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Market Snapshot: Building & Construction

Although wood-plastic composites are again forecast to grow significantly, the bulk of that growth will be in the extruded decking and fencing products rather than the molded trim, caps, and decorative accessories.

While the era of the McMansion may be over, a downturn in residential demand is being replaced with an uptick in commercial construction spending.

Shingles that mimic slate and cedar shake are molded from postindustrial plastic and recycled rubber. Enviroshake shingles are shown here being installed on a church roof.

Growth in this market now stems more from commercial sources than residential ones.

Ready to hear yet another result of the mortgage crisis and resulting downturn in new residential housing construction? You guessed it: Demand for molded plastic products for residential roofing, siding, and other end uses has fallen as well. In its place, however, is a renewed surge in interest from office, commercial, and industrial users, according to market researchers at Freedonia Group (Cleveland, OH). This represents a switch from a few years ago, when residential demand shot up and commercial projects plunged into a down cycle.

A trend reversed

According to Freedonia, building and construction markets over the next three years will reverse the trends in place from 2000-2005. Nonresidential roofing demand will be supported by accelerating construction activity and a release of pent-up replacement roofing demand, as well as ongoing environmental concerns and interest in energy savings. The company also forecasts continued interest in green roofing systems and photovoltaic roofing panels.

For the IM industry, molded roofing and siding continues to be a bright spot. Products that simulate wood shake, roofing tiles, slate, and asphalt shingles are predicted to grow despite the weakness in new housing construction. Freedonia also cites recycled roofing materials and composite shingles as growth leaders.

Michael Englund, principal economist at Action Economics, explains, “Strength in residential construction reversed course in 2006, leaving the year-over-year figure in negative territory after posting double-digit gains for much of 2004 and 2005. This weakness has extended into 2007. However, nonresidential construction spending has posted persistent gains this year, some as high as 15%.”

Wood and plastic on the rise

Wood-plastic composites (WPCs) continue to gain ground in this market, more so as extruded products for decking and fencing than in molded form. Market research firm Principia Partners LLC (Jersey City, NJ) estimates that WPCs have only penetrated 4% of their addressable market potential to replace wood, vinyl, reinforced plastics, concrete, or aluminum.

Ed Trueman, president and CEO of JER Envirotech (Delta, BC), which produces extruded wood-plastic panels and custom-compounded WPCs for injection molding, believes demand for the IM portion of WPCs is growing. “There is a huge interest in green products, and demand is high,” he says. “Our fiscal year ends in August, and the fourth quarter outperformed all of last year. We estimate that 65% of Q4 sales came from IM compounds rather than our extruded panels for walls and floors.”

Molded PP siding continues to dominate the nontraditional materials segment in terms of demand. However, its forecasted 1 million squares by 2015 falls more than 30% short of earlier estimates when the housing market was robust.

Even though molded roofing represents roughly 6% of the demand for plastic roofing, it is the fastest-growing segment, according to Freedonia.

JER’s compounds span the range of engineering thermoplastics and can have up to 60% filler, either wood or rice hulls. These injection moldable WPCs are mainly used today for decorative trim, caps, and other accessories for decking and fencing installations, but Trueman sees a broader application within construction, automotive, and consumer markets.

Decking is still the major application for WPCs, though, and Freedonia forecasts that while growth will be slower through 2011, it will still be a healthy 12%. Again, while this is an extrusion product, injection molded trim and decorative accessories should also see the same uptick in demand.

Roofing products proliferate

In the past decade, several newer companies have evolved to meet the growing demand for environmentally friendly roofing shingles. Typically, these shingles are made from postindustrial plastic and recycled rubber. Two such companies have recently announced projects involving public and commercial buildings, proving Englund’s point about the increase in nonresidential spending.

Carlisle, PA-based EcoStar offers roofing tiles molded from TPO and recycled EPDM rubber that mimic slate. While originally positioned as a premium residential roofing product, the company currently fields more queries from commercial sources. EcoStar shingles have recently been installed on a library, college, train station, and elementary school in various parts of the country.

Wellington Polymer Technology (Chatham, ON) uses reclaimed rubber, postindustrial plastic, and cellulose fibers to mold shingles that look like antique cedar shakes, called Enviroshake. Nonresidential projects they have completed in the United States and Canada include several churches and a motherhouse for Ursuline nuns.

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