Each January, Roofing Contractor talks to industry leaders to get their perspective on the coming year. This year we focused our efforts on associations — of both contractors and manufacturers — to see what they had planned for the coming year and what they feel will challenge their members in 2003.
The NRCA: Get Involved
To begin, we spoke to Don McCrory, who is president of the National Roofing Contractors Association, as well as president of Kiker Corp., a commercial roofing contracting firm in Mobile, Ala. According to McCrory, 2002 was a good year for NRCA: “The Pentagon Project went very well and was well received. It gave a lot of positive exposure for the industry.”McCrory says that first on NRCA’s agenda for the new year is to improve communications with manufacturers, distributors and consultants. For example, NRCA has formed a joint task force with the Roof Consultants Institute to develop uniform procedures for submittals. The association is also proceeding with a plan to develop roof system performance standards.
Another important item is to resolve the Proposition 65 issue in California (see below) and help shape the new energy code in Chicago. In addition, NRCA will be doing research on mold, an issue that McCrory feels is similar to asbestos.
“We are also starting a new educational program for young executives,” says McCrory. The Future Executives Institute is a three-year program developed in cooperation with Northwestern University’s Kellogg School of Graduate Business. The program is designed for men and women who expect to run roofing contracting firms in the future.
Another important item on the agenda is to gain congressional support for accelerated depreciation for new roofs. As McCrory explains, “We hope to tie it in with legislation on energy efficiency. The goal is to stimulate the roofing economy.” Instead of carrying over a new roof 39 years, it could be something shorter like 12 to 18 years. “Also, our PAC is working to support pro-business candidates,” McCrory says.
When asked about the economic situation in 2003, McCory says, “We can’t control it so we are doing everything to keep our members up to date on the changing situation.” He continues, “Some areas are doing well, some aren’t. It’s slow in our (Kiker Corp.’s) market. Our fourth quarter is actually up, but as of right now, we don’t have a backlog for the first quarter of 2003. That could change of course, because we are mostly involved with reroofing (95 percent of our work). But in general, in the Southeast, the first quarter is iffy.”
McCrory says that there are some signs of an economic turnaround, but not many. “It will probably be mid-2003 before there is an improvement on the low-slope market. It’s very slow, especially asphalt. Residential is still strong, although even that part of the market is starting to see a slowdown.” Nonetheless, “I am optimistic,” McCrory says. “People have to have a roof, and our maintenance division is very strong. We’re pushing that more and more. There is a lot of pent-up capital out there. (People are waiting), whether it’s due to 9-11, Iraq or the stock market.”
The biggest challenge for NRCA members, as McCory sees it, is insurance. “The next couple of years will be tough with a tight economy and a hard market,” he says. Therefore, “It’s important to stay abreast of developments in the marketplace, what’s happening with manufacturers and product concerns.”
The biggest challenge for NRCA as an association is to tell members how to deal with a tough market. “We will see a purge of the market,” McCrory says. His advice? “Contractors should be involved. At the very least, be a member. Get all the information possible, stay abreast of what’s going on in the industry.” He emphasizes that, “Failure to plan is a plan to fail. You have to be educated; you can’t be an isolationist. It is crazy not to be involved. I don’t understand contractors who aren’t involved, information is invaluable.”
As for the NRCA convention, “You can’t afford not to go,” he says. “There will be educational programs, new products, an opportunity to expand horizons with different manufacturers. You need to be diversified with systems and manufacturers.”
MRCA Takes Care of its Troops
Tom Knight is the executive director of the Midwest Roofing Contractors Association. “We kick the year off (in January) with a board meeting led by the executive committee,” Knight explains. “We have a number of ongoing programs, most notably the technical and research area.” At the MRCA’s 2002 convention, the T&R Committee unveiled the results from its second round of testing of aged single-ply membranes to determine if they maintain their Class A fire rating. “It was very controversial,” says Knight. “Testing will continue.”All of MRCA’s activities lead to its convention, which will be held this year in Cincinnati in October. “The convention hasn’t ever been that far east,” says Knight. “The Ohio Roofing Contractors Association is helping us out and we are very excited.”
