New-construction Starts in December Grew 5 Percent

New construction starts in December grew 5 percent to a seasonally adjusted annual rate of $554.5 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial. Although nonresidential building and housing settled back during the final month of 2013, the nonbuilding construction sector (public works and electric utilities) finished the year on a strong note. For 2013 as a whole, total construction starts advanced 6 percent to $516.8 billion. This follows the 10 percent gain reported for 2012 (which drew support from a record amount of new electric utility starts that year) and modest 2 percent gains in both 2010 and 2011. If the volatile electric utility category is excluded, total construction starts in 2013 would be up 14 percent, following a 9 percent gain in 2012 and essentially flat activity during 2010 and 2011.

The December statistics produced a reading of 117 for the Dodge Index (2000=100), compared to 111 in November. This marked the third highest month for the Dodge Index during 2013, after September’s 118 and October’s 125. During the first eight months of the year, the Dodge Index had hovered within the fairly narrow range of 100 to 108, but then showed a stronger pace of activity during the final four months, reflecting in part the impact of several very large projects. In December, large projects that were entered as construction starts included the $1.5 billion Goethals Bridge replacement project in New York and New Jersey, two large natural gas-fired power plants, and two large manufacturing plants. For all of 2013, the Dodge Index averaged 109, up from 103 in 2012.

Nonresidential building in December slipped 7 percent to $168.6 billion (annual rate), pulling back for the second month in a row after its elevated pace in October, although its fourth quarter average was still 17 percent above what was reported in the first quarter. Several commercial categories in December paused from the improved activity registered earlier in the fall. New office construction dropped 44 percent from November which had been lifted by the start of such projects as the $336 million Transbay office tower in San Francisco; in contrast, the largest office projects entered as December starts were an $80 million office complex in Cary, N.C., and a $73 million data center in West Des Moines, Iowa. Similar December declines were registered by hotels, down 42 percent; and warehouses, down 46 percent; although the latest month did include the start of an $88 million Amazon distribution center in Windsor, Conn. Store construction, which was the one commercial category that did not post a November gain, managed to increase 6 percent in December. The December pause for nonresidential building was cushioned by a sharp 110 percent jump for manufacturing buildings, which reflected the start of two massive chemical plants in Louisiana, each valued at $500 million.

The institutional building categories in December were mixed. Educational facilities grew 5 percent, helped by the start of a $213 medical research building in Boston and a $151 million college science building in Chicago. Healthcare facilities in December jumped 30 percent from the prior month’s subdued amount, and featured groundbreaking for an $80 million hospital in Virginia and a $70 million cancer center in Wisconsin. The smaller institutional categories generally weakened in December, with public buildings (courthouses and detention facilities) down 32 percent; churches, down 44 percent; and amusement-related work, down 46 percent (compared to the previous month which included the $763 million Vikings Multipurpose Stadium in Minneapolis). The transportation terminal category retreated a slight 1 percent in December, and included the start of a $230 million terminal renovation project at Los Angeles International Airport.

For 2013 as a whole, nonresidential building increased 7 percent to $168.6 billion, shifting to an upward direction after the 5 percent decline reported for 2012. The commercial categories overall advanced 16 percent, faster than the 13 percent gain witnessed in 2012. The strongest gain by commercial category was registered by hotels, up 28 percent; followed by warehouses, up 27 percent; office buildings, up 17 percent; and stores, up 1 percent. The small 2013 increase for stores was limited by the comparison to 2012 that included the $400 million renovation to Macy’s flagship department store in New York. The manufacturing building category in 2013 surged 36 percent, helped by the two large chemical plants in Louisiana reported as December starts as well as by such projects as a $1.7 billion fertilizer plant in Iowa, a $1.7 billion natural gas processing plant in West Virginia, and a $1.5 billion industrial gas products plant in Louisiana. The institutional building group during 2013 decreased 3 percent, less severe than declines of 9 percent in 2012 and 11 percent in 2011. The two largest institutional categories performed as follows – educational buildings, down 1 percent; and healthcare facilities, down 6 percent. The smaller institutional categories showed this pattern for 2013 – amusement-related work, up 25 percent; transportation terminals, down 2 percent; churches down 11 percent; and public buildings, down 27 percent.

