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March 2014   

Nonresidential Construction Index Reaches Record High


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FMI released the 2014 First Quarter Nonresidential Construction Index report Feb. 17, 2014, and it shows a 7.5 point increase since the 2013 fourth quarter report, as well as a 6.8 point increase from Q1 2013. This is the highest NRCI score to date.

The increase in score comes from an optimistic view of a rising economy, as nearly half of the participants expect construction to grow up to 5 percent in 2014. With the increase in growth, executives are eagerly searching for talented individuals to assist and manage industry projects. Panelists with a more moderate view of the growth potential cite some additional challenges in 2014: hiring talented people, finding profitable work, and uncertainty in the direction of the government, especially regarding decisions directly affecting the economy.

FMI Predicts Oil and Gas Labor Challenges
FMI announced Feb. 10, 2014, the release of its latest whitepaper, "Skills Shortages in a Booming Market — The Big Oil and Gas Challenge.” It discusses market trends within the oil and gas industry including a geographic pull on skilled labor, and actions being taken to address the inevitable labor shortage.

In 2008, 3.8 percent of the total construction workforce was engaged in direct oil and gas construction. By 2012, 6.4 percent of that workforce was engaged. According to FMI’s estimates, by 2017 nearly 10 percent of the total U.S. construction workforce will have moved over to this burgeoning segment of the industry.

"The oil and gas construction market remains vibrant, and many firms are seeking new ways to expand and grow their market presence,” says Scott Duncan, vice president with FMI Capital Advisors, Inc. "As competition for limited resources intensifies, labor and talent management are quickly becoming key differentiators in company performance and overall company value. Companies seeking to build a presence in this market need to ensure they have the systems and processes in place to maximize productivity and retain top talent.” Poor Weather Puts a Damper on Builder Confidence in February Unusually severe weather conditions across much of the nation along with continued concerns over the cost and availability of labor and lots resulted in builder confidence in the market for newly-built, single-family homes to post a 10-point drop to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index, released Feb. 18.

All three of the major HMI components declined in February. The component gauging current sales conditions fell 11 points to 51, the component gauging sales expectations in the next six months declined six points to 54 and the component measuring buyer traffic dropped nine points to 31.

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good,” "fair” or "poor.” The survey also asks builders to rate traffic of prospective buyers as "high to very high,” "average” or "low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Looking at three-month moving averages for regional HMI scores, the West was unchanged at 63 in February while the Midwest registered a one-point decline to 57, the South registered a three-point decline to 53 and the Northeast posted a four-point decline to 38.

HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

FMI’s Q4-2013 Construction Outlook Report Predicts 2013 Will End with Growth
FMI’s Q4-2013 Construction Outlook, released Jan. 31, 2014, predicts 2013 will end with 7 percent growth for the construction industry as a whole. Final statistics for construction-put-in-place will be available April 2014.

Select market predictions include the following:

Manufacturing. Growth in manufacturing construction will end around 4 percent for 2013. This upward trend will continue, reaching 6 percent or more starting in 2015.

Lodging. After several years of sharp decline during the recession, lodging construction continues its solid comeback in 2013, growing 18 percent. This sector is expected to grow another 10 percent in 2014. Improvement of existing properties will continue to be a focus for the industry.

Amusement and Recreation. The recent announcement of a $672 million stadium for the Atlanta Braves gives amusement and recreation construction a 2014 boost. Construction put in place for 2014 should reach $15.7 billion, with additional growth through 2017.

Residential. Forecasts show residential construction ending 2013 with 18 percent growth. Multifamily construction has been particularly strong in the past two years with growth of 48 percent in 2012 and 38 percent in 2013. With rents still high and household formations low, multifamily construction is expected to continue growing.

RCD’s December Expansion Index Indicates Widespread Economic Improvement
Reed Construction Data announced Jan. 14, 2014, that its December Expansion Index stood at 1.48, indicating overall construction in the United States is expected to grow over the next 12 months.

The Expansion Index is a monthly measure of expectations for the construction marketplace over the upcoming 12-18 months, based on the value of projects in the planning pipeline. A reading greater than 1 indicates construction volume is expected to expand.

In addition to an overall measure of U.S. construction, Reed uses the Expansion Index to track expected construction volume for every state and more than 360 Metropolitan Statistical Areas.

