MCN: What market trends do you expect to see within the metal construction industry in 2011? What is driving these trends?
Jim Bush: While the overall construction industry is expected to see small growth moving forward, the continued market share gains of metal in both roof and wall applications will continue. The continued marketing initiatives of the industry as well as the design community and building owners realizing the cost effectiveness of metal, the ability for metal to aid in sustainable design and architectural appeal continue to drive this growth.
Brad Robeson: Relative to historical norms, we expect overall non-residential low-rise construction starts to be slightly higher than 2010. Expected growth in commercial and industrial sectors will more than offset an easing in the Institutional sector, primarily government related projects.
Wayne Dickinson: There’s a lot going on right now and our industry is transforming as a result. Greater demand by users for long-term building performance and the introduction of newer, more restrictive code regulations are leading to smarter, better performing building products and design. Software advancements are allowing teams to collaborate and design comprehensive systems that improve the end result and lower the costs of construction so that projects are completed quicker and with fewer mistakes. Economic conditions have slowed new construction and are driving those who do need to expand to consider building renovations or possibly smaller buildings in order to obtain the necessary financing. For the metal construction industry to succeed these changes need to be recognized and embraced and we need to stay informed and prepared.
Harry Yeatman: There is a strong emphasis on efficiency. I mean efficient, cost-effective building footprints as well as energy efficiency. Also, the focus on green buildings does not mean everyone wants a LEED registered facility, but it has opened the door to more serious conversations about the green aspects of a facility including life cycle of various systems, the use of natural light in a facility, and energy efficiency of all shell materials.
Robert Anderson: I expect to see a continuing trend toward high-performance, high-efficiency, long-lasting construction products and systems. An increasing awareness of the impact of buildings on the environment is one of the main drivers of this trend.
Additionally,certification programs including the U.S. Green Building Council’s LEED and Center for Environmental Innovation in Roofing’s RoofPoint roof rating system and building codes like the International Green Construction Code and the International Energy Conservation Code are moving contractors, architects, consultants and building owners to incorporate sustainable building products into their project specifications.
The increasing importance of system performance testing and code approvals for construction products also continues to be an ever-present trend in the metal construction industry.
Todd Miller: On the residential end of things, I anticipate new construction to remain soft due to low demand. However, I expect upper end remodeling to increase as folks who might normally be building new will instead upgrade what they have. They will be seeking unique and sustainable products. This will continue to provide great opportunities for metal roofing.
Bill Hippard: The Metal Roofing Alliance has capitalized on the environmental and economic benefits of their members’ products to encourage homeowners to invest in their home. Sustainability and energy efficiency are important elements of many homeowners’ buying decisions, and metal roofing is an ideal solution. By installing a new metal roof, consumers can cut energy costs, help the environment and protect their biggest investment – their home.
It’s important to remember that the residential metal roofing industry takes its market share from competing products, such as asphalt and concrete tiles. As a result, all the growth spurred by MRA represents new opportunities, and new revenue for all the companies involved in the product, from steel mills and coil coaters to the contractors who install the metal roofs.
Jim Tuschall: I see an increase in natural metals being used such as zinc, stainless steel and copper. These materials offer long term life with little or no maintenance costs in addition to their desired visual appeal. Use of natural metals has also been driven by the green and LEED programs as architects and owners have become more carbon sensitive with material selections.
The increased use of metal foam panels will also continue in 2011. The high insulation value and faster installation process makes this more economical than the traditional field assembled liner panel and profile panels. The liner panels will have limited use however the single skin profile panel will continue to be widely used for aesthetic architecture.
Ray Frobosilo: We see next year not getting any worse, but only very gradually getting better. In our type of construction, we’re only now seeing the Stimulus package beginning to hit…a big part of that funding was infrastructure (highways, sewers, bridge repairs, etc.), and the actual construction part of it won’t be taking hold until 2011, and while that’s not enough o make for an economic recovery (for the industry) it certainly doesn’t hurt. We are seeing some segments of the country that have projects that were tied up in funding or financial review, that are just now starting to break loose — we’re talking $200-, $300-, $400-million projects — so we’re seeing cautious optimism.
