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Construction Trends

ABC Predicts Construction Recovery May Be Two Years Away

During a national online news conference June 8, ABC Chief Economist Anirban Basu said that the nation’s construction industry recovery may be two years away.

“From what we’ve seen so far in 2011, nonresidential construction will likely be further delayed,” said Basu. “Right now, what will happen in 2012 remains unclear.

“Officially, the country is in a period of economic recovery,” Basu said. “Unfortunately, this does not mean that all segments of the economy are doing well. No sector of the economy has been hit harder than the construction industry.”

Although employment in the construction industry has expanded over the past four months, Baus did not predict significant construction employment growth in the months ahead. Pointing out that the economy has hit a soft spot, making the construction job picture flat.

“Segments of the construction industry that will likely experience growth in the coming 10 to 12 months will be healthcare, which is the construction of hospitals, health centers and clinics, and the natural resources sector, which is in reaction to the growing cost of energy,” Basu said.

Lafarge to Sell Gypsum Operations for $1.4 Billion

Lafarge announced July 14 that the Group has entered into exclusive negotiations with Etex Group for the sale of its European and South American Gypsum assets at an enterprise value of 1 billion euros, or $1.4 billion. Under this proposed agreement, Lafarge would receive net cash proceeds of approximately 850 million euros ($1.195 million) and a 20 percent interest in the new partnership, which would combine the European and South American Gypsum activities of both Groups. Contractual rights specify that Lafarge would be able to sell its 20 percent interest to Etex Group after five years.

Lafarge’s European and South American Gypsum division manufactures gypsum wallboard and other gypsum-based products such as plaster, joint compounds, and plaster blocks. In 2010, Lafarge’s European and South American Gypsum operations generated consolidated sales of 895 million euros and EBITDA of 115 million euros.

This project will be submitted to the relevant authorities, notably anti-trust authorities. Moreover, there will be an information and consultation process with the relevant employee representative bodies.

Etex Group is an industrial group that produces and markets high-quality building materials and systems. With headquarters in Belgium, the Group holds more than 90 subsidiaries across 40 countries and employs more than 13,500 people.

NAHB Study Finds Loan Limit Declines a Discouraging Prospect for Recovering Housing Market

A drop in some mortgage loan limits for the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and the Federal Housing Administration scheduled to occur on Oct. 1 will reduce housing demand and place downward pressure on home prices in major housing markets, according to a study from the Economics and Housing Policy Group at the National Association of Home Builders released June 24.

When they come up for sale, the homes that will become ineligible to be purchased and securitized by the GSEs or to be purchased with FHA-insured financing as a result of the lower limits “would likely require financing with higher mortgage interest rates and other less favorable loan terms, such as higher required down payments and more stringent credit history thresholds,” according to the report.

“The lower limits will place a constraint on home buying in high-cost housing markets, such as those along the coasts and in California. It is the last thing we need in a housing market that is still struggling to get back on its feet,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

The downward pressure on prices could extend beyond the homes directly affected by the lower limits, the study warns, because first-time and trade-up home sales are interrelated.

The size of “conforming” mortgages for the GSEs is currently limited to $417,000 in general, but that ceiling can rise to as high as $729,750 using a statutory formula based on local median home prices.

Unless Congress acts to extend these levels, they will revert to the lower permanent criteria for high-cost areas under the Housing and Economic Recovery Act of 2008.

The base limit will remain at $417,000, but the formula for establishing limits for high-cost areas will change from 125 percent to 115 percent of the area median home price, and the national ceiling will drop from $729,750 to $625,500.

Purchasing homes that go above the GSE ceiling will require non-conforming loans that currently have been about 60 basis points (0.6 percentage points) higher than conforming loans, the study finds, and based on a report by the Federal Housing Finance Agency the non-conforming mortgages are expected to be 50 to 75 basis points higher.

Looking at limits published by the FHFA, 204 counties—or 6.5 percent of the 3,143 counties in the United States—will see a decrease in their high-cost conforming loan limit. These counties represent relatively dense concentrations of population and housing and contain 20.7 million owner-occupied units out of the 75.3 million nationwide, or 27 percent.

In the counties facing a decline, the average decline in the loan limit will be $67,018, down 11 percent from current levels.

