State of the Industry Report: Following Up on a Year of Surprises
February 4, 2009
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From supply and demand to storm activity, last year had some
surprises for the entire roofing industry, according to Keith Lowe, Vice
President of Sales for IKO.
From supply and demand to storm activity, last year had some surprises for the entire roofing industry, according to Keith Lowe, Vice President of Sales for IKO.
“2008 turned out to be somewhat of a surprise for the entire roofing industry,” Lowe said. “Storm activity was greater than anticipated. The end result was greater demand versus supply, and longer than expected lead times for product. But the basic business dynamics, including continued decline in the new construction market and increased costs due to raw materials, were present as projected at the start of the year.”
Lowe said to expect a continued decline in new construction activity in 2009. “The current economic environment will also impact the overall remodel opportunity, but residential roofing is impacted less by today’s economy than other building materials,” Lowe said. “At some point, if a homeowner needs a new roof, the roof will be replaced to protect the overall investment of the home. We also would project that some of the 2008 storm demand will carry over to 2009. But without significant new storm activity, we would project a down market in 2009.”
Lowe noted that based on the current manufacturing capacity, expected overall market demand and current costing, contractors should not expect significant decreases in pricing in 2009.
“In fact, we would anticipate some additional inflationary price increases in 2009,” he said. “The only events that might change the expectation as represented above would be greater than expected drop in demand resulting in an overcapacity in the market. Or, vice versa, pricing could go higher than expected if storm activity remains at the levels seen in 2008.”
In the meantime, Lowe expects laminates to continue to lead the way and continue to increase as a percentage of the asphalt roofing market. However, premium products, including limited lifetime laminates, have declined slightly.
“Based on current economic conditions we would expect that trend could continue,” Lowe said. “Homeowners may be even more cost conscious, and the 30-year laminate is still a good and better value versus other roofing alternatives.”
From supply and demand to storm activity, last year had some surprises for the entire roofing industry, according to Keith Lowe, Vice President of Sales for IKO.
“2008 turned out to be somewhat of a surprise for the entire roofing industry,” Lowe said. “Storm activity was greater than anticipated. The end result was greater demand versus supply, and longer than expected lead times for product. But the basic business dynamics, including continued decline in the new construction market and increased costs due to raw materials, were present as projected at the start of the year.”
Lowe said to expect a continued decline in new construction activity in 2009. “The current economic environment will also impact the overall remodel opportunity, but residential roofing is impacted less by today’s economy than other building materials,” Lowe said. “At some point, if a homeowner needs a new roof, the roof will be replaced to protect the overall investment of the home. We also would project that some of the 2008 storm demand will carry over to 2009. But without significant new storm activity, we would project a down market in 2009.”
Lowe noted that based on the current manufacturing capacity, expected overall market demand and current costing, contractors should not expect significant decreases in pricing in 2009.
“In fact, we would anticipate some additional inflationary price increases in 2009,” he said. “The only events that might change the expectation as represented above would be greater than expected drop in demand resulting in an overcapacity in the market. Or, vice versa, pricing could go higher than expected if storm activity remains at the levels seen in 2008.”
In the meantime, Lowe expects laminates to continue to lead the way and continue to increase as a percentage of the asphalt roofing market. However, premium products, including limited lifetime laminates, have declined slightly.
“Based on current economic conditions we would expect that trend could continue,” Lowe said. “Homeowners may be even more cost conscious, and the 30-year laminate is still a good and better value versus other roofing alternatives.”
