plastics market watch: building and construction

More information: www.plasticsmarketwatch.org

Building and Construction

A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETSWINTER 2016 | ISSUE IV

WATCHING:

Plastics—Building for a more sustainable future.

http://www.plasticsmarketwatch.org

PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE iii

Building for a more sustainable future

A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETS

SPI: The Plastics Industry Trade Association

CONTENTS

Foreword .................................................. 1

The Use of Plastics in Building and Construction......................... 5

Future Trends—Economics ....................... 9

Future Trends—Demographics ............... 17

Future Trends—Technology .................... 22

Future Trends—Public Policy .................. 31

Conclusion ............................................. 38

Sources .................................................. 41

Plastics Market Watch Snapshot ............ 43

iv PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE

SPI: The Plastics Industry Trade Association publishes a series of

unique Market Watch reports that explore key factors—including demo-

graphics, economics, policy, culture and technology—that impact the

plastics industry’s primary end markets. Plastics Market Watch: Building

and Construction, is the organization’s fourth market assessment

report which was developed in conjunction with National Association

of Home Builders (NAHB) and members of the American High Perfor-

mance Buildings Coalition. The previous Market Watch reports focused

on Plastics in Automotive & Transportation, Plastics in Healthcare &

Medical Devices and Plastics in Packaging about plastics in packaging.

In 2016, Market Watch reports will be published beginning with a

special issue on Plastics Recycling in Automotive. This report will be

released in April 2016 in conjunction with Re|focus, SPI’s new Recycling

Summit & Expo. Subsequent reports will address Bioplastics, Beverage

Containers, and the Electronics market.

© 2016 SPI: The Plastics Industry Trade Association


Special thanks to the SPI Plastics Market Watch work

group and members of the American High Perfor-

mance Buildings Coalition and the National Association

of Home Builders for their guidance and input on this

Building and Construction Report.

Materials compiled, written and edited by Hansel (Hank)

Cox, with editorial assistance from Richard Krock, The

Vinyl Institute, and Terry Peters, Michael Taylor and Kendra

Martin, SPI.

PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 1

Foreword

As we continue to look for ways to better serve our membership and the broader

plastics industry supply chain, one area of continued discussion is the impact of

consumers on our businesses. A variety of factors impact the way that we make our

products, how they are consumed and how successful our industry will continue to be.

With this as a backdrop, SPI is producing a unique report series that will explore key

factors—including demographics, economics, and technology—that impact the plastic

industry’s key end markets. The first report

about the plastics revolution in transpor-

tation was primarily, but not limited to,

cars and trucks. The second report was

about plastics in healthcare and medical

devices. The third report was devoted to

plastics in packaging. The fourth and final

report for 2015 is this one—on the use of

plastics in building & construction.

Our goal is to publish forward-

looking reports for our members and the

industry that blend economic and demo-

graphic data to paint a picture of where

we are headed in these critical markets.

When relevant, we will weave in other

influencing factors such as public policy,

technology trends, and resource issues.

These reports can then be used to present information on key drivers as input for your

strategic planning activities.

We plan to conduct presentations and webinars in conjunction with each report

to discuss our findings, and hope that these will provide important food for thought,

whether you are an equipment manufacturer, materials supplier, processor, recycler or

brand owner. As always, we welcome your feedback.


Key Drivers for End Markets

Market

Resources

Economic Indicators

Policy

Demographics

TechnologyConsumer Trends

2 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry

Trade Association


Plastics—Building a more sustainable future

Introduction


4 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE

For valves and fittings,

plastics offer superior

corrosion resistance

and are lighter, easier

to install, and more

cost effective than

alternatives. Impervious

to chemicals and sulfur-

bearing compounds,

plastic piping safely

transports everything

from fresh water to salt

water, crude oil and

laboratory waste.



The Use of Plastics in Building and Construction


One might not normally think of building and construction as a major use of plastics,

yet the construction industry is the second largest consumer of plastics, second only

to packaging. It isn’t difficult to see why this is true. The wide functionality of plastics

provides a distinct advantage over many other traditional building materials in terms of

resistance to weathering, flexibility for many uses and lower costs.

Though basic construction materials such as metal, wood and masonry remain

staples in construction, many plastic materials are as strong if not stronger than certain

metals. Plastic hardware is corrosion

resistant, allowing it to survive outside

in inclement weather indefinitely. Plastic

components used in construction cover

the waterfront from electric wiring,

flooring, wall covering, water proofing,

plastic screws, pipes, valves and fittings,

hinges, and decorative touches to name

only a few.

For valves and fittings, plastics

offer superior corrosion resistance and

are lighter, easier to install, and more

cost effective than alternatives. Imper-

vious to chemicals and sulfur-bearing

compounds, plastic piping safely trans-

ports everything from fresh water to salt

water, crude oil and laboratory waste.

These qualities also have combined with

plastics’ high strength-to-weight ratio to

produce materials for bridge construction,

including tough reinforcement rods,

nonskid surfacing and quickly installed

replacement decking. And for commercial

buildings that contain sensitive electronic equipment, plastics can provide highly protective

housing that won’t interfere with radio frequency or magnetic waves.

Plastics and plastic derivatives are finding a steadily increasing number of uses

that make houses, businesses and factories more airtight, durable, water resistant

and less expensive to construct, maintain and operate. Examples of plastic utility in

construction include: n Roofing—Reflective, light colored roofing membranes made of vinyl or thermoplastic

olefin (TPO) single-ply membranes combined with rigid polyiso board or spray polyure-


Examples of

plastic utility in

construction include:

• Roofing

• Insulation

• Wall coverings

• Windows

• Piping

• Composite “lumber” planks and rails

• Plastic house wrap


thane foam underneath—offers energy savings, durability and moisture control, espe-cially for commercial buildings in southern climates. Studies show that the surface temperature of a light covered roof is much lower than a darker one. The cooler the building, the less air conditioning is required, and therefore less energy is consumed.

n Insulation—Whether it is spray polyurethane foam (SPF) in the attic or rigid foam polyiso board in the walls, polyurethane based systems offer durability, energy savings and moisture control. When used for retrofit, situations they also help reduce the amount of building waste sent to landfills. In walls, behind walls and under floors, the use of polystyrene foams can provide significant energy efficiency. For example, rigid extruded polystyrene (XPS) is a builder favorite because it can be installed easily and effectively. Structural insulated panels (SIPs) made with expanded polystyrene (EPS) can help homeowners save hundreds of dollars annually on heating and cooling bills. Savings vary by material and products.

n Wall coverings—Vinyl-based materials are commonly used for durable, easy-to-clean hospitality and health care facilities. Vinyl requires only half as much energy to manufacture as the same amount of paper wall coverings.

n Windows—Plastics are used in some surprising ways. Polycarbonate—a material also found in eyeglasses—is used for window panes. These clear, lightweight, shat-ter-resistant plastic products have low thermal conductivity which can help reduce heating and cooling costs. Vinyl window frames are inherently energy efficient and save the U.S. nearly two trillion thermal units of energy per year, helping reduce green-house gas emissions associated with energy generation—and at the same time reducing maintenance time, materials and other costs.

n Piping—Plastic pipe and fittings are relatively easy to install, durable and will not rust or corrode over time. Several types of plastics are used for piping depending on the properties and performance required. Whether they are polyethylene, polypro-pylene, polyvinyl chloride (PVC) or acrylonitrile butadiene styrene (ABS), they each offer excellent fusion integrity when joined properly, in turn helping to eliminate potential leak points where water could be wasted. In home building, flexible blue and red cross-linked polyethylene piping (PEX) has become a favorite of many builders for hot and cold water delivery, all managed and hooked into a central and effective manifold system. The flexibility, lightness and ease of installation allow multiple feed lines throughout a house, bringing hot water more quickly to a sink or shower and saving water.

n Composite “lumber” planks and rails—Recycled plastics or plastic-wood composites are carefully engineered to virtually eliminate warpage and knots. They can outlast traditional materials, often require less maintenance and are resistant to peeling, cracking, splintering or fading. They are also eco-friendly in that much of the lumber is made from recycled materials and/or can be recycled.

n Plastic house wrap—This technology has reduced the infiltration of outside air into the average home by 10–50 percent helping to drastically reduce the energy required to heat or cool a home. These plastic films have helped reduce greenhouse gas emis-sions in the U.S. by as much as 120 to 600 million tons of CO2 since 1980.



Future Trends



But there is diversity

of opinion regarding

how strong that growth

will be. Goldman Sachs

has cut its forecast for

2016 U.S. economic

growth to 2.4 percent

from its previous

estimate of 2.8 percent,

which is far less than

in previous recoveries

from recession.


PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 9SPI: The Plastics Industry Trade Association

The U.S. construction industry is on an upswing, but is still struggling to recover from

the Great Recession. Building and construction generally are large ticket items and tend

to be the first projects sidelined when the economy hits a rough patch—and the U.S. has

just emerged from the deepest recession since the Great Depression of the 1930s.

“Overall construction—business, residential and non-residential—is about $1 trillion

a year,” said Jack Armstrong of the Structural Insulated Panel Association (SIPA). “Prior

to the downturn, we were building nearly 2 million units a year. In 2014 we did about 1

million, or half.”

The Bureau of Economic Analysis (BEA) reported that the overall economy slowed

down to 1.5 percent growth in the third quarter of 2015 from 3.9 percent in the previous

quarter. Some of this was due to a sudden and overdue depletion of inventories and

softness in energy prices, which sets the stage for more vigorous growth going forward.

But there is diversity of opinion regarding how strong that growth will be. Goldman

Sachs has cut its forecast for 2016 U.S.

economic growth to 2.4 percent from its

previous estimate of 2.8 percent, which

is far less than in previous recoveries

from recession. A major impediment is

weakness in China which has served as

the world’s primary growth engine for the

past 20 years. In particular, China has

boosted growth around the globe by its

major purchases of raw materials from a

variety of nations. But now its reduced

appetite is causing shockwaves near and

far. Brazil, Australia, Russia and other

major markets have faltered as global

demand for commodities, including oil,

iron ore and copper, continue to weaken.

