February 2008

Work Force,Technology and Competition Impact Global Construction
McGraw-Hill Construction, part of The McGraw-Hill Companies, has issued Key Trends in the European and U.S. Construction Marketplace SmartMarket™ Report, produced in partnership with the Innovative Construction Research Centre at the University of Reading, U.K. The report details the latest research on major issues facing today’s global construction industry, with an emphasis on the trends in Europe and the United States. Its findings are particularly relevant given the size of the impact construction has on the economies of the world, averaging 10 percent across the globe.

The research indicates that advances in technology, shifts in the construction workforce and increasing global competition are key concerns among industry leaders across Europe and the United States. The report also emphasizes the driving influence of governance and legislation, environmental pressures, global finance, new procurement methods and the increasing cost of materials. McGraw-Hill Construction’s research explores how these trends are shaping the increasingly interconnected construction marketplace.

"Construction activities are becoming increasingly global,” states Harvey M. Bernstein, vice president, Industry Analytics, Alliances and Strategic Initiatives at McGraw-Hill Construction. "The financial and building trends in one country are largely impacted by social and political events in other areas of the world. It is important that we understand these trends and how they will impact the work that we do today and in the future.”

Other major findings of the report include the following:
• Emerging and transitioning economies are fast becoming attractive building markets as well as formidable foreign competitors.

• Materials prices are continuing to escalate, placing a growing pressure on project costs and encouraging the shift to alternative materials.

• Construction industry leaders in Europe and the United States share concerns about the global work force shortage, and they expect the situation to worsen in the next five to seven years.

• The market for green building is significant and growing rapidly in both regions thanks to supportive legislation, market differentiation and the growing pressure of global competition.

• Usage of BIM (Building Information Modeling) is significant and growing, but there remains a dire need for enhanced awareness about the need for interoperability and the benefits of digital design.

These trends serve as challenges for the industry, but represent exciting opportunities for construction players in Europe and the United States. Roger Flanagan, professor of Construction Management at University of Reading, points to the prospects for the future: "It is exciting to consider the data and trends in this report, and imagine how they will shape the way we do business down the road. Ultimately, the business sense, entrepreneurship, innovation and imagination of leaders in our industry will decide how these trends shape our future.”

To order a copy of the report, go to www.analyticsstore.construction.com. PPE Compliance Remains a Top Workplace Concern
For the second year in a row, a survey of safety professionals has found that noncompliance with personal protective equipment protocols continues to be an issue in the workplace.

Eighty-seven percent of respondents said they had observed workers failing to wear PPE when they should have been, according to a survey of attendees at the 2007 National Safety Council Congress, conducted by Kimberly-Clark Professional. Eighty-five percent of safety professionals answered yes to the same question in a survey undertaken by Kimberly-Clark Professional at the 2006 NSC Congress. (Kimberly-Clark Professional is known for its global brands such as Kleenex, Scott, Kimcare, WypAll, KleenGuard, and Kimtech.)

The main "why” was "uncomfortable” PPE, according to 62 percent of respondents who had observed noncompliance in the workplace. This was followed by workers thinking PPE was not necessary for the task, PPE was "too hot,” PPE fits poorly or was "unattractive looking.”

So it’s not surprising that when asked "what” could be improved about the PPE they were currently purchasing, three-quarters of survey respondents said they would make it "more comfortable.” Safety professionals also gave the nod to more fashionable PPE. Eighty-four percent said that they would be more apt to purchase fashionable and attractive PPE if workers would be more likely to wear it and the price was comparable to what they were currently paying for similar products.

Off-the-Job Safety Programs. At a time when workplace deaths are on the decline but injuries and deaths in the home have risen, 59 percent of safety professionals said they had programs in place to promote at-home safety. Another 28 percent said they had plans to create this type of program in the future.

Of those with existing safety programs, 68 percent said the offerings consisted of training programs or providing training materials on off-the-job or at-home safety. Forty-four percent said they encouraged employees to take home company-provided PPE and 16 percent said they have incentive programs for staying safe off-the-job as well as on. Ten percent said they allow employees to borrow high-priced safety equipment, such as gas detection equipment, for home use.

Green Issues Take Center Stage. The survey also explored the effect of environmental considerations on purchasing PPE and other personal safety products. Here, the verdict was nearly unanimous. Ninety-four percent of respondents said environmental considerations and reducing the impact on the environment were important to them. Sixty-four percent ranked these as "very important,” while 20 percent described them as "somewhat important.” Ten percent said environmental factors were "increasingly important now,” as compared to a few years ago.

When it comes to green purchases, the top consideration was buying products made with recycled materials. Next was the ability to reuse or recycle products after use. Source-reduced products and packaging and a manufacturer’s overall commitment to the environment were nearly tied for third place. These were followed by the following:
• Purchasing from one supplier to reduce energy costs resulting from the transport of supplies from different sources.

• Products that are shipped in biodegradable packages with as little packaging material as possible.

• Products manufactured in a "carbon neutral” facility.

