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Construction Trends

June Construction Starts Jump 15 Percent

After weak activity in May, new construction starts in June climbed 15 percent to a seasonally adjusted annual rate of $436.8 billion, according to McGraw-Hill Construction.

The gain helped the pace of contracting during this year’s second quarter stay close to its first quarter level. June featured a substantial increase for the nonbuilding construction sector, led by the start of several large electric utility projects. Nonresidential building also registered improvement in June, while housing edged up slightly. During the first six months of 2011, total construction starts on an unadjusted basis came in at $198.2 billion, down 7 percent from the same period a year ago.rding to McGraw-Hill Construction.

The June data lifted the Dodge Index to 92 (2000=100), which is the highest reading so far in 2011. During the first five months of 2011, the Dodge Index had trended downward, moving from 91 in January to 80 in May.rding to McGraw-Hill Construction.

Nonresidential building, at $153.6 billion (annual rate), climbed 11 percent in June, McGraw-Hill reported. The commercial categories showed healthy percentage gains, moving up from May’s weak activity. Office construction in June rose 39 percent, boosted by the start of a $160 million corporate campus in the Houston metropolitan area, as well as by the start of a $147 million federal building renovation at Fort Snelling, Minn., and a $60 million renovation to a corporate headquarters in Seattle. Hotel construction jumped 55 percent, moving up from a particularly depressed May, and helped by the start of a $50 million hotel renovation in Philadelphia. Warehouse construction in June increased 30 percent, aided by the start of a $75 million distribution center for in South Carolina, while store construction improved 11 percent. The manufacturing plant category, which had been seeing an elevated pace of activity for much of 2011, settled back 13 percent in June.

On the institutional side of the nonresidential market, healthcare facilities in June rose 16 percent, continuing to strengthen after the sluggish activity earlier in 2011. June included groundbreaking for a $412 million medical center in Dallas, and a $316 million naval hospital at Camp Pendleton, Calif., as well as four other hospital projects valued at $100 million or greater. The amusement-related category increased 90 percent in June, aided by the $122 million addition to a performing arts center in San Antonio as well as two large casino development projects in Ohio. The public buildings category, which has fallen sharply over the past year, bounced back 89 percent in June, reflecting the start of a $250 million courthouse building in Long Beach, Calif. Educational facilities, the largest institutional category, improved a moderate 4 percent in June. Institutional structure types with June declines were church construction, down 34 percent; and transportation terminals, down 77 percent. The steep drop for transportation terminal work followed heightened levels of activity during April and May.Construction.

During the first six months of 2011, nonresidential building was down 9 percent from a year ago, as the institutional building sector fell 20 percent. In contrast, commercial building year-to-date climbed 11 percent, beginning to gain some upward momentum after last year’s very weak volume. The manufacturing plant category year-to-date increased 98 percent, aided by the start of several large manufacturing plants that reached groundbreaking during the first half of this year.

Residential building in June grew 1 percent to $120.1 billion (annual rate). The upward push was provided by multifamily housing, which increased 8 percent after retreating in May. Large multifamily projects that reached groundbreaking in June included a $123 million apartment building in Seattle and a $114 million apartment building in Chicago.

During the first half of 2011, the top five metropolitan areas in terms of the dollar amount of new multifamily projects were New York, Washington, D.C., Chicago, Boston and Seattle.

Single-family housing in June was unchanged from May, as the result of a varied pattern by region: the Midwest, up 3 percent; the South Central, up 2 percent; the Northeast, up 1 percent; the South Atlantic, down 1 percent; and the West, down 5 percent.

At the six-month mark of 2011, residential building dropped 10 percent from the first half of 2010, with declines reported for single-family housing, down 10 percent; and multifamily housing, down 6 percent. The multifamily decline in dollar terms is related to the fact that last year’s first half included several large multifamily renovation projects. At the same time, multifamily housing in dwelling unit terms during the first half of 2011 was up 5 percent compared to last year.

