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September 2014   

Construction Trends


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Global Demand for Drywall to Reach 10.4 Billion Square Meters
Global demand for drywall is forecast to rise 5.8 percent per year through 2018 to 10.4 billion square meters, a significant improvement from the rate of the 2008–2013 period. "Rebounds in building construction spending after a period of decline in both North America and Western Europe and solid, but decelerating, growth in the important Asia/Pacific region will be the primary drivers of growth,” notes analyst Allison Blackburn. "Increasing demand in the Africa/Mideast region, where drywall continues to gain popularity over more traditional building materials, will also contribute to gains.” These and other trends are presented in World Drywall & Building Plaster, a new study from The Freedonia Group, Inc., a Cleveland-based market research firm.

Nearly three-quarters of new drywall demand generated between 2013 and 2018 will be in China and the United States. Drywall sales in the United States are forecast to advance 8.7 percent annually during this period as the housing market recovers and as new residential floor space in the country posts double-digit annual growth. In China, demand for drywall is expected to post 7.2 percent annual growth during this time, bolstered by significant increases in both residential and nonresidential construction. Drywall is also projected to be used more frequently in residential applications in China.

Many industrializing countries—including Brazil, India, Mexico, Saudi Arabia and Turkey—are also forecast to post solid growth in drywall demand through 2018. Increasing demand for urban housing will drive residential building construction spending and related drywall sales. Additionally, growth in office and commercial construction activity will contribute to gains. Going forward, drywall demand will benefit as local construction firms increase drywall usage at the expense of other products, such as building plaster.

The drywall market in Western Europe is projected to expand 2.5 percent annually through 2018 to 1.2 billion square meters, a rebound from the decline experienced during the 2008–2013 period, but the slowest rate globally. Many countries are expected to post rebounds in demand as their housing markets recover. Spain will register the fastest growth in drywall demand in the region even though inflation-adjusted construction spending in 2018 will be well below the 2008 level. Other major markets projected to perform well include Italy and the United Kingdom. Overall drywall demand in Western Europe is expected to rise primarily due to an increase in new residential construction from a depressed 2013 level.

June Construction Starts Jump 6 Percent
New construction starts in June advanced 6 percent to a seasonally adjusted annual rate of $549.7 billion, the highest level so far in

2014.

According to McGraw Hill Construction, nonresidential building strengthened after pulling back in May, with the lift coming from the start of several large manufacturing plant projects. Modest gains in June were also reported for housing and nonbuilding construction (public works and electric utilities). During the first six months of 2014, total construction starts on an unadjusted basis were $254.1 billion, up 1 percent from the same period a year ago.

June’s data raised the Dodge Index to 116 (2000=100), up from 109 in May. During the first two months of 2014 the Index had averaged a sluggish 104, but then the pace of construction starts began to pick up, as the Index averaged 112 over the next four months. "The first half of 2014 revealed a mixed performance by project type,” stated Robert A. Murray, chief economist for McGraw Hill Construction. "Single-family housing stands out as the biggest surprise on the negative side, as its upward trend present for much of 2012 and 2013 has stalled for now. On the positive side, multifamily housing is still proceeding at a healthy clip, and commercial building continues to move hesitantly upward, with office construction this year providing most of the support. Manufacturing-related construction surged in the first half of 2014, while the institutional building sector is still trying to make the transition from lengthy decline to modest growth. The year-to-date increase for total construction starts, at a slight 1 percent, reflects the lackluster activity present in January and February. More recent statistics suggest that the expansion for total construction is getting back on track in a moderate, if selective, manner.”

Nonresidential building in June climbed 12 percent to $214.9 billion (annual rate), after slipping 4 percent in May. The increase came as the result of an exceptional volume of manufacturing projects in June. If the volatile manufacturing category is excluded, nonresidential building in June would be down 11 percent after a 22 percent gain in May. The commercial building sector in particular retreated in the latest month, sliding 27 percent after soaring 33 percent in May. Office construction dropped 49 percent in June following a robust May. June still featured the start of several large office projects; hotel construction also pulled back in June, dropping 25 percent after a strong May; stores and warehouses, which were sluggish during much of the first half of 2014, advanced 5 percent and 15 percent respectively in June. The institutional side of the nonresidential market improved 3 percent in June. The healthcare facilities category, which generally weakened in early 2014, increased 36 percent in June. The amusement category also posted a sharp June gain, soaring 62 percent. In contrast, the educational building category in June receded 10 percent, settling back from previous improvement. Even so, the latest month did include the start of several noteworthy public school construction projects. The other institutional categories witnessed decreased activity in June with churches down 10 percent, transportation terminals down 38 percent and public buildings down 56 percent.

During the first six months of 2014, nonresidential building increased 9 percent compared to a year ago. The manufacturing plant category soared 84 percent. The commercial categories grew 3 percent year-to-date, with office construction up 23 percent as its recovery seems to be finally gaining traction.