One hot topic for MRCA is mold research. “We produce a lot of business management forms for contractors,” says Knight. “So we released some verbiage on mold. We will do more in this area as it comes into focus.”
MRCA is also in the third year of a five-year program on continuing research on roof coatings, headed by roof consultant Jim Carlson.
Another high priority on MRCA’s agenda is the SHARP™ program, which stands for Safety and Health Agenda for Roofing Professionals. The program aims to help contractors reduce liability by reducing risk. “We provide manuals, training, tool box talks, etc.,” says Knight. “We’re aggressive. This type of program doesn’t exist anywhere else. It’s a very big thing.”
Knight points out that MRCA also owns its own insurance agency, MRCA Insurance & Bonds, which offers workers comp and liability coverage. “It grows each and every year and is an alternative to CNA,” says Knight.
Knight sees the economy and the market as the main challenges facing MRCA members. “Our members held up in 2002 but are worried about 2003,” he says. Knight believes that contractors that are doing good work, have maintenance departments, and have established good relationships with customers, should be OK. “Over all, good contractors will do well.”
Battles in the West
We next spoke with Kyle King, vice president and estimator for Snyder Roofing, Tigard, Ore., and president of the Western States Roofing Contractors Association.King says one big item on WSRCA’s 2003 agenda is to monitor Proposition 65 in California, also known as the Safe Drinking Water & Toxic Enforcement Act. In 2002, several roofing companies received 60-day notices claiming that they violated Proposition 65 by failing to warn employees, bystanders and passersby about alleged exposure to odors and fumes from asphalt and roofing compounds.
The WSRCA’s attorney is working with the NRCA to solve this problem. As King explains, the issue is “currently temporarily on hold, with an agreement that delays things for a while. We feel the longer it is delayed, the better.”
As for mold, “WSRCA is discussing how we can put language in contracts and other construction documents to minimize exposure.”
King feels the insurance issue is worse in California than in other areas of the country. “Lawyers are finding that (construction defect litigation) is a great way to make money,” he says. As for general liability insurance, “Roofing contractors in Oregon are seeing 35- to 40-percent increases. Insurance companies are either going to raise rates or drop you,” says King. His company’s premiums went up 35 percent. “WSRCA is trying to find a way to minimize the potential for loss.”
As for challenges facing WSRCA members, King says lack of skilled labor is still an issue in Washington and Oregon. “There is a low unemployment rate and those who are unemployed are coming out of the high tech industries and don’t want to go into roofing. It’s expensive to train people; we want those that have skills.”
When asked about the general business climate in 2003, King, whose company covers the Northwest and does all commercial work, says that things are still slow with projects canceled or delayed. While the residential market it still going strong, “The turnaround will also be slow, and long term. It will take a couple of years to recover,” he says. “I am cautious about how things will be. We go after any job we can. We see large companies, including Snyder, doing more repair work. Thankfully, we are set up for that.”
The Sun Still Shines in Florida
Steve Munnell, executive director of the Florida Roofing, Sheet Metal and Air Conditioning Contractors Association, has a slightly more upbeat report from his end of the country. “Florida has been pretty well off. The commercial side dropped at the end of 2001 but seems to have rebounded after the first quarter of 2002. There was a lot of rain over the summer, so that helped make things very busy. It does seem to have dropped a bit at the end of 2002, but it’s still pretty strong,” Munnell explains. “Florida is a $1.2 to $1.3 billion market. It’s the second or third largest market in the country. We are in pretty good shape; there is a lot of growth in the state. Some say too much! The state is … trying to get money for new schools and to repair the old ones. From time to time we hear that things are slowing, but overall, and compared to other parts of the country, things are pretty good.”Munnell says that FRSA surveyed its members on business value and what they expect for the next fiscal year. “We got 180 replies,” he says, “and most expected a 5- percent increase in sales.”