The 7 percent shortfall for total construction starts at the U.S. level during the first six months of 2011 relative to 2010 was due to declines in four of the five major regions: the Midwest, down 12 percent; the Northeast and South Atlantic, each down 10 percent; and the South Central, down 9 percent. The West was the one region to report a year-to-date gain, rising 7 percent with much of the upward push coming from a strong volume of electric utility projects.

Builder Confidence Regains Two Points in July

Builder confidence in the market for newly built, single-family homes rose two points to 15 on the National Association of Home Builders/Wells Fargo Housing Market Index for July, released July 18. The gain largely offsets a three-point dip recorded in June, and marks the ninth time out of the past 10 months in which the index has held within the same three-point range.

“The improvement in builder confidence in July is a positive sign that the outlook perhaps isn’t quite as bleak as was feared in June,” said Bob Nielsen, chairman of the National Association of Home Builders and a home builder from Reno, Nev. “While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions.”

“We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season,” said NAHB Chief Economist David Crowe. “The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve.”

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.

Two out of three of the HMI’s component indexes rebounded in July from declines in the previous month. The component gauging current sales conditions rose two points to 15, returning to its May level, while the component gauging sales expectations in the next six months rose seven points to 22, which is where it stood in April. The component gauging traffic of prospective buyers held even with the previous month, at 12.

Regionally, the HMI inched up one point to 12 in the Midwest and posted three-point gains in both the South and West, to 17 and 14, respectively. Only the Northeast posted a decline, slipping two points to 15.

New-Home Sales Remain Relatively Flat in June

Sales of newly built, single-family homes declined 1 percent to a seasonally adjusted annual rate of 312,000 units in June, according to figures released July 26 by the U.S. Commerce Department.

Regionally, new-home sales were mixed in June. Sales declined 15.8 percent in the Northeast and 12.7 percent in the West and posted gains of 9.5 percent in the Midwest and 3.4 percent in the South from the previous month.

Meanwhile, the inventory of new homes for sale continued a downward trend in June, falling 1 percent to 164,000 units. This marks the lowest inventory number on record and represents a 6.3-month supply at the current sales pace.

Slide in Home Improvement Spending Likely to Continue into Next Year

After showing signs of recovery, spending on home improvements is expected to remain volatile and weak over the next several quarters, according to the Leading Indicator of Remodeling Activity released July 21 by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, Cambridge, Mass. The LIRA is projecting that annual remodeling spending through the first quarter of 2012 will be down 4.0 percent. The Census Bureau’s improvements spending series, to which the LIRA is benchmarked, was revised downward as well.

“The recent slowdown in the economy has caused home improvement spending to weaken again,” says Eric S. Belsky, managing director of the Joint Center. “Falling consumer confidence levels have undermined interest in discretionary remodeling projects.”

“What looked to be a promising upturn in home improvement spending earlier this year has begun to stall,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “Housing starts, existing home sales, and house prices have all been disappointing lately, which has dimmed prospects for home improvement spending gains this year.”

The Leading Indicator of Remodeling Activity is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home improvement industry.

The next LIRA release date is Oct. 20, 2011.

U.S. Labor Department Considers Development of Data Tool to Combat Pay Discrimination

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs is considering the development of a new data tool to collect information on salaries, wages and other benefits paid to employees of federal contractors and subcontractors. The tool would improve OFCCP’s ability to gather data that could be analyzed for indicators of discrimination, such as disparities faced by female and minority workers. To provide an opportunity for the public to submit feedback, the department published an advance notice of proposed rulemaking in the Aug. 10 edition of the “Federal Register.”

OFCCP enforces Executive Order 11246, which prohibits companies that do business with the federal government from discriminating in employment practices—including compensation—on the basis of sex, race, color, national origin or religion. Last year, the agency announced plans to create a compensation data tool in the department’s fall 2010 regulatory agenda. In addition to providing OFCCP investigators with insight into potential pay discrimination warranting further review, the proposed tool would provide a self-assessment element to help employers evaluate the effects of their compensation practices.

