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Construction Trends

NAHB to Sue EPA Over Lead Paint Regulations

A coalition of housing industry groups joined the National Association of Home Builders July 8 in announcing plans to file a lawsuit against the federal Environmental Protection Agency for removing the “opt-out” provision from its Lead: Renovation, Repair and Painting rule.

The Lead: Renovation, Repair and Painting rule applies to homes constructed before 1978 when lead paint was banned. Its opt-out provision, which expired July 6, let consumers allow contractors to bypass extra preparation, cleanup and recordkeeping requirements in homes where there were no children under 6 or pregnant women, thus avoiding additional costs.

“Removing the opt-out provision more than doubles the number of homes subject to the regulation,” said NAHB Chairman Bob Jones, a home builder and developer in Bloomfield Hills, Mich. “About 79 million homes are affected, even though EPA estimates that only 38 million homes contain lead-based paint. Removing the opt-out provision extends the rule to consumers who need no protection.”

The Hearth, Patio & Barbecue Association, the National Lumber and Building Material Dealers Association and the Window and Door Manufacturers Association joined NAHB in filing the petition for review in the U.S. Court of Appeals for the D.C. Circuit.

The group will challenge EPA’s action on the grounds that the agency substantially amended its LRRP regulation without any new scientific data and before the regulation was even put into place on April 22, 2010.

“Even under the original rule, the opt-out provision was not available in homes where small children or pregnant women live,” Jones said. “That shows that this change provides no additional protection to the people who are most vulnerable to lead-based paint hazards.”

Remodelers’ and other contractors’ estimates of the additional costs associated with the lead-safe work practices average about $2,400, but vary according to the size and type of job. For example, a complete window replacement requires the contractor to install thick vinyl sheeting to surround the work area both inside the home and outdoors—with prep time and material costs adding an estimated $60 to $170 for each window.

“Consumers trying to use rebates and incentive programs to make their homes more energy efficient will likely find those savings eaten up by the costs of the rule’s requirements. Worse, these costs may drive many consumers—even those with small children—to seek uncertified remodelers and other contractors. Others will likely choose to do the work themselves—or not do it at all—to save money. That does nothing to protect the population this rule was designed to safeguard,” Jones said.

Also see Wachuwannano on page 26 and Problem Solved on page 48 for more on the EPA’s new rule.

Remodeling Spending Expected to Accelerate Moving into 2011

A recovery in home improvement spending will soon be under way according to the Leading Indicator of Remodeling Activity released July 15 by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. Remodeling spending is expected to increase on an annual basis by the end of the year, and the LIRA points to growth accelerating to the double-digit range in the first quarter of 2011.

“Absent a reversal of recent economic progress, there should be a healthy upturn in home improvement activity by year-end and into next year,” says Eric S. Belsky, managing director of the Joint Center for Housing Studies.

Homeowner optimism is bolstering a trend toward investing in the home again.

“The recovery in home improvement activity appears to be moving beyond simple replacement projects and energy retrofits to broader remodels and upgrades,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies. “A wider activity base would help generate the expected growth in the quarters ahead.”

Builder Confidence Declines in July

Builder confidence in the market for newly built, single-family homes declined for a second consecutive month in July to its lowest level since April 2009, according to the National Association of Home Builders/Wells Fargo Housing Market Index released July 19. The HMI fell two points from a downwardly revised number in the previous month to 14 for July.

“We continue to see a lull in home buying activity following the expiration of the federal home buyer tax credit program, as many of the sales that would have occurred this summer were likely pulled forward to meet that program’s deadline,” noted NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “In addition, builders are reporting continuing consumer hesitancy regarding home purchases due to uncertainty in the overall economy and job markets.”

“This month’s lower HMI reflects a number of underlying market conditions that builders are seeing, including hesitant home buyers, tight consumer credit and continuing competition from foreclosed and distressed properties that are priced below the cost of construction,” said NAHB Chief Economist David Crowe. “The pause in sales following expiration of the home buyer tax credits is turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the economy. That said, we do believe that favorable factors such as low mortgage rates, affordable prices, and demographic trends will help revive consumer demand for new homes this year, and that new-home sales will improve by 10 percent in 2010 from 2009.”

