Construction Trends

October 2008

Survey Finds Many Americans Believe Air Inside Their Homes Is Cleaner Than Outdoor Air, Despite Data Suggesting Otherwise
A survey released Aug. 11 by Denver-based Johns Manville found that more than a third, or 38.0 percent, of U.S. homeowners believe the air inside their homes is cleaner than air outside their homes. But the U.S. Environmental Protection Agency says a growing body of evidence suggests air inside homes and other buildings can be "more seriously polluted than the outdoor air in even the largest and most industrialized cities.”

There are a variety of sources of indoor air pollution, according to the EPA, including building materials containing substances such as added formaldehyde; wet or damp carpet; certain household cleaning products; central heating and cooling systems and humidification devices; the combustion of oil, natural gas or wood; and outdoor air pollutants such as radon or pesticides.

According to the Journal of Allergy and Clinical Immunology, the average American spends about 90 percent of his or her day inside, making indoor air quality an important issue, particularly for people with asthma or allergies. An EPA report, "The Inside Story: A Guide to Indoor Air Quality,” says polluted indoor air can cause irritation of the eyes, nose and throat, headaches, dizziness and fatigue.

The survey found 65.7 percent of U.S. homeowners are "concerned” or "very concerned” about indoor air quality. By comparison, a total of only 33.2 percent of homeowners said they are "unconcerned” or "very unconcerned” about indoor air quality.

The most common homeowner strategies for improving indoor air quality, according to the survey, included purchasing an air purifier (23.7 percent); cleaning heating/cooling duct systems (23.6 percent); upgrading furnace or heating system components (16.7 percent); making ventilation improvements (15.8 percent); and eliminating or reducing individual sources of indoor air pollution, such as building products containing added formaldehyde or those that give off VOCs/fumes (8.6 percent). Some 37.7 percent said they had not taken any steps to improve their homes’ indoor air quality.

More than two-thirds of survey respondents said they were "somewhat likely” (41.7 percent) or "very likely” (30.8 percent) to look for homes with features that enhance indoor air quality when shopping for a new home. By comparison, 12.1 percent said they were "somewhat unlikely” and 5.8 percent said they were "very unlikely” to look for homes with features that enhance indoor air quality.

Air quality is also a concern for workers in commercial buildings, the survey found. More than a third, 34.5 percent, of respondents who are employed outside the home said the air in their place of work was either "dirty” or "very dirty.” In addition, 39.4 percent of respondents said "no steps have been taken” to improve the indoor air quality where they work.

According to the U.S. Green Building Council, scientific studies have shown that improved indoor air quality in workplace settings, hospitals and schools has direct benefits. Workplaces that have taken steps to improve indoor air quality have seen increased productivity, decreased absenteeism, reduced health care claims and minimized remediation.

The online survey of 1,001 U.S. homeowners was conducted on behalf of Johns Manville, the global building products manufacturer. The survey had a sampling error of plus or minus 3.1 percentage points and was conducted July 21-23, 2008.

SFPE, NSPE and NICET Publish Unified Position
Because of industry-wide concerns over the inconsistencies in state and local engineering regulations regarding the qualifications for those who design fire protection systems, the Society of Fire Protection Engineers has joined the National Society of Professional Engineers and the National Institute for Certification in Engineering Technologies to develop a unified position statement entitled The Engineer and the Technician – Designing Fire Protection Systems.

The purpose this position statement is to describe reasonable and prudent roles and responsibilities of licensed professional engineers and certified engineering technicians when designing fire protection systems.

The licensing of engineers is important because of the essential role engineering has in society. Normally, structures and systems that impact the public’s safety are required to be designed by licensed engineers. For example, bridges, roads, electrical systems, drinking water systems and building structures are all required by state engineering laws to be designed by licensed engineers.

The engineering profession is regulated by licensing boards in each U.S. state and territory, and they set high standards for professional engineers to protect the public. By law, many jurisdictions require engineers to be licensed in order to practice.

Legally, the practice of engineering is a responsibility that cannot be delegated to non-licensed engineers (individuals). The role of the engineering technician is to understand the engineer’s design intent and help implement that design.

July Construction Jumps 6 Percent
The value of new construction starts advanced 6 percent in July to a seasonally adjusted annual rate of $578.0 billion, reports McGraw-Hill Construction, a division of The McGraw-Hill Companies. Led by the start of two massive electric power plants plus healthy gains for several public works categories, the nonbuilding construction sector climbed sharply. In addition, residential building edged upward, reflecting some strengthening for multifamily projects that offset further weakness for single-family housing. On the negative side, nonresidential building continued to settle back, as groundbreaking for manufacturing plants subsided from the heightened activity witnessed earlier in the year.

For the first seven months of 2008, total construction on an unadjusted basis came in at $337.0 billion, down 14 percent from a year ago. Excluding residential building, new construction starts in the first seven months of 2008 were up 4 percent.