The Labor Department’s Bureau of Labor Statistics reports that in 2010 women were paid an average of 77 cents for every dollar paid to men. In addition to the gender gap, research has shown that race- and ethnicity-based pay gaps put workers of color, including men, at a disadvantage. Eliminating compensation-based discrimination is a top priority for OFCCP.

The notice poses 15 questions for public response on the types of data that should be requested, the scope of information OFCCP should seek, how the data should be collected, how the data should be used, what the tool should look like, which contractors should be required to submit compensation data and how the tool might create potential burdens for small businesses. The proposal will be open to public response for 60 days, and the deadline for receiving comments is Oct. 11. To read the proposal or submit a comment, visit the federal e-rulemaking portal

U.S. Demand for Wall Coverings to Reach $2.2 Billion in 2015

Demand for wall coverings is projected to advance 8.2 percent annually from a weak 2010 base to $2.2 billion in 2015. This represents a dramatic improvement over the performance of the 2005-2010 period, when demand for wall coverings fell sharply in the wake of the economic recession and the collapse of the U.S. construction market, particularly residential construction. Just as the residential sector suffered the most from the downturn in construction, so will it also lead the way back, with demand for wall coverings in this key market segment advancing more than eleven percent per annum through 2015. These and other trends are presented in “Wall Coverings,” a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

Demand for wall panel products is forecast to increase 9.0 percent annually to $1.2 billion in 2015. Sales of wall panel products will benefit from the expected recovery in residential construction activity, coupled with improving prospects in nonresidential construction markets. Laminate panels, in particular sheet panels, will continue to dominate demand, but greater growth prospects will emerge for several products at opposite ends of the value spectrum.

Demand for wallpaper products is projected to increase 7.3 percent annually to $480 million in 2015. Sales of wallpaper products have been in decline for more than a decade, reflecting changes in consumer preferences away from wallpaper in favor of paints and coatings. However, the development of products such as wallpaper borders, custom wallpaper and textured wallpaper is expected to breathe new life into a previously depressed product category. Also, advances in wallpaper technology, which make these products easier to apply and remove, will expand sales opportunities.

Demand for decorative tile wall coverings is projected to increase 7.1 percent annually to $450 million in 2015. Gains will derive primarily from a recovery in new housing construction, although consumption will also benefit from accelerating new nonresidential construction. In addition, the recovery in construction markets will also lead to growth in improvement and repair spending in both residential and nonresidential markets, supporting increased demand for ceramic tile in bathroom and kitchen renovations. Higher end products, such as glass tile, will provide outsized niche growth prospects.

People in the News

Dur-A-Flex, Inc., East Hartford, Conn., has named Peter Zazzaro as vice president of operations. Zazzaro is the former global director of operations, quality and regulatory affairs for Dymax Corp., an ISO 9001 certified, global manufacturer of solvent-free, UV light curable adhesives and systems.

Named one of the “Best Places to Work in CT” for the fourth time by the Hartford Business Journal-sponsored awards program, Dur-A-Flex is a privately-held, leading manufacturer of quality epoxy, urethane, methyl methacrylate and colored aggregates offering a line of high performance polymer flooring and wall systems.

Johns Manville, Denver, announced that Fred Stephan has assumed the role of vice president and general manager for JM’s Insulation Systems business. Stephan’s previous roles within JM include vice president and general manager of the roofing systems business, vice president of business process simplification and vice president and general manager of JM’s engineered products group’s high performance nonwovens business. Stephan replaces Mike Lawrence, who has assumed leadership of JM’s Engineered Products North America business as part of the company’s succession planning and development process.

Varco Pruden Buildings, a provider of metal building systems headquartered in Memphis, Tenn., has named Guy Power a district manager.

