Opportunity knocking: Remodels and green upgrades offer hot prospects in the Canadian metal building industry
by Jonathan McGaha | 25 October 2010 12:00 am
There is no doubt the recent downturn in the global economy will have a significant impact on the Canadian building industry in 2009. However, for Canadian companies that are able to optimize their product mix, remain flexible during changing construction patterns and adhere to sound financial practices, 2009 should be a period of “practical opportunity” rather than the “doom and gloom” predicted by some.
What is clear is that fiscal restraint will be the order of the day for Canadian metal building products manufacturers.
Where to Make Money
“Even though economic conditions in the United States will definitely impact global markets, Canada is in a better economic position than most other countries,” said Emile Mabro, vice president and general manager of Vicwest, Oakville, Ontario, Canada. “We are rich with natural resources, largely self-sufficient in energy, and-despite some job loss, primarily in the automotive sector-labor markets are in relatively good condition.” As well, Canadians are not excessively overextended in debt or mortgage commitments.
While these factors mean the overall economy may not suffer as much as its U.S. counterpart, Mabro said, the most notable changes for Canadian building products manufacturers will result from a lack of available capital, which will alter construction patterns and slow building activity. On the residential construction front, most affected will be new construction as a result of tighter borrowing conditions and high levels of housing inventory. According to published reports, Canada will see a drop of 5.7 percent in new residential builds through 2010. This drop, however, should be buoyed by increases over the next two years in residential remodels as homeowners resist the urge to upgrade or downsize, opting rather to invest in renovations, additions and regular home maintenance repairs.
Though the increase in home retrofits won’t entirely offset the decreases in the new home construction market, it certainly will help lessen the blow. These conditions present opportunities for the metal building products industry as residential consumers shift focus to products that are more durable and long-lasting than other building materials. Companies that can offer renovators a broad range of residential products or that can tailor their offerings to take advantage of the retrofit market also stand to gain from this shift in construction focus.
Outside the Home
Institutional construction is predicted to continue increasing above 2007 and 2008 levels, but only in certain defined segments. While the total number of industrial, commercial and institutional starts is expected to decrease slightly, total put-in-place investment dollars should rise by 6.4 percent, according to forecasts from Statistics Canada, Ottawa, Ontario.
Construction of educational buildings will, however, see a drop as enrollment levels continue to decline, especially in rural markets. On the other hand, medical facilities are forecasted to see an increase predominately due to aging generations requiring more frequent medical care and long-term care facilities.
Offce construction will remain relatively stable, but significant growth is not expected as business owners cut back on large overheads and commercial developers seek to minimize the creation of excessive “unleaseable” inventory. Again, the key for manufacturers is developing alternative products that enable commercial owners and developers to meet diverse renovation and retrofit needs to replace the slowdown in new construction.
Easy Going Green
Mabro noted a particular opportunity will be the “continued growth of ‘green’ initiatives that will see continuous investment as we move into 2009.” Green initiatives in Canada have begun to catch up to our U.S. counterparts in both the ICI and residential markets. The number of nonresidential buildings achieving the LEED Canada recognition is steadily increasing, while on the residential front, LEED Homes is now being introduced.
While the average consumer is more interested in reducing energy consumption overall, there is an increased focus on integrated green strategies that are particularly suited to metal roofing products, particularly for commercial developers wishing to move “off the grid.”
“Across all building markets, we’ve seen a positive number of new construction and retrofits heading toward untraditional building practices in order to reduce annual operating costs,” Mabro said. Metal roof systems, for example, that incorporate solutions for both active and passive solar thermal energy collection, reflective recycled standing-seam roofing for reduced cooling consumption in the summer months, as well as integrated roof systems to collect rainwater for nonpotable uses, are becoming more common occurrences.
The increase in sustainable building practices can be attributed in large part to the various financial support and investment systems offered by Canadian federal and provincial governments, Canada Mortgage and Housing Corp., financial institutions and local utilities. Regardless of the source, it is apparent that environmental sustainability is a growing concern, and it indicates that Canadian consumers and companies alike are becoming more environmentally conscious in their planning activities and purchases.
What to Watch
Overall, 2009 will be a slower period in construction that will be coupled with a shift in priorities in construction patterns. This downturn, however, does not mean there are not opportunities for growth for those metal building products manufacturers willing to go beyond traditional market segments and take advantage of the changes in construction patterns in both commercial and residential markets.
Scott Ringler is national marketing director and Jane Swayze is marketing specialist for Vicwest, Oakville, Ontario, Canada.
Source URL: https://www.metalconstructionnews.com/articles/opportunity-knocking-remodels-and-green-upgrades-offer-hot-prospects-in-the-canadian-metal-building-industry/