Derived from a monthly survey that NAHB has been conducting for more than 20 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.” Any number over 50 indicates that more builders view conditions as good than poor.

Each of the HMI’s component indexes recorded declines in July. The component gauging current sales conditions fell two points to 15, while the component gauging sales expectations in the next six months edged down one point to 21 and the component gauging traffic of prospective buyers fell three points to 10.

Regionally, the HMI results were mixed in July. The Northeast, which has a smaller survey sample and therefore is prone to greater monthly volatility, posted a seven-point increase to 23 this month, while the Midwest posted a one-point improvement to 15. The South and West each posted five-point declines to 14 and 9, respectively.

May Construction Grows 3 Percent

At a seasonally adjusted annual rate of $406.3 billion, new construction starts in May climbed 3 percent from the previous month, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Nonresidential building showed improvement after weak activity in April, and residential building edged upward. However, nonbuilding construction retreated in May, following April’s elevated amount of new public works and electric utility projects. For the first five months of 2010, total construction starts on an unadjusted basis came in at $162.0 billion, down 2 percent from the same period a year ago.

The May statistics lifted the Dodge Index to 86 (2000=100), up from a revised 83 for April. The Dodge Index reached its most recent low at 82 back in February 2009, and since then it has hovered in the range of 83 to 94.

“The recent pattern of construction starts indicates that activity has stabilized at a low level, with ups-and-downs on a monthly basis, but the transition to sustained expansion has yet to occur,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “The good news with the May statistics is that nonresidential building rebounded after a very depressed April. However, the volume of nonresidential building remains quite low, and is likely to stay that way through 2010. Much of this year’s upward movement is expected to come from public works construction, which lost momentum in May after earlier gains.”

Nonresidential building in May jumped 19 percent to $145.6 billion (annual rate), following a 21 percent decline in April. The May pace for nonresidential building can still be characterized as weak by recent standards—12 percent below the monthly average for 2009 and a full 39 percent below the monthly average for the peak year of 2007. On the institutional side of the nonresidential market, educational facilities advanced 31 percent in May. Large education-related buildings that reached groundbreaking in May included a $229 million medical research building for the U.S. Army in Maryland, a $122 million university laboratory and science building in Massachusetts and a $100 million university performing arts center in Chicago. Healthcare facilities continued to strengthen, advancing 2 percent in May with the boost coming from a $159 million medical center expansion in California. Amusement-related work soared 62 percent in May, aided by the $80 million renovation and expansion of the Pauley Pavilion in Los Angeles and $75 million for the Fantasyland expansion at Disney World in Orlando, Fla. As for the other institutional categories in May, church construction increased 11 percent, but reduced contracting was reported for public buildings, which were down 3 percent, and transportation terminals, down 30 percent.

Several commercial categories in May registered large percentage gains, relative to very low levels in April. Office construction in May surged 44 percent, helped by the start of a $200 million renovation project at the United Nations Conference Building in New York, N.Y. Stores and warehouses in May posted gains of 26 percent and 28 percent, respectively. However, hotels showed further weakness in May, dropping 11 percent. The manufacturing plant category in May advanced 33 percent, reflecting the lift coming from $96 million for a semiconductor solar technology plant in Tennessee and $95 million for a lithium battery manufacturing plant in Florida.

Residential building, at $133.0 billion (annual rate), increased 1 percent in May. The multifamily side of the housing market grew 9 percent, as this structure type has now shown improved contracting for four straight months. The largest multifamily projects reported as May starts were the apartment portions of two mixed-use projects in St. Louis, Mo., with the apartment portions valued at $90 million and $81 million, respectively. Other large multifamily projects that reached groundbreaking in May included a $70 million apartment building in the Bronx, N.Y., the $64 million apartment portion of a mixed-use building in Honolulu, and a $58 million senior living facility in Elmhurst, Ill.

Single-family housing in May slipped 1 percent, losing momentum for the second straight month after trending upward from early 2009 through March of this year. By geography, single-family housing in May showed declines in the Midwest (down 13 percent) and the Northeast (down 3 percent), while the West was steady and modest gains were reported in the South Atlantic and South Central regions (each up 3 percent).

Murray noted, “The upward trend for single-family housing at the national level seems to have paused for now, but it’s likely to resume later in 2010, helped by what’s expected to be the continuation of very low mortgage rates into the second half of this year.”