Power, who has been in the construction business for 25 years, will be responsible for the sales and marketing of Varco Pruden products in South Georgia, South Alabama and the Florida panhandle. His office will be in Maysville, Ga.

ITW Muller, Arlington Heights, Ill., has expanded its sales team with the appointment of Rob Payne to industry manager. Payne will be responsible for supporting the team in the Western portion of the United States and Canada with a specific focus on building relationships with OEMs/Integrators and key distributors. He will also help build relationships with existing and prospective customers throughout the region.

Niles Building Products, Niles, Ohio, has added Dave Muccia as national sales manager. In this role, Muccia will head and build a strong sales force.

Muccia comes to Niles with 30 years of experience in the building materials industry, the majority being spent in the manufacturing segment. He started his career with National Gypsum and spent 12 years with Dietrich Metal Framing as a sales manager in the New York–New Jersey area. Most recently he was on the distribution side of the business as branch manager of Kamco Supply of New Jersey.

Gary J. Maylon, president of Metal Lath and Stucco Consulting Co. Inc. in Talladega, Ala., has received the ASTM Award of Merit and title of fellow from ASTM International Committee C11 on Gypsum and Related Building Materials and Systems. The Award of Merit is ASTM’s highest organizational recognition for individual contributions to standards activities.

A member of ASTM International and Committee C11 since 1990, Maylon was cited for his contributions to the development of standards related to stucco products and their installation. He has been the task group chairman and a major technical contributor to ASTM C1063, Standard Specification for Installation of Lathing and Furring to Receive Interior and Exterior Portland Cement-Based Plaster, for more than 20 years. C11 has recognized him in the past with the Award of Appreciation in 1999 and 2010. In addition to his work with C11, Maylon also serves on Committee E06 on Performance of Buildings.

Brewster, N.Y.–based Powers Fasteners has added Stephen Ludwig to its team of fastening and anchoring professionals. Ludwig will serve as director of the newly developed “electric tools and accessories” segment. The focus of his responsibilities will be to augment Powers’s line of anchoring products with the power tools used to install those products.

Ludwig has more than a decade of management experience with DeWalt and Apex Tool Group (formerly Danaher) and has extensive hands-on experience in electric tools, product development and channel management.

The ALL Erection & Crane Rental Family of Companies has named Craig Hunt the new general manager of ALL Carolina Crane & Equipment, LLC in Raleigh, N.C. He previously served as general manager of the branch until 2009, when he left to assist a family business.

Plymouth Foam Incorporated, with locations in Plymouth, Wis., Gnadenhutten, Ohio, and Becker, Minn., has promoted Thomas Groth to vice president of sales and marketing.

Groth has worked in the building and construction industry since 1992 and is familiar with distribution and B2B marketing.

Jim Doyle, district sales manager of BASF’s Wall Systems business for the Southeast, has been elected president of the Florida Wall & Ceiling Contractors Association by its board of directors.

Doyle has been involved with the EIFS industry for nearly 30 years. He has been an active member of the FWCCA since its inception in 1982 and on the board of directors for the past three years. In 2005 he was recognized with the FWCCA Lifetime Support Award.

FWCCA, a chapter of the Association of the Wall and Ceilings Industry, represents the needs and concerns of Florida contractors in the wall and ceiling industry.

Companies in the News

Quail Run Building Materials, Inc., a veteran owned steel manufacturing company located in Phoenix, announces its 25th anniversary. Quail Run began operations in 1986 and today manufactures a full line of cold formed steel building products.

Quail Run is a member of both the Steel Stud Manufacturers Association and the Supreme Steel Framing System Association.

Pro Plaster Products, a longtime importer, wholesaler and retailer of professional drywall finishing materials, tools and accessories, has begun manufacturing drywall finishing compounds in Australia.

The facility is located just outside Brisbane. According to Perry Richardson, Pro Plasters’ managing director, it is the result of an ongoing alliance with Solid Products, Inc. of Richfield, Wis.

