Construction Trends

December 2008

Construction Market Will Continue to Slide in 2009 McGraw-Hill Construction released its 2009 Construction Outlook on Oct. 23, which forecasts a drop in overall U.S. construction starts for next year, as the tough funding environment continues, construction projects are deferred, and financial stress gradually eases. Against this backdrop, the level of construction starts in 2009 is expected to decline 7 percent, to $515 billion, following a 12 percent decline predicted for 2008.

"The speed and scope of the events in September and October were startling,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, addressing 400 construction executives and professionals at the Outlook 2009 Executive Conference. "Tighter lending standards are a major constraint for the construction industry. For single-family housing, declines are continuing and showing no sign of an upturn. Home prices are continuing to drop—a 20 percent drop so far this year, and we expect another 10 percent decline through the first half of 2009. Then, things should level off. Store construction has taken the biggest hit; we’re looking at a 30 percent decline in retail square footage starts this year.”

Highlights of the 2009 Construction Outlook include the following:

•Single-family housing for 2009 will be down 2 percent in dollars, corresponding to a 4 percent drop in the number of units to 560,000 (McGraw-Hill Construction basis).

• Multifamily housing will retreat 6 percent in dollars and 8 percent in units, after the sharp plunge witnessed during 2008.

• Commercial buildings will drop 12 percent in dollars and 15 percent in square feet, similar to the declines experienced in 2008. Stores and warehouses will continue to lose momentum, the office correction will be steeper, and hotel construction will finally pull back after its lengthy boom.

• Institutional buildings will slip 3 percent in dollars and 6 percent in square feet, as the financial crisis affects funding coming from states and localities.

• Manufacturing buildings will plunge 32 percent in dollars after an exceptional 2008 that was lifted by the start of several massive oil refinery expansion projects.

The 2009 Construction Outlook was presented at the McGraw-Hill Construction Outlook Executive Conference in Washington, D.C., which brought together top management from all parts of the construction industry including firms involved in building product manufacturing, architecture and design, contracting, engineering, industry associations and other industry professionals. The Construction Outlook is a mainstay of business planning for construction and manufacturing industry executives.

This year, the conference also unveiled a new report that analyzes industry trends for building products and industry players and provided a preview of the 2009 Green Outlook: Trends Driving Change, a first-of-its-kind outlook report on market size, trends and opportunity across green building sectors and regions. The Green Outlook was released at GreenBuild last month.

For more information, visit http://construction.ecnext.com/coms2/summary_0249-295230_ITM_analytics.

Nonresidential Construction Job Market Continues Decline in October
The nation’s nonresidential building construction job market declined for the second straight month losing 4,100 jobs in October, according to the November 7 employment report released by the U.S. Labor Department. Employment in nonresidential construction now stands at 769,200. Since October 2007, nonresidential building construction has lost 38,200 jobs, or 4.7 percent. Meanwhile, the residential building construction job market continues to post larger declines with 8,100 jobs lost in October 2008, and 118,800 jobs, or 12.4 percent, lost since October 2007. Residential employment is at 813,700.

Total private construction employment, which includes specialty trade contractors, and accounts for 7,069,000 jobs nationally, fell by 49,000 jobs in October and is down by 508,000 jobs since October 2007, a 6.7 percent decline. The last time the nation lost this many construction jobs on a year-over-year basis was July 1991, when job losses stood at 522,000 and the economy was operating at recessionary levels.

Overall, national employment declined by 240,000 jobs in October, following a revised 284,000 jobs lost in September. The nation’s unemployment rate is now up to 6.5 percent in October, the lowest since March 1994.

"Any observer who was unconvinced that the U.S. economy has entered a period of recession will undoubtedly be persuaded by the October job numbers, which fell well short of already lowered expectations,” said Anirban Basu, chief economist for the Associated Builders and Contractors. "The national economy is now feeling the full force of the financial crisis that peaked in September, and is now causing collateral damage in every region of the nation and in virtually every industry.

"Until a new regulatory environment is established, and until confidence is restored in the overall economy, financiers will stay on the sidelines further dampening economic performance,” added Basu. "The balance of 2008 will represent a period weaker than any experienced in decades, and 2009 does not look any better.

"The broader economic weakness of the U.S. economy is increasingly penetrating the nonresidential construction industry,” Basu said. "However, there is discussion in Washington of an even bigger economic stimulus package than was implemented earlier this year, and it may include a meaningful infrastructure investment component, which would eventually stimulate the construction industry’s expansion and job growth,” continued Basu. "Still, it is unclear whether this sweeping legislation can be organized during the upcoming lame duck session of Congress, or whether the next stimulus package will be forged by the next Congress.”

