For a house to function at its very best, it needs a high quality roof. Although a good roof can last 25+ years, the roofing industry has new construction opportunities in addition to replacements and repairs to keep it profitable every year.
The APAC region is the largest and fastest growing segment of the global roofing industry with an 8.1% CAGR. By 2020, the global market is expected to have a value of up to $97.5 billion.
What is helping the roofing industry continually push forward is innovation. Asphalt shingles might still be fairly common, but modified bitumen roofing, elastomeric roofing, and even green roofing options are available to home and building owners today. The fastest growing market for the industry, however, is metal roofing, which is growing at a 5.8% CAGR.
Relationships Drive the Roofing Industry
- According to Ken Kelly, President of Kelly Roofing, just because there are local business opportunities doesn’t mean there will be automatic revenues. “Revenues, not price, will be the deciding factor for customers,” he said, as reported by Roofing Contractor.
- Look for more roofing options that are being specified with single-ply membrane, shrinking the size of the built-up roofing market.
- Modified bitumen systems will also continue to increase thanks to the lead provided by thermoplastic polyolefin, or TPO. As warranties increase with PVC, new capacity options are becoming available to the roofing industry.
- The readjustment of R-value calculations and more stringent ASTM standards will increase the amount of insulation required per project, which will also change maintenance and repair applications at the local level. This will be at the expense of traditional roofing systems.
- Pricing pressures on the industry, along with rising equipment costs, will also continue to promote the installation of more TPO throughout the global markets.
- Building codes are being changed, especially in regards to the adhesives that are being used in the low slope market, which will require contractors to watch their formulas to avoid huge liabilities they may not even be aware they are taking on. Many areas are requiring reductions in VOCs.
- From 2011-2016, the roofing industry saw average annual growth of 1.8%, creating revenues of $35 billion in the US alone.
- Look for increased demand in the new construction sector of the roofing industry in the APAC region. The re-roofing market in North America and Europe will also see increased levels of demand. This is even though energy prices are expected to rise due to a depletion or reduction of available resources.
- Revenue from re-roofing, repair, and maintenance accounts for 65%, while 35% is from new construction. This is because the average useful life of a commercial roof is about 7 years. [Hoovers]
- Metal roofing currently has an overall market share of 11% in the re-roofing segment and accounts for 5.5% of all roofing today.
- 40% of new roofing opportunities occur in the non-residential sector of the roofing industry.
Regulatory compliance is going to be the greatest challenge the roofing industry will face in the decade ahead. Right now, one contractor in California with a multi-county footprint might need to be able to meet 60+ county-level building code requirements, plus then take into account local specificity on certain limits or requirements. Watch for roofing systems to become standardized as much as possible in order to meet these heavy regulatory demands, including a transition to cold-applied adhesives to create cleaner roofs that are easier to install and have fewer worker safety concerns. Look for the industry to continue developing B2B relationships as a top priority, while maintaining relationship networks to reach out to the homeowner market for re-roofing needs.
Steep Slope Requires Differentiation to be Successful
- New products within the steep slope market will help local contractors be able to differentiate themselves. HD shingles from IKO or Stormtite synthetic underlayment are just two examples of ways a contractor can stay competitive within the local roofing industry.
- New architectural options, such as strip shingles, will also give consumers new looks for their homes or buildings that may provide a boost to the steep slope forecast as well.
- Look for increased mobile technologies to help contractors be able to close sales with their prospects. Tablets are becoming a must-have tool for the roofing industry because it allows a contractor to show consumers what their home or building will look like when completed.
- Metal roofing will also continue to be a popular option, even with steep slope roofing, due to its energy efficiency, longevity, and ability to be recycled.
- Bill Coleman, President of MBCI, says that consumers are continued to express interest in having energy efficient and sustainable roofing. “We anticipate the demand to increase for products that improve a building’s energy efficiency, lengthen its life expectancy and lower maintenance costs,” he told Roofing Contractor.
- The challenge with steep slope roofing is ultimately its cost. With metal roofing especially, there is a larger initial investment required. Since architects and contractors typically look to the roof first for cost-savings within a design, the industry will need to present data on long-term cost-savings to consumers to encourage an investment into this type of design.
- 61% of homeowners reported choosing metal roofing for its longevity, while 16% stated strength and protection according to metalroofing.com.
- More than 7 million homeowners are expected to need re-roofing or maintenance work in any given year in the US alone.
To be successful within the roofing industry, there must be a marketing effort made through in-home consultations so that people can see what their potential savings could be with a new roof. As metal roofing continues to gain a market share, look for contractors to take advantage of the training programs the manufacturers in the roofing industry are offering for these new products. The bottom line is this: no matter what type of roof a contractor specializes in building or repairing, if metal roofing and steep slope options are not part of that portfolio, adding them in the next few years may need to be a priority.
Future Challenges for the Roofing Industry
- The primary challenge for the industry is stability. One out of every three contractors that enter the roofing industry in the United States will be out of business within their first 3 years of opening. Once a contractor makes it past 36 months, their chances of long-term success are much higher.
- The cost of roofing is about 4% of any new construction budget, but issues after the construction are completed are related to roofing 60% of the time.
- In the US, it is estimated that homeowners and commercial property owners waste $3 billion annually because they make the wrong decisions about their roofing needs. This includes hiring unlicensed contractors.
- Nearly half of all roofing sales come from steep slope roofing needs. 60% of contractors offering steep-slope asphalt saw an increase in their sales in this category.
- 88% of contractors’ companies are involved with single-ply roofing, while two thirds or more are involved with low-slope asphalt, coatings and/or metal roofing. This is because single-ply roofing accounts for 49% of the total commercial industry.
- Low-slope asphalt and metal roofing combine to account for 24% of the commercial industry.
- In 2014, roofing contractors reported a 12% rise in their field labor costs. Two-thirds of employees within the industry are not covered by a health insurance benefit.
- More than 70% of contractors report that they haven’t received a government safety inspection to determine their regulatory compliance in the last 12 months.
- Through 2024, the BLS estimates that there will be 15,800 open positions within the US roofing industry, paying an average of $17.65 per hour. That’s 13% growth, which is classified as being faster than average. “Most of the demand for roofers will stem from roof replacement needs and high job turnover.”
- Over the past 10 years the rubber roofing market went from eight manufacturers of EPDM rubber to two. The number of roofing manufacturers continues to increase while the number of companies leaving the market also increases. [Benchmark]
As long as there are buildings, there will be a need for the roofing industry. How that industry grows, however, is going to be very different tomorrow than it was yesterday. Consumers are demanding much more value and longevity from their roof. They want environmentally friendly products and are willing to pay a little more to get them. This means contractors are going to be forced into a position one day where they provide repairs and maintenance in addition to new construction in order to survive. As building codes evolve, look for the industry to bring in more legal help to make sure each contractor is meeting current responsibilities. Employee demands for greater benefits may also increase, but overall, the industry seems to be on a long-term upswing, unless another economic downturn occurs, even though some local contractors may not be able to build up enough business to survive.