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July 2014   

Nonresidential Construction Index Continues to Grow, Digital Innovation Slows Growth in Q2


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FMI has released the 2014 Second Quarter Nonresidential Construction Index report, which shows slight improvement of a 0.9 point increase from Q1 and a 5.7 point increase from Q2 2013.

Although growth continues, it is beginning to slow indicating that the economy still holds a lingering recession mentality. The largest repercussion of this mindset is that it keeps companies from investing, banks from lending and consumers from spending. Thus, the pressure to keep prices low continues along with the need for greater profitability, leading to two key challenges: How to improve productivity, and where to find qualified personnel.

A 1.7 point decline in the productivity component of the NRCI is indicative of these challenges. To answer these issues, deliberate time must be spent on new ideas, innovation and R&D. However, 47 percent of industry panelists indicate that their company does not have an ongoing research and development effort. This suggests an opportunity exists to improve market position for those companies that can be the most innovative.

When panelists were asked where the industry most needs to focus future innovation, one industry leader responded, "On anything that makes construction more productive. More productivity means less labor is needed on-site during a time of real labor shortages.”

FMI also released its Q2-2014 Construction Outlook, and that forecast shows cautiously optimistic growth since the forecast has been lowered a percent since the Q1-2014 Outlook. Construction-put-in-place for 2014 is now predicted to increase 7 percent over 2013 levels.

One reason for the prediction is the growth of the digital world. With e-commerce becoming a larger market, especially in the retail and educational industries, brick and mortar will inevitably grow at a slower rate. This trend also is slowly affecting office, travel, recreation and even health care, as more time is spent online.

Select market predictions include the following:

Residential—Affordability, mobility and uncertainty in the job market has been evident as new-home growth is slowing and renting remains a safer choice for many. With new jobs and pay scales not rising as fast as costs, the forecast has been adjusted from 18 percent growth to 12 percent in 2014.

Commercial—With retail production slowing due to the above mentioned expansion of e-commerce shopping, the industry growth rate will slow to 6 percent in 2014.

Health Care—With political uncertainty continuing to hold off new health care facilities, the forecast is for CPIP to remain flat in 2014. However, the $40.8 billion in new construction is expected to continue at a sustainable pace.

Education—The largest sector of total nonresidential CPIP, education’s slowdown is a large contributor to slower growth in construction overall. 2014 will see only 1 percent growth in the market sector.

Builder Confidence Rises Four Points in June
Builder confidence in the market for newly built, single-family homes rose four points in to reach a level of 49 on the National Association of Home Builders/Wells Fargo Housing Market Index released June 16. It remains one point shy of the threshold for what is considered good building conditions.

"After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. "However, builders are facing strong headwinds, including the limited availability of labor.”

"Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” said NAHB Chief Economist David Crowe. "Builders are reacting accordingly, and are moving cautiously in adding inventory.”

Derived from a monthly survey that NAHB has been conducting for 30 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.

All three index components posted gains in June. Most notably, the component gauging current sales conditions increased six points to 54. The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Looking at the three-month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46.

Housing Affordability Edges Higher in First Quarter
Slightly lower median home prices along with steady mortgage rates contributed to higher housing affordability in the first quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, released May 13.

In all, 65.5 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $63,900. This is slightly higher from the 64.7 percent of homes sold that were affordable to median-income earners in the fourth quarter.

Meanwhile, the national median home price dipped from $205,000 in the fourth quarter to $195,000 in the first quarter while average mortgage interest rates were virtually unchanged, moving from 4.54 percent to 4.57 percent in the same period.

"Housing affordability remains strong and this is an encouraging sign as the spring home building season moves into high gear,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.

"As home prices and mortgage interest rates are unlikely to go down, the first quarter HOI is another indicator that this is an opportune time to buy,” said NAHB Chief Economist David Crowe.

Syracuse, N.Y., was the nation’s most affordable major housing market, as 93.7 percent of all new and existing homes sold in this year’s first quarter were affordable to families earning the area’s median income of $67,700. Meanwhile, Cumberland, Md.–W.Va. claimed the title of most affordable smaller market, with 96.3 percent of homes sold in the first quarter being affordable to those earning the median income of $54,100.

Other major U.S. housing markets at the top of the affordability chart in the first quarter included Buffalo–Niagara Falls, N.Y.; Youngstown–Warren–Boardman, Ohio–Pa.; Harrisburg–Carlisle, Pa.; and Dayton, Ohio; in descending order.