Beijing recently cut its estimate of

economic growth from 7 percent to 6.5

percent, and many believe it is significantly

lower than that. “The Chinese economy

has slowed noticeably during the past few months, with some observers believing the true

pace of economic growth may be lower than that implied by GDP,” Goldman said. Oxford

Economist Oren Klachkin said China’s economic activity is slowing at an “alarming” pace,

adding that the country’s move in August to lower the value of its currency has hurt

investor confidence in China’s economy and worsened capital outflows.

Future Trends—Economics


Trade Association

In addition to cutting its projection of U.S. growth, Goldman also lowered its earnings

estimates and price targets for the S&P 500 (SPX) which it now expects to end 2015

at 2,000—down from its previous estimate of 2,100. When the Federal Reserve hikes

up short-term interest rates, it will strengthen the dollar and put upward pressure on

mortgage rates. In turn, this will inevitably have an impact on building and construction.

Building and construction is traditionally divided between residential and nonresi-

dential. SIPA data show that residential construction exceeds commercial by a margin of

61 percent to 38 percent. Apartments and multi-family housing are generally considered

to be commercial and thus categorized among nonresidential.

Without question, building and construction comprise a major sector of the U.S.

economy. According to data compiled by the National Association of Home Builders

(NAHB), residential investment recently accounted for about 3 percent of the nation’s

GDP. Housing services contribute another 15 percent of GDP for a total impact of 18

percent of GDP.

At the national level, the economic impact of residential construction is broad-based,

as jobs are generated in the industries that produce lumber, concrete, lighting fixtures,

heating equipment, and other products that go into a home or remodeling project. Other

jobs are generated in the process of transporting, storing and selling these projects.

Still others are generated for professionals such as architects, engineers, real estate

agents, lawyers, and accountants who provide services to home builders, home buyers,

and remodelers.

NAHB estimates that for every 100 single-family homes built, enough economic

activity is generated to support 297 jobs, $28 million in economic income (wages and

business), and $11 million in federal, state and local fees and tax revenue. These are the

first-year impacts.

Similarly, for every 100 rental apartments developed, enough economic activity is

generated to sustain 113 jobs and to produce $10.7 million in economic income on an

annual basis. The activity also generates $4.2 million in fees and tax revenue.

Residential remodeling also provides significant impact to local economies and is

a major contributor to the nation’s GDP. The NAHB model estimates that for every $10

million in remodeling expenditures, 89 jobs are supported for a year. The activity also

yields $8.3 million in economic income and produces $3 million in federal, state and local

taxes and fees.

Plastics processing and manufacturing is notably dependent on building and

construction, which accounts for 9 percent of plastics production. According to the

American Chemistry Council (ACC), in 2014 building and construction accounted for

12,626 million pounds of plastics on a dry weight basis, compared to 26,081 million

pounds for packaging.

The data on use of polyvinyl chloride (PVC), the third largest volume plastic produced

in North America and the second largest selling plastic in the world, offers a more focused

perspective on the importance of plastics in building and construction. According to

Richard Doyle, president of the Vinyl Institute, “The building and construction sector is

extremely important to the vinyl industry with nearly 70 percent of our industry’s products

being used to in various applications like flooring, siding, wire and cable, windows, wall

coverings, piping and roofing, all of which contribute to sustainable and resilient structures

for people throughout the world.”

Exports are a relatively small but growing segment of the constructions plastic

100 297$28$11SINGLE-FAMILY

HOMESJOBS

ECONOMIC INCOME

FEES & TAXREVENUE

100 113$10.7$4.2RENTAL

APARTMENTSJOBS

ECONOMIC INCOME

FEES & TAXREVENUE

NAHB estimates that for every 100 single-family homes built, enough economic activity is generated to support 297 jobs, $28 million in economic income (wages and business), and $11 million in federal, state and local fees and tax revenue. These are the first-year impacts.

Similarly, for every 100 rental apartments developed, enough economic activity is generated to sustain 113 jobs and to produce $10.7 million in economic income on an annual basis. The activity also generates $4.2 million in fees and tax revenue.

Because residential

construction is a major

market for plastics,

the vitality of the

housing industry is

vital to plastics. And

the overall picture is

a positive one for an

industry recovering

from the most severe

economic downturn

since the 1930s.


market. In 2014, the U.S. exported almost $124 million in plastic floor coverings to other

nations. The largest four markets were Canada, Japan, Australia and the United Kingdom.

About $83 million in window, door, deck and railings were sold to foreign countries, the

four largest markets being Canada, Japan, Mexico and the Dominican Republic. And

some $75 million in wall and ceiling products were exported, the four largest markets

being Canada, Hong Kong the United Kingdom and Mexico. The biggest export category

under plastics in building and construction was rigid tubes, pipes and hoses which racked

up about $808 million in foreign sales in 2014. The four leading customers were Canada,

Brazil, Mexico and Japan.

Building and construction took a major hit during the Great Recession, but now all

signs point to a surging recovery. “Business is booming,” said David Stutzman, CEO of

Conspectus, the largest independent architectural specifications outfit in the country. “I

think 2016 will be a good year.”

ResidentialBecause residential construction is a major market for plastics, the vitality of the

housing industry is important to plastics. And the overall picture is a positive one for

an industry recovering from the most severe economic downturn since the 1930s.

Markets in 79 of the approximately 360 metro areas nationwide returned to or exceeded

their last normal levels of economic and housing activity in the third quarter of 2015,

according to the most recent National Association of Home Builders/American Leading

Markets Index (LMI). The index’s nationwide score edged up to .93, meaning that based

on current permit, price and employment data, the nationwide average is running at 93

percent of normal economic activity. Meanwhile, 69 percent of markets have shown an

improvement year-over-year.

“Housing markets are improving gradually as the economy strengthens and job

creation continues,” said Tom Woods, a home builder and developer from Blue Springs,

Mo., and chairman of the NAHB. “In especially encouraging news, markets most affected

by the downturn posted the largest year-over-year increases in their LMI (Leading Market

Index) score. This shows that the recovery is taking hold in those areas.”

“The employment metric of the LMI is making solid gains, with the number of metros

that reached or surpassed their norms rising by 32 in a year,” said Dr. David Crowe, NAHB

chief economist. “Single-family permits keep inching forward, but remain only 47 percent

of normal activity, and continue to be the sluggish component of the index.”

“The number of markets on this quarter’s LMI at or above 90 percent has risen to

175—almost half of all markets nationwide,” said Kurt Pfotenhauer, vice chairman of First

American Title Insurance Company, which co-sponsors the LMI report. “This is a strong

indicator that the overall housing market continues to make headway and bodes well for

the rest of the year.”

The NAHB does not anticipate that interest rates will impede the housing recovery.

“Short-term interest rates will follow the federal funds rate and as the economy picks up

steam. The yield curve will flatten with longer term ranges rising by roughly two-thirds of

the 300 basis point increase in the federal funds rate over the course of 2016 and 2017,”

said Crowe. “The rate on 30-year fixed rate mortgages will end 2017 still below 6 percent,

posing no threat to the housing recovery.”

Census Bureau data show that housing starts have risen steadily from 612,000 in

2011, to 784,000 in 2012, to 928,000 in 2013, to 1 million in 2014. NAHB projects 1.1

million in 2015, 1.3 million housing starts in 2016 and 1.5 million in 2017.

Plastics processing and manufacturing is notably

dependent on building and construction, which accounts

for 9 percent of plastics production. According to the

American Chemistry Council (ACC), in 2014 building

and construction accounted for 12,626 million pounds

of plastics on a dry weight basis, compared to 26,081

million pounds for packaging.

9%PLASTICS PRODUCTION

12,626 MPOUNDS OF PLASTICS

26,081 MPOUNDS OF PLASTICS

BUILDING &CONSTRUCTION

PACKAGING


Trade Association

NAHB Housing Starts ProjectionsRising house prices pose a potential threat to the housing recovery, but here too the

NAHB sees clear sailing ahead. “House price appreciation since the boom and bust cycle

has followed a clear path during the recovery, rising rapidly in 2012 and 2013, revisiting

double digit annual growth, before softening in 2014 and trending downward to more

sustainable rates more recently,” Crowe said. “The notable exceptions to that pattern

were the sharp decelerations that followed the declines in existing home sales after the

interest rate spike in 2013 and the harsh winter leading into 2015.”

Housing price increases picked up again in July–August coinciding with renewed

strength in existing home sales and bringing the pace of house price appreciation back

in line with the earlier softening trend, NAHB said. “We expect a continuation of this

correction in the near term before the rate of increase in house prices drifts down to a

more sustainable pace near 4 percent over the course of 2016 and 2017.”

The most recent NAHB survey of

members showed that builders’ confi-

dence in the housing market declined

slightly in November 2015, falling three

points to 62, but any reading above

50 indicates most builders are opti-

mistic about conditions in the market

for single family homes. “The November

report is a pullback from the unusually

high October and is more in line with the

consistent, modest growth that we have

seen throughout the year,” said Crowe. “A

firming economy, continued job creation

and affordable mortgage rates should

keep housing on an upward trajectory as

we approach 2016.”

The overall home ownership rate

rose from less than 64 percent in the

late 1980s to more than 69 percent in

the mid-2000s before dropping to below

64 percent again in 2015. If current

ownership rates by age and race persist,

the Mortgage Bankers Association (MBA)

anticipates home ownership to grow

modestly to 64.8 percent. If those rates

of home ownership by group revert to

higher long-term trends, they expect

the home ownership rate to rebound to

66.5 percent.

NonresidentialThe years 2014–2015 denoted

a welcome upswing for nonresidential

construction, a category that generally

encompasses businesses, shopping

centers, hotels, K–12 schools, public

and religious buildings, transportation

terminals, various public works, electric

utilities, hospitals and clinics, etc. “We are

finally in the midst of a sustained recovery,”

wrote Jeff Gavin in Electrical Contractor

(ecmag.com). “Growth is steady, and

momentum assuredly recovers when

events such as unexpected weather hit.