It is Pro’s intent to manufacture a complete line of drywall finishing products for wholesale and retail distribution throughout Austral Asia market.

Recycled Energy Development and National Gypsum Company have developed a combined heat and power project at NGC’s Burlington, N.J., facility. The project, which was supported by the state of New Jersey, will produce approximately 3.4 megawatts of clean electricity and deliver more than 210,000 MMBtu of thermal energy, resulting in an overall efficiency of greater than 90 percent.

RED’s CHP system will provide clean power and thermal energy to NGC’s wallboard production facility. The transformational CHP project will reduce NGC’s energy intensity and greenhouse gas emissions, and serve as a model for energy efficiency and emission reductions at energy intensive industrial facilities throughout the United States.

L&W Supply Corporation, Chicago, has won two highly coveted “A,A” Partners of Choice awards from David Weekley Homes for two regions: Seacoast Supply in Florida and Building Specialties in Texas. This is the highest evaluation a supplier can receive and the first time in the program’s eight-year history that two regions of one company have received this designation. In a field of 150 companies, Seacoast Supply and Building Specialties are two of only 10 suppliers to achieve the prized “A,A” award from participating in the homebuilder’s rigorous evaluation process.

L&W Supply’s Seacoast Supply and Building Specialties achieved the “A,A” award for scoring an “A” in both the quality and service categories for one full year. This is the fourth consecutive year Seacoast Supply has achieved the top status, continuing the longest period a building products distributor has held the cherished award. Previously winning an “A” award for quality, this is the first year Building Specialties has received this honor.

The ALL Erection & Crane Rental Corp. has opened ALL Crane Rental of Louisiana, the newest branch of the ALL Family of Companies. Located centrally between Baton Rouge and New Orleans in Geismar, La., the company’s 31st yard will fulfill the demand for heavy lift equipment in the Gulf Region. The new full-service yard in Louisiana will serve the region around Baton Rouge and New Orleans, including Gulfport, La., and Biloxi and Jackson, Miss.

Products in the News

Reward Wall Systems, Omaha, Neb., has become the first insulated concrete form to be officially certified to the new ASTM E2634 standard. This new standard will be referenced in the next 2012 IRC and IBC codes.

The new ASTM standard was created to deal with the varying quality of ICFs on the market by creating more consistency, acceptance, and credibility for the ICF market. Code officials and the design community will use the standard to ensure a minimum requirement is meant.

New on the ’Net

“Sustainable Ceiling Systems,” a new U. S. Green Building Council approved course from Armstrong Ceiling & Wall Systems, is now available online.

The new addition to the USGBC catalog of courses not only addresses the contribution of acoustical ceiling systems to energy performance, indoor environmental quality and occupant productivity, but also the application of those concepts on projects.

Participants will also learn how to evaluate “green” interior finishing products to assist their clients in their environmental efforts, and how ceiling systems can contribute to as many as thirteen LEED® credits.

At the conclusion of the course, participants will be able to specify and apply different types of ceiling systems to maximize their impact on building design, energy efficiency, and sustainability.

Completion of the course qualifies for one continuing education hour toward the Green Building Certification Institute’s Credential Maintenance Program. The course is also approved as a continuing education unit by the American Institute of Architects and Interior Design Continuing Education Council.

To access “Sustainable Ceiling Systems,” visit

Designed to assist professionals in choosing the best anchor for their application, the Hilti Anchor Selector App for iPhones is now available on iTunes at no charge. The first of its kind, the Hilti app allows users to browse and choose anchors based on a variety of criteria including load values, location, base material and baseplate geometry.

A “Find Anchor” feature makes searching for general information about a Hilti anchor easy and includes valuable information such as hole diameter, embedment depth, setting instructions and list of tools needed for installation. Using the “My Favorites” functionality, users can save their searched or most frequently used anchors for quick reference in the future.

Download the Hilti Anchor Selector App on iTunes at The app is compatible with iPhone, iPod touch and iPad with software version 4.2 or newer.

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