The AIA and the AGC did a webinar about a month ago, and the AIA employment benchmark is just getting back to that level and that’s a big barometer for them. The AGC is seeing the same thing…gradual recovery; nothing is going to happen quickly. And the general consensus is, until banks start doing what banks are supposed to do
— that’s lending money at a fair rate — nothing’s going to happen of any substance.
MCN: What innovations can we expect in 2011, with regard to metal construction products, components and applications?
Bush: I believe you will continue to see creativity in architectural design. The combining of various panel styles and systems on individual projects will be driving this creativity. Research and development of energy efficient roof and wall assemblies will continue through industry initiatives and you will begin to see this new research enter the marketplace. Cool metal roofing achieved through paint technology will be enhanced with other energy saving features such as ASV (above sheathing ventilation), insulated roof and wall assemblies, and utilizing metal components in conjunction with solar technologies such as photovoltaic’s, transpired solar collectors and other solar/thermal technologies that capture the solar energy available.
Robeson: Roof top solar collecting systems, roof and wall retrofit applications.
Dickinson: We’ve already seen the resurgence of old ideas such as insulated metal panels and solar technology but the manufacturing and capabilities of these products are greatly improved over their predecessors. As we move forward, manufacturers will continue to develop better performing products—some may be new and some may be modifications of products we are already familiar with, like adding a high performing coating to an existing panel.
Yeatman: We believe energy efficient and sustainable solutions are the wave of the future. We would expect this to drive much of the innovation in the future.
Miller: I think we will continue to see the development of more multi-hued or printcoat colors being used on metal building products for enhanced beauty and distinction.
Tuschall: Paint systems are improving offering coatings that look like wood and natural products, warranties are also being extended. Use of solar products will continue to be used of roof and walls for obvious reasons.
Frobosilo: That’s really what’s setting apart manufacturing companies as well as architectural firms…design innovation, product innovation, etc. The new energy code is forcing innovation, in terms of ‘How are you going to meet the new model energy code with today’s construction technologies?’
In a strangely ironic way, economies like this put people back in the mode of innovating. In the metal framing industry, it had become pretty staid over the last 40 years – a stud was a stud no matter who you bought it from. Now with ASTM looking more forward in terms of performance based products, it’s allowing people to come out and say “This product does what the standard says, but with a different configuration, thickness, metallurgical or design innovations, etc.. So [innovation] has certainly changed the face of our industry.
Design innovation is really what is keeping the companies that are interested in it, a little bit ahead of the game. Nobody’s doing great [in the construction industry] , but it’s the ones that are sitting there without the ability or the focus on innovating, that are probably suffering the most.
There are plenty of companies out there that are spending more on R&D then they ever have before.
MCN: The past couple of years have seen the economy greatly affect the metal construction industry. What adjustments/strategies have builders, contractors and suppliers made to weather the storm?
Bush: All those involved in the construction industry have been affected by the economy. Businesses have streamlined and everybody is doing more with less personnel.
Robeson: In general, I believe there is a shift from survival strategies to thriving. In other words, the past several years were all about reacting to unprecedented economic forces by adjusting tactical actions quickly to that which was imperative, without certainty as to the degree of those forces. These paces have conditioned us to focus on the right levers with a greater sense of urgency and understanding. Our builders, contractors and suppliers are under a significant amount of stress. We have to behave rationally and responsibly to insure our sustainability and support their livelihood now and in the future. I expect they will do the same in return.
Dickinson: For example, roofing contractors that may not have been familiar with metal panels at one time are now installing our roof systems; some are researching and applying value-added materials like photovoltaic systems; and some are looking at new applications like retrofit roofing systems for existing buildings. In other cases, contractors devoted to niche markets such as residential may be exploring new opportunities, like those found in the commercial sector, as they look for business. Of course this is leading to a more competitive marketplace.
Yeatman: As a supplier of building solutions using steel, we have seen all market segments contract in the past few years. In response, we have made investments in technology, equipment, and our customers to insure we are providing the highest quality products and services in the most cost efficient way. In some cases, that have meant that we have been forced to reduce capacity within our business to meet the market demand, all the while, continuing to invest in new technology and equipment.