The 2 percent decline for total construction starts on an unadjusted basis during the first five months of 2010 was the result of varied behavior by sector. Residential building climbed 30 percent, with the comparison to the early months of 2009 when the improvement for single-family housing was just beginning to take hold. Nonbuilding construction year-to-date decreased 8 percent, with public works down 4 percent while electric utilities fell 28 percent. Nonresidential building year-to-date dropped 16 percent, due to this performance by major segment: commercial building, down 32 percent; manufacturing building, down 63 percent; and institutional building, down 4 percent.

By geography, total construction in the first five months of 2010 showed this pattern relative to last year: the Northeast, up 8 percent; the South Central, no change; the West, down 1 percent; the South Atlantic, down 2 percent; and the Midwest, down 12 percent.

Annual Survey of Equipment Finance Activity Shows Unprecedented Decline in New Business Volume in 2009

The Equipment Leasing and Finance Association released on July 14 its 2010 Survey of Equipment Finance Activity, which shows that new business volume among a sample of the ELFA member companies declined 30.3 percent in 2009, in contrast to a 2.2 percent decline in 2008. Pre-tax income and net income, in dollar terms, declined by 55.7 percent and 54.4 percent, respectively. Decreases in revenues and total headcount were only 13.8 percent and 5.8 percent, respectively.

For the first time in the past 10 years of the SEFA, weighted average return on equity was in the single digits at 5.2 percent, a decline from 11 percent in 2008. Return on assets declined by half, falling to 0.6 percent from 1.2 percent during the year-earlier period.

“Not surprisingly, industry performance data for 2009 mirrored the difficult conditions prevalent in the broader U.S. economy,” commented ELFA President Woody Sutton. “Fortunately, it appears the worst is behind us: More recent data collected during the past two quarters suggest a gradually improving U.S. economy extends to the equipment leasing and finance sector.”

The SEFA is the broadest compendium of industry data, comprising a representative cross-section of equipment lease and loan origination by product, structure and origination. It provides a baseline and benchmark for companies operating in the equipment finance space through a voluntary survey of ELFA member companies. In the 2010 SEFA project, 100 reporting entities participated in the survey as compared to 122 the prior year.

Independent equipment finance organizations had the largest decline in new business volume with a rate of 46.3 percent, while new business volume for Banks and Captives declined by 26.1 percent and 20.9 percent, respectively. From an asset perspective, new business volume by equipment type declined for all categories with transportation and construction equipment hardest hit and computer equipment investment close behind. Similar trends were seen in equipment investment by end-user industry with construction, utilities and services showing the sharpest declines.

Architecture Billings Index Falls Back After Three Months of Improving Conditions

June 23, 2010 – After three straight months of improving conditions, the Architecture Billings Index fell nearly three points. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending.

The American Institute of Architects reported the May ABI rating was 45.8, down substantially from a reading of 48.4 the previous month. This score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), and comes on the heels of the highest score since January 2008 when revenue at architecture firms headed into recession. The new projects inquiry index was 55.5.

“This dip is somewhat of a surprise since it appeared that conditions were pointing toward a recovery,” said AIA Chief Economist Kermit Baker, Ph.D., Hon. AIA. “The overriding issue affecting the entire real estate sector is unusual caution on the part of lending institutions to provide credit for construction projects that apparently would be successful in this economic environment.”

He added, “An amendment has passed the House that would help lenders and borrowers as they attempt to work out their loans under terms that are mutually acceptable, avoid large numbers of commercial foreclosures, and free up credit that can be used more constructively. If this passes the in Senate then some much needed relief will available for the struggling design and construction industry.”

Key ABI highlights in May include the following:

• Regional averages: Northeast (50.6), Midwest (48.5), South (45.9), West (42.9).

• Sector index breakdown: commercial/industrial (51.3), multifamily residential (46.9), mixed practice (46.8), institutional (43.4).

• Project inquiries index: 55.5.

Global Demand for Drywall to Reach 10.7 Billion Square Meters in 2014
Global demand for drywall (also known as gypsum board, plasterboard and wallboard) is forecast to advance 8.4 percent per year through 2014 to 10.7 billion square meters, a significant improvement over the 2004–2009 rate of growth. More than four-fifths of all new product demand generated during the 2009–2014 period will be attributable to the United States and the Asia/Pacific region.