The July statistics lifted the Dodge Index to 122 (2000=100), compared to a revised 116 for June.

Residential building, at $182.5 billion (annual rate), grew 2 percent in July. Multifamily housing posted a 22 percent gain while single-family housing dropped an additional 5 percent, extending its lengthy correction. For the first seven months of 2008, the dollar volume for single-family housing was 38 percent below last year. By region, the largest year-to-date declines for single-family housing were reported for the West, down 47 percent; the South Atlantic, down 40 percent; and the Midwest, down 37 percent. Declines of lesser magnitude were reported for the South Central, down 29 percent; and the Northeast, down 24 percent.

Nonresidential building in July retreated 4 percent to $219.1 billion (annual rate). Much of the decline was related to an 81 percent plunge for manufacturing plant construction, which had been boosted in June by the start of a $1.9 billion oil refinery expansion in Michigan. If the manufacturing plant category is excluded, nonresidential building in July would be up 7 percent. Office construction climbed 28 percent, and stores and warehouses witnessed gains of 13 percent and 17 percent, respectively, although year-to-date both structure types remained down more than 20 percent. Hotel construction was the one commercial structure type to weaken in July, dropping 25 percent.

On the institutional side of the nonresidential market, healthcare facilities rebounded 33 percent from a weak June, while the healthcare category has shown an up-and-down pattern so far in 2008, through the first seven months it’s holding onto a 10 percent lead in dollar terms over last year. The public building category in July increased 8 percent, and amusement-related construction grew 6 percent. The educational building category in July was steady with its June pace, while dormitories settled back 5 percent. Both structure types maintained dollar volume gains for the first seven months of 2008 versus last year, with educational buildings up 6 percent and dormitories up 33 percent. Churches and transportation terminals witnessed reduced contracting in July, sliding 32 percent and 38 percent, respectively.

For the first seven months of 2008, the 14 percent decline for total construction compared to last year was the result of a 38 percent shortfall for residential building, outweighing gains of 1 percent for nonbuilding construction and 6 percent for nonresidential building. The improved level for nonresidential building was supported by a 104 percent surge for manufacturing plant construction year-to-date, reflecting the start of three massive oil refinery expansions valued at a combined $12.7 billion. The institutional structure types in the first seven months of 2008 were up 7 percent in dollar terms, but the commercial structure types were down 9 percent.

By region, total construction in the January–July period of 2008 showed decreased activity in the Midwest, down 12 percent; and the South Atlantic and West, each down 25 percent. The Northeast and South Central were each up a modest 2 percent year-to-date.

Private Nonresidential Construction Declines Slightly in July
Private nonresidential construction in July 2008 ended its monthly streak of consecutive record highs, according to the Sept. 2 construction spending report by the U.S. Department of Commerce. For the first time in seven months, activity fell 0.6 percent to $416.8 billion, slightly down from the revised figure of $419.8 billion in June, but 16 percent higher than the volume of construction spending recorded in July 2007.

Of the 16 subsectors of total nonresidential construction, 13 produced year-over-year gains, including manufacturing (up 56 percent), lodging (up 29.8 percent) and public safety (up 25.2 percent). From the period of June 2008 to July 2008, transportation spending led the way (up 3.8 percent) and public safety followed (up 3.2 percent).

By contrast, construction related to religious structures declined (down 14.8 percent) compared to 12 months earlier, communications-related construction also fell (down 2.1 percent) and commercial, such as retail construction, was lower (down 0.9 percent). On a monthly basis, from June 2008 to July 2008, five subsectors recorded declines in construction value, including manufacturing (down 5 percent), religious (down 2.5 percent), power (down 2.2 percent), communication (down 1.7 percent) and lodging (down 0.1 percent).

While July private nonresidential construction was 0.6 percent lower than June’s tally, public nonresidential construction increased 1.4 percent. Still, dragging down the construction spending index was the private residential construction sector. Housing activity fell 2.3 percent since June 2008 and 27.5 percent since July 2007, marking its lowest level in seven years.

A decline in the value of private nonresidential construction has been predicted for many months, and it appears to have finally arrived. However, according to Associated Builders and Contractors Chief Economist Anirban Basu, "No one should infer too much from one data release as the decline in private nonresidential construction in July is consistent with the notion of a still stuttering economy that is increasingly impacting nonresidential construction through a variety of mechanisms, including soft demand and a difficult financing environment.

Construction Inputs Nearly Unchanged in August
Construction input prices in August virtually went unchanged from July, according to the Sept. 12 producer price index report by the U.S. Labor Department. Although there was a slight decrease since July, the year-over-year increase since last August is still remarkably high at 12.7 percent.