Miller: We have seen contractors have to move to a higher-end clientele. In the residential spectrum, we have seen a dramatic decline in the availability of home improvement financing. Again, this has pushed contractors to focus on more affluent customers.
Tuschall: More advertising dollars spent on retrofitting older metal buildings. Vacant buildings need to compete for tenants/owners and metal is an affordable option to modernize the façade.
Frobosilo: On the manufacturing side, we’ve all just leaned our businesses out as much as we can. We’ve hunkered down and focused on increasing market share by reducing costs through product innovation.
Contractors are spending more money in getting a project “shovel ready.” We see contractors now, more than ever before, investing more in the process to get a project shovel-ready, which they believe gives them a strategic advantage when the funds do ultimately get released. He who can begin the quickest may have the advantage. They’re spending more money bidding and estimating than they normally would have.
Contractors are reaching out farther, geographically, to bid work
– and often times it’s paying off for them.
MCN: Strategically, what additional adjustments do you expect to see in the industry in 2011, or do you expect the market to be similar to 2010? Please explain.
Bush: believe you will see only slight improvement in the new construction market in 2011. Renovation of existing structures will drive the rebound of the construction market.
Robeson: If you accept the macro view in terms of over-all levels of activity, then I expect the market to be somewhat similar to 2010. However, a micro view of market segment activity shifts, funding sources and new economic factors will force adjustments within the market. Market participants will need to choose whether or not to adjust their strategies and to what degree.
Dickinson: The trend for more energy-efficient building solutions will continue to increase. Government and Institutional consumers have led this rally but other markets will follow. Economic conditions, however, have tempered. Although we believe the quick and aggressive economic decline has passed we have braced ourselves for a slower and more steady recovery.
Yeatman: We believe the market has stabilized, and we should begin to see modest growth in 2011 as pent up demand makes its way to the street. We are poised to take advantage of any growth in non-residential construction markets in 2011 and beyond.
Miller: I believe that we will see consumers become less skittish about making investments. They will realize that their homes and other buildings are the one investment that, over the long haul, can reliably be expected to increase in value. We will see more of them investing in those structures.
Frobosilo: I think that people have hunkered down to the limit that their business can sustain it. They’re lean and mean now versus what they were three of four years ago, and it’s paid off in lower costs for project management, lower costs for construction, and I don’t see a lot more changes occurring. Design innovations will be occurring, but not that the breakneck pace of the past three years where it was more a matter of survivability.
All the measurable statistics show that this thing had probably hit bottom and is beginning a gradual climb out of it. You just have to keep alert and keep doing what you’re doing.
MCN: Expanding into new markets is a common goal for any industry, metal construction being no different. In your opinion, what new markets, applications or building categories appear to be good candidates for metal construction components in 2011 and beyond? Please explain.
Robeson: Most obvious is the reintroduction or resurgence of metal framed up-slope or retrofit systems. Enveloping an existing building or several adjoining structures with new roof and wall cladding systems for improved weather tightness, insulating performance and appearance upgrades is a great option to new construction. Extending the existing, usable building space life span, while at the same time enabling a great platform for the installation of solar collective systems, are just several long term benefits.
Dickinson: Metal has been expanding into markets for years. It’s hard to say that there isn’t any industry in which we don’t already play a role. Where we have our greatest opportunity is in demonstrating how our products can outperform other more conventional materials while meeting the current needs of the building owner or architect.
Yeatman: Over the last few years, we have been adjusting our business model from a traditional pre-engineered building company to a building solutions supplier with the engineering and manufacturing capabilities to provide our customers with solutions to all of their building needs involving metal. We no longer focus solely on the pre-engineered building part of our customers’ businesses.