While the pace of the recovery can be

frustrating, last year (2014) marked the

first year where all but one of the major

Thou

sand

s of

Uni

ts

Source: www.census.gov/briefrm/esbr/www/esbr020.html

2000 2002 2004 2006 2008 2010 2012 2014

2,500

2,000

1,500

1,000

500

0

New Housing Units Started in the United StatesSeasonally Adjusted Annual Rate

Total Starts

926

618

Single-Family Starts

Milli

on U

nits

, SA

AR

’79 ’82 ’85 ’88 ’91 ’94 ’97 ’00 ’03 ’06 ’09 ’12 ’15

2.3

2.0

1.7

1.4

1.1

0.8

0.5

0.2

0

NAHB Housing Starts Projections

http://ecmag.com


construction markets made gains or

stayed positive.”

According to the Associated Builders

and Contractors, Inc. (ABC), nonresidential

construction spending in September 2015

was $692.8 billion, down 0.1 percent from

the preceding month, but still representing

a year-over-year increase of 12.4 percent,

the largest increase since April 2008.

“The last several months have generally

been associated with sizable increases in

nonresidential construction,” said Anirban

Basu, ABC chief economist. “While not

particularly upbeat, this does not alter

the fact that nonresidential construction

spending continues to recover and that

most contractors are busier than they

were a year ago.”

Robert Murray, chief economist and

vice president of Dodge Data & Analytics,

said that 2014 “marks the first year where

the institutional sector is no longer pulling

down the other construction sectors.”

The recovery in nonresidential is estab-

lished, he said, adding, “It’s clear we are

in broad-based and recognized recovery

that is cyclical and reminiscent of 1990s

which led to a 20-year period of stability

and growth.” Dodge projects the overall

commercial sector will come in at 15

percent for 2015.

There is a sense in the industry that

there is tremendous room for expansion.

“We’ve lost seven years,” said Ken

Simonson. “We have a lot to catch up.”

Some of the more promising areas: n Energy—It will continue to drive U.S.

construction in 2015 and beyond, primarily due to development of oil and natural gas. “I think oil and gas infra-structure will be a huge construction opportunity,” said Branko Terzic, pres-ident and CEO of Branko D. Terzic & Associates, at a McGraw-Hill panel in Washington. “Over the next 10 years, $275 billion in gas and oil distribution upgrades will be needed; $23 billion for natural gas storage facilities; and $32 billion for gas processing; an esti-

mated $20 billion for crude oil pipe-lines; and $9 billion for rail investment. These and other infrastructure invest-ments will total some $505 billion.” There will also be huge investments in energy efficiency, smart grid devel-opment, and renewables, which are expected to grow rapidly. Green buildings are increasingly seen as both healthier for humans and a positive for the environment.

n Offices—Last year’s square footage gains were at the highest level since 2008. New office starts in 2015 were projected to increase at 18 percent (122 million square feet) and 19 percent ($32.3 billion). In addition, high rise construction—six stories and up—for office space continued a three-year climb as downtown vacancy rates continued to slide.

n Nontraditional building types—Data centers represented five of the 20 top office projects in 2014, generating $1.6 billion in construction value. The largest was a data center for the U.S. Army in Fort Meade, Md., at $861 million. Microsoft broke ground on three data centers—repre-senting $875 million—to support its cloud effort. Travelers Insurance invested in a $200 million data center in Omaha, Neb.. Technology companies are leading the parade. The top states for office construction were Texas (by a large margin) followed by California and Illinois.

n Hotels—These were on a roll, building on strong activity in 2013. Growth in 2014 registered 32 percent (56 million square feet) and $11 billion. 2015 is not expected to finish quite as strong, but should include a healthy gain of 14 percent (64 million square feet) and 17 percent ($12.9 billion). This industry is strong. According to Smith Travel Research, occupancy rates during the first nine months of 2014 were 65.9

Both residential and

nonresidential building

and construction are

constricted by a severe

shortage of skilled

labor. For example,

NAHB survey data of

the industry for 2015,

revealed that access

to labor was the top

builder challenge.

Per

cent

’79 ’82 ’85 ’88 ’91 ’94 ’97 ’00 ’03 ’06 ’09 ’12 ’15

70

68

66

64

62

60

Homeownership


Trade Association

percent, a 3.5 percent increase from the year before. Several large projects were underway in 2015.

n Retail—Store and shopping center construction slowed some 6 percent in 2014 after three consecutive years of strong growth. Though declining 2 percent to 113 million square feet, dollar values increased 2 percent to $17.1 billion. Growth in 2015 is projected to come in at 11 percent (125 million square feet/$18.9 billion). Some major retail chains did move ahead with expansion plans in the first nine months of 2015. Walmart built new stores and began remodeling existing stores ($1.8 billion). Discount stores including Dollar General, Family Dollar and Dollar Tree all grew, breaking ground on construction projects totaling $82 million to $161 million. Costco and Target reawakened in 2014 with $116 million and $99 million in new construction respectively. Home supply stores expanded, including Menards ($193.3 million) and Lowe’s ($47.8 million). Considered part of the retail sector, commercial warehouses grew 9 percent in 2014 (160 million square feet) and 15 percent ($10.3 billion). In 2015, activity is expected to expand to 12 percent (179 million square feet) and 14 percent ($11.7 billion). E-commerce, which represented 6.4 percent of all retail activity in 2014, continued to fuel this sector in 2015.

n Institutional—This area reversed a five-year decline in 2014 growing by 1 percent (288 million square feet) and 4 percent ($95.3 billion). Education in 2014 saw an increase of 6 percent (117 million square feet) and 7 percent in dollar value ($40.8 billion). Growth in 2015 is projected to come in at 8 percent (127 million square feet) and dollar value gain between $44.6 billion and $55 billion. Construction of K–12 schools outpaced that of higher education, up 10 percent in 2014. Junior high schools rose 18 percent, senior high schools 15 percent and primary schools 4 percent. Another factor in K–12 spending is rehab work, a growing sector because many schools are old and deteriorating. Construction starts for four-year colleges rose 7 percent in 2014. A subsector representing college related laboratories and research facilities rose 45 percent due in part to funding for STEM (science, technology, engi-neering and math).

n Healthcare—Construction fell 7 percent to 68 million square feet in 2014, though the dollar value rose 3 percent ($22.8 billion). Stronger growth is projected for 2015. Several factors have been holding this sector down, including cuts in federal spending for Veterans Administration hospitals, and hospital mergers. The elections should resolve some of these issues and that, together with an aging population, strongly suggest this sector will rebound.

n Public buildings—This category emerged from four years of double-digit declines, thanks largely to major courthouse projects. In 2014 public building grew by 2 percent (17 million square feet) and 8 percent ($7.1 billion). This year starts were expected to rise 5 percent (18 million square feet) and 6 percent ($7.5 billion).

n Religious buildings—These showed continuing weakness in 2014, dropping 6 percent (10 million square feet) and 7 percent ($1.7 billion). The numbers in 2015 were expected to be stronger showing a 3 percent gain in space (11 million square feet) and 4 percent in spending ($1.8 billion). Rising donations to charities, including reli-gious-based, are expected to influence this category.

n Amusement/recreational buildings—This area grew by 8 percent in 2014 (39 million square feet) and 9 percent ($5.3 billion). Those data were expected to grow in 2015 by 13 percent (44 million square feet) and 14 percent ($14 billion). Six projects valued at more than $100 million each broke ground in 2014 and continued into 2015. The largest is the new football stadium under construction for the Atlanta Falcons, valued at $948 million.

There is a sense in the

industry that there

is tremendous room

for expansion in the

commercial sector. Some

of the more promising

areas are:

• Energy

• Offices

• Nontraditional building types

• Hotels

• Retail

• Institutional

• Healthcare

• Public buildings

• Religious buildings

• Amusement/recreational buildings

• Transportation terminals

• Manufacturing plants

• Electric utilities


n Transportation terminals—There were some big projects in 2014 though overall starts were down 8 percent from 2013. The market size stood at 17 million square feet and dollar value at a seven year low of $5.3 billion, an 18 percent decline. In 2015, starts and dollar value of this sector were expected to increase for the first time since 2006.

n Manufacturing plants—These have provided a roller coaster ride for several years, but in the first nine months of 2014, work began on 25 manufacturing plants worth $100 million or more. Of those, 15 were chemical and/or energy related. Overall manufacturing construction jumped 3 percent (54 million square feet) and 57 percent ($29.1 billion) in 2014. With the completion of some big projects, the numbers were expected to come in lower in 2015, but the future looks bright. “I see a big turnaround down the road for manufacturing that should remain strong for several years,” said AGC’s Simonson.

n Public works and electric util-ities—This category had a strong 2013 but took a major hit in 2014 landing at $113.4 billion. The CMD Group placed starts higher in 2015 but the results are unclear. Congress recently passed a transportation bill, which offers hope for positive gains, but it remains to be seen how quickly that money will hit the streets. Envi-ronmental public works saw a 14 percent increase in 2013 but fewer big projects in 2014 dropped that down to 4 percent ($31.8 billion). That includes a 9 percent decline in water supply systems and a drop of 6 percent for river/harbor development. Stronger performance was projected for 2015.

n Electric utilities—This area saw a whopping decline of 56 percent for utility construction in 2013, firming up somewhat in 2014 for only a 3 percent drop. A dip to $20.5 billion, or 9 percent, was projected for 2015 primarily because of uncertainty about President Barack Obama’s Clean Air

Act carbon-pollution standards. Stricter pollution standards may lead to more util-ities building natural gas fired plants, retrofitting coal plants to use natural gas and more investment in alternative energy sources. Ongoing efforts to create smart grids and integrate renewable and alternative power sources will promote construction of new transmission and distribution lines. In its most recent Long-Term Reliability Assessment, the North American Electric Reliability Corporation (NERC) reported that the electric power industry plans to build 18,300 miles of new transmission and distribution capacity between 2013 and 2018. Another 6,800 miles of transmission capacity is under review.

Labor ShortagesBoth residential and nonresidential

building and construction are constricted

by a severe shortage of skilled labor.

For example, NAHB survey data of the

industry for 2015, revealed that access to

labor was the top builder challenge. This is

a residual of the recession when there was

a dramatic drop in work projects and tens

of thousands of workers left construction

for other fields. “We’re coming back,” said

Armstrong, “but it’s half of what it was.