Private Nonresidential Construction Bounces Back Slightly in September,
After two months of decline, private nonresidential construction spending increased (1.3 percent) in September compared to August, according to a Nov. 8 report from the U.S. Census Bureau. Private nonresidential construction spending hit $415.2 billion in September. Overall, private nonresidential construction spending topped off at $715.6 billion in September 2008, or an 11.4 percent increase from same time last year.

Of the 16 subsectors that comprise total nonresidential construction, 11 produced year-over-year gains, with manufacturing (up 54 percent), lodging (up 26.1 percent) and power (up 25.9 percent). Subsectors that reported the largest monthly increases were manufacturing (up 5.2 percent) and religious construction (up 2 percent) compared to August.

Those nonresidential construction subsectors reporting decreases in spending year-over-year include communication (down 17.1 percent), conservation and development (down 13.3 percent), religious construction (down 11.6 percent) and commercial construction (down 11.6 percent). Six subsectors reported decreases in construction spending from last month with conservation and development (down 17.3 percent) and commercial construction (down 2.9 percent) posting the biggest losses.

Public nonresidential construction was down 1.3 percent in September compared to the previous month, but still up 3.8 percent year-over-year. Residential private construction is back down, decreasing 1.3 percent compared to August and down 27.7 percent year-over-year. Overall, total construction spending is down 0.3 percent since August, and 6.6 percent since September 2007.

Code Hearings Feature Major Issues
International Code Council members debated and voted on code change proposals shaping the future of building safety and fire prevention during the organization’s Final Action Hearings held in September in Minneapolis. The hundreds of approved code changes will be included in the 2009 version of the International Codes, used to guide construction in all 50 states and Washington, D.C.

Among the major changes approved are these:

• Fire sprinklers are required in all new one- and two-family residences beginning Jan. 1, 2011.

• Fire sprinklers are required in all new townhomes.

• Carbon monoxide detectors are required in homes with attached garages or fuel-fired equipment such as gas furnaces, gas stoves and gas water heaters.

• For skyscrapers, buildings greater than 420 feet in height, an additional stairwell is required to assist firefighter access to upper floors. The additional stairwell is not required if the building includes special elevators that can be used to evacuate occupants during an emergency.

• Members did not approve the comprehensive energy package in EC-14 purporting a 30 percent increase in energy efficiency. However, several energy efficiency-related changes were approved, including the following:

o A requirement to install programmable thermostats in new homes and buildings with forced air furnaces.

o High-efficiency light bulbs required in at least 50 percent of permanent lighting fixtures in new homes.

o Maximum fenestration u-factors are lowered in warmer climates to reduce the amount of heat loss or gain through windows and doors to lower energy costs during cooling periods.

o An increase in insulation R-values for walls, floors and basements in cold climates to achieve heating and cooling savings.

Those are the major changes according to the ICC, but according to the EIFS Industry Members Association, the major change was the approval of exterior insulation and finish systems for inclusion in the 2009 International Building Code and International Residential Code.

"This action validates the product and removes ambiguities in the interpretation of what EIFS are, and how they are implemented into the building code construction process,” said Stephan Klamke, EIMA’s executive director.

The approval is the culmination of more than six years of effort by many individuals both inside and outside of the industry, according to Klamke.

Klamke said EIFS inclusion in the 2009 international building codes, combined with an August 2009 Department of Energy study demonstrating that EIFS performs better than brick, stucco and cement fiber siding, offers further evidence that EIFS (including EIFS with drainage) is an outstanding exterior cladding choice for achieving the key building performance goals of energy efficiency, temperature control and moisture control in mixed, coastal, Zone 3 climates.

SSMA to Launch Code Compliance Certification Program
Members of the Steel Stud Manufacturers Association, Glen Ellyn, Ill., voted to implement an SSMA-sponsored Code Compliance Certification Program. Supported by third-party inspection, the program will assure the marketplace of access to structural steel studs and track that comply with national and local building codes.

Approval of the program marked the culmination of extensive research and development by the SSMA board of directors and its technical committee. A certification consultant was brought in to assist in the development.

The SSMA program, as implemented, addresses heavier structural framing. Plans are under way to expand the program to incorporate non-structural framing products.

As of July 1, 2009, SSMA member plants will have undergone third party inspection conducted during a six-month program rollout. This step will reassure the marketplace that all SSMA structural framing products continue to meet or exceed SSMA specifications.