Insurance and building codes are the biggest challenges facing FRSA members. And while he isn’t hearing much about material shortage problems, “There is still a shortage of skilled and semi-skilled labor,” says Munnell. “But it’s not as bad as in the past.” He doesn’t see any real solution to the problem that just won’t go away.
As for FRSA’s agenda for 2003, Munnell says that the association’s leadership has identified insurance as a huge area of concern. “We formed a new committee to see what kind of assistance we can provide in all areas — auto, liability, health.”
Munnell says that there have been huge increases in premiums already, and believes that 2003 will be worse. “Availability is an issue as well,” he says. “We are looking at many avenues — maybe starting our own insurance company. It’s a real challenge for Florida, and the nation.”
Workers comp is a critical issue in Florida. “We are very involved in efforts to reform the Florida workers comp system,” says Munnell. “We have some of the highest rates in the country.” In 2003, Florida’s legislature will be trying to solve the problem, and the FRSA will be very involved. The association is part of a coalition that has come up with some proposed legislation designed to reform the system.
Another item on the agenda for FRSA is the Florida Building Code, which went into effect in March 2002. “We are currently in a code-change cycle where we can offer amendments. Our code committee will be actively involved. We are able to comment through Feb. 1, 2003,” says Munnell. “We have ‘oodles’ of changes. There are many unclear things. We’ve been making a list. Then, the Florida Building commission will address the proposed changes.”
The association is also offering educational programs through its Foundation. “We’ve had some good growth in our membership and want it to continue,” says Munnell. “We’ve got 730 members — 40 new members since July, most of them contractors. We see this trend continuing.”
Finally, FRSA has a new Internet committee and plans to expand its Web site. “We’ve added a new members-only section,” says Munnell. “We want to add many new features to make the site more valuable to our members and to help consumers learn about roofing systems.” In addition, “We have identified that e-mail and the Internet will be increasingly valuable tools. Almost half of our members have Internet access, so we are looking for better ways to communicate with our members – maybe e-mail more and fax less.” Currently, the Web site has all members listed, so consumers can find a contractor near them. FRSA’s site also has advice on what to look for in a contractor and information on different roofing systems.
The National Outlook
To get a slightly broader outlook on the construction industry from the contractor’s perspective, we spoke to Edward L. “Eddie” Rispone, 2003 chairman of the Associated Builders and Contractors. Rispone is a founder and the chairman of the management board of Industrial Specialty Contractors, Baton Rouge, La. ISC is an industrial instrumentation and electrical contracting firm.“ABC has incredible diversity in its membership — from specialty contractors to general contractors, from large firms to small start-ups, from commercial to industrial firms in a wide variety of trades,” says Rispone. So first and foremost on its agenda, “ABC will continue to speak with a clear voice in the halls of government to advocate free enterprise and open competition in the U.S. construction industry.”
Another top priority for ABC is safety and training. ABC provides safety training and craft training in a variety of trades at its chapters across the country. “We must ensure that our industry is continuously improving its safety record,” says Rispone. “This is one reason that ABC has established a partnership with the Occupational Safety and Health Administration on construction job-site safety.”
ABC also emphasizes member service, especially with regard to the smaller firms. “We must do everything we can to help them build sound business practices that will ensure a long, successful life for their firms, and continued employment opportunities for their associates,” says Rispone.
Rispone sees one of the biggest challenges of 2003 as ensuring open competition in the construction industry. “President Bush, in February 2001, signed an executive order banning mandatory project labor agreements (PLAs) on government-funded and government-assisted construction projects,” Rispone explains. “ABC will continue to advocate for this executive order as it makes its way through the courts. We will support efforts to pass legislation banning PLAs at the federal and state levels, and will actively oppose PLAs at municipal and local levels.”
As far as business in the coming year, Rispone expects construction to be flat, or even a bit slower than in 2002. “Much of the commercial sector will be slower,” he says. “The sector that is likely to continue growing at a steady pace is the residential construction market, especially single-family homes. In addition, we expect some growth in government construction such as educational institutions and airports.” In short, “2003 will be a year when the hot pace of the past decade cools, but from a historical perspective, the U.S. construction economy is still very strong.”