Anderson: Metal is already used in virtually every segment of construction, and I anticipate that metal’s share of the construction market will continue to grow in 2011. In new construction and retrofit applications within the commercial, institutional and residential segments, people are increasingly aware of the value proposition behind metal. Designers love the flexibility that metal provides, owners love the long, low-maintenance life, and contractors love the dependability. When you couple that with the fact that metal is a very “green” and sustainable choice, it is clear why the use of metal in all segments of construction has grown over the last decade.
Miller: I think that continued development of more attractive coatings will make our products of more interest to niche markets where the coatings may be designed for a specific purpose such as “camo” printcoats on metal roofing for hunting lodges and camps. I also believe that people who do build new buildings will be looking for their construction dollars to go as far as possible. This will often lead them back to metal building products.
Hippard: In 2011, the Metal Roofing Alliance will focus on bringing new contractors into the metal marketplace. Many of the savvy home improvement contractors who currently install windows or siding can easily add metal roofing to their product mix. It’s critical to grow the number of qualified, trained installers in order to grow the residential roofing market. The opportunities are there, and the MRA is ready to help home improvement contractors to take advantage of them. Contractors looking to grow their business have numerous training opportunities within the MRA.
Frobosilo: Back around 2000, we had worked to revise the International Building Code (IBC) and get cold-formed steel more accepted within the code for the features and the benefits that it brought: lightweight, taking cost out of the foundation, fire-resistance, speed of construction, cost of construction, etc. The building code started to acknowledge that and for the first five or six years after 9-11, you were seeing structures going up across the country, specifically in hospitality, multi-family, assisted living, education/dormitory, and mid-rise construction, being done out of cold-formed steel than you’d ever seen before because the code allowed for it.
Then there was the benefit of a relatively robust economy and real strong pent-up demand after 9-11, and the mid-rise producers
(companies like Worthington and Nucor) began to invest more in that mid-rise opportunity.
Now there are design solutions out there that can pretty much render a four- or five-story building out of cold-formed steel competitive with anything else you can build with…be it seismic, be it fire, be it costs, be it termite, be it mold, etc.
While the economy has tailed, there is still a pent-up demand. The birthrate hasn’t gone down, people are still going to need living spaces. We believe you’re going to see multi-family [residences] come back strong, more quickly than single-family
[residences].
MCN: The lending policies of banks will likely remain tight through 2011, potentially limiting (at least in part) the number of new construction projects. In an effort to fill this void, retrofit projects seem to be on the rise. In your opinion, how much of an impact does the retrofit market have on the metal construction industry both now and going forward?
Bush: As mentioned previously the retro fit market will be the main growth area in 2011. Existing building are being transformed from their original intended use. Funding for energy efficient renovations appear to be more readily available. Incentives for energy efficiency upgrades will remain available and make these renovations attractive to developers. The versatility of metal roof and wall components as it relates to energy efficient upgrades makes it an attractive choice for retro fit applications.
Robeson: Non-residential reroofing or roof replacement in total is staggering when compared against new roof installations. I believe a metal retrofit solution provides the opportunity for a significant impact on our industry. Funding sources for retrofit projects will have to be identified aside from banks.
Dickinson: Retrofit roofing has always been a good market for manufacturers like MBCI. In a down economy, retrofit tends to be more attractive to the owner. Coupled with the new energy code changes and the federal government’s mandate to perform energy retrofits on federal buildings, both roof and wall retrofit systems should see a nice increase in activity in 2011.
Yeatman: We believe this is a very significant opportunity for our industry. Historically, in tough economic times, building owners tend to keep their existing buildings, by upgrading them in lieu of building new. Metal roofing and wall products are great solutions for that building owner who wants to wait out the economy for a bit longer, yet still have a fresh look and a functional building to house their business.
Anderson: It has a huge impact. If your business is partly new construction and partly retrofit work, there’s little doubt that the mix has shifted to primarily retrofit. On the roofing side, retrofits and reroofing represent a significant opportunity in 2011.
Miller: There are always more buildings out there to be remodeled than there will ever be new ones built in a year. Retrofit construction has been, and will continue to be, a vital and essential part of our industry and its marketing.
Hippard: Since its inception, the Metal Roofing Alliance has focused on the retrofit market. Each year in the United States alone, seven million homes need a new roof – far outpacing the number of new homes built.