Concurrent with the implementation of testing and inspection, SSMA will launch a communication plan to promote and strengthen the SSMA membership brand and to educate owners, architects, builders and code officials on the on key properties and product markings that confirm code compliance.

New Evaluation Program Verifies Product Sustainability
Manufacturers are introducing products every day that they say are green or sustainable. Now, with a SAVE evaluation from ICC-ES, they can prove their claims are verified. The Sustainable Attributes Verification and Evaluation program provides independent confirmation that evaluated building products are sustainable and may qualify for points under major green rating systems.

A SAVE evaluation involves both inspection of the manufacturer’s production process and reviews of independent product testing, where required. Manufacturers that successfully complete the evaluation process receive a Verification of Attributes Report in one or more of nine key categories: recycled content (postconsumer/preconsumer), regional materials, bio-based materials, certified wood products, solar reflectance index and thermal emittance of roofing materials, volatile organic compound content and emissions (adhesives and sealants), volatile organic compound content and emissions (paints and coatings), urea formaldehyde resin content in composite wood products and volatile organic compound content and emissions of floor coverings.

Manufacturers who want their construction products or systems evaluated under the SAVE program can view the application details, which can be found at www.saveprogram.icc-es.org/. ICC-ES maintains a list of products successfully evaluated under the SAVE program in a Directory of Reports.

AISI Announces the Establishment of the AISI Standards Council
The American Iron and Steel Institute has established the AISI Standards Council. This new organizational structure, which was formally approved by the American National Standards Institute, will consolidate the leadership and administrative functions of the formerly separate executive subcommittees of the AISI Committee on Specifications and AISI Committee on Framing Standards.

The new AISI Standards Council is responsible for maintaining ANSI accreditation and ensuring compliance with the approved operating procedures, which is important to continuing the openness, balance and consensus structure of the standards development process. The new AISI Standards Council is also responsible for maintaining an efficient and effective committee/leadership structure, monitoring the complete suite of ANSI-accredited AISI standards, and identifying needs for developing new standards.

CertainTeed Insulation to Expand Canadian Presence with Purchase of Ottawa Fibre
Saint-Gobain, through its subsidiary, CertainTeed Insulation Canada, Inc., has signed an agreement to purchase Canadian fiberglass insulation manufacturer Ottawa Fibre. Under the agreement, CertainTeed Insulation will acquire all of the operating assets of Ottawa Fibre for approximately $41 million (Cdn.), plus assume the fund’s adjusted debt.

The sale is expected to be finalized in early January 2009 following unit-holder and regulatory approvals.

The acquisition includes fiberglass insulation manufacturing facilities in Ottawa and Tillsonburg, Ontario and Redcliff, Alberta, as well as a ceiling tile plant in Ottawa, giving the company a consistent, domestically-produced source of CertainTeed insulation products for Canadian customers.

CertainTeed Gypsum already has a well-established presence in Canada, where it is the leader for wallboard and finishing products.

ASSE Launch 7th Annual Kids’ Safety-on-the-Job Poster Contest
The annual American Society of Safety Engineers’ 7th annual kids’ Safety-on-the-Job Poster Contest is now open to ASSE members’ children, grandchildren, nieces and nephews, with a Valentine’s Day, Feb. 14, 2009, deadline. ASSE members can also sponsor local schools, co-workers’ children and more to enter. The contest is open to children ages 5 to14 with top prizes to be awarded to those in each of the five age groups that best illustrate being safe on the job.

The winning poster in each age group will be featured on the ASSE North American Occupational Safety and Health Week 2009 poster distributed worldwide. This year’s them for NAOSH Week is "Safety Means Always Coming Home,” a theme that reverberated throughout the hundreds of posters received from children over the past six years of the contest. NAOSH Week runs from May 3–9, 2009, and is a tool ASSE uses to promote the importance of occupational safety, health and the environment in everyone’s lives. Occupational Safety and Health Professional Day is May 6, 2009.

Children are invited to create and submit posters no larger than 11 x 14 that best illustrate being safe at work. The first place winner in each age group receives a $1,000 savings bond, the second place winner receives a $500 savings bond and the third and fourth place winners receive a $200 savings bond. All entrants receive a prize and are invited, along with their families and all ASSE members, to attend the ASSE poster contest awards ceremony in Washington, D.C., May 4, along with other planned activities. Last year ASSE held events at the U.S. Capitol, the National Gallery of Art, the National Zoo and the U.S. Department of Labor.