Prices for fabricated structural metal products continued to grow, rising 1.5 percent in August, up 14.6 percent since last August. After two consecutive months of price increases, plumbing fixtures and fittings decreased 0.7 percent in August. Nonferrous wire and cable prices continued to rise slightly at 0.4 percent in August, up 5.3 percent since last August. Prices for fabricated ferrous wire products rose 4.0 percent in August, up over 27.9 percent since August 2007. In addition, prices for softwood lumber increased 1.1 percent in August, down 6.1 percent since the same time last year. Asphalt felts and coatings prices continued to post a significant increase, up 12.7 percent from July, and 42.6 percent higher since August 2007.

Prices for crude energy materials dropped 19.4 percent after a 6.9 percent gain in July, with natural gas playing a key role as prices fell 23.9 percent in August after a 7.8 percent increase the month before. Overall, finished energy goods declined 4.6 percent in August after a 3.1 percent increase in July, driving finished goods prices to decrease 0.9 percent in August following a 1.2 percent increase the month before.

Nonresidential Construction Job Market Gains in August Going against the tide of the nation’s rising unemployment rate, the nonresidential construction sector gained 2,900 jobs in August, according to the September 5 employment report by the U.S. Labor Department. The figures are on a seasonally-adjusted basis. In July, the nation’s nonresidential construction sector saw in increase of 4,400 jobs. In contrast, the residential construction industry continues to lose jobs. In August, residential construction shed another 4,400 jobs and has now lost 111,100 jobs over the past year. Total construction employment in August 2008 was 437,000 lower than in August 2007, a decline of 5.7 percent. On a monthly basis, total construction employment fell by 8,000 jobs in August. Over the past 10 years, construction employment grew from August 2004 to its peak in September 2006. Since then, the industry has shed 564,000 jobs.

Overall, the national unemployment rate in August shot up to 6.1 percent as employers cut 84,000 jobs. This is the highest rate since September 2003.

"While there has been small job growth in July and August, we anticipate that there will see nonresidential construction job losses in the remaining months of 2008 and into 2009,” said Anirban Basu, Associated Builders and Contractors chief economist. "One of the construction industry’s key leading indicators, the architectural billings index, though up slightly last month, still remains below levels achieved earlier in the decade indicating a substantial slowing in nonresidential construction starts. The good news is that recent declines in the prices of a number of key commodities could help foment more construction starts going forward.

PrimeSource Building Products, Inc. Purchases Assets of Compass International, Inc.
PrimeSource Building Products, Inc., a wholesale distributor of building materials and purveyor of construction fasteners worldwide, has purchased the assets of Compass International, Inc., originator, marketer and distributor of the MARKER and DARTS fasteners. Compass International is headquartered in Anaheim, Calif., with additional offices in Chicago, Houston and Atlanta.

The purchase was complete Sept. 10, 2008. Terms of the acquisition were not disclosed, but sources tell us that PrimeSource’s intention is to bring as many Compass employees into the PrimeSource family as possible. Also, Compass products will become PrimeSource products.

Customers of both companies’ products should expect normal business operations to continue throughout the course of the transaction.

Johns Manville Celebrates Historic Milestone in 2008 It’s an anniversary few companies ever get to celebrate, but Johns Manville (JM), a Denver-based Berkshire Hathaway company, is marking 150 years in business in 2008. Throughout the year, the company will host employee events at its locations in North America, Europe and Asia to commemorate this historic occasion.

From a humble beginning as a roofing shingles business operating out of the basement of founder Henry Ward Johns’ home in New York City in 1858, today JM holds leadership positions in all of the key markets it serves for insulation, roofing, filtration, spunbond non-wovens, glass textile wall coverings and glass fibers.

The company’s products have been used to protect the lives of soldiers in World Wars I and II; help America launch its space shuttle missions; provide world-famous museums like the Louvre and Guggenheim with more hygienic environments; improve the energy-efficiency and durability of buildings like the Seattle Seahawks football stadium; strengthen wind energy blades; enhance indoor air quality; reduce noise; insulate commercial aircraft and automobiles; and reinforce roads.

In 2001, JM became part of world-renowned businessman Warren Buffett’s Berkshire Hathaway family.

Visit www.jm.com to watch video clips of the company’s storied journey and to read more highlights of key events in its rich history.

NAHB to Honor Outstanding Work Site Safety Programs
Nominations are now being accepted for the 2008 National Association of Home Builders Safety Award For Excellence, which provides recognition for home builders who develop outstanding work site safety programs. The SAFE award honors the achievements of builders and trade contractors who have developed and implemented high-quality construction safety programs, as well as government officials and NAHB-affiliated associations who have made successful efforts to advance safety in the home building industry.

A list of categories, nomination requirements and an application can be accessed online at ww.nahb.org/SAFE. The nomination period closes Oct. 13, 2008.