Smaller markets joining Cumberland at the top of the affordability chart included Springfield, Ohio; Kokomo, Ind.; Mansfield, Ohio; and Lima, Ohio.

For a sixth consecutive quarter, San Francisco–San Mateo–Redwood City, Calif., held the lowest spot among major markets on the affordability chart. There, just 13.3 percent of homes sold in the first quarter were affordable to families earning the area’s median income of $100,400.

Other major metros at the bottom of the affordability chart included Santa Ana–Anaheim–Irvine, Calif.; Los Angeles–Long Beach–Glendale, Calif.; New York–White Plains–Wayne, N.Y. –N.J.; and San Jose–Sunnyvale–Santa Clara, Calif.; in descending order.

All of the five least affordable small housing markets were in California. At the very bottom of the affordability chart was Santa Cruz–Watsonville, where 21.1 percent of all new and existing homes sold were affordable to families earning the area’s median income of $77,900. Other small markets at the lowest end of the affordability scale included Napa, Salinas, San Luis Obispo–Paso Robles, and Santa Rosa–Petaluma, respectively.

Please visit nahb.org/hoi for tables, historic data and details.

Housing Production Falls 6.5 Percent in May
Declines in both single- and multifamily starts pushed nationwide housing production down 6.5 percent in May to a seasonally adjusted annual rate of just over 1 million units, according to figures released June 17 by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. However, single-family permits, which can be an indicator of future building activity, rose 3.7 percent.

"The dip in single-family production shows builders continue to move carefully in adding inventory,” said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del. "They are also facing supply chain issues, such as access to lots and labor.”

Single-family housing starts were down 5.9 percent to a seasonally adjusted annual rate of 625,000 units in May. Meanwhile, multifamily production fell 7.6 percent to a seasonally adjusted annual rate of 376,000 units.

"The encouraging news is that single-family permits are up by almost 4 percent,” said NAHB Chief Economist David Crowe. "The modest increase is evidence that builders expect continued release of pent-up demand and a gradual expansion of the housing market. We are still forecasting a 12 percent increase in total housing starts for the year.”

Regionally in May, combined single- and multifamily housing production fell in the Northeast, the Midwest and the West, with respective losses of 25.2 percent, 16.5 percent and 16.3 percent. Meanwhile, the South posted a 7.3 percent gain.

Issuance of building permits registered a 6.4 percent decline to a seasonally adjusted annual rate of 991,000 units in May. This was due entirely to a decrease in the multifamily sector, where permits registered a 19.5 percent loss to 372,000 units. Single-family permits increased to 619,000 units.

The Northeast and Midwest registered overall permit gains of 3.5 percent and 3.8 percent, respectively, while the South and West posted respective losses of 7.3 percent and 15.2 percent.

Multifamily Surge Propels Housing Starts Over 1 Million Mark in April
Soaring production of multifamily apartments pushed nationwide housing starts above the million-unit mark in April, according to figures released May 16 by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Total housing production rose 13.2 percent for the month to a seasonally adjusted annual rate of 1.07 million units, due entirely to a 39.6 percent increase on the multifamily side, while single-family production held steady.

"The flat single-family data confirm our latest surveys, which show that single-family builders remain concerned that tight credit availability and uncertain economic conditions are keeping potential buyers on the sidelines,” said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del. "However, demand for apartment construction still remains high.”

Single-family housing starts rose 0.8 percent to a seasonally adjusted annual rate of 649,000 units in April. Meanwhile, multifamily production jumped 39.6 percent to a seasonally adjusted annual rate of 423,000 units—their fastest pace since January 2006.

"The growth in multifamily production is a very positive development as it shows an expected increase in household formations from young people renting apartments and taking the first step into the housing market,” said NAHB Chief Economist David Crowe. "These young households will form the demand for ownership in the future.”

All four regions posted gains in combined single- and multifamily housing production in April, with the Northeast posting a 28.7 percent gain, the Midwest registering a 42.1 percent increase, the West posting an 11.1 percent increase and the South noting a 1.5 percent gain.

Issuance of building permits, which can be an indicator of future building activity, rose 8 percent to a seasonally adjusted annual rate of 1.08 million units in April. This was due entirely to an increase in the multifamily sector, where permits registered a 21.8 percent gain to 453,000 units. Single-family permits registered a marginal 0.3 percent gain to 602,000 units.