Under present law, 3.63 million owner-occupied homes are priced above the conforming loan limits. Under the changes set to take place on Oct. 1, an additional 1.38 million owner-occupied homes will be above the limit, leaving a total of 5 million homes that will not be eligible for GSE funding.

Lowering the limits will take an even bigger toll on homes eligible for FHA-insured financing, the study finds.

As with the GSEs, the national ceiling for FHA loans will drop to $625,500 on Oct. 1, and for counties whose housing is priced somewhere between that amount and the lowest ceiling of $271,050, the FHA mortgage loan limit will also decline from 125 percent to 115 percent of the area median.

According to the limits published by the FHA, 620 counties—or 20 percent of the total—will see a decrease in their FHA loan level. The affected counties contain 44.3 million owner-occupied housing units, or 59 percent of the owner-occupied housing stock in the United States.

For counties facing a decline, the average drop in the FHA loan limit is $58,060, down 14 percent from current levels.

Under present law, 8.32 million owner-occupied homes are priced above the existing FHA loan limits. Under the changes set to take place on Oct. 1, an additional 3.87 million owner-occupied homes will surpass the limit, bringing the total number of homes ineligible for FHA-insured mortgages to 12.2 million.

The report, “GSE and FHA Loan Limit Changes for 2011: Scope of Impact,” is available at

New-Home Sales Decline 2.1 Percent in May, Holding Above First Quarter Average
Sales of newly built, single-family homes declined 2.1 percent to a seasonally adjusted annual rate of 319,000 units in May, according to figures released June 23 by the U.S. Commerce Department. The decline only partially offsets a larger gain that was registered in April.

“Today’s report indicates that new-home sales are holding fairly steady at a relatively low rate, with both April and May sales numbers running above the first-quarter average,” noted Bob Nielsen, chairman of the National Association of Home Builders and a home builder from Reno, Nev. “In view of the slow progress of economic recovery and the challenges builders continue to face with regard to rising materials prices, access to construction credit, competition from foreclosed homes and inaccurate appraisals, the averages for the last two months combined represent some very slow improvement which should continue as expected economic gains boost consumer confidence.”

“One bright spot in the government’s May housing numbers is the inventory of new homes for sale, which continued to fall to a new record low last month,” said NAHB Chief Economist David Crowe. “This means that builders continue to be appropriately cautious about adding new homes to the marketplace, and it has pushed down the months’ supply to a level typically found in stable markets.”

The largest decline in new-home sales this May occurred in the Northeast, which recorded a 26.7 percent slide. The West posted a more modest, 3.5 percent decline, while the Midwest posted no change from the previous month and the South posted a 2.4 percent gain.

Meanwhile, despite the slower sales pace, the inventory of new homes for sale continued downward in May, declining 3.5 percent to 166,000 units. This marks the lowest inventory number on record and represents a 6.2-month supply at the current sales pace.

Housing Starts Gain 3.5 Percent in May

Nationwide housing starts rose 3.5 percent to a seasonally adjusted annual pace of 560,000 units in May, according to figures released June 16 from the U.S. Commerce Department. The gain partially offsets a larger decline that was registered in April.

“While the upward movement registered in today’s report is somewhat good news, housing production continues to bounce along the bottom near historic lows, and is only running at a level necessary to replace dilapidated or destroyed units,” said Bob Nielsen, chairman of the National Association of Home Builders and a home builder from Reno, Nev. He also noted that “Amidst this fragile marketplace, the nation’s policymakers should be aware of a recent poll that confirms the strong value that most American voters continue to place on homeownership and housing choice.”

Conducted this May on behalf of NAHB by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C., the poll asked 2,000 likely voters about their attitudes on homeownership and housing policy. It found that the vast majority of current home owners are happy with their decision to own a home and believe that owning their own home is important, while nearly three-quarters of those who do not now own a home consider it a goal of theirs to eventually buy one. Additionally, the poll determined that 73 percent of owners and renters believe the federal government should provide tax incentives to promote homeownership. Details on this poll are available at

“Like consumers, builders remain very concerned about the pace of economic growth and are awaiting signs of improvement before moving forward with new projects,” noted NAHB Chief Economist David Crowe. “The relative bright spot in new-home construction is on the multifamily side, where improving demand for rental apartments is spurring gains in that sector. However, access to construction credit remains a limiting factor for new building.”