You still need carpenters, plumbers, and

electricians. Right now the construction

market is labor constrained. There are

not enough workers because so many

left the market. The people we have now

have not been engaged in this work for

long and often lack the necessary skills

and training.”

For example, according to NAHB

analysis of government data, total payroll

employment in the residential construction

sector declined by nearly 1.5 million during

the recession. The industry is rebuilding

its workforce, but it is taking time. NAHB

estimates that over the 12-month period

ending with November 2015, home

builders and remodelers added 128,000

net jobs to the industry, bring the total to

2.511 million. However, only 524,900 jobs

have been added since the industry low

point of employment.

“Overall demand for construction

continues to grow at a very robust rate,”

said Simonson. “It appears, however, that

many firms performing private nonresi-

dential work could not find enough qual-

Job Growth

CONSTRUCTIONUP

3.8%compared with 2% across all categories

PROFESSIONAL

SERVICESarchitecture, computer systems design

and legal services

UP

3.5%

CONSTRUCTION WORKERS

$27.54 an hour

UP

2.6%


Trade Association

ified workers in September to keep pace with growing demand.” There were only 479,000

unemployed construction workers in September 2015, “the smallest total in 15 years,”

he added.

According to data compiled by the Bureau of Labor Statistics (BLS), construction

is showing the strongest job growth for the 12 months through October 2015, up 3.8

percent compared with 2 percent across all categories. Professional services—that

includes jobs in architecture, computer systems design and legal services—came in

second with 3.5 percent growth. Strong demand for construction labor is reflected in pay

scales. Construction workers made $27.54 an hour in October based on U.S. Department

of Labor data, up 2.6 percent from the year before.

Further, BLS projections show strong growth for the construction labor force over

the next 10 years. According to the government estimates, the overall construction sector

is expected to add, on a net basis, almost 800,000 jobs through 2024. That places the

construction sector second in terms of expected growth on a percentage basis.

“Demand may be starting to outstrip the industry’s capacity given the severe and

growing shortages of available, qualified workers,” said Stephen E. Sandherr, CEO of the

Associated General Contractors (AGC). He called upon government leaders to act on

measures recommended in the AGC’s Workforce Development Plan designed to make it

easier to prepare, recruit and train new workers.

Turner Construction, which has 45 offices throughout the U.S., and hires from 325

to 350 recruits out of college each year to be field engineers and other types of managers,

is seeing stiffer competition for workers and is paying more in response. “Is the compe-

tition greater—absolutely,” said Katie Igoe, Turner Recruiting Director. “They’re wanting

more money. They’re getting multiple offers.”

SummaryBuilding and construction has not regained its prerecession vigor but is making

steady progress with promise of more to come in the years ahead. Consumers are more

confident as unemployment continues to fall and wages are at last on the upswing, and

there is clearly much deferred demand to be met. Worldwide economic conditions, the

prospect of an interest rate hike and an acute labor shortage appear to be the major

clouds on an otherwise sunny horizon.

Building and

construction has not

regained its prerecession

vigor but is making

steady progress with

promise of more to

come in the years

ahead. Consumers

are more confident

as unemployment

continues to fall and

wages are at last on the

upswing, and there is

clearly much deferred

demand to be met.


Future Trends—Demographics


“Build it and they will come” has

a mixed record as a business strategy,

but the growth of “they” generally

leads to an increase in construction,

as growing populations spur the need

for more housing and the infrastructure

needed to support the population. While

numerous other factors—such as interest

rates, employment, per capita income,

GDP growth, and urbanization, among

others—play a significant role in the rates

of housing and construction growth,

absent population these other factors are

moot, said Ken Gronbach, KGC Direct,

a multi-generational marketing/demo-

graphic expert and author of The Age

Curve: How to Profit from the Coming

Demographic Storm.

As of 2010, the value of global

construction output was said at between

$7– to $7.4-trillion, depending upon the

analyst and/or timing of the analysis, and

estimates for future construction growth

suggest annual global output will more

than double to reach $15 trillion sometime

between 2020 and 2025.

Analysts generally agree that China,

the U.S. and India will be the primary

drivers of global construction growth, with

India expected to overtake Japan as the

world’s third largest construction market

sometime between 2017 and 2022, again

depending upon the analyst. Overall,

analysts feel that China, the U.S. and India

will account for somewhere between 51

to 64 percent of all global construction

growth. While not as large as the above

mentioned markets, other Asia-Pacific

countries—such as Indonesia, the Philippines and Vietnam—are expected to experience

some of the fastest rate of construction growth over the next 10 years.

Some countries in Sub-Saharan Africa are also expected to have high rates of

growth, while construction growth in Latin America is expected to be slower than the

global average. Forecasts for western and eastern Europe are mixed, with a range

between outright stagnation to modest growth. On a strictly demographic basis,

Gronbach believes that the high-end $15 trillion estimate in annual global construction

can certainly be reached, if not well exceeded, by 2025.

The world’s population, currently estimated to be nearing 7.4 billion, continues to

grow and will likely reach at least 8.5 billion by 2030 and 9.7 billion by 2050, according

to United Nations forecasts. While all of these people will need housing as well as infra-

structure to support them, the levels of additional housing and infrastructure construction

will rely to a large extent on their local economies.

Approximately half of the projected population growth going forward to 2050 is

expected to occur in nine countries: India, Nigeria, Pakistan, Democratic Republic of

Congo, Ethiopia, United Republic of

Tanzania, United States, Indonesia and

Uganda, listed here according to the size

of their contribution to total world popu-

lation growth. Thus, while many of these

countries can support—and will benefit

from—an expansion in their housing and

construction industries, others will struggle

to provide basic housing and infrastructure

for their expanding populations.

Nevertheless, the housing and

construction industry will need to expand

in all of these countries to accom-

modate their growing populations. For

the purposes of this report, Gronbach

reviewed data and projections offered by

four different studies, but he found Global

Construction 2025: A Global Forecast

for the Construction Industry to 2025 to

be the most insightful due to its pointed

consideration of demographics.

Less clear is how the housing and

construction industry will fare in those

“Build it and they will

come” has a mixed

record as a business

strategy, but the growth

of “they” generally

leads to an increase in

construction, as growing

populations spur the

need for more housing

and the infrastructure

needed to support

the population.


Trade Association

countries facing stagnating population shifts or outright population decline. While many

analyst projections tend to look for positives for the industry in those countries, Gronbach

believes that such forecasts may be overoptimistic. He notes it is hard to believe that

housing and infrastructure construction will expand in the face of declining populations.

Construction DynamicsThe notion of “Build it and they will come” actually tends to work in the U.S. With

the population currently estimated to grow from 321 million to 347 million by 2025, and

then by another 51 million to reach 398 million by 2050, the U.S. will need to do some

serious building.

As of the 2010 U.S. Census, there were just over 130 million housing units available

for the 308 million or so people living in this country. To maintain a rough approximation of

existing housing unit characteristics, the housing unit stock would need to rise to at least

140 million by 2025 to account for the increase in population. With about 2.8 million new

units built from 2011 to 2014, and an estimated “removal” rate of 400,000 housing units

per year, the U.S. will need to build about 1.3 million new housing units per year for the

next 10 years, which is several hundred thousand more than has been built annually for

the past few years since the Great Recession.

The two groups that will undoubtedly

impact U.S. housing and construction

the most going forward to 2025 are the

estimated 79 million baby boomers (born

1946–1965 and currently aged 50 to

69) and the 87 million or so members of

Generation Y (born 1986–2005 and now

ages 10 to 29), sometimes called millen-

nials, about 80 million people. These

generations, the two largest in U.S.

history, have continually confounded

marketers, and will likely continue to do

so going forward.

Perhaps largely because of the

2008 housing collapse and subsequent

recession, boomers didn’t start retiring

and members of Gen Y didn’t enter the

job market in the numbers expected.

That has now changed and boomers are

reportedly retiring at a rate of one every

eight seconds, and Gen Y is entering the

job market in droves. Gen Y, which made

a mark by living “at home with the parents”

longer than previous generations, is now

“leaving the nest” in increasing numbers.

Gen Y is also just entering the peak years

for first-time home buyers.

A major weak link in the residential

industry is the buying pattern of millen-

nials. This group has been struggling to

find jobs in a weak economy and are often

saddled with onerous debts from college.

About a fifth of millennials still live with their

parents. Many are unemployed, underem-

ployed and/or underpaid. Not surprisingly,

they are delaying marriage and family,

which are usually triggers for buying a

home. (Investors.com, August 27, 2015)

The share of U.S. homes sold

to first-time buyers in 2013 and 2014

declined to 28 percent, its lowest level

in almost three decades, according to

the National Association of Realtors,

suggesting young people, in particular

Generation Y, are being left out of the

housing recovery. In better times, the

average was nearly 40 percent, said

28%

In 2013-2014First-time buyers declined to

39%

In 2009First-time buyers spiked to

Share of U.S. homes sold

The share of U.S. homes sold to first-time buyers in 2013 and 2014 declined to 28 percent, its lowest level in almost three decades, according to the National Association of Realtors, suggesting young people, in particular Generation Y, are being left out of the housing recovery. In better times, the average was nearly 40 percent, said Selma Hepp, chief economist with Trulia, a home information website that is part of Zillow Group. The numbers spiked to nearly 39 percent in 2009, but that was due to a one-time tax credit for first-timers.

http://Investors.com


Selma Hepp, chief economist with Trulia,

a home information website that is part

of Zillow Group. The numbers spiked to

nearly 39 percent in 2009, but that was

due to a one-time tax credit for first-timers.

But things are looking up. A survey

by Trulia indicated that nine out of 10

millennials plan to buy a home, but not

necessarily today,” said Hepp. In the

survey, 50 percent of those married with

kids said they plan to buy sooner than

later—within the next two years. “The

ones that have gotten married and have

kids are trickling in now,” Hepp said. “Our

data and numerous data indicate they are

coming back into the market and contrib-

uting a bigger share to the new-buyer

market. The thing is, in many markets

where they would be buying, they may be

constrained by affordability.”