Drywall sales in the United States are predicted to grow 12.4 percent annually through 2014 as the country’s housing market recovers from a period of significant turmoil. The drywall market in the Asia/Pacific region will record the second fastest growth rate through 2014, after North America. A number of Asian countries are expected to post large gains, including China, India, Thailand and South Korea. China alone will account for more than one-third of all new global drywall demand between 2009 and 2014. These and other trends are presented in World Drywall & Building Plasters, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

The Africa/Mideast region, Eastern Europe, and Central and South America are also projected to see significant advances in drywall sales, spurred by healthy building construction gains. Turkey, Russia and Brazil will experience particularly rapid growth, as local construction firms increase their use of drywall in wall and ceiling construction applications. Drywall markets in more developed parts of the world—Australia, Canada, Japan and Western Europe—will generally expand at a slower pace through 2014 than their industrializing counterparts. Nonetheless, several of these countries are still expected to experience impressive drywall demand growth (starting from a low 2009 base), including South Korea, the United Kingdom and Spain.

The largest drywall manufacturing countries are the United States, China, Japan, Germany, the United Kingdom and France, each of which had 2009 drywall shipments of more than 250 million square meters. Global demand for gypsum-based building plaster is projected to advance 5.3 percent per annum to 36.9 million metric tons in 2014. The building plaster market will experience somewhat slower growth through 2014 than the drywall market, as construction firms in many countries adopt drywall-based building construction techniques (at the expense of wet construction, which employs more building plaster per unit) because of rising labor costs. At the global level, drywall demand is nearly two and one-half times greater (on a weight basis) than for gypsum-based building plaster.

World Drywall & Building Plasters (published 06/2010, 309 pages) is available for $5,800 from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, contact Corinne Gangloff at (440) 684.9600 or e-mail [email protected]. Information may also be obtained through

New on the ’Net

BASF, Florham Park, N.J., has announced a new website for its Neopor® expandable polystyrenes— The result is a more robust Internet resource that makes it easier for customers to learn about Neopor.

The new website has been especially designed for the North American market. Features of the site include a literature section; a spotlight on the latest building success stories and links to customers showcasing their use of Neopor in commercial applications; an expanded marketing section; and an online customer information service that puts users in touch with a BASF customer relationship specialist.

Synthetic Surfaces Inc., Scotch Plains, N.J., has revised, expanded and updated its website. The site contains information useful to contractors, builders, engineers, installers, architects and manufacturers about its adhesives.

The website has eight short, simple sections including NORDOT® Outdoor Adhesives; photos showing various ways the adhesives are used; history and evolution of this 37-year-old company; business philosophy; publications from 1973 to now; educational cartoons; and a “Feature of the Week.”

People & Companies in the News

Fortifiber Building Systems Group®, Reno, Nev., was listed as a finalist in the Reno Gazette Journal’s annual survey for the Greater Reno-Tahoe Best Places to Work Awards.

This was the first year Fortifiber participated in the survey and had 100% of the eligible employees participate. Most notably, Fortifiber ranked very highly in employees’ “Alignment with Goals” and ability to make an “Individual Contribution.”

Vice President of Manufacturing Bill Rieger remarked, “It was an honor to rank as highly as we did on our first time out, but we are most looking forward to using the results to further improve our processes here at the plant.”

Plymouth Foam Incorporated, a North American manufacturer and marketer of high performance cellular foam plastic products, with locations in Plymouth, Wis.; Gnadenhutten, Ohio; and Becker Minn., announces the promotion of David Bolland to the position of president and chief executive officer. Bolland had been president and chief operating officer since March 2005.

Bolland is a Plymouth Foam board director, a member of the Young President’s Organization, and serves on the EPS Molders Association board of directors as president.

Thomas Testwuide Sr. will continue to serve as chairman of the board, a position he has held since 1998.

ProBuild Company LLC, Denver, has reached an agreement to purchase some of the assets of Chopp Lumber, a building materials supplier based in Waldorf, Md. The location will supply trusses, wall panels and lumber to the residential and commercial markets of the greater Washington, D.C., market and Southern Maryland.

