For the third year in a row, Roofing Contractor and BNP Media Market Research teamed up to conduct a research study to get the contractors’ perspective on the roofing industry. The State of the Industry survey, sponsored, sponsored by GAF Materials Corporation, was designed to find out how contractors fared in 2010 and how they expect their businesses to perform this year and beyond. The survey was conducted from Oct. 15 through Nov. 15, 2010. BNP Market Research contacted more than 10,000 roofing contractors for the Web-based study, and 263 respondents completed surveys for a response rate of 3 percent.
Specific research objectives of the State of the Industry study included:
• Measuring sales volumes in 2010, 2011 and over the next three years.
• Determining trends among different product categories.
• Indentifying key problems contractors currently face.
We also wanted to find out the percentage of contractors using the Internet, websites, smart phones and various new social platforms for business purposes.
An overview of the results shows that contractors are hopeful the economy has hit bottom and they are poised for a rebound. They are also becoming more high-tech, and mobile devices that did not exist when we conducted our Internet Usage Survey in 2005 are now commonplace in the roofing industry.
Survey DemographicsRespondents to the survey were typically high-ranking members of their companies. Some 68 percent listed their title as owner, president, CEO or vice president. Another 26 percent were managers or supervisors. Geographically, respondents broke out this way: 37 percent were from the South, 25 percent were from the Midwest, 21 percent were from the West and 16 percent were from the Northeast. A third of the companies surveyed employed more than 40 people, while 30 percent employed 10 or less. The average number of employees was 35.
The average gross annual sales figure for the companies in the survey was $4.9 million. Thirty-nine percent had annual sales of under $1 million in 2010 and 37 percent had between $1 million and 4.9 million in sales.
The companies perform a mix of residential and commercial work. As Figure 1 shows, last year 33 percent of revenue came from residential replacement and 30 percent from commercial replacement. Commercial new construction accounted for 13 percent of revenue, while residential new construction accounted for 6 percent. More than 80 percent of total revenue in 2010 came from replacement and repair.
Sales Volume in 2010Total annual sales volume data is shown in Figure 2, which shows annual sales volume for 2010 compared to 2009, expected sales volume for this year and predicted sales volume over the next three years. As you can see from the chart, 40 percent of respondents reported an increase in sales last year, while 41 percent saw sales decrease. About 18 percent had sales stay about the same. The sales numbers for 2010 compare favorably to those in 2009, in which 27 percent reported increases in sales volume while more than half - 53 percent - saw sales volume decrease.
Most contractors appear optimistic that their sales volume will increase in 2010 and over the next three years. Fifty-eight percent of survey respondents expect sales to increase this year, while 16 percent expect them to decrease. The long-term outlook is even better, with 79 percent of contractors surveyed expecting sales volumes to increase over the next three years.
Sales by Product TypeBreaking down 2010 sales by product category shows that more contractors experienced an increase as opposed to a decrease in sales for single-ply, solar, metal, cool roof coatings and steep-slope asphalt roofing products. As Figure 3 demonstrates, solar and single ply were the categories with the most contractors seeing gains.
These numbers are up sharply from last year’s survey, in which almost every segment saw a double-digit differential between those seeing a decrease and those seeing a increase in sales. In 2009, far more contractors saw a decrease than saw an increase in all product categories except single ply and metal roofing, and metal was the only category in positive territory.
In 2010, most categories were on the upswing. Single-ply, solar, metal, and cool roof coatings all saw a double-digit differential in favor of those seeing increases. Steep-slope asphalt was also in positive territory, while garden roofing was about even. Categories with more contractors seeing a decrease included slate, low-slope asphalt and concrete tile.
Respondents expect these trends to continue, with the vast majority expecting sales to increase or stay the same in all categories in 2010.
Online and on the JobContractors were also asked about the sources used to access information on the roofing industry and the tools they use to gather it. The vast majority of respondents - 97 percent - have access to the Internet at work, and more than three-quarters of them access the Internet more than once a day. Google is the most popular search engine, with 78 percent of contractors using it, and www.roofingcontractor.com was the most frequently visited website, with 82 percent of respondents citing it.
As Figure 4 shows, 80 percent of the contractors surveyed have a company website, leaving 20 percent who do not yet have an online presence. Those numbers are up substantially from Roofing Contractor’s 2005 internet usage survey, in which 58 percent of respondents had a company website.
Of those with a website, 61 percent have a professional Web hosting or design service design, build and manage it, while 30 percent handle it in-house. The average annual cost for a website, along with search engine optimization, was $1,634.
More than 70 percent of respondents have updated their site within the past year. Ninety-three percent of sites feature a “Contact Us” form for requesting service or estimates, and 63 percent have links to manufacturers’ websites. Video tools are found on about a fifth of contractors’ sites, with 20 percent including an introductory video or video demonstrations of services performed. Eight percent of sites have a home page that’s optimized for smart phone use.
Social Media and Mobile DevicesSo-called social media sites such as Facebook and MySpace have gotten a lot of attention in the mainstream media, but are contractors using them for business purposes? Social media usage is detailed in Figure 5, which shows 30 percent of respondents use Facebook for business reasons. A quarter of respondents are on LinkedIn, 13 percent visit YouTube for business purposes, 11 percent use blogs and 10 percent are on Twitter.
Contractors aren’t necessarily accessing the Internet from their offices. As Figure 6 shows, 90 percent of respondents use a home computer or laptop to access the Internet for business purposes. Forty-three percent of contractors use a mobile device such as a Smart Phone or BlackBerry to find work-related information, and another 11 percent use a Notebook or iPad. Of those using a mobile device, the BlackBerry was the most popular at 31 percent, with 15 percent using a Droid and 13 percent an iPhone.
The survey also reveals that texting isn’t just popular with high school students. Sixty-two percent of contractors in the survey use text messages to communicate with employees, 46 percent use them to communicate with customers, and 43 percent use them to communicate with vendors. However, more than a third do not text at all.
Problems Facing the IndustryThe survey also asked contractors to rate the biggest challenges facing the roofing industry in 2011. The results are shown in Figure 7. Contractors rated lowball pricing/bidding wars, insurance/health care costs and the weak economy as the most pressing problems facing contractors. Other top problems included government intervention/regulation, increased material costs, cash flow/financing, and finding qualified workers.
Contractors also offered advice to help others weather the storm. Most contractors stressed the fundamentals. “Be smart and know your costs,” advised one respondent.
“Be reliable and every customer’s house like it’s your own,” said another. “Provide the customer with quality installations, learn and know your costs, market yourself with honesty and integrity.”
“Call all past clients and offer other services along with roofing - service and maintenance programs, inspections, gutters, green and solar services,” one survey taker recommended.
Many contractors stressed the importance of understanding the financial basics. In the words of one respondent, “Learn to run it as a business and know and control your margins from one month to the next so you can make the adjustments.”
“Quit trying to match the fly-by-night companies on price and focus on the long-term benefits that a successful firm should be able to offer,” offered another.
One contractor summed it up this way: “Understand value and how to sell it to the customer. Keep focused on what you bring to the table.”