found in the number of projects any company did. In 2020, no companies did more than 25 exterior light-gauge framing projects, but in 2021 about 25% did more than 25. Similar numbers hold true for interior light-gauge framing projects with only 4.8% doing more than 25 in 2020, but over 20% doing more than 25 in 2021.
The size of the projects also increased from 2020 to 2021 for both exterior and interior light-gauge framing. Exterior project size grew 9.5% from 9,350 square feet in 2020 to 10,235 square feet in 2021. Interior projects increased in size 3% year over year from 10,739 square feet in 2020 to 11,059 square feet.