Residential and Commercial Roofing Not Sagging; Demand to Grow 5% Annually by 2012 According to Principia Partners

EXTON, Pa.--(BUSINESS WIRE)--The total North American demand for commercial and residential roofing is estimated to be 216 million squares (1 square = 100 square feet) valued at nearly $8.6 billion in 2007, according to Principia Partners. This is down 5% in volume terms from 228 million squares and down 2% in value from $8.8 billion in 2006. Residential markets account for 155 million squares valued at $5.3 billion, 72% and 62% of the volume and value respectively in 2007.

Commercial markets account for 61 million squares valued at $3.3 billion in 2007. Interestingly, this is a decrease in volume of 3% from the 63 million square and an increase in value of 2% from the $3.2 billion in 2006. This is due to a shift from some lower priced materials like EPDM to higher priced products like TPOs, metal, green (garden/vegetative) roofs, etc.

A new market study by Principia Partners provides up-to-date clarity and crucial insights on the residential and commercial markets for roof coverings in North America. The study focuses on all major types of roofing materials used in both roofing segments, including asphalt, metal, clay and concrete tile, slate, shake, polymer composite, single ply (PVC and EPDM), and reflective or “cool roofs.”

Residential roofing is dominated by asphalt shingles which account for 92% of the volume and 75% of the value respectively. Asphalt shingles as a roofing product type reached nearly $4 billion in sales in 2007. Within the category, there has been a shift away from traditional 3-tab shingles toward lightweight and heavyweight laminates with lightweight being the most prevalent. Tile represents only 6% of the residential roofing volume but 13% of the value because of its higher average selling price. Tile is a roofing material of choice in select regional markets like the West and Southeast.

Commercial roofing sales reached $3.3 billion overall in 2007 with single-ply products comprising the largest segment. Single-ply encompasses EPDM, TPO and PVC membranes and accounted for 32% of volume and 28% of value in 2007. However, within the single-ply category, TPO has been taking share from EPDM and PVC. Modified bitumen, a hybrid between single-ply and hot built-up roof is sometimes classified as a single-ply as well. Combined, single-ply with modified bitumen comprises 50% of commercial roofing volume and 41% of the value. Asphalt shingles constitute a large category within commercial by volume while metal is larger still in value by virtue of its average $210 per square selling price.

Roofing material demand is driven by the overall construction market, residential and commercial, and is impacted by such relevant factors as interest rates, weather patterns and events (hurricanes, hailstorms), housing starts and other economic indicators. John Pruett, Director of Marketing and New Business Development at Principia add “It’s not just about starts. Let’s not forget the existing housing stock and commercial buildings that need to be re-roofed. Over 75% of shipment volume and a similar value of roofing material value come from repair and re-roofing (R&R). This is true not only in the residential sector, but the commercial sector as well.”

From a supply perspective, significant product volume and revenue are held by a few key players in certain segments. For example, the combined GAF-Elk business represents approximately 43% of the North America asphalt shingle segment. Eagle and MonierLifetile together control just under 60% of the concrete tile segment; Firestone Building Products and Carlisle together control 66% of the EPDM segment and 56% of the TPO segment in the commercial market; and BASF and Bay Systems combine for 92% of the SPF roofing value in North America. However, most segments are better characterized as oligopolistic or even fragmented as four or five companies share market leadership The top ten suppliers overall supply 79% of the volume and 62% of the value, nearly $5.4 billion in 2007.

Going forward over the next five years, Principia projects that overall demand will increase from 216 million squares valued at $8.6 billion in 2007 to 250 million squares valued at $10.7 billion by 2012, or 5% compounded average annual growth over this time period.

Asphalt shingles will continue to be the dominant type of roofing product, although the share for 3-tab shingles will decline by 2%. Metal roofing will grow by $333 million, or 3% annually in value. Built-up roofs will continue their slow decline as systems requiring less skilled labor and generating lower fumes gain favor. TPO will continue to slowly gain share from other single-ply membranes, including EPDM and PVC. Building-integrated photovoltaic (BIPV), green/garden roof systems and reflective roofs will all double in size, or come close to doing so, as home and building owners seek energy savings, and environmentally-friendly construction practices and products gain widespread acceptance and use.

Principia’s study has analyzed the drivers and trends of the residential and commercial roofing categories by material type and segment, distribution channel, and region, and provides forecasts for the next five years. Results of the report will provide subscribers with critical market data and analyses essential for planning purposes including:

• Up-to-date assessment of the residential and commercial roofing markets
• Assessment of the major roofing products
• Identified product development needs and distribution channel opportunities
• Market share review for roofing producers
• Profiles of over 50 companies active in the business
• Strategic insights into both roofing markets

Principia Partners is a leading international strategy consulting firm, and has extensive experience in building products and construction materials. The Firm has closely monitored these markets 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. A prospectus of this study is also available by calling John Pruett at 800/378-8330, extension 247.