The Expansion Index is a ratio of the value of projects in the planning phase over the value of the projects estimated to be still under construction in a defined geography and/or building segment. The relationship says if more in the pipeline than underway, the volume will increase in the future if that ratio is greater than 1. The data covered include non-residential and multifamily residential construction.

To view the Expansion Index, visit www.reedconstructiondata.com/market-intelligence/expansion-index.

2013 Ended on a Strong Note for Suppliers
The monthly Economic Indicator Report released Jan. 23, 2014, by the Industrial Supply Association showed that 2013 ended on a positive note for ISA members, but growth was at a slightly slower pace.

The ISA Manufacturer Index declined from 62.0 percent in November to 58.9 percent in December, while the Distributor Index decreased from 58.5 percent in November to 55.2 percent in December. For each index, a reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

Better Reporting of Access Platform Accidents Boosts Statistics
The powered access industry is reporting more accidents through IPAF’s voluntary program. This reveals that there were 53 fatalities worldwide in 2013 involving aerial work platforms, also known as mobile elevating work platforms, according to preliminary results from IPAF’s accident database.

The main causes of these fatalities were overturn (16), fall from height (13), entrapment (10), electrocution (7), impact with AWP (4) and falling object (2). In one case, the cause of the fatality was not known.

Almost half of the number of reported fatalities (26 or 49 percent) involved mobile booms (3b on the graph). Fourteen fatalities (26 percent) involved mobile verticals (3a on the graph) and 11 (21 percent) involved static booms (1b on the graph). In two cases (4 percent), the type of machine involved was not known.

Thirty (57 percent) of the fatalities occurred in the United States, home of 54 percent of the world’s rental fleet. Three fatalities each were reported in Germany, Spain and the United Kingdom, two fatalities each in Belgium, Canada, France and the Netherlands, and one each in Armenia, Australia, Ireland, Malaysia, Norway and in the Middle East.

IPAF’s accident reporting project was launched in January 2012. In the first year of the project, 32 fatalities worldwide involving AWPs/MEWPs were reported.

IPAF technical officer Chris Wraith stressed that the accident project is still in an early stage and cautioned against direct comparisons in its second year. "It will be at least 2016–2017 before any realistic year-on-year comparison on the frequency of accidents can be of value,” he said. "The comparative figures presented are for information only and do not in any way suggest an increase in the number of AWP-related fatalities from 2012 to 2013. They are more an indication that the awareness and success of the project is growing. Powered access is probably the safest way of performing temporary work at height. The industry is becoming more aware and reporting accidents, rather than having more accidents.”

Manufacturers, rental companies, contractors and users are encouraged to report any known fatal and serious accidents involving aerial work platforms and mast climbing work platforms worldwide at www.ipaf.org/accident.

Leading Markets Index Edges Higher in February as More Markets Recover
Markets in 58 out of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index, released Feb. 16, 2014. This represents a net gain of two from the previous month. The index’s nationwide score ticked up a percentage point to .87. This means that based on current permits, prices anfad employment data, the nationwide average is running at 87 percent of normal economic and housing activity.

Baton Rouge, La., tops the list of major metros on the LMI, with a score of 1.41—or 41 percent better than its last normal market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, Texas, as well as Harrisburg, Pa. and Pittsburgh, all of whose LMI scores indicate that their market activity now exceeds previous norms.

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D., respectively.

For historical information and charts, go to nahb.org/lmi.

Double Digit Growth in Remodeling Spending Expected Through Mid-Year
The home remodeling market should see strong growth in 2014, according to Leading Indicator of Remodeling Activity released Jan. 16 by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in Cambridge, Mass. The double-digit gains in annual home improvement spending projected for the first half of the year should moderate some to just under 10 percent by the third quarter.

The Leading Indicator of Remodeling Activity is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home improvement industry.

The next LIRA release date is April 17, 2014.

Strong Single-Family Growth Will Fuel Housing in 2014

Led by a resurgence in single-family production, housing will continue its climb toward higher ground in 2014, but builders are still confronting several challenges that could hinder the pace of the ongoing recovery, according to economists speaking at the National Association of Home Builders International Builders’ Show Feb. 4.

"My single-family forecast for 2014 is pretty aggressive—822,000 starts, which is likely 200,000 more than 2013,” said NAHB Chief Economist David Crowe. "There are five key points to the turnaround: Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing, and builders see it.”