This is especially true in markets with good job growth, such as New York, San Fran-

cisco, Los Angeles and Austin, Texas. “That is where you are also seeing low inventories

and hence higher price appreciation,” said Hepp.

A more positive attitude toward home buying by millennials would appear to be part

of a larger overall trend. According to the Mortgage Bankers Association (MBA), by 2024

the U.S. will create between 14 and 16 million new households. Of those, as many as 13

million will be owners and as few as three million will be renters.

As reported by Laura Kusisto in The Wall Street Journal, the MBA expects as many

as 1.3 million additional households will be created each year. That would be a significant

pickup from the recession when the number of households was essentially flat. “It’s a

huge amount of housing demand any which way you cut this,” said Lynn Fisher, MBA’s

vice president of research and economics.

Some economists have predicted that the home ownership rate will continue to

decline given that Hispanic families are expected to constitute the largest share of new

households and that demographic historically has had comparatively low rates of home

ownership. But the MBA says the downward spiral will level off or reverse in part because

the U.S. population is growing older and older people are much more likely to buy than

to rent. Four out of five households headed by someone age 25 or younger are renters

compared with only 44 percent of those aged 35 to 39. Two-thirds of the population

growth among Hispanics will be among people 40 years or older.

One of the oddities in the MBA analysis is that most new households formed over

the coming decade will not be young people striking out on their own, but rather older

people north of 60. Baby boomers are expected to form nearly 13 million new house-

holds, netting 10 million additional owner households. That compares to just over five

million households formed by millennials, netting an additional four million owners.

This trend is driven somewhat by people over the age of 60 living longer and healthier

lives, said Fisher. These boomers are thinking about downsizing, and many of those in

northern climates are interested in seeking out warmer pastures. Some are likely to stay

in their current homes but others may choose to sell and become renters or divorce and

9 out of 10

Millennials

plan to buy a home

50%married with kids plan to buy

A survey by Trulia indicated that nine out of

10 millennials plan to buy a home, but not

necessarily today,” said Hepp. In the survey, 50

percent of those married with kids said they

plan to buy sooner than later—within the next

two years.

14-16 Mnew households

13 Mowners

3 Mrenters

By 2024

A more positive attitude toward home buying by millennials would appear to be part of a larger overall

trend. According to the Mortgage Bankers Association, by 2024 the U.S. will create between 14 and 16

million new households. Of those, as many as 13 million will be owners and as few as three million will

be renters.


Trade Association

form separate households, driving growth

in housing demand. While this portends a

period of flux for the housing industry, it

should also mean growth, albeit growth

in certain sectors and regions, not

uniform growth.

Gronbach based his estimate on

10-year projections made in a 2004

report. As those projections were

considered “modest,” the actual annual

number of removals is likely higher, and

thus the number of new housing units

needed as expressed here should be

considered conservative. In fact, the

Global Construction 2025 report puts the

U.S. new housing unit need at 1.5 million

annually. Note that the U.S. housing

market has been in flux since its 2006

peak prior to the housing bubble collapse.

In that year almost 2 million housing units were constructed, with the number of annual

units constructed falling to a low of about 584,000 in 2011, and since rising to about

883,000 units constructed in 2014.

Plastics industry analyst IHS, of Englewood, Co. believes it will take the U.S. nine

more years before annual prerecession construction levels are restored, which coincides

with Gen Y entering its peak earning years. With boomer retirement comes a desire for

one-level living and “active living retirement” communities, not to mention warm weather

locales. So look for building booms in retirement style housing throughout the Southeast

and Southwest, wherever the climate is temperate.

Gen Y, meanwhile, is going to need a lot more starter homes than are currently

available. So, what of all those baby boomer mini-mansions that popped up from the

1990s to 2000s? Well, not all boomers will move, and Generation X (born 1966–1985 and

now ages 30 to 49) are now in the key earning years in which they can afford them. Add

in high-net-worth immigrants and the current inventory is likely adequate, but in another

10 years demand should grow again as Gen Y starts entering its peak earning years.

Infrastructure and Nonresidential ConstructionWhile housing is the primary driver of U.S. construction, new housing and a growing

population will drive the need for new infrastructure and nonresidential structures (offices,

factories, medical facilities, schools, etc.). However, infrastructure needs will also be driven

by the advanced age of existing infrastructure. According to the American Society of Civil

Engineers, the U.S. needs to invest $3.6 trillion to upgrade existing infrastructure, with

roads, wastewater treatment, levees, drinking water, inland waterways, dams, aviation,

and hazardous waste all scoring poorly on the society’s quadrennial report card on the

nation’s infrastructure.

Canada’s population dynamics are very similar to the U.S., but with a population

of only about 33 million. However, Canada often lags behind the U.S. in many metrics,

including the state of its economy and housing market. The country did not experience

the housing bubble collapse due to strict lending requirements and the subsequent

recession was not as severe as it was in

the U.S. However, the country now faces

a significant housing price decline and its

economy may have entered a recession

due to global declines in oil prices. Thus,

Canada will likely suffer a decline in

housing and construction spending for at

least the next few years, and, if it follows

the usual lag time, should recover and

start to trend back upwards.

With regard to infrastructure

spending, though, Canada is ahead of the

U.S., as the federal and provincial govern-

ments have already made investment

commitments to refurbish and replace

aging infrastructure.

China, India and Asia-Pacific Countries

China tried the “build it…” but they

didn’t come, as evidenced by dozens of

“ghost cities” in the country. Nevertheless,

China, with the world’s largest population

at just under 1.4 billion residents, is a

construction powerhouse, and is believed

to account for up to 20 percent of annual

global construction spending.

While China will remain a global

construction powerhouse, growth in

construction is expected to slow over the

next 10 years, and then slow even more

after 2025. The country also faces a likely

slowing of its economy as it rebalances

more from investment and export-led

growth to household consumption;

however the latter will serve to increase

affluence, driving demand for larger homes

and additional infrastructure. Meanwhile

India, with explosive growth in both its

overall population and number of middle

class households, is expected to become

the world’s third-largest construction

market—overtaking Japan—sometime in

the next five to eight years.

Analysts at Oxford Economics and

Global Construction Perspectives forecast

that China and India will need more than

250 million new housing units by 2025.

Industry analyst

IHS believes it will

take the U.S. nine

more years before

annual prerecession

construction levels

are restored, which

coincides with Gen

Y entering its peak

earning years.


Japan’s expected fall from third place is

likely due in large part to its accelerating

population decline and aging population.

With no reversal in sight, and extensive

growth in other areas of the world,

Japan’s comparative level of construction

spending will likely continue to decline.

South Korea and Taiwan, as fully

developed and industrialized countries,

are not likely to experience significant

increases in construction spending for

the foreseeable future. Indonesia, Vietnam

and the Philippines, with growing popula-

tions and rapidly expanding economies,

are expected to be among the fastest

growing construction markets in Asia. In

fact, Indonesia, which is ranked as the

world’s 10th largest construction market,

is expected to become the fifth largest by

2025.

Europe and RussiaMost European countries are

facing population declines, with some

facing population contractions of up

to 15 percent by 2050. Again, Oxford

Economics and Global Construction

Perspectives analysts recognize this

as being detrimental to the region’s

future housing and construction industry

growth, and forecasts that construction

growth will decline by 5 percent by 2025.

However, some other analysts seem to

ignore population dynamics and assume

that the region can return to moderate

construction growth as long it can solve

its debt issues.

Eastern Europe in many cases is

facing more drastic projected population

declines than Western Europe, yet analysts

see better construction growth prospects

for the region due in large part to ongoing

modernization efforts to become fully

developed. Russia, which was considered

the ninth largest construction market in

the world as of 2012, is projected to have

among the strongest construction growth

within the Euro-Russian region, with two analysts believing it will become the sixth largest

construction market in the world. Gronbach questions these assumptions about Russia

because of its low birth rate, high death rate, and projected significant decline in popu-

lation, which is expected to fall by up to 20 percent by 2050. With declining populations

comes a likely reduction in the need for housing and infrastructure, along with a probable

reduced capacity to pay for it. This should be kept in mind when considering construction

growth rates for the entire Euro-Russian region. It is unclear to what extent the recent

immigration wave will have on Europe’s population dynamics, but the large numbers could

mitigate projected population declines for some countries.

AfricaAnalysts generally seem quite upbeat about Africa’s housing and construction

market, with Sub-Saharan Africa considered the second fastest construction growth

market after Asia. This would make sense given that Africa’s population is among the

fastest growing in the world. The continent currently has a population of just over 1 billion

people, and some projections estimate the population to more than double to 2.4 billion

by 2050. While political and economic stability remain concerns, many African countries

are experiencing strong economic growth, rapid urbanization and a rising middle class.

These factors are expected to foster significant construction of housing, non-residential

buildings (offices, factories, medical facilities, schools, etc.), and related infrastructure.

Latin America presents a mixed bag as far as forecasts for future housing and

construction growth. Birth rates across the region have been falling for two decades

and population growth has slowed signifi-

cantly. Most Latin American countries are

also already highly urbanized, which limits

construction growth potential, and many

of the countries have stagnating econ-

omies. While overall construction growth

is expected to be slower than the global

average, opportunities for growth do exist,

and there is definitely a need for housing,

albeit “affordable” housing. By some esti-

mates 60 million Latin Americans live in

substandard housing considered unfit for

habitation, and it is estimated that popu-

lation trends will dictate the need for more than 25 million new homes in Brazil and Mexico

alone by 2025.

Overall, Chile, Columbia and Mexico are considered to be the Latin American coun-

tries with the most potential for construction industry growth, while Brazil could be added

to the list if it were to resolve some economic impasses such as a difficult bureaucracy

and complex tax structuring.

Summary“Build it and they will come” may not generally prove true, but build the popu-

lation and you have impetus for expanding the economy and encouraging the growth of

housing and construction. In short, the continued growth of the housing and construction

industry seems strongest where populations are experiencing healthy growth. On the flip

side, static population or actual declines likely presage contraction in construction growth.

Continued growth of the

housing and construction

industry seems strongest

where populations

are experiencing

healthy growth.