OSHA Announces New Interactive Training Webtool on Identifying Workplace Hazards
The Occupational Safety and Health Administration has released a new interactive training tool to help small businesses effectively identify hazards in the workplace. Employers and workers can virtually explore how to identity common workplace hazards in the manufacturing and construction industries. Users of the new training tool will learn not only hazard identification skills but also learn about hazard abatement and control.

Through the hazard identification tool, users can play from the perspective of either a business owner or an employee as they learn to identify realistic, common hazards and address them with practical and effective solutions. The tool explains the key components of the hazard identification process, which include information collection, observation of the workplace, investigation of incidents, employee participation and prioritizing hazards.

OSHA developed the tool in conjunction with its Training Institute to assist small business owners in effectively identifying hazards in their workplace. The hazard identification training tool can be found on OSHA’s website at www.osha.gov/hazfinder. For additional compliance assistance resources visit www.osha.gov.

Five Percent SIP Production Growth and Alternative-Skin Panel Marketing Announced at SIPA Annual Event
Results from the Structural Insulated Panel Association’s annual production survey show a 5 percent increase in structural insulated panel production in 2013 among the association’s manufacturing membership, consisting of 28 manufacturing locations in the United States and Canada. Industry-wide statistics reveal no net gain or loss in total SIP industry production over 2012 figures for the 44 known SIP manufacturers surveyed, representing 53 manufacturing plants producing wood-faced SIPs.

SIPA member manufacturers continued a three-year trend of increasing their percentage of SIPs for nonresidential applications, helping boost production despite relatively slow growth in single family housing starts—traditionally a key market segment for SIPs.

Findings from the survey were announced on April 29 at the 2014 SIPA Annual Meeting & Conference in Fort Lauderdale, Fla. The industry event drew near-record attendance, with a 30 percent increase in participants over last year’s conference. Over 60 builders and design professionals registered for one-day educational seminars presented in collaboration with the U.S. Department of Energy’s Zero Energy Ready Home program, WoodWorks, and outreach support from the Southern Florida Chapter of the U.S. Green Building Council.

The event also marked SIPA’s new inclusive approach to alternative panel skin systems for joint education, design and outreach. Representatives from SIP manufacturers producing panels with metal, cementitious, magnesium oxide and phenolic fiberglass laminate skins spoke in a plenary session, discussing the benefits and applications of the different skin materials.

SIPA also announced an initiative to develop a comprehensive design guide during the conference. Produced by NTA, Inc., the new guide will present standard SIP design and engineering methodology for architects and engineers to streamline engineering on SIP projects.

DOL Launches Annual Summer Campaign to Prevent Heat-Related Illnesses

The U.S. Department of Labor’s Occupational Safety and Health Administration has announced the launch of its annual Campaign to Prevent Heat Illness in Outdoor Workers. For the fourth consecutive year, OSHA’s campaign aims to raise awareness and educate workers and employers about the dangers of working in hot weather and provide resources and guidance to address these hazards.

"Heat-related illnesses can be fatal, and employers are responsible for keeping workers safe,” said U.S. Secretary of Labor Thomas E. Perez. "Employers can take a few easy steps to save lives, including scheduling frequent water breaks, providing shade and allowing ample time to rest.”

Thousands of employees become sick each year and many die from working in the heat. In 2012, there were 31 heat-related worker deaths and 4,120 heat-related worker illnesses. Labor-intensive activities in hot weather can raise body temperatures beyond the level that normally can be cooled by sweating. Heat illness initially may manifest as heat rash or heat cramps, but can quickly escalate to heat exhaustion and then heat stroke if simple preventative measures are not followed. Heat illness disproportionately affects those who have not built up a tolerance to heat (acclimatization), and it is especially dangerous for new and temporary workers.

"Acclimatization is a physical change that the body undergoes to build tolerance to heat, and it is a critical part of preventing heat illnesses and fatalities,” said Dr. David Michaels, assistant secretary of labor for occupational safety and health. "Over the past three years, lack of acclimatization was the cause in 74 percent of heat-related citations issued. Employers have a responsibility to provide workplaces that are safe from recognized hazards, including outdoor heat.”

Last year, OSHA issued 11 heat-related citations. In some of these cases, the employer and staffing agency were cited because they involved temporary workers.

In preparation for the summer season, OSHA has developed heat illness educational materials in English and Spanish, as well as a curriculum to be used for workplace training, also available in both languages. Additionally, a Web page provides information and resources on heat illness—including how to prevent it and what to do in case of an emergency—for workers and employers. The page is available at http://www.osha.gov/SLTC/heatillness/index.html.