For a little more than a decade, the Metal Roofing Alliance (MRA) has successfully promoted residential metal roofing to consumers and contractors, and we’ve created a market that never existed. We’ve educated both audiences about the benefits of residential metal roofing, and generated hundreds of thousands of consumer leads for contractor follow-up. In fact, the MRA’s consistent national marketing program is one of the few that is actually creating demand for steel.
MCN: Photovoltaics are increasingly going hand-in-hand with metal building components, particularly roofing. In your opinion, how will the growing popularity and high-profile of PV affect metal construction in 2011 and beyond?
Bush: The continued growth of PV systems will be dependent upon the availability of grants and incentives which aid in the ROI of the systems. The long life of metal roofing is the driver behind the compatibility of the two systems.
Dickinson: Metal roofing is the only substrate for PV that can actually outlive the equipment. PV modules are warranted for 20 years and can last much longer. So, it makes the most sense to use a roofing material that protects that investment for its whole life. In addition, metal roofs are designed in such a way that allows for the easy application of either Crystalline or thin-film photovoltaic materials.
Yeatman: Federal and state subsidies have contributed to the growth of the PV market on metal roofs. Technology is also improving and we expect to see much better ROI/Paybacks in the next five years. The challenge with PV is to integrate and hook up to the grid in an easier and more seamless manner. I believe we will see products that accomplish this in the not too distant future.
Miller: There’s no doubt that roofs will increasingly be seen as opportunities to create energy. At some point in the future, no one in the roofing industry will not be able to avoid the realization that they are in the energy business as well. This is done both through the generation of power and through increasing the energy efficiency of buildings as well.
MCN: In 2011, do you believe the overall health of the metal construction industry will better than, the same as or worse than in 2010?
Bush: I believe we will see slight growth in 2011. The start of the year we will continue to see a sporadic market and a bit more consistency of improvement in late 2011. Availability of funds will be the key driver of any growth.
Robeson: My sense is the economic drivers of the past several years have had or will have a correcting effect on several fronts. The most significant example of this is how the industry has cannibalized itself through pricing. I believe, for the most part, companies have figured out you can’t sustain yourself on little or no margin. As an industry we must continuously strive to convert projects of conventional building materials by exploiting the benefits of metal building and component systems, selling the value of these benefits and price accordingly. The collective individual behaviors we chose will determine the overall health of the industry.
Dickinson: I think that’s up to us. The construction industry is expected to see some moderate economic improvement towards the end of the year.
Regardless, how we as an industry respond to any market condition requires us to remain educated about the factors that influence product selection, stay involved with associations and committees that work on our behalf, and stay responsible for the financial success of our companies without sacrificing the integrity of our industry as a whole.
Yeatman: Again, we believe the non-residential construction market has stabilized and is poised for some growth in the 2011 and beyond. That should be good news for all of the businesses that supply into the metal architecture industry. I even sense a little optimism out there!
Miller: I guess I will use the phrase “guardedly optimistic” because I do not know that anything is a “sure thing” in today’s economy and global environment but I am guardedly optimistic we will see significant industry growth of 10 percent or even more in the new year.
Hippard: Like many, I’m hopeful for a recovery in 2011. However, it’s important to note that the residential metal roofing industry has remained relatively steady, even throughout the recession. For homeowners, roofing is a need, not a want. They may put off remodeling a kitchen, but everyone needs a roof over their heads. Homeowners know that putting off replacing or repairing a roof ultimately leads to more expensive problems. When your roof is leaking it’s a home improvement project that cannot be postponed.
Tuschall: I see a slight increase in private construction which could be a turning point to a healthier 2011. Metal will continue to be an architect’s first or second choice again for its flexibility in design and its green perception.
Frobosilo: I think going forward you’re going to see a lot of consolidation in our industry and in distribution, and I think you’ll see continued trends in more joint venture projects because of the bonding capabilities and the ability to go out and gain these projects. For the big projects and government projects, you’ve got to have aggregate bonding capacity that a lot of the smaller companies just can’t do.
