EXTON, Pa.--(BUSINESS WIRE)--The North American residential and commercial thermal insulation market for building and construction reached 5.8 billion pounds valued at over $5.2 billion in 2010. While these are large figures, the overall demand has decreased by nearly 30% since 2006.
The economic slowdown over the past few years has had dramatic changes in consumption for thermal insulation in both residential and commercial construction sectors. Insulation demand in 2009 was roughly 60% for repair and remodeling, and 40% in new construction by volume, pounds and value. This is a sharp reversal from 2006 when new construction accounted for nearly 65% of insulation market value.
While insulation demand severely decreased due to the decline in construction activity, several positive factors have increased awareness and interest in insulation including heightened focus on energy conservation and efficiency, new building codes with stricter insulation requirements and government incentives like the ARRA rebates to fund energy saving initiatives.
The economic stimulus bill, known as The American Recovery and Reinvestment Act (ARRA), was signed into law in February 2009. The new IECC 2009 standards will require increased use of higher insulative products to achieve the necessary R-values and/or a change in construction design form 2x4 to advanced 2x6 in order to allow enough space to meet the new standards.
Ken Jacobson, a Partner at Principia Partners, says “Concerns about energy consumption among commercial building owners and homeowners increased as oil prices exceeded $100/barrel oil in 2007 and 2008. The importance of increasing insulation levels where possible became more apparent. Insulation manufacturers have reacted with increased emphasis on retrofit applications in promoting energy cost savings along with the benefits to the environment.”
Most homes have about 1% for insulation as a cost line item, typically standard fiberglass plus a vapor barrier system. With 2% it is possible to get more than two times the efficiency various energy efficient designs. Many consumers are reluctant to spend an extra 1 to 2% for insulation, but will spend money on a solar array for their roof. A tight envelope can save as much as 40% on heating and cooling costs.
Mr. Jacobson continues “With rising energy prices and uncertainty about future fossil fuel costs, payback periods for higher cost foam insulations are becoming shorter, estimated at an average five years at present. Even though spray foam insulation, for example, can be three to five times the installed cost of fiberglass, it remains a small part of the cost of these projects, which are often financed with home equity and commercial loans.”
Principia sees a bright future for the industry and projects the thermal insulation market in North America will grow to $6.3 billion in 2012. Growth in insulation products will be dependent on two key drivers:
- Overall construction activity (new and repair/remodeling, and residential and commercial)
- Adoption rate of building practices focused on energy efficiency and more stringent building codes.
Furthermore, insulation is gaining increased consumer, builder and architect awareness as a tool in improve energy efficiency. Suppliers are continuously and actively promoting the advantages of their respective products and/or systems. As the profile of the industry increases, more will have to be done considering all aspects of energy efficiency.
All of these are tools in the architect’s arsenal to develop green houses and buildings. In fact, contractors believe that insulative properties, consumer awareness, increasing R-value requirements and the desire to be green are the most important factors driving future growth for the insulation industry.
Principia's latest study RESIDENTIAL AND COMMERCIAL INSULATION 2010 serves as an important baseline analysis for year-over-year forecasting and business planning purposes by existing and new industry participants. Principia Partners is a leading international business consulting firm, and has extensive experience in building products industry. In particular, the Firm has closely monitored the market for building and construction products over the past 10 years through various research efforts. For more information, visit the Industry Reports section of the Publishing portion of the company's web site at www.PrincipiaConsulting.com.