Consumer confidence has returned to pre-recession levels, and household balance sheets are on the mend. Year-over-year household formations are on the rise and are now averaging 620,000 compared to just 500,000 during the housing downturn. At the height of the housing boom, the United States was producing 1.4 million additional households each year.

Meanwhile, new-home sales are averaging just 8.7 percent of total home sales, barely half the historical average of 16.1 percent. In the midst of the Great Recession, the cumulative lost number of existing home sales between 2007 and 2011 totaled more than 4 million, Crowe said. Moreover, the percentage of mortgages seriously delinquent has fallen, and the decline has been larger in markets that had the highest rates.

In a sign that builders are well aware of the trend now under way, the NAHB/Wells Fargo Housing Market Index, which measures builder sentiment in the single-family housing market, has been above the 50 mark for the past eight months. Any reading above 50 means that more builders view sales conditions as good rather than poor.

However, Crowe cautioned that builders still face several headwinds, including rising building material prices, persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals and limited availability in labor and developed lots. Moreover, gridlock and uncertainty in Washington threaten to harm consumer confidence and future housing demand.

NAHB is forecasting 1.15 million total housing starts in 2014, up 24.5 percent from last year’s total of 928,000 units.

Single-family production is projected to rise 32 percent in 2014 to 822,000 units and surge an additional 41 percent to 1.16 million units next year.

NAHB is anticipating 333,000 multifamily starts in 2014, up 9 percent from 306,000 last year. Single-family home sales are projected to hit 584,000 this year, a 35.9 percent increase above last year’s 430,000 sales. Meanwhile, residential remodeling is expected to register a modest gain this year over 2013.

The slow and steady housing recovery will bring nationwide housing starts to 71 percent of normal by the fourth quarter of this year and 93 percent of normal by the end of 2015, Crowe said. Viewing the recovery on a state level, by the end of 2015, the top 20 percent of states will be back to normal production levels, compared to the bottom 20 percent, which will still be below 84 percent.

New-Home Sales Down 7 Percent in December; Up 16.4 Percent for the Year
Sales of newly built, single-family homes fell 7 percent to a seasonally adjusted annual rate of 414,000 units in December, according to figures released Jan. 27, 2014, from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Despite the monthly drop, home sales in 2013 were up 16.4 percent over the previous year.

Regionally, new-home sales activity fell 36.4 percent in the weather-battered Northeast, 7.3 percent in the South and 8.8 percent in the West. The Midwest posted a gain of 17.6 percent.

The inventory of new homes fell to 171,000 units in February, which is a five-month supply at the current sales pace. Although this is an increase over the previous month, it is due to the slower sales pace in December.

Coalition Urges OSHA to Withdraw Silica Rule
The Construction Industry Safety Coalition, which is a group made up of 25 trade associations, requested Feb. 10 that the Occupational Safety and Health Administration withdraw its proposed rule to drastically lower the permissible exposure limit of crystalline silica for the construction industry.

Coalition members agree that OSHA’s proposed crystalline silica rule is potentially the most far-reaching regulatory initiative proposed by OSHA for the construction industry. They believe OSHA has not met its burden of demonstrating that the proposal is technologically and economically feasible, and it is simply unworkable for the construction industry. Costs for contractors would also rise as the coalition believes OSHA has underestimated the cost of the proposed rule by a factor of at least 4. The group now estimates a cost to the industry of $2.2 billion per year, but this figure is expected to rise.

ASTM Gypsum Committee Invites Participation in Development of Standard for Metal Suspension Ceiling Systems

All interested parties are invited to join in the development of a proposed new ASTM International standard that would be used during the design and installation of suspended gypsum ceiling systems for commercial construction. ASTM WK44242, Practice for Installation of Metal Suspension Ceiling Systems for Gypsum Board Applications, is being developed by Subcommittee C11.03 on Specifications for the Application of Gypsum and Other Products in Assemblies, part of ASTM International Committee C11 on Gypsum and Related Building Materials and Systems.

The products described in ASTM WK44242 are designed and installed where suspended drywall systems are used in most commercial construction, including hospitals, schools, churches, retail and other commercial spaces.

ASTM Committee C11’s Next Meeting is May 5–8 in Toronto, Ontario. Contact Kelly for more details at (610) 722.1218 or jjkelly@armstrong.com.