The Manufacturers: Metal Leads the Charge
On the manufacturing side, we began by speaking to Tom Black, executive director of the Metal Roofing Alliance, to get a feel for the fast-growing residential metal roofing industry. The MRA is a coalition of metal roofing manufacturers, paint suppliers, coaters, dealers, metal industry associations and contractors.The main item on the MRA’s agenda in 2003 is contractor membership. For $400 a year, a member contractor is listed on the MRA’s Web site and included in the “find-a-contractor” section for consumers.
“We’re also spending $600,000 on Internet advertising,” explains Black. The purpose of this advertising is to get consumers who are looking for roofing information to come to the MRA’s Web site and the find-a-contractor feature. “Over 700,000 consumers have visited the site,” says Black. “We get about 100,000 a month. So far, over 12,000 have filled out the find-a-contractor form. They leave their name and e-mail, and more information like a phone number if they want to. Then a list of contractors in their area pops up.” In addition, customer names are put in a contractor’s mailbox so that the contractor can download the info on a daily basis.
“There are links to our site on other sites like Better Homes & Gardens,” continues Black. “We’re trying to advertise through banner ads and listings in areas where people are looking for home improvement information; and on search engines. We are trying to drive traffic to our Web site.”
The MRA is also going to do some non-Internet advertising (it has done some advertising on cable in the past) but hasn’t decided what form it will take yet. According to Black, “The Internet has been surprisingly successful. We’ve found that more and more consumers have access to the Internet. People research large purchases and are going to the Internet first.”
The biggest challenge for the MRA’s manufacturer members is finding good, qualified installers. “And the economy needs to pick up,” says Black. “People are investing in their houses for value and that is a positive trend. Most contractors are doing pretty well but this last quarter (of 2002) has been slow. Backlogs have shrunk a little bit.”
And yet Black remains optimistic for his industry, “Our member manufacturers see metal continuing to grow.” According to Black, growth in the residential metal market from 1998 to 1999 was 29.4 percent; from 1999 to 2000 it was 25 percent; and from 2000 to 2001 it was 33.1 percent. “We are still expecting to see double-digit growth for 2002,” he says. (Exact numbers were due in early January, after press time.)
Aiding this growth, according to Black, is the fact that consumers understand the benefits of metal: longevity and increased value for their homes. Environmental concerns are also a plus. “The metal being put on is a little over 50-percent recycled material for steel (a little less for aluminum),” Black explains. “And often people don’t have to tear-off the old roof, so metal keeps asphalt shingles from going into landfills.”
Asphalt Roofing Fights Back
And what of the people representing those asphalt shingles? We next spoke to Russ Snyder, executive vice president of the Asphalt Roofing Manufacturers Association. ARMA represents the majority of the asphalt roofing industry’s manufacturing companies and their raw material suppliers. Member companies produce a variety of bituminous-based residential and commercial roofing systems, including asphalt shingles, roll roofing, built-up roofing, and modified bitumen-roofing systems.First on ARMA’s agenda, according to Snyder, is an industry promotional program designed to gain market share. The theme is “Have you seen what’s up with asphalt roofing?” It will be relayed in a series of print ads targeted to professionals who recommend both steep-slope and low-slope asphalt roofing products for residential and commercial properties.
“The program has two parts,” says Snyder. “The first is to promote laminated asphalt shingles to residential builders and architects.” According to Snyder, many asphalt roofing alternatives on the market today create a very high-end look, yet have advantages because of their durability, ease of maintenance and long lifecycle.
On the commercial side, “We are promoting low-fuming asphalts and cold-process applications,” says Snyder. “We want to educate people on the changes in technology that have occurred.”
A big challenge for the asphalt industry is the movement to green building. Snyder says ARMA members are responding by introducing reflective roofing products compliant with the new code changes. Another challenge, according to Snyder, is to better understand requirements in codes for the performance of roofing materials.
