W&C’s State of the Industry 2017
The wall and ceiling industry has been vibrant and healthy. But is another correction near?
Walls & Ceilings conducted its own in-house State of the Industry survey that blasted out a survey to hundreds of contractors in five regions across the country. These contractors were asked about everything from challenges (labor, employee benefits, bidding) to the residential vs. commercial market, technology and much more.
As our State of the Industry survey makes clear, there are a number of important challenges still facing the wall and ceiling community. We asked industry experts to single out what they feel are the most critical obstacles in the year ahead and share their advice on overcoming them.
BNP Media’s Clear Seas Research conducted a state of the industry study and here are the results.
Overall Business Conditions
In 2017, the demographics of professionals that read Walls & Ceilings are contractors, distributors/dealers, architectural/engineering firms and manufacturers. Yet, it was contractors that make up the largest segment of readers by a majority of 69 percent.
The majority of commercial business revenue comes from new construction, while residential business revenue is split relatively evenly between new construction and repair. Broken down, it reads as:
- Commercial new construction 41%
- Commercial repair 13%
- Residential repair 18%
- Residential new construction 22%
- Other 6%
More than half of respondents indicate business conditions are better in 2017 than in 2016, and 62 percent expect business conditions to be slightly or much better in 2018.
Out of these respondents, 79 percent indicated the cost of doing business has increased in 2017 compared to 2016, and 84 percent expect the cost of doing business to increase in 2018.
Again, labor seems to be the biggest issue facing contractors. About 70 percent of the respondents indicate their company is facing labor availability issues. Labor costs, material costs, healthcare costs and training are the other dominant issues.
About a third of respondents indicate their company’s greatest inefficiency is scheduling and planning or personal/staff incompetence.
As our State of the Industry survey makes clear, there are a number of important challenges still facing the wall and ceiling community. Sales, as is always, is critical to a company’s success.
About two-thirds of the companies’ 2017 sales are expected to increase compared to 2016, with an average expected increase of 21 percent.
On average, drywall accounts for about a third of product sales. Ceilings, steel framing, EIFs/stucco and insulation combined account for about half of sales, on average:
- Drywall: 33 percent
- Ceilings: 16 percent
- Steel framing: 12 percent
- EIFS/Stucco: 11 percent
- Insulation: 8 percent
- Plastering: 6 percent
Economic conditions are expected to be the most influential factor in 2015, followed by lowball pricing/bidding wars and costs of healthcare:
- Economic conditions: 76 percent
- Lowball pricing/bidding wars: 62 percent
- Costs of healthcare: 61 percent
- Finding qualified works: 53 percent
- Material costs: 52 percent
- Cash flow/financing: 48 percent
- Government intervention/regulation: 48 percent
- Costs of insurance (not including healthcare): 44 percent
The industry is still healthy. Some economists are forecasting a correction in late 2019/early 2020. Many companies report work that takes them from six to more months out. Jobs booked more than half a year out suggest a better market than conditions that some contractors faced just five years back, such as competitors low bidding and hand-to-mouth work schedules that were always uncertain from month to month.
All indicators from this survey to other independent studies suggest that the construction market overall (which certainly includes walls and ceilings contractors) should breathe easy as the next few years suggest a healthy climate. But as always, be aware because there are always peaks and valleys in construction.
Clear Seas Research is a full service, B-to-B market research company focused on making the complex clear. Custom research solutions include brand positioning, new product development, customer experiences and marketing effectiveness solutions. Clear Seas offers a broad portfolio of primary, syndicated research reports and powers the leading B-to-B panel for corporate researchers, myCLEARopinion Panel, in the architecture, engineering, construction, food, beverage, manufacturing, packaging and security industries. Learn more at clearseasresearch.com.
To purchase this study to read a more complete and thorough overview, visit https://clearseasresearch.com/product/2017-state-of-the-industry-walls-ceilings/.