The year-to-date statistics showed a slight gain for hotels, up 1 percent, but declines for warehouses, down 3 percent, and stores, down 11 percent. Institutional building in the January–June period was able to edge up 1 percent, providing some evidence that its lengthy decline has reached an end. Most notable was a 6 percent gain for the educational building category, supported especially by an 18 percent increase for K-12 facilities. However, the other major institutional category, healthcare facilities, fell 5 percent year-to-date. The smaller institutional categories showed a varied year-to-date performance: public buildings, up 26 percent; amusement-related work, up 2 percent; churches, down 15 percent; and transportation terminals, down 26 percent.

Residential building, at $214.3 billion (annual rate), grew 3 percent in June. Multifamily housing rebounded 22 percent, as it continues to show an up-and-down pattern around what is still a rising trend. Single-family housing in June slipped 2 percent from May, continuing the essentially flat pattern that emerged toward the end of 2013 and has carried over into 2014.

Murray noted, "The cost of financing stayed low in June, as the 30-year fixed mortgage rate finished the month at 4.1 percent, but strict bank lending standards continue to make it hard for first-time homebuyers to enter the market, at a time when investor demand for single family homes is waning.”

At the six-month mark of 2014, residential building in dollar terms was up 4 percent from a year ago, a much smaller gain than the annual increases that were reported in 2012 (up 31 percent) and 2013 (up 26 percent). Single-family housing year-to-date was up only 1 percent. Multifamily housing advanced 16 percent year-to-date, not as large as the 24 percent hike for the full year 2013, but still in the double-digit range.

New-Home Sales Down 8.1 Percent in June
Sales of newly built, single-family homes fell 8.1 percent to a seasonally adjusted annual rate of 406,000 units in June, according to data released July 24 by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Sales numbers for May were revised downward to 442,000.

"The numbers are a little disappointing, but May was unusually high and some pull back isn’t completely unexpected,” said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del. "Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand.”

"With continued job creation and economic growth, we are cautiously optimistic about the home building industry in the second half of 2014,” said NAHB Chief Economist David Crowe. "The increase in existing home sales also bodes well for builders, as it is a signal that trade-up buyers can move up to new construction.”

Regionally, new-home sales were down across the board. Sales fell 20 percent in the Northeast, 9.5 percent in the South, 8.2 percent in the Midwest and 1.9 percent in the West.

The inventory of new homes for sale held steady at 197,000 units in June. This is a 5.8-month supply at the current sales pace.

NAHB/Builders Mutual Insurance Company SAFE Awards Now Accepting Entries
The National Association of Home Builders is now accepting applications for the 2014 NAHB/Builders Mutual Insurance Company Safety Award For Excellence. This awards program recognizes the achievements of builders and trade contractors who have developed and implemented high quality construction safety programs, and honors government officials and NAHB-affiliated associations and student chapters that have made successful efforts to advance safety in the home building industry.

The SAFE Awards recognizes member companies, workers and other individuals for the excellent programs that make them leaders in the residential construction industry. New this year, NAHB added a category for NAHB Student Chapter Safety Program of the Year, which is open to student chapters in high schools and career technical schools (secondary school programs), community colleges (two-year programs), and universities (four-year programs) in the United States.

Safety Program of the Year award categories are available for single-family builders, remodelers, specialty trade contractors, multifamily builders and more.

For a detailed list of categories, requirements and an online nomination form, visit www.nahb.org/SAFE. Applications are due by Friday, Sept. 26, 2014.

Award winners will be recognized at a ceremony during the 2015 NAHB International Builders’ Show in Las Vegas.

For more information on the NAHB/Builders Mutual Insurance Company SAFE Awards program, or to apply, visit www.nahb.org/SAFE. For any additional questions, contact Chelsea Vetick at cvetick@nahb.org or (800) 368.5242 x8590.

NAHB Revamps Its Green Awards for 2014
The National Association of Home Builders announced its new integrated Green Awards program July 30. For the first time, industry professionals have the opportunity to be recognized across several awards programs for their green building accomplishments, rather than entering one standalone awards program.

Starting this year, green and sustainable categories have been added to many of NAHB’s industry awards programs, including the Best in American Living Awards, The Nationals, the 50+ Housing Awards, the multifamily Pillars of the Industry Awards and the Jerry Rouleau Awards for Excellence in Marketing and Home Design for systems-built homes. Winning a green or sustainable award in any of these programs, means the entrant will be automatically entered into the Best in Green Awards. Best in Green categories include the following: 50+ Home or Community, Single-Family Production Home, Single-Family Custom Home, Multifamily Project, Interior Project, Remodeling Project, Development, Sales and Marketing Strategy and Systems-Built Home.

Winners will be announced on Jan. 21, 2015, during the International Builders’ Show at a new event, Plugging into Performance: Best in Green Awards Brunch (www.nahb.org/BIGAwardEvent). In addition, all other green and sustainable award winners from the individual programs will be recognized.

For more information, or to apply for an award, visit www.nahb.org/greenawards. Contact Jaclyn Toole at jtoole@nahb.org or (202) 266.8225 with any additional questions.

