Roofing in the West
What Lies Ahead for the Western Roofing Industry in 2011? by Marc Dodson, editor
It all started with a few simple questions sent to our readers at random. The paramount question was: “What lies ahead for the Western Roofing industry in 2011?” Our survey returned a mixed bag of responses from all facets of the industry. Manufacturers were the most optimistic group about the construction economy for 2011, with well over half predicting an upturn by mid-year. Some stated the last few months were the best they had seen in years, while other, particularly those dealing with new construction
products, predicted more of the same.
Financial experts seem to be in agreement that 2011 will be the turn-around year for the economy; many pointing to the fact that consumer spending was up for this recent holiday season and low interest rates have induced large purchases. Beacon Economics has been, “publicly forecasting a slow recovery for more than a year.”
The majority of roofing contractors are predicting more of the same construction economy that we experienced during 2010. This is quite a switch, as roofing contractors had always tended to be more optimistic about the future. Others claimed they had been busy for the last few months and expected the increase in business to continue into 2011. Not surprisingly, almost every contractor that stated business was up, asked not to be
identified. As one contractor put it, “I’ve got a good thing going here and I know others are hurting. There’s no reason for me to start waving flags and let everyone know where the gold is buried.”
There were a few areas that almost all could agree on; with the exception of isolated high-end projects, new residential construction will remain down throughout the West for 2011, while (depending on the area)
new commercial construction could be up or down. The bright spot for 2011 will continue to be reroofing, recover, roof maintenance, and service.
View From the Field
Looking into the 2011 crystal ball, what do roofing contractors from around the West think this next year holds in store for them? Here are a few of their responses.
• Christian Madsen, WSRCA president, and president and CEO of Madsen
Roof Company, Sacramento, Calif., states, “There is no doubt that the economic climate continues to be challenging, with efficiency and
competitive pricing still at a premium. We feel good that, in the face of this environment, we are coming off of a successful year. We will continue to keep a close eye on costs and production efficiencies as we move forward. We also believe that now is the time to broaden our marketing efforts by increasing our advertising outreach and attendance at conferences. All indications are that the economy will gain momentum in the upcoming months. So, while now is no time to become complacent, we are cautiously optimistic that we will experience meaningful growth in the new year.” • Fred Schroeder, vice-president and CEO of Houston’s Waterproofing & Sheet Metal Specialist, Houston, Texas, says business will probably remain the same next year, “As most of you know, Houston Texas is mostly based on the oil industry. Since the Houston roofing business was already
suffering from a post Hurricane recession, the last thing Houston needed was a ban on offshore drilling; this has hurt many business overall. Texas had skipped most of the national recession, but even now we are seeing things get tough.
“Once a week we hear about a roofing company shutting it doors and some of these companies have been around for much longer that we have. We have seen the amount of bids drop since August. And many project are
being put on hold or waiting on funding. About 95% of all projects are public or government. There are fewer reroofs and if there is one, OMG the amount of bidders; I have seen less people at an Astros’s game than showed up to the pre-bid. We are hoping to match our sales from 2010 and just keep plugging away.”
• Frank E. Lawson Jr., president of The Lawson Roofing Co., San
Francisco, Calif., says, “I think the first half of 2011 will be similar to 2010. The new construction market is still sluggish and private development is spotty due to lack of financing. Public works projects are the bulk of the construction activity and reroofing has been slow due to owners repairing roofs rather than replacing roofs. There are many commercial properties still without tenants so until the economy improves potential roofing work is in limbo. The residential market is very quiet both for new housing and re-roofing of existing residential projects.”
• David Montross, president of Montross Companies, Lake Forest, Calif.,
notes, “I see our business the same or better for 2011. This has been our second best year out of the last ten years in business. I believe it will get better because we have partnered up with several more companies, we have provided due diligence reports, budgets, and have been taking care of their service work at group rates. 2010 has been a relationship-building year with dividends to follow.
