2015 State of the Industry Survey
2014 Began Slowly, But Picked up and Looks to Continue Through 2015
Roofing Contractor teamed with BNP Media Research and GAF to conduct its annual State of the Industry survey of the roofing market. Now in its seventh year, the goal of the survey is to evaluate the industry by identifying current issues and future trends in roofing. Additionally, the study examines the key problems contractors currently face.
Participants in this Web survey were randomly selected from Roofing Contractor’s domestic readership and from members of Allied Building Products Group and ABC Supply Co. Inc. Both residential and commercial markets were included, and the majority of respondents in either market listed their job title as corporate or executive management (53 percent for residential and 47 percent for commercial).
Breaking down the sources of revenue, replacement roofing brought in the most dollars for both residential and commercial segments. Repair work was second for bringing in money for the residential sector, but new construction edged out repair work for the second spot in the commercial sector. However, the differences percentage-wise were slim.
Sampling was divided down residential and commercial lines. The residential study results reflect the answers from respondents with at least 75 percent of revenue coming from residential sources, while those respondents with at least 75 percent of revenue coming from commercial sources provided responses for the commercial group results. This distinction must be noted because the majority of contractors in the survey did both types of work, so contractors in the residential group could do a substantial amount of work in the commercial sector and vice versa.
Whether it’s residential or commercial, contractors are more optimistic about heading into 2015 than they were heading into 2014. Approximately 9 percent of residential contractors expect a decrease in sales heading into 2015; this is down from last year’s 14 percent expecting a decrease. Conversely, more contractors, 72 percent, expect an increase as we enter 2015 (Figure 1).
Confidence in the commercial side is up more than in residential. Seventy-nine percent expect an increase in 2015 (Figure 2). Perhaps more telling is that only 4 percent of commercial contractors expect a decrease in sales volume compared to last year. The confidence heading into 2015 is greater than it was heading into 2014.
Both sectors are feeling positive about the outlook for the next three years. Eighty-three percent of residential contractors are expecting total sales volume to increase as compared to a whopping 93 percent of respondents expecting sales volume to increase in the commercial sector. Last year, only 76 percent of respondents expected commercial to increase in the next three years. What a difference time makes.
The survey then asked respondents about what products their companies were involved with and what they expected to happen with the sale of products based on type.
Residential (Figure 3): Steep-slope asphalt leads the way with three quarters of residential contractors being involved with it, while more than half are involved with low-slope asphalt, single-ply roofing and/or metal roofing. To that end, nearly half of all residential contractors’ sales stems from steep-slope asphalt.
More than 60 percent of contractors offering steep-slope asphalt saw an increase in their sales in 2014. Conversely, about one third of contractors selling wood shakes and slate saw a decrease in the sale of those products. For 2015, more than half of contractors offering steep-slope, metal roofing and/or single-ply products expect an increase, while about 25 percent offering wood shakes expect sales of that product type to decrease.
Commercial (Figure 4): On the commercial side, 88 percent of contractors’ companies are involved with single-ply roofing, while two thirds or more are involved with low-slope asphalt, coatings and/or metal roofing. Single-ply roofing dominates sales in the commercial market, accounting for 49 percent of sales, while low-slope asphalt and metal roofing combine to account for 24 percent.
The industry’s uptick was reflected in the sale of products through 2014. The vast majority of commercial contractors offering single-ply roofing saw an increase in sales last year. With 80 percent reporting an increase, it easily outpaces those who saw no change (15 percent) or those who saw a decline (6 percent). Sales of slate and concrete tile were the areas that saw the biggest decline.
Respondents expect this trend to continue throughout the coming year, with 77 percent expecting single-ply roofing sales to increase in 2015, accompanied by upticks in sales for coatings and metal roofing. Continued declines or no changes in the sales of many other product offerings are expected.
Labor and Associated Costs
While the industry has many concerns, no other topic dominates quite like finding qualified labor. Respondents to the survey ranked finding qualified workers as the number one concern among both residential and commercial contractors.
Residential: The survey showed that the majority of residential contractors experienced an increase in their labor costs during 2014. On average, the increase was 12 percent. Employees were conducting more of the field labor than subcontractors (57 percent versus 43 percent). Compensation type for salespeople was fairly evenly distributed among salary, commission and salary plus commission, but commission does edge out both salary and salary plus commission in terms of which was used more often.
When it comes to healthcare, two-thirds of the respondents in the residential sector said that they’re are not provided with a company- sponsored health care/insurance plan. Among the one-third of those who said they were covered, their companies mostly covered their health insurance premiums.
Commercial: While more commercial contractors reported seeing an increase in labor costs than their residential counterparts, the increase was lower. According to the study results, the increase in commercial was 10 percent versus a 12 percent increase in residential.
There were by far more employees conducting field labor in the commercial sector than in the residential sector, with 80 percent of work being done by employees rather than subcontractors. Compensation type for salespeople was fairly evenly split between salary and salary plus commission. Not many salespeople in the commercial sector worked solely on commission.
Three-quarters of commercial contractors are provided with a company-sponsored health care/insurance plan. Of those who receive a company-sponsored plan, almost all of them have their health insurance premiums covered by their company.
When it came to employee safety, nearly all residential contractors made use of harnesses, but 72 percent reported that they hadn’t had an inspection from OSHA in 2014. Commercial contractors, on the other hand, had twice as many OSHA inspections last year.
As the study shows, the industry as a whole is on an upswing. That upswing is likely to continue barring some unforeseen event. Refer to Roofing Contractor’s State of the Industry Report on page 50 for more anecdotal thoughts on the past year in roofing as well as thoughts on what’s to come.