People in the News
Flex-Ability Concepts, Oklahoma City, Okla., has hired Rachael Fieldsend as assistant marketing manager. A graduate of Southwestern Oklahoma State University, Fieldsend will assist in all areas of marketing communications with an emphasis on social media.

Companies in the News
AMES Taping Tools, headquartered in Stone Mountain, Ga., announces the grand opening of its newest location in Chamblee, Ga., approximately 14 miles northeast of Atlanta. The addition of the Chamblee location brings AMES to 60 corporate stores and 56 franchise locations. Located at 4646 Buford Highway, the new store provides rental service for their complete line of AMES’ automatic taping and finishing tools. The store also sells the company’s TapeTech line of ATF tools as well as an assortment of associated drywall products, merchandise and hand tools.

Bendheim Wall Systems Inc., the exclusive distributor of Lamberts channel glass in North America, welcomes Artexture+ Inc. (New York, N.Y.), CG Schmitt & Company Inc. (Encinitas, Calif.), Roos International Ltd. Inc. (Deerfield, Fla.), and Stoessel, Sedgwick and O’Connor LLC (SSO Sales of New England, New Britain, Conn.) as new sales representatives. The four experienced architectural product sales groups will assist architects, designers and contractors with specifying and integrating channel glass walls in interior and exterior building applications.

FMI Corporation has opened an office in Houston. This is FMI’s fifth office in the United States. FMI professionals joining Hill include investment banker Scott Duncan and management consultant Michael Clancy.

FMI Corporation is headquartered in Raleigh, N.C., and has additional offices in Tampa, Fla, Scottsdale, Ariz. and Denver.

Gypsum Management and Supply, Inc., headquartered in Tucker, Ga., has signed an agreement to acquire Contractors Choice Supply, Inc. of Lubbock, Texas. The deal expands GMS’s presence in West Texas and establishes Contractors Choice Supply as a wholly owned subsidiary of GMS.

GMS is the largest distributor of drywall, acoustical ceilings and other specialty building materials in the United States. Founded in 1971, GMS now operates a network of more than 140 distribution centers nationwide.

Contractors Choice Supply, founded in 2000, is a distributor of drywall, metal framing, acoustical, insulation and other specialty building products in West Texas.

Johns Manville will merge their American, European and Asian activities for engineered products into one global business unit. JM’s Engineered Products business manufactures and markets premium-quality glass and polyester nonwoven products for the building and construction industry, filtration and battery separation media, reinforcement glass fibers for composites and specialty industrial glass products.

Previously, JM operated two Engineered Products business units: one for the Americas and one for Europe and Asia. The realignment keeps some of the regional components, mostly within the nonwovens business, while the composites, filtration and energy storage businesses will be managed more globally.

Enno Henze, who is responsible for JM’s nonwovens, fibers and glass textiles businesses in Europe, as well as its nonwovens business in China, will lead the newly created Engineered Products business as Senior Vice President and General Manager. Henze will relocate to JM’s global headquarters in Denver from Germany to lead the Engineered Products business.

Knauf Insulation has completed its acquisition of Guardian Insulation. The transaction includes Guardian Fiberglass, a leading supplier of insulation products for the construction market, and Guardian Laminated Building Products. Guardian Fiberglass will be integrated into Knauf Insulation and Guardian Laminated Building Products has become Silvercote, LLC.

USG Corporation and its distribution subsidiary, L&W Supply Corporation, accepted David Weekley Homes coveted "Partners of Choice” Award at their recent national account meeting. This is the eighth straight year that the L&W Supply branches in Florida have been honored with the award and recognized as a top supplier, and the fourth year for L&W Supply/Building Specialties branches in Texas.

As the nation’s largest privately held residential home builder, David Weekley Homes achieves the highest levels of homeowner satisfaction through its world-class partnerships. In 2004, the home builder implemented its interactive supplier evaluation system, which is used by suppliers and the homebuilder to achieve world-class status in managing the flow of goods and services through the supply chain. In this process, more than 800 of David Weekley Homes’ team members deliver quarterly ratings to their suppliers based on performance in a number of areas, two key areas being quality and service. The evaluations and ratings, paired with one-on-one discussions, formalized feedback instruments, coaching sessions and action plans, exhibit a true partnership between David Weekley Homes and their national trading partners.

L&W Supply (Fla.) received an A, A rating for quality and service, the highest rating a supplier can receive. L&W Supply/Building Specialties (Texas) received an A rating for quality.

Parex USA, Inc. announced the sale and ownership change of its parent company, ParexGroup, to CVC Capital Partners on Aug. 7.

ParexGroup, one of the world’s leading manufacturers of specialty chemicals and ready-to-use mortars for the construction industry, was founded in France by Lafarge in 1978. Since 2001, ParexGroup was one of four companies owned by Materis, a French corporation. Under the new ownership structure, ParexGroup will operate independently and will no longer be affiliated with Materis or its subsidiaries.

Products in the News
Intercorp., an importer and master distributor of high-quality construction fasteners under the Strong-Point® brand, has received an evaluation report (ESR #3528) from ICC Evaluation Service certifying that their Strong-Point products meet International Building Code and International Residential Code requirements.


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