NAHB member companies in good standing that build residential homes or townhomes using light construction methods can nominate themselves for a SAFE award. Specialty trade contractors, remodelers and light commercial and multifamily builders, as well as NAHB-affiliated associations and federal or state OSHA officials are also eligible for awards if they are nominated by an NAHB member or affiliated association.

Award winners will be recognized during the NAHB Safety Award For Excellence (SAFE) Banquet at the Shimmer Theater in the Las Vegas Hilton in Las Vegas, Nev., as a part of the International Builders’ Show.

For more details, e-mail Lindsay Cather, lcather@nahb.com, at NAHB, or call her at (800) 368.5242, extension 8163.

People & Companies in the News
The Drake Group, which represents independent distributors of gypsum, steel, insulation and related wall, ceiling and other building products, has named Don Moses as its executive director. Moses recently retired from CertainTeed, where he was the president of CertainTeed Gypsum.

BASF, headquartered in Florham Park, N.J., has launched its new customer focused "Construction Solutions” Internet Web site enabling quick and easy access to the company’s building and construction portfolio of more than 600 technologies and product offerings.

The Web site, www.BASF.com/construction, is designed as a resource to customers seeking detailed information and solutions on the more than 75 construction solution and product categories offered by BASF. Information is provided for BASF products used directly on construction sites or integrated into other products to improve the performance of products used in construction. The Web site also provides focused information regarding sustainable construction practices for professionals and the general public.

Bonsal American, Charlotte, N.C., has expanded its sales efforts in the eastern United States by naming Mike McLawhorn as territory sales manager for ProSpec®, its brand of commercial construction products.

McLawhorn will be responsible for ProSpec tile installation products in North and South Carolina, and Virginia. He will also handle concrete repair and restoration products in the Carolinas. McLawhorn has more than 16 years of experience in the flooring and tile setting materials industry, including owning his own tile installation business.

CertainTeed Corporation, Valley Forge, Pa., has made an investment in Arxx to further develop the growing market for Arxx’s Apex™ Block, a naturally insulating cement-foam building material used for both above- and below-grade walls. Terms of the investment were not disclosed.

Apex Block is an Insulating Concrete Form building system made from 100 percent post-industrial/pre-consumer expanded polystyrene and cement. Apex units are assembled like Lego® blocks and form a strong skeletal-type post and beam structure of reinforced concrete, capable of supporting multi-story structures.

The North American Building Material Distribution Association has launched its new Web site, www.nbmda.org. Though the Web address remains unchanged, the association now offers its members and industry professionals a new online look and feel that will enhance the user experience.

Quail Run Building Materials, Phoenix, Ariz., has appointed Don Plueard as president and chief operating officer.

James Thomson has been named senior vice president of human resources for the North American businesses of Saint-Gobain, Valley Forge, Pa. He succeeds Dennis Baker, who is retiring from the company.

Thomson joined Saint-Gobain in 1997 and has held various positions throughout his career. In early 2008, Thomson was named president of Saint-Gobain Crystals in Hiram, Ohio, the position he held before being named to his most recent position.

The Scaffold Industry Association, Kansas City, Mo., held its annual convention and exposition in July, where John R. Miller, outgoing president of SIA, installed the new executive committee during the annual Industry Awards Dinner: President Bill Breault Jr., Breault Industrial Group, Inc.; President-Elect Stephen Smith, Edge International; Vice President Randy Moody, The Brock Group; Secretary Chuck Hutchinson, Bil-Jax, Inc.; and Treasurer Daryl Hare, Waco Scaffolding and Equipment, Portland.

Joining the executive committee are Past President John R. Miller, The Millstone Corporation; Presidential Appointee Jeff Stachowiak, Sunbelt Rentals; Board Appointee Gene Morgan, Mdm Scaffolding Services; and Board Appointee Mike Russell, Power Climber

Term runs from 2008 to 2010.

Topcon Positioning Systems, Inc., Livermore, Calif., has announced a change in its management that went into effect Sept. 2.

The new structure’s four market-focused business units and leaders reporting to Ray O’Connor, president and CEO of TPS, are Survey and Construction: Jamie Williamson, senior vice president and general manager; Emerging Business (GIS, network, mobile): Eduardo Falcon, senior vice president and general manager; Precision Agriculture: David Vaughn, senior vice president and general manager; and Telematics: Mark Bittner, senior vice president and general manager.

In the new structure Mick Yamazaki has been promoted to the new position of chief operating officer. He will also retain his executive vice president’s title and will continue to head the manufacturing operations of TPS.

In June of this year, O’Connor was appointed an executive officer of Topcon Corporation. He is the first person of non-Japanese descent and the youngest person ever to be named as a Topcon Corporation executive officer. O’Connor will also have expanded international responsibilities as chairman of Topcon Europe Positioning (TEP) and Sokkia Europe BV.