OSHA also has released a free application for mobile devices that enables workers and supervisors to monitor the heat index at their work sites. The app displays a risk level for workers based on the heat index, as well as reminders about protective measures that should be taken at that risk level. Since its 2011 launch, more than 130,000 users have downloaded the app. Available for Android-based platforms and the iPhone, the app can be downloaded in English and Spanish by visiting http://www.osha.gov/SLTC/heatillness/heat_index/heat_app.html.

In developing its inaugural national campaign in 2011, federal OSHA worked closely with the California Occupational Safety and Health Administration and adapted materials from that state’s successful campaign. Additionally, OSHA is partnering with the National Oceanic and Atmospheric Administration to incorporate worker safety precautions when heat alerts are issued across the nation. NOAA also will include pertinent worker safety information on its heat watch Web page at http://www.noaawatch.gov/themes/heat.php.

People in the News

Phillips Manufacturing Co. has added Jason Fyock as manufacturing engineer for the Niles, Ohio, facility and Ron Brenton as facility manager of the Umatilla, Fla., facility.

I.C.T.C. Holdings Corporation has appointed Carlos de Melo to the position of vice president and general manager, HERO Products Group, North American Operations. He has been with HERO for the past 15 years and was previously vice president of customer service. He will work from HERO’s headquarters in Vancouver, Canada.

The company has also appointed Terry Newton as senior vice president of global sales – key accounts. Newton has been involved in the delivery of custom color, most recently with X-Rite as vice president of sales and business development.

Companies in the News
Intercorp., an importer of high quality construction fasteners and based in Miami, has partnered with Florida International Marketing. Through this partnership Florida International Marketing will warehouse and distribute the Strong-Point brand of fasteners to distributors throughout Florida. This partnership will in effect create a new location for Intercorp that will complement their other existing locations in Los Angeles, Chicago, Dallas, Atlanta, Portland, Houston and Cleveland.

Milwaukee Tool acquired the Empire Level business based in Mukwonago, Wis., on June 2.

Steeped in history dating back to 1919, Empire Level is a fully integrated solutions provider in the layout and measurement product categories. Empire is a U.S. manufacturer of levels, squares, layout tools, and safety and utility tape.

Products in the News

Sto Corp. and Oldcastle’s Amerimix brand have announced a joint marketing agreement that will allow for the ease of combining StoPowerwall® Stucco finishes with Amerimix Pre-Sanded, Concentrate, Scratch and Brown, and Pump Grade Sanded product warranties, giving contractors the advantages to both under one single warranty.

The joint warranty program will include Amerimix Stucco Products AMX 750 FBC, AMX 755 FBC, AMX 745 FSB and AMX 740 FSB. The warranty will cover these Amerimix Stucco Products in conjunction with using a StoPowerwall Stucco System.

The terms of the new Sto and Amerimix warranty are the same as the StoPowerwall system warranties, up to 12 years, depending on the system configuration. For more information on Sto Corp. and the new joint warranty, visit www.stocorp.com, or call (800) 221.2397.

New on the ’net

Atlas Roofing Corporation, Atlanta, announces the complete redesign of their Web presence at www.atlasroofing.com. Atlasroofing.com is now more than ever the hub for everything Atlas, including all six divisions. Specifically, users who work with Atlas roof insulation or wall insulation divisions can visit one online destination for all product, technical support, services, corporate, and divisional information and news.



Therma-Tru Corp. in Maumee, Ohio, has launched an online Education Center for builders, contractors, dealers and fabricators that provides easy access to product information at www.thermatru.com/learning. The free interactive tool includes three featured sections, product knowledge quizzes and a chance to win prizes.

In addition to the Education Center, Therma-Tru also offers Two-Minute Tru-Facts on each of its new 2014 products at www.thermatru.com. The downloadable fast-read information sheets provide critical product details and can be found on the new products page of the trade professional section of the website.

What’s App, Doc?
Makita U.S.A. has launched a new mobile app with a dashboard of options that includes tool registration, dealer locator, information on new tool releases and more. Other features include a log-in to register a warranty or check for previously registered tools, and a feature window that constantly updates on Makita promotions, new technologies, sponsored teams and athletes, and more. The app also features a QR Code Scanner, Frequently Asked Questions organized by tool category, and links to Makita social media channels.

The app is available at the Apple App Store and Google Play Store. For more information, go to makitatools.com/mobile.

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