Residential building in December dropped 6 percent to $205.3 billion (annual rate), with both sides of the housing market easing back. Single family housing slipped 3 percent, as recent months have shown more of an up-and-down pattern after the consistently steady gains witnessed earlier in the year. When viewed on a quarterly basis, single family housing still registered consistent growth during 2013, with the fourth quarter up 8 percent compared to the first quarter. Multifamily housing in December retreated 13 percent after November’s increase of the same magnitude. December’s largest multifamily projects were smaller in scale than what had been reported in the previous month, but still included such substantial entries as a $159 million apartment building in Sunny Isles Beach, Fla., a $128 million condominium tower in Honolulu, and a $127 million apartment building in Brooklyn.

The 2013 amount for residential building was $205.5 billion, up 24 percent, and close to the 31 percent gain reported for 2012. Single family housing in dollar terms climbed 26 percent, similar to the prior year’s 29 percent hike. The regional pattern for single family housing in 2013 showed increases for all five major regions, as follows – the South Atlantic, up 33 percent; the Midwest, up 27 percent; the West and Northeast, each up 26 percent; and the South Central, up 18 percent. Multifamily housing in 2013 advanced 16 percent, showing additional growth on top of the increases in 2010 (up 23 percent), 2011 (up 33 percent), and 2012 (up 37 percent). By major region, multifamily housing revealed this performance in 2013 – the Midwest, up 26 percent; the Northeast, up 24 percent; the South Atlantic, up 21 percent; the West, up 13 percent; and the South Central, down 6 percent. The top five metropolitan areas in terms of the 2013 dollar amount of multifamily starts, with the percent change from 2012, were – New York, up 23 percent; Boston, up 74 percent; Washington, D.C., unchanged from the prior year; Miami, up 12 percent; and Los Angeles, down 24 percent. Metropolitan areas ranked 6 through 10 for multifamily starts were – Dallas-Ft. Worth, down 6 percent; Chicago, up 52 percent; Seattle, unchanged from the prior year, San Francisco, up 12 percent; and Denver, up 17 percent.

The 6 percent gain for total construction starts at the national level in 2013 was the result of gains in four of the five major regions. Showing the strongest growth was the Northeast, up 17 percent; followed by the Midwest, up 9 percent; the West, up 8 percent; and the South Central, up 3 percent. The South Atlantic was the one major region to experience a decline in 2013, dropping 3 percent. The South Atlantic’s shortfall reflected the comparison to 2012 that included the start of two massive nuclear facilities, located in Georgia and South Carolina. If electric utilities are excluded from the construction start statistics in the South Atlantic, then total construction for that region in 2013 would be up 19 percent.

Free Webinar Tomorrow: Predicting and Preventing Workplace Injuries

Griffin Schultz, general manager of Predictive Solutions, will present a webinar on Wednesday, Jan. 29 at 1 p.m. (EST) titled “Predicting and Preventing Workplace Injuries—a How-To Guide.”

In this webinar, Schultz will describe how big data, analytics, and prediction relate to the world of safety. Following a review of the theory and methodology behind predicting workplace injuries, Schultz will provide examples of companies that are successfully employing prediction to keep their workers safer. These examples will serve as the basis for a “how-to” guide.

Schultz is responsible for all aspects of Predictive Solutions’ business—a fully owned subsidiary of Industrial Scientific Corp.

Access a registration link for this webinar.

NRCA’s President, Nelson Braddy, Responds to Proposed Legislation to Reform Cost Recovery Provisions of the Federal Tax Code

Senate Finance Chairman Max Baucus (D-Mont.) recently released a discussion draft of proposed legislation to reform the cost recovery provisions of the federal tax code. This draft would repeal the current depreciation system, referred to as Modified Accelerated Cost Recovery System, and replace it with a new system that pools assets into separate categories. The draft also instructs the Congressional Budget Office (CBO) to analyze the economic depreciation rates of tangible assets and authorizes the U.S. Department of Treasury to review CBO’s findings to determine whether assets should be reassigned depreciation schedules or whether new ones should be created.

Under the Baucus proposal, the changes in these depreciation schedules would generate nearly $700 million in revenue for the government during the next decade. This would be used to offset cutting the 35 percent corporate income tax rate. Unfortunately, Baucus’ proposal cuts tax rates for only C-corporations but not for pass-through businesses that pay income taxes at the individual rate.