“We have had a major increase of work starting before the fourth quarter and the hiring of 17 more crew. Although prior months jobs have been fewer, there is money that has to be spent because of different REIT's, purchases in the market with reinvestment back into the properties, and CC&R's that we work with. One not so new trend is that were doing more work with roof coatings. We have purchased additional spray equipment to accommodate for this trend.”
Colo., states, “The bid work has picked-up looking toward 2011 projects, the problem is not the amount of work to bid but the contractors who are willing to cut margins to get the work. I see 2011 as a carbon copy of 2010, as far as work and bid load. Contractors with a solid customer base will continue to get by while those who rely solely on bid work will find 2011 to be really difficult. A trend we are seeing is: owners are starting to do some intensive homework before hiring a contractor and the most important criteria is the quality of past projects and your balance sheet, that is a far cry from what we were seeing just two to three years ago. I think we are just trying to get used to the "new-normal" and looking toward strengthening and/or renewing relationships with customers.”
• Brad Baker, president of Professional Roofing, Sun Valley, Idaho, says, “2010 was real slow for new construction, but the reroofing market was very good for all the local roofers. The Sun Valley area had the Castlerock forest fires about two years ago that came right next to the edge of town and everybody with shake roofs that were 15-25 years old saw their houses ‘flash before them.’ After the fires, homeowners looked at changing their roofs from ‘combustible’ to ‘non-combustible’ for fire safety. 2011 looks real slow considering the area was building 20-30 custom homes a year and now we are down to six to eight per year. The owners that are building are
getting several bids instead of just a couple, so competition is fierce with little profit left or any room for error.”
• Tim Gardner, Snyder Roofing of Washington, Snohomish, Wash.,
states, “We squeaked through 2010, but 2011 looks grim for any new
construction. GC's and architects are not trending upward yet and all expect 2011 to be our worst year yet. The state is broke so we can't expect much help from them. We have yet to see anything significant from the feds. Competition is fierce and working for free. Other than that, things are wonderful.”
• Bill Baley, president of CIS, Mission Viejo, Calif., notes, “We are seeing an easing in financial miss-trust out there. Retail customers are telling us that owners are starting to realize they have put off needed roof
replacement and maintenance, too long in some cases, and are now trying to get back on track. Not a huge swing to the positive yet, but it is
noticeable and seems to have been steadily increasing over the last four months. The fact that California has seen some very nice rain storms as well, has really helped push the increase in activity along.
“I am cautiously optimistic that things truly are improving and will continue to do so. Talking with property managers, they have seen
significant budget cuts pushed down to them from the property owners over the last 18 months, and are really tired of trying to get their ‘go-to’
contractors to do the same quality work for less money. They have burned bridges with some of their good contractors and have been forced to use cheaper and lesser quality contractors to get maintenance work performed due to cut budgets. They now tell me they have seen some easing on the owner’s parts to drive the building maintenance spending down. Hopefully this will continue and we can get back to doing quality work for them at a reasonable rate. The forecasted rain is a big help as always, but I wish I could see what the first quarter will hold… that will tell the whole story for me.”
• Kent Summers, president of Specialty Roofing, Peoria, Ariz., laments, “Labor becoming a major issue. Because of out of state storm chasers paying cash and increased ICE audits, labor shortage is almost at a critical mass level.”
• Curt Large of Evergreen Roofing, White City, Oregon, states, “My
guess is the 2011 roofing season in Oregon should be steady. New
construction will still leave much to be desired though. Evergreen Roofing of Oregon was fortunate to have had an 18% uptick in 2010. We focused on
only a dozen or so larger new construction jobs and instead placed our resources on retro systems. I am quite certain this will be the trend for us in 2011 as well. Based on what I see and hear coming through the pipe, new construction in our area will remain somewhat flat through the end of 2011 and shortly into 2012. The good news is; the weather pattern
affecting the Northwest this winter will keep the phone ringing from those who have been putting their projects off. I think it will come down to once again, who is hungry and willing to go out and beat the street for the work. It’s there… you just have to find it!” •••