Winners will be announced the first week of March. Posters and photos from the May 2008 events can be viewed by going to www.asse.org/naosh08. Entry forms and contest rules can be found at www.asse.org/newsroom under ASSE’s 7th Annual Kids’ "Safety-on-the-Job” poster contest link.

NAHB to Honor Excellence in Green Home Building
The National Association of Home Builders will honor excellence in green residential design and construction practices and outstanding green advocacy efforts with the 2009 NAHB National Green Building Awards.

Awards will be given in the following categories: Advocate of the Year (Builder, Remodeler, Individual, Group); Project of the Year (Single Family, Remodel, Multifamily); Development of the Year; HBA Green Building Program of the Year (New and Existing); and Outstanding Green Marketing.

A new category has been established for 2009: the Local Government Award, to recognize a government body that has worked to allow and encourage green practices. The nomination for this award must come from a local home builders’ association.

All award applications, supporting documentation and photographs must be submitted via e-mail or on a compact disk. Download entry forms at www.nahb.org/greenbuildingawards. No paper applications will be accepted.

To be eligible, projects must have been started after June 2007 and be substantially completed by December 2008. Additional entry requirements and an online application are available at www.nahb.org/greenbuildingawards. Entries must be postmarked by Jan. 31, 2009.

Award winners will be recognized at a gala dinner on May 8, 2009, as part of the 11th annual NAHB National Green Building Conference in Dallas.

People & Companies in the News
Bonsal American, Inc., Charlotte, N.C., has added a new position to its leadership team and has promoted two other members to better handle growth.

Gil Seco has been promoted to senior vice president and general manager of the construction products division, which includes products sold under the ProSpec brand. Seco is responsible for sales, operations and financial performance for the construction products business unit. In addition, he will lead Bonsal American’s international and contract packaging businesses.

Bill Ashton has been named chief operating officer of the dry mix division, which includes products sold under the Sakrete brand. During his 16 year tenure at Bonsal, Ashton has held various operations management positions, most recently vice president of operations. Ashton will oversee all plant operations for the dry mix division as well as customer service, quality control and transportation.

Andy Brinkmeier has been named vice president of business development with responsibility for mergers and acquisitions, business development and engineering. He has held various roles in his professional career, including project manager, vice president of operations and director of marketing.

Daniel Benigni has been promoted from regional controller to vice president of finance for Bonsal American. His responsibilities include credit, accounting, payroll, risk management, purchasing, safety and IT training.

Shirley Wodynski has been named the new executive director of the Ceilings & Interior Systems Construction Association, St. Charles, Ill. She assumed her position Sept. 24, 2008, following the announcement of former CISCA Executive Director Bonny Luck’s planned retirement.

Wodynski has most recently been the assistant executive director of the Illinois Landscape Contractors Association. She spent 24 years working with Lions Clubs International in a variety of capacities. She has experience in the areas of association management, finance, legal, education, membership and information technology.

Luck remains with CISCA on a consulting basis through June 2009. Her tenure with CISCA will be celebrated at the 2009 CISCA Convention in Nashville.

Powers Fasteners, Inc., Brewster, N.Y., has expanded its global presence into China with the opening of a new office in Shanghai. The facility will be under the direction of Jake Olsen, who has been promoted from director of new product development to vice president of global business development.

The reengineered Trim-Tex Web site (www.trim-tex.com and www.drywallart.com) features more products, new tips and more information for architects, builders, contractors and homeowners. With an easy-to-navigate layout, creating distinctive and profitable drywall projects has never been easier. Featuring more than 70 new products for 2008, this virtual encyclopedia of drywall finishing products includes everything from product specs to installation tips and ideas.

The Drywall Art Web site is loaded with photos, videos and designs that put drywall creativity at the tips of your fingers. This interactive Web site not only shows photos varying from room to room, but also reveals which Trim-Tex products were applied. View the photo of the month or enter your own projects to get a chance to be the next Drywall Artist of the year!

In Memoriam
Stephen B. Powers, executive vice president of Powers Fasteners, Inc., Brewster, N.Y., died in a motorcycle accident on Oct. 5. He was 45.

Powers, who ran the company with his three brothers, managed the firm’s information technology sector and was business manager for Powers Global overseas companies.

Powers is survived by his wife and two children, his mother and brothers.

Doyle Souser, general manager of Stockton Products, headquartered in North Las Vegas, Nev., was one of 25 people who died in the Sept. 12 Metrolink commuter train crash in Southern California. He was 56.

Souser was traveling home to his family in Camarillo when, on the same track, a freight train ran head-on into the commuter train, creating what is being called one of the worst train crashes in Southern California history.

Souser is survived by his wife and three children.