Roofing

Plumbing

Flooring

Insulation

Plastics appear in a broad array of building

products other than piping—such as insulation,

flooring, and roofing. One of the most significant

uses of plastics in building and construction—

and one conspicuously evident to anyone driving

past a building site—is house wrap, a general

term that denotes a synthetic material used to

protect buildings.


Plastics have made steady inroads into building and construction for a variety of

reasons—mainly issues of utility, cost, ease of installation and longevity. The shift has been

aided by the propensity of the plastics industry to constantly develop new products to

supersede traditional building materials in many phases of the building process.

Construction Specifiers are people responsible for selecting and organizing appro-

priate materials for individual projects. “There are always new things being introduced,”

said David Stutzman of Conspectus. “We go out of our way to look at new things.”

But human health and environmental concerns are ever present, especially when

considering new products. “Our job as specifiers is to select the most appropriate mate-

rials for our clients’ projects, which requires us to verify that components have passed all

the tests,” said Elias Saltz of Eckenhoff Saunders. “We see plastics as more economical

in certain circumstances.”

A major use of plastics in building and construction is piping—supplying fresh water

to houses and buildings and providing drainage from structures into local sewers. “The

traditional approach was to use copper pipes for supplying water to houses and buildings

and iron pipes to drain it away,” said Lance McNevin, director of engineering for the

Building and Construction Division of the Plastic Pipe Institute. “But when copper prices

shot up so high, the genie was out of

the bottle. Polypropylene pipe had been

widely used in Europe for decades. It took

the spike in copper prices to allow the

European solution to come here. We will

not go back to copper pipes.”

Tony Radoszewski, president of

the Plastic Pipe Institute, also sees the

price of copper as a turning point in

the shift to use plastic piping in building

and construction. “Plastic was not well

received in the housing industry when

copper dominated,” he said. “But during

the commodity boom, the price of copper

shot through the roof. It was being stolen

from job sites. Home builders got fed up,

began looking for alternatives. Almost

overnight, plastic piping became a

dominant product in the market.”

“You must judge your product as to

how well it is suited to the specific situ-

Future Trends—Technology

Plastic was not well

received in the housing

industry when copper

dominated. But during

the commodity boom,

the price of copper shot

through the roof. It was

being stolen from job

sites. Home builders got

fed up, began looking

for alternatives.


ation,” said Mike Cudahy, head of the

Regulations and Sustainability Section

of the Plastic Pipe Fittings Association.

“Some products are more important than

others. Appropriate insulation and piping

will enable that building to save energy

and water. People worry a lot about

counter tops, but things like that really

have little impact. Architects use lifetime

cycle analysis (LCA) to compare various

products. The important thing is to make

sure your functional units make sense.”

The various challenges related to

supplying and draining from residences

and other buildings call for a variety of

plastic piping developed according to

specific uses. Also, plastics appear in a

broad array of building products other

than piping—such as insulation, flooring,

and roofing. There are specific plastics

appropriate to handle any building chal-

lenge. And the next month or year will

likely bring forth a new plastic composite

that is more effective and less expensive.

House WrapOne of the most significant uses of

plastics in building and construction—

and one conspicuously evident to

anyone driving past a building site—is

house wrap, a general term that denotes

a synthetic material used to protect

buildings. The wrap materials are generally

lighter in weight than previous asphalt felt

material used for protection. House wrap

functions as a weather-resistant barrier

preventing rain from getting into the walls

while permitting water vapor to pass to the

exterior. If moisture from either direction is

allowed to build up within stud or cavity

walls, mold and rot can ensue and the

fiberglass or cellulose insulation will begin

to lose its R-value.

“House wrap has been around for

at least 20 years,” said David Stutzman

of Conspectus. “There are many different

types. Just asking for building wrap will

not guarantee the best result. You must be careful to match the product with the project.”

“House wrap provides an air barrier used to cover the entire building,” said Elias

Saltz, head of specifications for Eckenhoff Saunders Architects. “It prevents air and water

from getting through. For example, brick is porous and water will work its way through,

but house wrap will keep it out. By preventing the movement of air, it also serves to inhibit

the loss of energy from the building. The plastic is thin, inexpensive and it works. A plastic

membrane is especially useful for underground water proofing. Buried underground it

never sees ultraviolet light and lasts a long time.”

The first house wrap was Tyvek developed by DuPont. “Tyvek had all the market,

but its patent has run out,” Stutzman said. “There are today multiple types of Tyvek,

depending on the specific need.”

Some critics contend house wrap is oversold as an air barrier because workers

seldom seal all of the edges or repair cuts at rough openings. “Because there are so

many places that air can move across the house wrap, it doesn’t really perform as an air

barrier when installed,” said Paul McGovern of energyvanguard.com. “There is one type

of air leakage that it does help reduce, however—infiltration, air moving into the house

(as opposed to exfiltration, air moving out of the house).” McGovern said the best use

of house wrap is to act as the drainage on a building. “It stops liquid water from going

through, but it allows water vapor to pass so when the building materials do get wet, they

can dry through the house wrap.”

Plastic house wrap technology has reduced the infiltration of outside air into the

average home by 10–50 percent, helping to drastically reduce the energy required to heat

or cool the home. These plastic films have helped reduce greenhouse gas emission in the

U.S. by as much as 120–600 million tons of CO2 since 1980.

Vinyl FlooringFlexible PVC flooring is inexpensive and used in a variety of buildings covering the

home, hospitals, offices and schools. Complex and 3D designs are possible as prints can

be created and then protected by a clear wear layer. A middle vinyl foam layer also gives

a comfortable and safe feel. The smooth, tough surface of the upper wear layer prevents

the buildup of dirt which prevents microbes from breeding in areas that need to be kept

sterile, such as hospitals and clinics.

Vinyl flooring was invented in the 1930s and by the 1950s largely replaced linoleum

due to its water resistance, longevity, attractiveness and low cost. The colors and pattern

http://energyvanguard.com


Trade Association

options available with vinyl flooring are nearly endless.

Solid and composite vinyl can be combined to create

a number of unique, random patterns. Printed vinyl

is even more versatile, allowing the look of natural

stone, hardwood, or any other material. One can

even mix and match material facades to make it look

like different elements. Vinyl does not feel cold in the

winter, and is generally soft beneath your feet. Some

vinyl sheets and tiles have a padded layer that can

make walking on these floors pleasurable.

Vinyl is generally considered to be a highly durable

material that, if properly installed and maintained, can

last upwards of 10 to 20 years. However, the quality

of the material used and the way it was manufactured

will determine how well the floor lasts over time. Solid

vinyl and composite vinyl tiles are homogeneous, with

colors permeating every layer making them scratch

resistant. Printed vinyl will be as durable as the clear

wear layer that protects the surface. Fiberglass rein-

forced vinyl sheets are extremely durable while also

pliable and resistant to damage. It is also easy to

replace individual vinyl pieces when/if necessary.

“Resilient flooring remains a leader in the overall

floor coverings industry recovery as consumers

respond positively to new luxury vinyl tile (LVT) and

fiberglass-backed sheet vinyl products,” said Dean

Thompson of the Resilient Floor Covering Institute. “As a result, resilient flooring’s growth

rate is estimated to be close to 33 percent more in square feet and nearly 50 percent

more in dollars between 2012 and 2015 than overall floor coverings industry rates.”

He also pointed out that “carpet still has the biggest share of the flooring market,

but its share is declining. Carpet’s share historically exceeded 50 percent but today it is

less than 45 percent,” said Thompson. “Hard surfaces like hardwood and vinyl are taking

a bigger share.”

“The resilient flooring market is about 55 percent commercial and 45 percent resi-

dential and on the commercial side, the big market is institutional—hospitals, schools,

government. Resilient flooring continues to make inroads in commercial markets as users

turn to resilient flooring as a low-cost durable flooring material,” Thomson added.

At the low range vinyl can cost as little as 50 cents per square foot. However higher

end premium vinyl materials can cost as much as $10 a square foot. The difference in

price is determined by the quality of the tile and the design options.

For some applications, such as flooring and wall covers, PVC must have added

plasticizer to make it more flexible, transparent, and durable. Without plasticizers, the

vinyl would be rigid and lose all flexibility. Commonly used plasticizers called phthalates

have come under criticism for possible reproductive effects. In October 2007, California

became the first state to pass a bill banning certain phthalates from toys and the U.S.

Consumer Product Safety Commission imposed a ban on some phthalates. But the U.S.

Food and Drug Administration said it found no compelling evidence to suggest phthalates

The resilient flooring

market is about 55

percent commercial and

45 percent residential

and on the commercial

side, the big market is

institutional—hospitals,

schools, government.

Resilient flooring

continues to make inroads

in commercial markets

as users turn to resilient

flooring as a low-cost

durable flooring material.


posed a safety risk. While none of this action affected the flooring industry, building

owners are becoming more aware and conscious of the chemicals in the products they

use. The flooring industry is one step ahead, developing non-phthalate plasticizers to

serve its needs.

“The trend toward sustainable flooring signals industry growth in the vinyl tile category

as specifiers and designers seek the material’s aesthetics and sustainable materials

contributing to improved indoor air quality and occupant safety,” said The Construction

Specifier. “Some flooring manufacturers are taking steps to ensure the ability to capitalize

on market growth. For example, by ensuring the switches of plasticizers on the production

line are seamless, manufacturers are able to avoid surprises

on the line—not all plasticizers are interchangeable.”

New flooring options such as luxury vinyl tiles and

planks can benefit everyone, said The Construction Specifier.

“Consumers can enjoy clean indoor quality, designers have

more flooring choices and options unheard of just a decade

ago. Raw materials suppliers have found ways to make

products that provide a healthy working environment without

sacrificing performance and aesthetics. The combination

of these factors creates an optimistic economic outlook for

the industry.”

PipingPlastic pipe first became a real alternative to traditional

plumbing pipe, usually copper or iron, with the introduction of

cross-linked polyethylene in the early 1970s. The use of plastic piping really took off early

in this century when the price of copper skyrocketed, making plastic materials a pref-

erable substitute.