New Standard Construction Management Agreement Clarifies Costs and Fees in CM Agency Contracts
The ConsensusDocs Coalition has published a new Construction Management Agency standard agreement. The "ConsensusDocs 830 Agreement Between Owner and Construction Manager (CM Provides General Conditions)” and related exhibits replace "ConsensusDocs 801 Construction Management Agreement.”

The new agreement was revised based upon industry feedback and the Drafting Council’s evaluation that providing greater clarity in defining costs, fees and profit would avoid potential claims over these issues on projects utilizing CM Agency. In surveying current practices, the council found that the areas of defining fees, profit and overhead on general conditions items vary greatly. Consequently, the agreement structure was refined and an optional general conditions exhibit was provided. The Council will be publishing an alternative version of this agreement in which the CM does not provide general conditions.

For more information, visit www.consensusdocs.org.

People in the News
Kevin Kelly, a Delaware builder and developer with more than 30 years of experience in the housing industry, was elected as the 2014 chairman of the National Association of Home Builders. Kelly is president of Leon N. Weiner & Associates, Inc., and became actively involved with the Home Builders Association of Delaware when he joined the company in 1979. His building experience includes land development, multifamily and single-family home building, with an emphasis on affordable housing.

National Gypsum, Charlotte, N.C., has promoted John Mixson to the position of vice president of sales and marketing. He succeeds Craig Weisbruch, who retires as senior vice president of sales and marketing after 39 years of service to National Gypsum.

Michael Gardner, executive director and CEO of the Gypsum Association, has been hired by the International Code Council as executive vice president of compliance programs. Gardner will be leading ICC efforts to maximize the ICC’s performance and achieve its long-term financial goals. Working with the CEO and presidents of ICC’s Evaluation and Accreditation services, Gardner will work to coordinate strategic efforts, build industry relationships, expand value for clients and manufacturers and identify new opportunities to help the ICC leverage knowledge and technical expertise to help clients navigate the complexities around the supply chain, from compliance and regulatory issues to market acceptance. His new position is effective April 7, 2014.



The Gypsum Association, Hyattsville, Md., has hired Susan Hines as assistant director, technical and promotion services. In this position, she will support the organization’s contributions to model building codes and technical standards while advancing awareness of their gypsum manufacturer members’ products and services.

Companies in the News

Lafarge North America announces that its Lafarge U.S. headquarters in Chicago has achieved gold certification under LEED® for Commercial Interiors from the U.S. Green Building Council. LEED® gold certification identifies Lafarge’s Chicago office as a showcase for sustainable design and recognizes the company’s leadership in transforming the building industry. The Lafarge U.S. headquarters office opened in Chicago in September 2012.

Panattoni Construction, Sacramento, Calif., announced Feb. 6, 2014, that it has changed its name to Alston Construction Company. For more than 25 years, Panattoni Construction, now Alston, has offered its clients a variety of general contracting, construction management and design-build services.

Products in the News
Armstrong Ceiling Systems has received a 2013 Product Innovation Award from Architectural Products magazine. The award, one of only seven presented to new products in the Surfaces category, recognizes the innovative design capabilities of Create! custom ceiling panels, which allow designers to create their own one-of-a-kind ceiling art.



Cemco announces an agreement with Brady Innovations to become the exclusive manufacturer and supplier of ProX Header. All ProX Header products will be manufactured in Cemco’s manufacturing facilities.

Owens Corning announces a UL-certified Environmental Product Declaration for its Foamular Extruded Polystyrene (XPS) Insulation. An industry-first in North America for XPS rigid foam insulation, the EPD describes the environmental impact of the products based upon an established set of product category rules and independently verified life cycle assessment data from cradle-to-grave.

E-News
Parex USA, Inc. has unveiled its first mobile phone app. The free app, currently available for iPhone, iPad and Android devices, can be downloaded from the iTunes App Store and Google Play Store. The app provides easy access to resources for all Parex products and systems.

Shurtape Technologies, LLC has launched its website at shurtape.com, offering craftsmen an easy-to-navigate way to find the right tape for their demanding applications.

Sto Corp. has a new blog at www.stocorp.com/blog/. Sign up to receive updates on the latest in moisture protection, building resilience, green building, saving energy and so many more industry topics.



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