At its peak, new construction expenditures bested remodeling by a ratio of 3-to-1 but now it's even and recladding jobs constitute 74% of the siding market, according to partner Ken Jacobson with Principia, an industry research and consulting firm and host of the Siding 2011 Conference in Charlotte, N.C., Nov. 14-15. While this 30% swing is by far the swiftest change in the industry, many more trends, technologies, codes, challenges, and buyer demographics are fast affecting siding sales. The following is the latest buzz--what conference presenters believe will impact the direction of the industry in 2012 and beyond.
1. While Principia predicts new home construction will grow a net of 137% in the next 10 years, CertainTeed Corp.'s former CEO Peter Dachowski believes the overhang of distressed properties will continue to keep recladding materials a strong force in the product market. "Siding will remain a remodel-oriented business even when market comes back," he said.
2. Energy code changes create new challenges for attaching siding. The 2012 International Energy Conservation Code requires continuous insulation per ASHRAE 90.1 and a popular method is to attach several inches of foam insulation around the exterior prior to cladding. "Whatever you're doing to attach your siding must span through the insulation material and that can create some challenges," said Jay Crandell, professional engineer for ARES Consulting and technical director for the Foam Sheathing Coalition. There are very few fasteners designed to affix siding to foam and the extra thickness causes detailing issues when installing trim and windows as well.
3. The new codes also require stricter moisture management solutions within the wall, resulting in a more complex wall system, and the more complex the system, the closer the manufacturer needs to be the end user, advised Ben Skoog, business marketing manager of siding and trim for LP Building Products. "One approach is to jump over the channel; the other approach is to work with the channel."
4. Company-owned distribution has its pros, said Brad Beard, senior vice president of Associated Materials Incorporated, the owner of Alside siding. The company distributes through 124 of its own supply centers, giving the end user a one-stop shopping experience and a direct link to the manufacturer. The sales team can sell a wide array of products and have to learn about fewer brands. But it also has a major con: only one brand versus the variety offered by other dealers and distributors.
5. To stay on top of the competition, two-steppers need to create value by becoming distributors with serious customer service: field sales, just-in-time delivery, pull-through, in short, significant extra services. "We all say we're doing this, but we're not," said Sam Sanregret, president of Capital Lumber Co., a building material distributor. "There can be significant value added to two-step distribution."
6. Since 2008, more than 1,600 lumber yards have shut down--nearly one per day, reported one speaker. Nevertheless, the siding distribution channel has not changed much in five years, said Chuck Stein, president of Environmental Stoneworks. The most notable changes are that big boxes are selling more and there is slightly more direct movement-a result, Stein said, that is likely price-driven. "The real value is service. It becomes the key differentiator," he added. Out of 50 conference attendees polled, 40% believed one-step distribution would be the fastest growing siding channel in the future; 26% thought it would be direct distribution; 18% said big boxes; and the least, 16%, thought two-step distribution would grow the fastest.
7. Baby boomers will impact the siding market much more than people anticipate, Dachowski warned. Currently, 77% of seniors age 75-84 still own a home and what type of siding do they want? Low maintenance. "Study demographic mega trends," Jim Ziminski, vice president and general manager of Exterior Portfolio, said. "They don't lie and you can't beat them."
8. Younger generations will have robust interest in home buying when housing starts return, predicted the director of marketing for Boral Bricks, Shelley Ross. The emerging buyer demographic wants curb appeal that is warm, personal, and "homey." Twenty years ago the trend in exteriors was traditional architecture, now 37%, the largest percentage, want their façade to look casual and comfortable, she said.
9. Warm colors are replacing rich colors, finds Tapco International's Jonathan Wierengo, vice president of marketing. Earthy red, golden, and clay unseat prior trends of beige, chocolate brown, and barn red. Trim is becoming more monochromatic, sporting hues a few shades darker or lighter than the siding, while high contrast trim, like white, is taking a backseat. In addition, more people want a combination of cladding materials to create visual interest.
10. With so many siding options a click away, homeowners are getting smart about products because of the Internet, manufacturers said. Exterior Portfolio, now a brand of Royal Building Products, started using its website, Facebook, and Twitter to reach consumers and then, some of its dealers got uncomfortable. "They thought we were trying to go around them," Ziminski said. "We're not--we're helping them. Technology will continue to change the way we go to market." His advice for staying ahead of the curve: "bring in young talent."
11. "When we button up a leaky house, the simple solution for energy waste, we create moisture problems," said Alswinn Kieboom, general manager of Pactiv Building Products. Air barriers, a gap that allows water vapor to dry, are essential for effective water management behind porous cladding types, such as stucco or stone. But dealer, builder, and homeowner education needs to keep up with these complex wall systems. "A lot of us make really good products but it's how they come together that causes the problems," Kieboom concluded.
12. Vinyl continues to dominate the siding market at 38% of the volume in 2011, according to Jacobson.
13. The next step for fiber cement siding manufacturers is to compete with the cost of vinyl, the former senior vice president of business development for Nichiha USA, Darrin Haugan, reported.
14. Keep an eye out for a new material in North America: chemically modified wood. Unlike pressure-treated wood, the non-toxic chemicals preserve the fibers to the core, making it last longer, machine easily, resist cupping, increase coating life, fully recyclable, and termite indigestible. While a bit pricey, admitted Lisa Ayala, sales manager for Accsys Technologies, the maker of Accoya wood, "you're going to hear a lot more about modified wood in the future."
15. Leaders in the siding industry will capture the largest piece of the pie if they invest in game-changing siding products and systems, not just new shapes and colors, Jacobson exhorted.
16. Sweden's housing market crashed in the early 90s following explosive growth spurred on by banks' easy lending. New construction fell 75-80%. Dachowski used the case to form his predictions of the U.S. market. It took Sweden about six years to recover to half of what it was.