Single-family housing starts rose 3.7 percent to a seasonally adjusted annual rate of 419,000 units in May—their strongest pace since this January. Multifamily starts rose 2.9 percent to a 141,000-unit rate in May.

Regionally, housing production rose 1.5 percent in the South and 18.1 percent in the West, but declined 3.3 percent in the Northeast and 4.1 percent in the Midwest in May.

Issuance of building permits, which can be an indicator of future building activity, rose 8.7 percent to a seasonally adjusted annual rate of 612,000 units in May. This was the strongest pace since December of 2010. Single-family permits were up 2.5 percent to a 405,000-unit rate, while multifamily permits rose 23.2 percent to a 207,000-unit rate—their best pace since October 2008.

Permit issuance posted double-digit gains in the Northeast and West in May, rising 35.6 percent and 15.1 percent, respectively. The South also posted a gain, of 3.5 percent, while the Midwest registered a 1.1 percent decline.

Builder Confidence Declines Three Points in June

After holding at a low but steady level for the past six months, builder confidence in the market for newly built, single-family homes declined three points in June to a reading of 13 on the National Association of Home Builders/Wells Fargo Housing Market Index, released June 15. The last time the index was this low was in September 2010.

“Builders are being squeezed by the continuing weakness in existing-home prices—against which they must compete—as well as rising material costs,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “In addition to the ongoing impacts of distressed property sales on home prices, appraisal values and consumer confidence, rising costs for materials such as roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs.”

“Builder confidence has waned even further as economic growth has stalled, foreclosures have continued to hit the market and the cost of building a home has risen,” agreed NAHB Chief Economist David Crowe. “Meanwhile, potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy. Economic growth must pick up in order for housing to gain the momentum it needs to get back on track.”

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.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Every component of the HMI fell in June. The component gauging current sales conditions and the component gauging traffic of prospective buyers each fell two points, to 13 and 12, respectively. The component gauging sales expectations in the next six months fell four points to tie its record low score of 15 set in February and March of 2009.

The Northeast was the only region to post a gain in its HMI score for this June, rising two points to 17. Meanwhile, the Midwest dropped three points to 11, South dropped two points to 14 and the West posted a four-point decline to 12.

Special Announcement: A major new NAHB-commissioned poll of 2,000 likely 2012 voters confirms the high priority that Americans continue to place on homeownership even amidst the current struggling market—as well as the voting public’s strong support for continued federal tax incentives to promote homeownership and housing choice. Complete poll results can be viewed at

EPA Says Lead Rule Needs No Alterations

After carefully weighing all available information and considering the public comments, the Environmental Protection Agency concluded July 15 that it is not necessary to impose new lead-dust sampling and laboratory analysis, known as the clearance requirements, as part of the Lead Renovation, Repair and Painting rule. The agency believes that the existing lead-safe work practices and cleanup requirements, which went into place in 2010, will protect people from lead dust hazards created during renovations jobs without the need for additional clearance requirements.

Nothing in the action taken July 15 will hamper implementation of the tough protections already in place. EPA determined that the lead-safe work practices will protect human health without imposing additional regulatory burdens and costs associated with taking dust samples and obtaining laboratory analyses.

EPA had agreed to complete a final rule addressing the clearance issue by July 15 as part of an agreement to settle litigation with the Sierra Club and other petitioners over certain post-renovation cleaning requirements of the 2008 RRP rule.

Although EPA is not imposing clearance requirements, the final rule clarifies and strengthens the current lead-safe work practices, including requiring that a vertical containment system or equivalent measures be used when outside renovations are performed within 10 feet of a property line, and that HEPA-vacuum filters be changed at regular intervals.

EPA says it will aggressively enforce the LRRP rule and continue its extensive education and outreach program to ensure lead-safe work practices and continue to reduce lead poisonings across the country.

Visit for a copy of this final rule or for additional information on the LRRP requirements.

OSHA Launches Interactive Website to Help Explain Its Recordkeeping Rules

The Occupational Safety and Health Administration has unveiled a new interactive Web tool to help users determine whether injuries and illnesses are work-related and recordable under the OSHA Recordkeeping rules.

