As materials improve, the race is on for market dominance.
When it comes to trim and siding, homeowners and production builders share a common desire: They want a material that’s durable and aesthetically pleasing and requires little maintenance. But when price enters the picture, the two groups split: Homeowners can accept higher prices for higher quality, while builders prefer to keep costs at a minimum.
This quality-versus-price tug-of-war is nothing new for the construction industry, but what is new is how emerging technologies can shift the balance one way or the other. With trim, the common trend from our Product Monitor last year was that PVC was gaining ground in a category still largely dominated by wood, as it provided the best durability and least maintenance, albeit with a higher price tag. Now, however, it looks as though PVC isn’t as hot as previously thought. “PVC is a high-end product, and builders want to maximize their bottom lines,” says Casey Olson, an industry analyst at Principia Consulting. “If durability and maintenance are comparable, builders, especially volume builders, will choose the cheaper product.”
Though PVC still wins outright on durability, especially in areas with moisture, Olson and others say warranties on treated wood are starting to become competitive. “Treated-wood products now offer an almost comparable warranty to PVC. And people like wood,” Olson says.
Commercial Roofing 2018 is now available for pre-purchase with full delivery planned for Q4 2018. This latest addition to Principia’s subscription-based data products will be delivered in a series of interactive dashboards and key insights summarized in four sections: Demand, Supply, Growth and Customer Insights.
Commercial Roofing 2018 will provide a vital benchmark analysis for forecasting and business planning. Using 2017 and 2018e as a baseline, this data analyzes demand by material, construction type, distribution channel, supplier and region, and provides a year-over-year forecast through 2021.
To learn more about this expanded scope and deliverable to our ongoing coverage of the commercial roofing market, download the brochure now.
Commercial Insulation 2018 is now available for pre-purchase with full delivery planned for Q4 2018. This latest addition to Principia’s subscription-based data products will be delivered in a series of interactive dashboards and key insights summarized in four sections: Demand, Supply, Growth and Customer Insights.
Commercial Insulation 2018 will provide a vital benchmark analysis for forecasting and business planning. Using 2017 and 2018e as a baseline, this data analyzes demand by material, construction type, distribution channel, supplier and region, and provides a year-over-year forecast through 2021.
To learn more about this expanded scope and deliverable to our ongoing coverage of the commercial insulation market, download the brochure now.
Change comes slowly to the construction industry as builders often stick with what they know best to lower their risks. But change does come, and the current shortage of skilled labor is one factor encouraging builders to use products that make tighter, more energy-efficient building enclosures in less time.
Industry analysts call it “multi-functionality” or the “systems approach,” but the result is enhanced sheathing, insulation and weather-resistive barriers that help builders do more in less time by combining several steps into one. At the same time, manufacturers are introducing products that help builders meet growing expectations for tighter, better-insulated enclosures.
“There is a shortage of construction workers in the United States,” says Nancy Musselwhite, an industry analyst with Principia. “Anything you can do to take time off the application of a product—if you can combine two products into one, if you can make it go faster, if you cant take labor out—a builder is likely to look at it.”
Total demand for weather resistant barriers in North America was valued at $4 billion based on manufacturers’ factory gate level in 2017. Residential construction, led by roofing applications, accounted for the majority of market demand. Principia Consulting’s recent report Weather Resistant Barriers – Residential & Commercial 2018 covers products with a primary or secondary function of providing air, water or vapor barrier properties and are applied either to an exterior wall behind exterior cladding or to a roof underneath the exposed roofing during construction. Over the next three years, the forecast for weather resistant barriers demand in North America is estimated to reach $4.4 billion, or nearly a 4% CAGR through 2020.
Capturing Market Share
Suppliers need to consider how to capture more share of this expected market growth. For roof underlayment, demand typically follows the repair and remodel market with over 55% of the roof underlayment replaced on a re-roofing project. However, only 10% of the time is the roof underlayment the same brand or manufacturer as the roofing materials selected. Many suppliers provide complete product lines, from base sheets to cap sheets, shingles, underlayment, accessories and flashing.
Figure 1 provides a look at how often the roof underlayment is the same as the roofing material, shown by respondent type for both residential and commercial projects.
Figure 1: Percent Roof Underlayment Match to Brand of Roof Materials Selected
Architects and builders typically are inclined to pay greater attention to warranty and be encouraged by the manufacturer to use the same brand of roof underlayment as the roofing materials selected. However, when contractors are involved in choosing the roof underlayment they are more likely to select the product they are most familiar with rather than the brand that matches the roof materials used. This preference is found to be similar for both residential and commercial projects.
Commercial builders also are the most likely to match the brand of roof underlayment product with the brand of roof materials. These builders are more brand and product sensitive regardless of whether specified or promoted as best practice.