The survey also addressed another environmental issue, by asking respondents to choose between two types of industrial wiping products: A recycled cloth towel that is laundered and reused, releasing chemicals and metal contaminants in the wastewater of industrial laundries, or a disposable paper or paper/polymer wiping product that is discarded into a landfill after use. Fifty-six percent said they would choose the disposable wiper. Twenty-seven percent selected the laundered towel. Seventeen percent said they did not know which product they would pick.

Health and Safety Concerns. Respondents were also asked whether they were concerned about the potential health and safety issues faced by their workers as a result of exposure to oil, grease, heavy metal residues or other toxic elements on re-usable rental shop towels. Nearly three-quarters voiced concern, with 44 percent of these respondents saying they were "very concerned.” Twenty-three percent said they were not concerned.

For full survey results, visit www.kcprofessional.com/us/mkt/nscpressrelease.

Demand for Molding and Trim to Near $11 Billion in 2011
Demand for molding and trim is forecast to increase 2.1 percent per year through 2011 to $11 billion. Advances will be supported by healthy new nonresidential construction activity. The strongest opportunities for molding and trim will be seen in the office and commercial segment, where demand will rebound from the weak results posted between 2001 and 2006. Although wood materials will continue to account for the majority of molding and trim demand in 2011, the other major material types will offer more favorable growth prospects. Demand for plastic molding and trim will experience the fastest gains, driven by the material’s desirable performance characteristics and low maintenance requirements. These and other trends are presented in Molding & Trim, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

The residential building market will continue to dominate molding and trim demand through 2011. However, an expected decline in new single-family housing completions will significantly hamper growth. Gains will be faster in the aftermarket than in new applications through 2011, aided by a healthy outlook for residential improvement and repair activity. In addition, the large, aging U.S. housing stock will support residential replacement demand. Demand for molding and trim in value terms will be restrained by moderating unit prices for plastic and metal materials, both of which were at elevated levels in 2006.

Interior moldings are the largest product segment of the molding and trim market. These products will continue to benefit from widespread use in all of the major types of housing, where they provide decorative ornamentation and serve functional uses such as concealing joints. Moldings are also relatively common in selected nonresidential applications such as office, commercial and institutional structures.

Value demand for stairwork products will slow significantly through 2011, restrained by a moderation in raw material prices for metal and wood from their highs between 2001 and 2006. Additionally, demand will be limited by the weak new housing market through 2011. Nevertheless, use will be supported by installation in nonresidential structures, as demand for stairwork will benefit from the projected upturn in nonresidential construction activity. Other products, including exterior molding and trim, will see above-average growth, supported by the recovery in nonresidential markets. A healthy outlook for residential improvement and repair spending will also bolster advances, as exterior molding and trim products need replacement more often than their interior counterparts because of exposure to weather.

Molding & Trim (published 12/2007, 289 pages) is available for $4,500 from The Freedonia Group, Inc., 767 Beta Dr., Cleveland, OH 44143-2326. Information may be obtained through www.freedoniagroup.com.

DOE Oak Ridge Lab Tests: EIFS Outperforms Other Claddings
New test data show that exterior insulation and finish systems outperform brick and stucco both in moisture absorption tests and thermal efficiency tests. Phase II of EIMA-sponsored testing by the U.S. Department of Energy Oak Ridge National Laboratory demonstrates EIFS’ superior resistance to moisture penetration.

The ORNL conducted two phases (24 months) of carefully monitored tests involving introducing water into test walls and measuring the rate of water absorption in the rainy, humid climate of Charleston, S.C. The ORNL test data indicate EIFS incorporating 4-inch polystyrene foam outperforms other cladding choices. At the same time, brick and stucco demonstrated high rates for water and moisture absorption and retention in hot, humid climates.

The tests also showed that outboard insulation and vertical notch drainage with EIFS provides a water-resistant barrier that works much better than building wraps. In short, for EIFS outperforms other wall system materials under heat and humidity exposure.

NAHB Introduces Certified Green Professional™ Designation
A new professional designation program from the National Association of Home Builders will soon provide home buyers with additional assurance that the builder or remodeler they’ve chosen is authentically "green.”

The Certified Green Professional™ designation will be unveiled Feb. 14 during Green Day at the International Builders’ Show in Orlando, Fla. Application information will be available at the show.

Builders, remodelers and other industry professionals must have at least two years of building industry experience and be involved in the construction of at least one home in the past 24 months to apply for the Certified Green Professional designation.

The designation is based on the "Green Building for Building Professionals” course, a two-day training and education session that more than 700 builders have already completed since the course was piloted two years ago. Candidates must also complete a University of Housing management course, agree to continuing education requirements and adhere to a code of ethics.

Applicants can take the course work during special pre-conference education sessions before the International Builders’ Show opens on Feb. 13. The business management and Green Building for Building Professionals classes are also offered at other NAHB conferences and by local home building associations throughout the country. The first class of Certified Green Professionals will receive their designations at the 10th annual NAHB National Green Building Conference, May 11-13 in New Orleans.