Structus Building Technologies, Bend, Ore., has announced the restructuring of its executive level leadership group. The new structure positions the company to achieve its aggressive growth goals in the coming years.

Founder/Owner Tim Smythe has moved from his role as CEO to that of chairman of Structus. Smythe will remain closely involved in the research, design and creation of new products and technologies.

Bill Scannell has been promoted to CEO. Scannell joined Structus in 1997 as a sales representative, was promoted to national sales manager in 2000 and then president in 2005.

As one of his first actions as CEO, Scannell has assembled a new leadership team that includes Tracey Wright (promoted to director of sales), Jennifer Houston (promoted to director of marketing), JJ Yacovella (human resources director), Dave Slavensky (chief operating officer), Mark Cahill (chief financial officer) and Doug Wambaugh (vice president of engineering).

The board of directors of Armstrong World Industries, Inc., Lancaster, Pa., has named Matthew J. “Matt” Espe as the company’s chief executive officer and president. His appointment was effective in late July 2010.

Espe brings 30 years of experience in sales, marketing, distribution and management of global manufacturing businesses to Armstrong. He joins the company from Ricoh Americas Corporation, a subsidiary of Ricoh Company, Ltd.

Espe succeeds Michael D. Lockhart who stepped down in February 2010.

Intercorp., an importer of construction fasteners under the Strong-Point brand, has relocated its Chicago branch to a larger and more efficient location on Millennium Drive in Elgin, IL.

JLG Industries, Inc., McConnellsburg, Pa., has announced the retirement of Craig Paylor as president of JLG and executive vice president Oshkosh Corporation. The company also announced that Wilson Jones, Oshkosh Corporation executive vice president and president of Oshkosh’s Fire and Emergency segment, has been named to succeed Paylor as president of JLG and executive vice president of the Access Equipment segment of Oshkosh Corporation.

Paylor stepped down on July 1, 2010. During his more than 30-year tenure at JLG, Paylor has played a key role in supporting the company’s growth from a $40 million privately held company to a publicly traded global corporation with sales approaching $3 billion prior to the acquisition in 2006 by Oshkosh. Paylor held the position of president of JLG since May 2007.

Wilson has been in the specialty vehicle manufacturing industry for more than 20 years. He joined Oshkosh Corporation in 2005 as the vice president and general manager of the airport products business unit and later became vice president, sales and marketing for the fire and emergency group. In 2007, Wilson was promoted to president of Pierce Manufacturing and to the position of executive vice president of the Fire and Emergency segment in 2008.

The National Finishing Contractors Association, Bethesda, Md., has appointed Anthony (Tony) Darkangelo to the position of chief executive officer for National FCA. Darkangelo succeeds Stuart Binstock, who is no longer with the association.

Darkangelo joined National FCA in 2008 as the regional vice president for the central region. Darkangelo brought multiple affiliates on board. He excelled in assisting members and building relationships with National FCA’s union partners around the country. His extensive work with National FCA’s committees allowed for the newly formed Safety Advisory Committee to expedite the National FCA Safety Awards Program.

In early July, Lafarge North America opened doors at its new headquarters in Reston, Va. The new space has been designed to maximize the use of recycled materials and create a space that will use electricity, water and other resources in a more efficient manner.

Moving into a new office space gave Lafarge the opportunity to create a more sustainable office space with a lower carbon footprint. In addition, more than 90 percent of the construction waste from the Lafarge headquarters will be recycled.

Products in the News

Alabama Metal Industries, Inc. (AMICO), a Gibraltar Industries Company, announced a new listing on ICC-ESR website for its re-engineered metal laths. ICC-ESR #2247 can be found at With this new listing, AMICO has launched a “Lath Integrity Program” that will include color-coded bundle bands identifying the weight of the lath, the ASTM C847 and ICC-ESR #2247.

EMMEDUE®, the Italian manufacturer of the patented equipment to make EMMEDUE® structural insulated concrete panels, announced that on July 1, 2010, the Emmedue Advanced Building System has been approved compliant with the latest International Building Code and International Residential Code, after thorough testing and evaluation by ICC-ES (International Code Council Evaluation Services).

The full ES report is available for download at and

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