Suppliers who sell to both residential and commercial markets and offer a full complement of products for roofing would benefit from targeted marketing and incentive programs. Such programs may entice contractors and residential builders to use the same brand of roof underlayment as the roof materials used. The benefits realized for a supplier could range from increased revenue and market share to less price competition and minimized technical risks.
For more insights on the market dynamics and growth for roof underlayment and other weather resistant barriers, contact Principia about its latest report Weather Resistant Barriers – Residential & Commercial 2018.
Learn more about our deeper coverage of weather resistant barriers in residential construction through our Principia BuilderSeries® data products at www.principiaconsulting.com/principia-builder-series.
While wood trim continues to account for 53% of the $1.7 billion exterior trim market in the United States, wood-alternatives like cellular PVC, fiber cement and engineered wood continue to take share. The market remains evenly balanced between new construction and repair/ remodel.
Exterior trim is one of over 12 residential building product categories currently monitored through the Principia BuilderSeries® set of data products. A short list of 5 observations from our recent industry research is shown below:
- Prefinished wood trim products competing on performance, branded for market identity
- Fly ash composites making inroads against traditional incumbent trim products
- Specialty 1-step channel growing as distributors expand further into siding and trim
- Several cellular PVC trim producers now offering complementary cellular PVC siding products
- Expected rationalization based on acquisition of quality suppliers, exit by low margin producers
Exterior Trim Demand Overview – Principia DemandBuilder® Exterior Trim
The image above provides a high level snap shot of Principia’s data product DemandBuilder® Exterior Trim. DemandBuilder® subscribers have the ability to:
- Accurately measure current share and revenue potential
- Identify opportunities to pursue in sales territories
- Set benchmarks for business using comparative market data
To learn more about Principia’s data products or exterior trim market data please contact us today.
Total demand for weather resistant barriers in North America was valued at $4 billion based on manufacturers’ factory gate level in 2017. Residential construction, led by roofing applications, accounted for the majority of market demand. Principia Consulting’s recent report on weather resistant barriers includes products with a primary or secondary function of providing air, water or vapor barrier properties and are applied either to an exterior wall behind any cladding or to a roof underneath the exposed roofing during construction.
Weather Resistant Barriers Continue to Grow and Evolve
Weather resistant barriers penetration into North America has increased over the last several years in wall applications for both residential and commercial markets. For the residential market, although housewrap remains the dominant material for wall applications, other materials have made inroads. In roof applications, synthetic roofing underlayment has increased its share of the market significantly since Principia’s first weather resistant barriers study in 2010. As Sue Ross, Principia’s industry analyst for weather resistant barriers, points out, “Expected industry growth is a function of organic growth in the underlying construction markets, both new and existing structures, and the continued focus on energy efficiency in both residential and commercial construction driving increased market penetration. Weather resistant barriers are expected to reach almost $4.4 billion in 2020, growingnearly 4% annually over this three‐year period.
Direct to Dealer Remains the Primary Channel Outlet
The primary channel to market varies significantly depending on whether roof or wall. For roofing underlayment, 1‐step distribution is the primary method, for the most part bypassing 2‐step distribution. Overall, more than half of weather resistant barrier products flow through the 1‐step distributor channel, which includes roofing, gypsum and masonry supply houses. Traditional distributors with a focus on roofing and siding products generally account for most of 1‐step distribution sales of weather resistant barriers.
The Weather Resistant Barriers Residential & Commercial 2018 includes market demand by census region/division and product type, roof vs wall application, as well as by construction market (residential versus commercial), construction type (new versus repair and remodel), building type, and distribution channel. Using 2017 as a baseline year, the report provides forecasts through 2020.
To purchase the report or learn more about the scope and content covered, please contact Frank Dix, Director of Business Development at email@example.com.
About Principia Consulting
Principia is a leading research and consulting firm focused exclusively on the building materials and construction industry. For over 20 years, we have helped our clients grow faster and more profitably by providing high quality information, analytics and insights. Visit www.principiaconsulting.com for more information and the latest building materials and construction industry insights.
Situation: A leading building products distributor was looking to expand its product line and grow through acquisition of a regional distributor serving residential and commercial markets. The Client and the target both served the same geographic market with largely synergistic product lines. Major priorities for the diligence were to size and segment the current and future addressable market. A key objective was to determine if the target was likely to meet its financial projections based on projected market growth, and strengths and weaknesses relative to competition.
Approach: Principia conducted primary research with current and prospective customers, along with supplier and channel checks to assess market growth prospects as well as the target’s competitive position. Extensive data was developed to size the market to understand the underlying construction market drivers in the region and formulate a view on the target’s growth prospects. Over 100 interviews were conducted to determine reasons for purchasing from the target and its peers and identify possible ways for the target to gain share of wallet.
Outcome: Principia validated that the target should be able to meet its growth objectives and identified areas where the Client would be able to drive synergies and realize the expected value from the completed transaction. The purchase of the target closed shortly after diligence was completed.