The Rosemont, Ill.-based National Roofing Contractors Association supports comprehensive tax reform that boosts economic growth by substantially lowering individual and corporate tax rates. Roughly 75 percent of its members are S-corporations, limited liability companies and other pass-through entities. Cutting taxes for entrepreneurs that file at the individual rates and as large corporations is essential for the roofing industry. NRCA is disappointed Baucus’ discussion draft does not include reductions in individual income tax rates.

In addition, NRCA supports reforming the depreciation schedule for commercial roof systems. The current 39-year depreciation schedule is an obstacle to economic growth and more than double the average life cycle of a commercial roof system, which is 17 years. Baucus has proposed extending the depreciation schedule for real property, including commercial roof systems, to 43 years, which does nothing to remove the incentive for building owners to forego a full retrofit to a failing roof in favor of making only piecemeal repairs. In addition, extending the depreciation schedule will further complicate business owners’ tax decisions; do nothing to promote economic growth; and fail to advance greater energy efficiency within the commercial building sector. Baucus has stated the goal of this proposed legislation is to “establish a system of cost recovery that better approximates the decline in the economic value of an asset.” However, 43 years to depreciate a commercial roof system does not accurately represent its economic value.

NRCA is pleased to see Baucus included higher Section 179 expensing limits in his discussion draft, which would permanently increase the expensing limits to $1 million and be indexed for inflation.

Baucus has requested comments regarding the discussion draft be submitted by Jan. 17, 2014. NRCA will submit its comments to the tax code in a comprehensive manner. The association remains committed to working with lawmakers to pass progrowth tax policies that benefit the roofing industry and the economy.

Survey Finds Labor Shortages Are Increasing

Nearly three-fourths of construction firms across the country report they are having trouble finding qualified craft workers to fill key spots, according to the results of an industry-wide survey released by the Associated General Contractors of America, Arlington, Va. Association officials called for immigration- and education-reform measures to help avoid worker shortages.

Of the 74 percent of responding firms that are having a hard time finding qualified craft workers, the most frequently reported difficulties are in filling onsite construction jobs, like carpenters, equipment operators and laborers. Fifty-three percent are having a hard time filling professional positions, especially project supervisors, estimators and engineers.

Eighty-six percent of respondents said they expect it will remain difficult or get harder to find qualified craft workers; 72 percent say the market for professional positions will remain hard or get worse. Seventy-four percent of respondents report there are not enough qualified craft workers available to meet future demand while 49 percent said there weren’t enough construction professionals available.

To prepare future construction workers, 48 percent of responding firms are mentoring future craft workers; 38 percent are participating in career fairs; and 33 percent are supporting high school-level construction skills academies. In addition, 47 percent of responding firms are offering internships for construction professionals.

Stephen E. Sandherr, CEO of the Associated General Contractors of America, says Congress needs to jettison arbitrary caps on construction workers that were included in immigration reform the Senate passed in 2013. “Lifting those restrictions will go a long way to ensuring construction jobs left vacant by domestic labor shortages go to workers who are in the country legally,” he says.

Sandherr urges elected and appointed officials to do more to ensure public-school students have an opportunity to participate in programs that teach skills, like construction. He adds skills-based programs offer students a more hands-on way to learn vital 21st century skills, such as math and science. Such programs also have been proven to reduce dropout rates and give students an opportunity to earn the higher pay and benefits that come with construction jobs.

Nearly 700 construction firms participated in the survey. View the national survey results and analysis, as well as results for 15 states with larger survey samples.

ARMA Releases Educational Video

The Asphalt Roofing Manufacturers Association has produced a short, educational video, titled “Asphalt Roofing and the Science of Color”. It explains how manufacturers create different color shades and combinations. The video is designed to help homeowners choose the color that works best for their home. Watch the video on the association website or YouTube channel.

Resources to Assist with Equipment Finance

The Equipment Leasing and Finance Association has released three resources to help businesses take advantage of the benefits of equipment finance. The multimedia resources—a video, digital toolkit and an infographic—highlight how companies of all types and sizes can use leasing and financing to their strategic advantage to acquire the equipment they need to operate and grow. The tools are available on the association’s website.