NAHB will celebrate Green Day at the International Builders’ Show as a way to highlight the new designation, the NAHB National Green Building Program and a host of special seminars, speakers and education opportunities.

Applicants can visit nahb.org/courses to discover additional class locations for courses associated with the Certified Green Professional designation.

Avoiding Launch Failure in the Building Industry
Every year, manufacturers in the building industry rely on the introduction of new products to generate revenue. The problem? About 67 percent of new products don’t make it to a second year.

In fact, manufacturers face a series of significant challenges, according to The Optimal Product Launch: Strategies for Success in the Building Industry. This comprehensive white paper was released by Baublitz Advertising, a firm that has helped launch a variety of building industry products.

The paper examines the critical barriers to success and common mistakes: neglecting key audiences, poor planning, failing to measure and more. The Optimal Product Launch also provides detailed strategies for developing a successful launch program, calling it "a carefully orchestrated, sustained effort that begins during the product development process and ends long after the announcement of the new product.”

The paper finds that manufacturers must focus on several critical elements during a launch. These include the following:
• Marketing through the distribution channel.

• Selecting—and executing—the right tactics.

• Coordination of all marketing and launch initiatives.

• Product differentiation and branding.

• Proper allocation of resources.

The Optimal Product Launch concludes that manufacturers who fail to plan ultimately plan to fail, adding potentially viable products to the long list of those that never make it to a second year.

To download a complimentary copy of the complete white paper, visit www.baublitz.com, and click on the "NewsBlitz” icon on the homepage.

Construction Falls 8 Percent in November
New construction starts tumbled 8 percent in November to a seasonally adjusted annual rate of $522.8 billion, it was reported by McGraw-Hill Construction, a division of The McGraw-Hill Companies. The continuing slide for residential building was joined by a weak performance in November for nonresidential building, which was only partially offset by improved activity for public works.

Through the first 11 months of 2007, total construction on an unadjusted basis came in at $573.4 billion, down 10 percent from the same period a year ago. If residential building is excluded, new construction starts for the January–November period of 2007 would be up 3 percent compared to 2006.

The November statistics produced a reading of 111 for the Dodge Index (2000=100), compared to 121 for October.

Nonresidential building in November fell 14 percent to $191.6 billion (annual rate), as most of the major structure types witnessed reduced contracting. Hotel construction, which had been boosted in prior months by groundbreaking for several massive hotel/casino projects, dropped 31 percent in November. Office construction retreated 14 percent. Store construction settled back 11 percent in November, and, in general, the second half of 2007 has seen a slightly slower pace for this structure type after a robust first half of the year. Manufacturing plant construction also retreated, slipping 7 percent. Warehouse construction was the one commercial structure type able to report a November gain, rising 8 percent with the push coming from the start of two large distribution centers, located in Pennsylvania and North Carolina.

On the institutional side, healthcare facilities continued to see large hospital projects reach groundbreaking, including a $250 million hospital in California and a $135 million hospital in Oklahoma. However, there were fewer such projects than what had been reported for October, and as a result healthcare facilities in November showed a 20 percent decline. Decreased activity in November was also reported for educational buildings, down 11 percent; and transportation terminals, down 33 percent. November showed gains for several of the smaller institutional categories—amusement-related projects, up 4 percent; churches, up 5 percent; and public buildings, up 7 percent.

For the first 11 months of 2007, nonresidential building maintained a 3 percent lead over last year. Gains in year-to-date dollar volume were reported for stores, up 13 percent; and warehouses, up 8 percent; as well as manufacturing buildings, up 15 percent. Offices and hotels showed respective declines of 1 percent and 9 percent in dollar terms, although this was relative to the January–November period of 2006 that included groundbreaking for several unusually large and expensive projects. School construction for the first 11 months of 2007 advanced 5 percent in dollar terms, while public buildings surged 35 percent. The healthcare facilities category reported a 4 percent decline from its record 2006 pace, and year-to-date reductions were also shown by amusement-related projects, down 8 percent; transportation terminals, down 10 percent; and churches, down 14 percent.

Residential building, at $216.9 billion (annual rate), dropped 10 percent in November. The correction for single-family housing continued with a 6 percent decline, and single-family housing has now fallen in nine out of the first 11 months of 2007.

Multifamily housing in November resumed its downward trend, falling 20 percent after its brief upturn in October.

For the January–November period of 2007, residential building fell 24 percent from last year, with single-family housing down 26 percent and multifamily housing down 17 percent. On a regional basis, single-family housing showed the largest year-to-date decline in the South Atlantic, down 32 percent; followed by the West, down 28 percent; the Midwest, down 24 percent; and the South Central and Northeast, each down 18 percent.

The 10 percent decline for U.S. total construction during the January– November period of 2007 was the result of decreased activity across the nation, reflecting this pattern for the five major regions: the South Atlantic, down 13 percent; the West, down 12 percent; the South Central, down 10 percent; the Midwest, down 8 percent; and the Northeast, down 6 percent.