Plastic pipe and fittings are relatively easy to install and inexpensive. They are

durable and will not rust or corrode over time. Several types of plastics are used for piping

depending the properties and performance required. Some of the more common types

are cross-linked polyethylene (PEX), polypropylene, polyvinyl chloride (PVC), Chlorinated

Poly (Vinyl Chloride) CPVC, and acrylonitrile butadiene styrene (ABS). Each offers excellent

fusion integrity when joined properly, helping to eliminate potential leak points where water

could be wasted.

Roughly half the U.S.s PVC resin is used for producing pipes for municipal and

industrial applications. It accounts for 66 percent of the water distribution market in the

U.S. and 75 percent of sanitary sewer pipe applications. PVC pipe is lightweight, low cost

and low maintenance. It is used primarily for drains, sewers, water mains, irrigation and

other low pressure applications.

PEX is a form of plastic piping that can handle pressure and heat, and is becoming

a builder’s favorite for hot and cold water delivery all managed and hooked into a central

and effective manifold system. It is flexible, light and easy to install—allowing multiple

feed lines throughout a house which allows hot water to arrive more quickly to a sink or

shower. PEX can run straight from a distribution point to an outlet fixture without cutting

or splicing the pipe—reducing the need for potentially weak and costly joints and also

reducing the drop in pressure that can result from turbulence introduced at transitions.

Because PEX pipes typically have fewer sharp turns, there is greater water pressure at the

sinks, showers and toilets where it is needed.

Roughly

HALFthe world’s PVC resin is used for

producing pipes for municipal and industrial applications.

66%of the water distribution market in

the U.S.

75%of sanitary sewer pipe applications

PVC pipe is lightweight, low cost and low maintenance.


Trade Association

“PEX and CPVC account for about 90 percent of all plumbing distribution pipe in

residential construction, while copper accounts for the other 10 percent,” said PPI’s

Lance McNevin. “In commercial buildings, it’s the other way around with PEX and CPVC

having less than 10 percent of the market and copper most of it. There is no technical

reason for this, it’s just traditional among builders of commercial structures.”

Polypropylene (PP) is used in piping systems concerned with high-purity and those

designed for strength and rigidity—intended for use in potable plumbing, hydronic

heating and cooling, and reclaimed water. PP is sometimes preferred for its resistance to

corrosion and chemical leaching, its resilience against most forms of physical damage,

including impact and freezing, its environmental benefits and its ability to be joined by heat

fusion rather than gluing.

Overall, the future prospects for plastic piping in building and construction are bright

as a growing number of builders become aware of its advantages over metal—including

greater life expectancy, resistance to degradation, ease of installation, weight advantage

and significant cost savings. All major building codes allow plastic piping.

InsulationHeating and cooling costs amount to 56 percent of the energy used in the average

American home, according to the U.S. Department of Energy which highly recommends

strict attention to insulation for both construction of new structures and retrofitting of

older ones. Historically, the standard forms of insulation have been fiberglass, rock wool

and slag wool, but now polyurethane is coming on strong. The insulating quality of rigid

polyurethane foam is high compared to other forms of insulation, and enables builders to

make walls thinner, but just as quiet, warm and sturdy. It also allows for lower roof profiles.

Polyurethane, the most common form of spray foam insulation, was developed by

the military in the 1940s and originally applied to aircraft. There are two basic types of

spray foam insulation—open cell and closed cell. Open cell is a type of foam in which the

tiny cells are completely closed. It is less expensive because it uses fewer chemicals. It

provides an excellent air barrier but does not provide any type of water vapor barrier. It is

generally used for interior walls and is not recommended for outdoor applications.

Closed cell insulation is much denser than open cell with a smaller, more compact

cell structure. It is a good air barrier and also a good water barrier. It is often used in

roofing projects and other applications, but can be used anywhere.

Sprayed polyurethane foam provides weatherproof sealants, forms a seamless layer

of insulation, fills gaps and seams during application and covers irregular, hard-to-insulate

shapes. Closed cell spray polyurethane foam insulation forms both an air barrier and

moisture barrier. Spray foam insulation also reduces drafts while helping create sturdier,

quieter buildings. Polyurethane insulation also can be structurally self-supporting, and can

be attached to a wide range of substrates while requiring no additional adhesive.

Whether it is spray polyurethane foam (SPF) in the attic or rigid foam polyiso board

on the roof, polyurethane based systems offer durability, energy savings and moisture

control. When used for retrofit situations, they also help reduce the amount of building

waste sent to landfills.

Used in walls, behind walls and under floors, polystyrene foams can provide signif-

icant energy efficiency. Rigid extruded polystyrene (XPS) is favored by many builders

because it can be installed easily.

Buildings treated with spray foam insulation typically insulate as much as 50 percent

better than traditional insulation products, according to ecotecinsulation.com. Spray

Whether it is spray

polyurethane foam (SPF)

in the attic or rigid foam

polyiso board on the

roof, polyurethane based

systems offer durability,

energy savings and

moisture control.

polyurethane insulation typically has an

R-value—a measure of the resistance

of an insulating or building material to

heat flow—around R-5 to R-6 per inch

compared with blown fiberglass which

typically has an R-value of only R-2 to R-4

per inch. Sprayed insulation also protects

buildings against moisture, reducing the

likelihood of wood rot or mold, and also

serves as a barrier to unwanted noise.

http://ecotecinsulation.com


“The environmental benefits of rigid

polyurethane foam are significant, and

include increasing energy efficiency and

reductions in energy-efficient construction

costs, reducing project weight and

savings of all construction components

that the material replaces,” according to

the American Chemistry Council (ACC).

“Given the widespread adoption of rigid

polyurethane foam in today’s construction,

these savings can continue to grow

around the world.”

Structural Insulated PanelsStructural insulated panels (SIPs)

are a small but growing sector of the

construction market. SIPs typically consist

of foam interiors between two skins, either

wood or metal, that provide ready-made

walls. “These panels really are the

structure,” said Jack Armstrong, director

of the Structural Insulated Panel Associ-

ation. “You can build with wood up to five

stories. Many hotels and warehouses are

built with SIPs.”

There is a variation of SIPS that

has only one rigid side. “You can have

a one-sided panel with exposed foam

on one side called a retrofit insulated

panel or RIP,” Armstrong said. “You can

nail down one sided panels on a roof or

skim existing buildings with it.” About

93 percent of SIPs are made with poly-

styrene, 6 percent polyurethane and 1

percent extruded polystyrene. The panels

are 5–7 inches thick using 4–4.5 inches

of foam.

“This technique has been around

since the 1970s, ever since plywood was

invented, more or less,” Armstrong said.

“The panels are built in a factory. They are

precision cut, very fast to install and very

energy efficient. Nowadays it’s not enough

to build a great building. It must stand the

test of time. These plastic foams do not

rot. They do not fall apart from exposure

to water.”

Jim McMahon, a construction specifier, said in 2014 the SIPs industry produced

almost 19 million square feet of panels. “That number was up about 5 percent from

2013,” he said, “reflecting a pickup in the industry. That breaks down into 61 percent

residential, 38 percent non-residential and 1 percent non-buildings such as silos and

chicken coops.“

There is some disagreement in the industry about the cost effectiveness of SIPs. “We

have to convince homebuyers that SIPS are more energy efficient,” McMahon said. “They

provide a direct saving in labor and energy costs which pay out in 5–7 years.”

“The construction market right now is constrained by a shortage of skilled labor,”

Armstrong said. “You still need carpenters, plumbers, electricians and many of them

left the market in the downturn. The panelized systems help builders get around the

labor shortage.”

“There were about 6,700 homes built in the U.S. in 2014 that had some form of SIPs

panel,” McMahon said. “There were about 650,000 single family home starts, so only

about 1 percent used them. The SIPs industry has developed an efficient product that

should be used more often, but builders and framers don’t want to be bothered learning

something new.”

WindowsThe unique properties of plastics make them suitable for extensive use as windows

in residences and other structures, and highly competitive with other materials such as

aluminum and wood. Vinyl windows are impervious to rust, rot, blistering, corrosion and

infestation by termites or other insects.

Plastic windows are all plastic. Polycarbonate—a material used in eyeglasses—

is used as panes. These clear, lightweight, shatter-resistant plastics have low thermal

conductivity which helps reduce heating and cooling costs, while still protecting against

inclement weather.

The vinyl used as dressing for the panes, usually solid vinyl or vinyl-clad frames,

serves to minimize condensation which helps discourage mold. One study showed

that vinyl window frames require three times less energy to manufacture than aluminum

window frames. Also, use

of vinyl window frames

saves U.S. consumers

nearly two trillion BTUs of

energy per year—enough

to meet the yearly elec-

trical needs of 18,000

single family homes. The

design of vinyl window

frames further enhances

energy eff iciency by

creating chambers in the

frame that provide addi-

tional resistance to heat transfer and insulating air pockets.

The energy efficiency of vinyl windows and glass doors can mean less electricity is

used to heat and cool a home or building which can help reduce the greenhouse gas

emissions associated with coal-fired power plants. Also, the low maintenance require-


Trade Association

ments of vinyl windows and glass doors eliminate the need for paints, stains, strippers

and thinners.

Vinyl windows also can mimic wood patterns to the degree that most people are

unable to tell the difference.

RoofingFor many homeowners, asphalt shingles continue to be the roofing material of

choice, at least for sloped roofs. But asphalt shingles are expensive to install, wear out

after 15–20 years, and then are expensive to remove. A growing number of consumers are

opting for plastic roofing, especially where flat or almost flat roofing surfaces are in play.

There are three basic plastic competitors for roofing honors, each with its own

supporters and critics. n Thermoplastic Polyolefin (TPO) is actually a broad family of roofing materials. TPO is a

blend of polypropylene and ethylene-propylene rubber.

n Ethylene Propylene Diene Monomer (EPDM) is a synthetic rubber derived from oil and natural gas (ethylene propylene). When the ethylene propylene is combined with diene (an unsaturated hydrocarbon alkene containing two carbon-to-carbon double bonds) the flexible EPDM results.

n Polyvinyl chloride (PVC) is produced by polymerizing vinyl chloride monomer, which in turn is derived from abundant natural resources—salt and natural gas.