The OSHA Recordkeeping Advisor is an interactive tool that simulates an employer’s interaction with a recordkeeping rules expert. The Advisor relies on the users’ responses to questions and automatically adapts to the situation presented. Responses put into the program are strictly confidential, and the system does not record or store any of the information. The Advisor helps employers determine whether an injury or illness (or related event) is work-related; whether an event or exposure at home or on travel is work-related; whether an exception applies to the injury or illness; whether a work-related injury or illness needs to be recorded, and which provisions of the regulations apply when recording a work-related injury or illness

OSHA’s Injury and Illness Recordkeeping page ( links to the Recordkeeping Advisor and other guidance materials to help employers understand and comply with Federal recordkeeping and reporting requirements.

The OSHA Recordkeeping Advisor is one of a series of elaws (Employment Laws Assistance for Workers and Small Businesses) Advisors developed to help employers and workers understand federal employment laws. A full list of Advisors can be found at the elaws website,

SFIA Releases Technical Guide

The Steel Framing Industry Association, Falls Church, Va., has released “Technical Guide for Cold-Formed Steel Framing Products,” a comprehensive guide that provides technical information for designing with cold-formed steel framing members.

The 110-page book covers both structural and non-structural applications. The guide begins with section properties of SFIA member product profiles, then provides complete load and span tables for most applications. Designers will find all the information they need to accomplish code compliant structural analysis. It is available free online at the SFIA website under “Technical Information.” The direct address for this guide is

The SFIA says this is the first industry association technical catalog for cold-formed steel framing to comply with the 2009 IBC and the 2007 AISI North American Specification. Not only does it meet the latest building codes including the 2009 IBC and 2011 CBC, it also incorporates all of the requirements of the AISI Specification including distortional bucking.

World Power Tool Demand to Exceed $27 Billion in 2015

World power tool demand is projected to rise 4.4 percent per year through 2015, reaching $27.3 billion. The pace of growth will be most rapid in the developing countries of Asia, where rising incomes and advances in residential and nonresidential building construction activity will bolster demand. The US market will also provide solid growth opportunities, reflecting a turnaround in the current housing crisis, as well as continued enthusiasm for do-it-yourself projects by US consumers. These and other trends are presented in “World Power Tools,” a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

China will post the strongest gains, as the nation continues robust growth in construction expenditures. India will also record strong gains in power tool demand, averaging 9.0 percent annually through 2015. Outside of Asia, the most promising opportunities are in Eastern Europe, where rising fixed investment activity will boost demand. The relatively mature markets of Japan and Western Europe will continue to see gains that considerably lag the global average, reflective of their below-average outlooks for construction expenditures.

Electric tools (plug-in and cordless) dominate world demand, representing more than 70 percent of power tool sales in 2010. Electric tools (most notably hand drills) will remain the leading type of power tool, due to their frequent use in both consumer and professional applications. Cordless products will continue to post the best gains, as improved battery technology increases their performance advantages.

Professional demand will grow more rapidly than consumer demand through 2015 as many nations experience recovery in construction activity. Professional users account for more than two-thirds of power tool sales, reflecting the greater concentration of expensive power tools among this group. Given the amount of use, professionals will spend more on better quality tools, since the initial investment often pays off over the long run through better performance and longer tool life. Consumers, on the other hand, are more likely to shop by price, and rarely have need of expensive tool systems like pneumatics and hydraulics.

CertainTeed Corporation CEO Retires

CertainTeed Corporation, Valley Forge, Pa., has announced the retirement of its president and CEO, Peter Dachowski, effective Aug. 31, 2011.

During his 35-year tenure with CertainTeed, and its parent company Saint-Gobain, Dachowski served in a long progression of executive roles in finance and global management. He joined CertainTeed in 1976 and was quickly promoted to vice president and treasurer and later, corporate comptroller. Through the late 1980s, despite an economic downturn, he led significant growth in CertainTeed’s roofing, ventilation, siding and window businesses through new product innovations and acquisitions. In the early 1990s, his responsibilities were expanded to include all of CertainTeed’s building materials manufacturing and wholesale distribution businesses.

In 1996, Dachowski was appointed president of Saint-Gobain’s worldwide insulation business, based in Paris, driving significant growth particularly in Eastern Europe and Russia, expanding the ceilings business in the Far East, restoring the profitability of the stone wool business, developing a common global brand identity and cultivating the company’s world leadership position in these product areas.