As for the economy, “Business is looking good for 2003,” says Snyder. “It has been a flat year for the commercial side; residential is doing good. We are looking for increases in MB and BUR, especially in the educational and institutional areas. On the shingle side, the housing market demand continues strong. It’s at an all-time high and builders continue to look to asphalt shingles.”
Single-Ply Hangs Tough
Paul Yurcich is the president elect of SPRI, which represents sheet membrane and component suppliers to the commercial roofing industry. Yurcich says that SPRI’s main goal for 2003 is to continue with its mission, “To provide the best forum for member companies to focus their collective knowledge and efforts on critical issues that enable the membership to operate more effectively in the marketplace.”To this end, the association will be promoting the SPRI Wind Design Seminar, which has been revised to include ASCE 7-2002 and the new Factory Mutual requirements in FM 1-28 and FM 1-29 that incorporate ASCE 7-98. SPRI also plans to complete the first revision of the CD-ROM version of the Professional’s Guide to Specifications, ANSI canvassing for the Retro Fit Drain Standard RD-1, and recanvassing of the Edge Design Standard. To round out its agenda for 2003, SPRI plans to develop a test method/protocol for laboratory-accelerated weathering for reflectivity of sheet membranes.
Yurcich sees several challenges facing SPRI members in 2003. “With diminishing resources and increased competition, many … will be challenged with continuing to maintain the high level of customer service that the industry has come to expect,” he says. Another concern is “the ability … to maintain reasonable returns during times of raw material price escalation.” Finally, SPRI members must “recruit the right person(s) for targeted growth areas/markets.”
When asked about the market in the coming year, Yurcich responded, “Business activity in 2003 is difficult to predict. There are many uncertainties in the world political markets (e.g., terrorism and Iraq) that can have an undetermined effect on the economy as a whole and the petroleum feedstock that are used, to varying degrees, in sheet membrane products.” He does see some indications that the economy is improving, including low inflation, low interest rates, improved commercial credit restrictions, continued positive consumer spending and positive growth in the gross domestic product.
“The construction industry as a whole has experienced approximately 10 years of expansion up to and maybe including 2002,” Yurcich continues. “There are sectors within the construction industry (single-family housing, public works and institutional buildings) that are exhibiting positive growth in 2002 and are forecasting positive growth for 2003. However the commercial sector continues to exhibit negative growth through 2002. Within SPRI, (our members) will experience a slight decline in year-over-year shipments. However, TPOs continue with double-digit year-over-year growth.” In short, “In 2003 we anticipate small overall growth in the shipments of sheet membranes.”
Roof Coatings: Asbestos-Free in 2003?
We also spoke to Raymond “Tripp” Hyer, vice president, Sales & Marketing, for Gardner-Gibson Inc., Tampa, Fla., as well as president of the Roof Coatings Manufacturers Association. Hyer tells us that in 2003, the biggest issue in the roof coatings industry will be asbestos liability. “Asphalt-based coatings have traditionally been made with asbestos fibers, but advanced formulations and mounting liability claims will most likely be the catalyst for the inevitable switch to all asbestos-free products,” he explains.Because there has been growing liability on re-selling them, some major roofing distributors have discontinued selling asbestos-containing products. “For decades, insurance companies have excluded liability coverage on asbestos products and manufacturers have been forced to become self-insured,” Hyer says. “Growing awareness that there is no insurance coverage has caused many resellers to cease selling asbestos-containing products.”
Hyer says that out of all products made by the industry, it is estimated that the majority of asphalt coatings are already asbestos-free. The manufacturing industry has continuously been advancing asbestos-free formulations to replace asbestos-based products. “This technology is rapidly being accepted by the marketplace and offers dependable quality for the professional,” says Hyer. “In most cases there is no noticeable difference in the product or performance.”
But that begs the question: Why hasn’t the industry switched to all asbestos-free technology? According to Hyer, there are several reasons including higher raw material costs, significant manufacturing issues and resistance to change. “In the end, it is ultimately up to the contractor,” he says. “He may choose to accept the liability risk, or do as many other reputable contractors have already done — insist on asbestos-free products and thus, protect himself and his customers from costly asbestos liability.”
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