Schedule Your IRE Trip with a New Mobile App

Hanley Wood Exhibitions has launched a new mobile app for the 2014 International Roofing Expo, which will be held Feb. 26-28 in Las Vegas. The free app is available now for iPhone, iPad, Android and Blackberry users. It helps users register and make hotel reservations; navigate the show floor; access exhibitor lists and profiles; and view the conference schedule, session details and speaker profiles. It also features a personalized planner to help attendees organize their IRE schedule. The IRE mobile app can be found by searching “IRE” in the Apple App Store, Google Play or Blackberry World.

Comments Sought on PV Racking Criteria for Asphalt Shingle Roof Integration

The Center PV Taskforce is releasing the first public draft of PV Racking and Attachment Criteria for Effective Asphalt Shingle Roof System Integration for an initial round of public comment. The first draft has been prepared by the PV Taskforce.

The Center PV Taskforce will accept public comments until 8 p.m. EST on Friday, Feb. 14, 2014.

The document is intended to enhance collaboration between key stakeholders from the solar and roofing industries, and accelerate the deployment of rooftop-integrated solar. Members of the solar industry and other interested parties are encouraged to submit comments and engage the Taskforce in future stakeholder discussions. Taskforce members also will accept comments from the at-large community and consider those comments within internal stakeholder discussions.

Directions for submitting public comments:

  • Download a copy of PV Racking and Attachment Criteria for Effective Asphalt Shingle Roof System Integration.
  • All comments shall be submitted no later than 8 p.m. EST, Friday, Feb. 14, 2014.
  • All comments shall be submitted using the Center PV Taskforce online survey form.
  • Additional details can be found on the first page of the criteria document.

If you have questions, please contact James Kirby, (202) 380-3371.

Customize Standard Roofing Details to Meet Unique Project Needs

The National Roofing Contractors Association (NRCA) has released The NRCA Construction Details CD — 2014, a valuable resource that enables construction architects and designers to customize standard roofing details to meet their unique project needs.

The CD, which contains 575 customizable details from The NRCA Roofing Manual, can be imported into AutoCAD software, where details can be customized to fit the specific needs of a project, saving architects and designers valuable construction detail drawing time.

The NRCA Construction Details CD contains details included in the following volumes of The NRCA Roofing Manual:

  • The NRCA Roofing Manual: Architectural Metal Flashing, Condensation and Air Leakage Control, and Reroofing — 2014
    The NRCA Roofing Manual: Steep-slope Roof Systems — 2013
    The NRCA Roofing Manual: Metal Panel and SPF Roof Systems — 2012
    The NRCA Roofing Manual: Membrane Roof Systems — 2011

National Building Code of Canada Adopts Updated Standard for Measuring LTTR of Polyiso Products

On Oct. 31, 2013, the National Building Code (NBC) of Canada adopted the most recent version of CAN/ULC-S704-11, the standard specification for polyiso in Canada, which references the test method CAN/ULC-S770-09 for determining the long-term thermal resistance (LTTR) of polyiso foam insulation. This adoption brings consistency to the test methods used for measuring LTTR in Canada and the U.S.

In the U.S., polyiso manufacturers use the ASTM C1289 standard (ASTM C1289 Standard Specification for Faced Rigid Cellular Polyisocyanurate Thermal Insulation Board) to predict the long-term thermal resistance R-value for a variety of polyiso insulation boards. ASTM C1289 includes the CAN/ULC-S770-09 and ASTM C1303-12, another test method used for LTTR.

“Since our members make and ship product in the United States and Canada, it is critical that polyiso insulation be subjected to the same criteria for measuring LTTR in both countries,” says Jared Blum, president PIMA. “We are pleased that the NBC in Canada has adopted CAN/ULC-S704-11 and CAN/ULC-S770-09 and that it is in harmony with ASTM C1289. Together these standards provide more data for predicting the long-term thermal performance of polyiso insulation and further enhances the validity of PIMA’s QualityMark program.”

The PIMA QualityMark program, the only third-party program for the certification of the thermal value of polyiso insulation, allows polyiso manufacturers to obtain independent, third-party certification for the LTTR values of their polyiso insulation products. Polyiso is the only insulation to be certified by this unique program for its LTTR value. The program was developed by PIMA and is administered by FM Global.

To participate in PIMA’s QualityMark certification program, a Class 1 roof is suggested to have a design R-value of 5.7 per inch. PIMA member manufacturers will publish updated R-values for their polyiso products later this year. Polyiso is unique in that the R-value increases with the thickness of the foam, so three inches of polyiso has a higher R-value per inch than two inches.