Since his return to North America as president and CEO of CertainTeed in 2004, Dachowski has led key initiatives focused on quality, innovation and sustainability. Under his direction, CertainTeed expanded significantly into Canada, established an industry-first building science team and launched revolutionary product.

John Crowe, who is currently the president of Saint-Gobain’s global abrasives business, will succeed Dachowski as president and CEO of CertainTeed Corporation. Crowe has held numerous leadership positions within the Saint-Gobain group of companies over the past 30 years. As the president of Saint-Gobain Abrasives, he is responsible for 13,000 employees and approximately 75 manufacturing facilities in 24 countries.

People in the News

The Finishing Contractors Association, Bethesda, Md., has hired Cindi Spangler of St. Louis, Mo., as its new central regional vice president and safety specialist. Spangler has an extensive background in the construction industry and most recently served as the safety director for T.J. Wies Contracting.

Spangler brings a wealth of experience in the construction industry to FCA with a specialty in safety practices. During her time as safety director for T.J. Wies Contracting, Spangler helped its safety program win various awards, including receiving a Construction Safety and Excellence Award sponsored by the General Contractors of America, where her company placed third in the nation.

Spangler will maintain and develop relationships with contractors throughout the Central United States, and will also use her understanding of jobsite safety to direct the FCA’s safety initiatives.

Kica Loliyong has joined ProSpec, Charlotte, N.C., in a newly created position, vice president of sales. Loliyong will assume national sales responsibility for the full line of ProSpec products.

Previously Loliyong was manager of the consumer division at Mapei. At Mapei, he managed relationships with key customers such as Lowe’s and The Home Depot and worked with cross-functional teams in sales, R&D, product management, operations and marketing to launch new products and drive product growth/profitability. Prior to Mapei, Loliyong worked at TEC Specialty Products and Sherwin-Williams.

Along with his professional career in the industry, Loliyong brings leadership experience from his military background with the United States Marine Corps, where he was a decorated veteran of both Operations Desert Shield and Desert Storm.

Parex USA, Inc., Anaheim, Calif., announces the addition of Karine Galla and Heidi Larsen to the marketing team.

Galla and Larsen will each take the on position of product manager, focusing on the two main elements of Parex USA’s façade division, stucco solutions and EIFS respectively.

Galla, an 11-year veteran of Parex USA, has been promoted to the new position. She previously worked as a project manager at the Riverside plant and most recently as the manager of the customer service department.

Larsen has extensive experience in the construction products industry. Prior to joining Parex USA, Inc., she served as the marketing and architectural sales manager for a supplier of cementitious floor underlayments and acoustical control products. There she became well versed in developing architectural specifications, data sheets and submittal packages.

Companies in the News

Fastener distributor Intercorp. has moved all of its Dallas branch to a warehouse twice the size and just a few miles from the previous warehouse.
“Our branch has been growing rapidly over the last several years and our new offices and warehouse can now accommodate this growth for years to come,” said Branch Manager Ed Harper. “Ultimately, we want to be able to serve our customers throughout the Southwest from our Dallas and Houston warehouses as quickly as possible. With this move we have substantially increased our inventory levels that will allow us to do just that.”

On June 1, American Masons’ and Building Supply, a privately owned building materials distributor in Hartford, Conn., was purchased by Dave Westerman, a former regional manager with Probuild Gypsum.

American Masons’ is a distributor of drywall, steel, insulation and masonry products servicing contractors throughout Connecticut and Southwestern Massachusetts.

Westerman has spent more than 29 years in the industry primarily in the Connecticut market.

He succeeds Efrem Jaffe, whose family has owned and operated American Masons’ at its current location since 1933.

New on the ’Net

There’s a new look at National Gypsum. The company has launched a refreshed version of with all the features of the old site with a new look, some new information and easier navigation.

Product information, specification and MSDS sheets, construction guides and information on AIA/CES courses are all there. Plus, the company’s green site and Green Product Score tool are included under the Sustainability tab. Company and product news will provide regular updates on what’s happening at National Gypsum and in the gypsum industry.

Customers can follow National Gypsum on the refreshed, Facebook ( and

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