This critique is based on information supplied by RTN Roofing Systems of

Loveland, Colo.

TPO may be the most widely used roofing product on the market today because it is

relatively cheap and because it is white. But TPO has been known to shrink and pull away

from curbs. “Our investigations of our clients’ roofs continue to identify issues with some

TPO membranes: splitting and crazing along rows of fasteners, accelerated aging along

walkpads, polymer erosion to the point of exposing scrim reinforcement, enough issues

for us to have concerns,” wrote Jeff Evans in Perspectives magazine in May 2010. People

in the TPO business insist they are correcting the problems.

TPO comes in relatively small rolls—about 8 feet by 50–100 feet. Small sizes means

there are many seams created during installation. Seams are where leaks happen. The

good thing about TPO is that it does have

reasonably high resistance to animal fats,

some hydrocarbon and vegetable oils,

and microbial growth. It is available in

various thicknesses.

EPDM can be either vulcanized or

non-vulcanized. Vulcanized EPDM is used

as a roofing membrane. Non-vulcanized

EPDM is usually used for detail work or

flashing of the cured roofing material. Its

distinguishing characteristic compared to

TPO is that EPDM is almost always black.

There is a perception, at least in northern

areas, that black roofs tend to absorb

more heat than white, and then reduce

heating bills.

A properly seamed and installed

black EPDM roof is very good at handling

rain, snow, UV rays, abrasions, ozone

and temperature fluctuations. In higher

temperatures, however, some critics

contend the membrane—especially at

the seams—can begin to shrink and

pull apart.

PVC is a relatively hard substance,

so plasticizers are added to PVC used

for roofing to make the membrane

more pliable. Most PVC membranes are

mechanically attached, though fully-ad-

hered or even ballasted PVC roofing

systems are occasionally found. Almost

all PVC membranes are welded at the

seams. This creates a monolithic durable

structure able to withstand constant

expansion and contraction of the building

structure throughout the day.

PVC has excellent puncture and heat

resistant properties, but is incompatible

with asphalt-based products. Anytime

PVC is combined with asphalt shingles,

a separator must be installed to keep the

PVC from directly contacting the asphalt.

“While most other roofing products can

come in either reinforced or non-rein-

forced materials, PVC is often reinforced

right out of the box,” says RTN Roofing

Systems. “While some manufacturers’

reinforcement may be better than others,

it’s good to know that there is a little more

structural integrity from the get-go with a

PVC roofing membrane.”

RTN says PVC is a bit more

expensive than TPO and competitively

priced against EPDM. “If overall quality

is the criterion used to decide what your

next roofing system should be,” RTN

says, “then PVC should be at the top of

your list.”

Composite WoodIt seems unlikely that plastics will

ever supplant traditional heavy building

materials like brick and mortar, but it is

It seems unlikely

that plastics will ever

supplant traditional

heavy building materials

like brick and mortar,

but it is making inroads

as an alternative to

many traditional uses

of wood.


making inroads as an alternative to many

traditional uses of wood. Polyurethanes

play a major role in composite wood

which is a combination of synthetic and

natural materials, according to ACC. Poly-

urethane-based binders, typically used

both with wood and rubber, are used in

composite wood products to permanently

glue organic materials into oriented strand

board, medium-density fiberboard, strand

lumber, laminated veneer lumber and even

strawboard and particleboard.

Oriented Strand Board (OSB) is

made from fast-growing trees such as the

aspen poplar, southern yellow pine, mixed

hardwoods and other suitable species.

OSB is frequently made by coating wood

chips (known as strands) with methylene

diphenyl diisocynate (MDI), then arranging

consecutive strand layers roughly perpen-

dicular to each other, and finally pressing

the strands under high temperature and

high pressure to form boards. The MDI

binds the strands together by reacting

with water on the strands to form polyuria

and reacting with hydroxyl groups in the

wood lignin to form polyurethane. OSB

panels measure 4' by 8' and are typi-

cally ¼" to 23/32". OSB is widely used

as construction sheathing as the web

material for wood I-joists, as struc-

tural membranes or structural insulated

panels (SIPs).

Medium-Density Fiberboard (MDF)

is widely used to manufacture furniture,

cabinets, door parts, moldings, millwork

and laminate flooring. MDF panels are

manufactured in a variety of dimensions

and densities, providing opportunity to

design the end product with the specific

MDF needed.

As with other composite wood

products, MDF typically consists of cellu-

losic fibers combined with a synthetic

resin or other suitable bonding system and

joined together under heat and pressure.

Additives may be introduced during

manufacturing to impart additional characteristics. The surface of MDF is flat, smooth,

uniform, dense and free of knots and grain characteristics. The homogeneous density

profile of MDF allows intricate and precise machining and finishing techniques for superior

finished products. Trim waste is significantly reduced when using MDF compared to other

substrates. Stability and strength are important assets of MDF and it holds precise toler-

ances in accurately cut parts.

Long strand lumber (LSL), also known as Oriented Strand Lumber (OSL), is similar

to OSB except the strands used in LSL are longer than those in OSB. Also, all of the

strands are arranged parallel to each other so that the product is very strong along its

entire length. LSL is much thicker than OSB because it’s intended to serve as a substitute

for dimension lumber. It is suitable to use in place of 2x4” studs in residential construction.

Another major use is the flange portions of wooden I-joist beams.

Laminated Veneer Lumber (LVL), also known as Structural Composite Lumber (SCL),

is an engineered wood product created by layering dried and graded wood veneers with

waterproof adhesive into blocks of material known as billets. Cured in a heated press, LVL

is typically available in various thicknesses and widths, and is easily worked in the field

using conventional construction tools.

In LVL billets, the grain of each layer of veneer runs in the same direction rather than

cross-lamination which is typical of other engineered woods products such as plywood.

The resulting parallel-laminated lumber has excellent performance characteristics. LVL is a

solid, highly predictable and uniform engineered wood product that is sawn to consistent

sizes and is virtually free from warping and splitting.

One important benefit of LVL is that

the veneering and gluing process enables

large timbers to be made from relatively

small trees of many species, thereby

providing for efficient use of wood fiber

resources. Some of LVL’s many uses are

headers and beams, hip and valley rafters,

scaffold planking and the flange material

for prefabricated wood hoists.

SummaryThe myriad uses of plastics in building

and construction detailed in this section

is by no means exclusive. Plastics are

enjoying increased usage in walls and

ceilings, as well as polyurethane coatings,

adhesives and sealants. No modern

structure would be even thinkable without

plastic insulation of electric wiring. The

flexibility of plastics and the creativity of

people in the industry have fostered a

steady stream of innovation. For as long

as people are engaged in building and

construction, it stands to reason that

plastics will have an important role to play.

The flexibility of

plastics and the

creativity of people

in the industry have

fostered a steady stream

of innovation. For

as long as people are

engaged in building and

construction, it stands

to reason that plastics

will have an important

role to play.


100+ YEARS

4-8 TONSSAVED

Replacing plastics is undesirable. According to the Denkstatt report (2010), plastics have the greatest

potential for reducing CO2. For every ton of CO2 produced, over

their usage and end-of-life phase, plastics save on average 4-to-8 tons of CO2. This figure

can be further improved to 9-to-15 tons.

Plastics are not only made from petroleum and natural gas.

Hydrocarbons are increasingly extracted from biomass. Other alternative raw materials for plastics are starch, cellulose,

sugars, lactic acid, organic waste, vegetable oils, microorganisms

and algae.

Plastics make integral water management possible. From

infiltration systems to drainpipes and rainwater tanks: plastics offer

all possible systems for a sustainable water policy.

Plastics are increasingly being recycled and reused as plastics.

Thanks to the optimization of their unique properties including barrier function, design freedom, insulation and acoustic properties

and recyclability, plastics help save natural raw materials and

consume less energy.

Plastics have a long lifespan. Plastic pipes for water have a lifetime of at least 100 years, plastic joints last at least 50

years. Over the last 15 years, the lifespan of PVC roof coverings has

increased by 50 percent.

Plastics offer lightweight solutions for structures. With

renovations, buildings are often demolished because the structure cannot handle the

additional load needed to meet the current insulation

requirements, for example. Plastics can play an important

role in this respect.

Plastics lie at the basis of renewable energy. Plastics are essential for the blades of wind turbines, solar panels, fuel cells,

and breeder reactors for oil extraction from algae.

Plastics are increasingly using fewer materials. Thanks to

plastics, applications can be ‘miniaturized’. Just think of

computers, cooling installations, communications equipment and the thermal breaks in metal and

wooden profiles.

Plastics form the basis for optimized building components.

The sector is encouraging plastics producers to get together with other companies, in order to

optimally harmonize the materials for a building element.

Plastics distinguish themselves with

regard to sustainability in

construction in many respects.



Building and construction comprise a

major portion of the economy accounting

for millions of jobs, and are also a critical

factor in the quality of life for all of the

nation’s residents—from the homes we

live in to the businesses we patronize to

the offices, buildings and factories we

work in.

Building and construction are

subject to a wide variety of public policies

that affect every aspect of the building

process from the selection of building

sites to the size and composition of the

construction in question to the choice

of building materials. Policies can come

from the federal, state and local levels,

and frequently overlap. Contradictions are

not unheard of. Those in the construction

business must be aware of the potential

for public policies to appear out of

nowhere and to impact their enterprise in

unforeseen ways.

The most obvious public policy issue

that impacts building and construction

is interest rates. The Federal Reserve

sets short-term interest rates which

are separate from long-term rates set

by market forces, but nevertheless can

influence the overall trends of rates. The

Federal Reserve’s recent decision to hike

short-term rates by a quarter percent

reverberated throughout financial markets

and helped boost long-term mortgage

rates, which in turn nudged the cost of

mortgages up a notch.

Long-term fixed interest rate mort-

gages are not standard throughout the

world. Indeed, they are not available

in many countries. Fixed rate mortgage rates provide security for borrowers, but leave

lenders vulnerable to dramatic swings of rates in financial markets. Most home mortgages

end up being sold to Fannie Mae and Freddie Mac, semi-government entities that hold

title to millions of mortgages and are hence vulnerable to swings in the fortunes of financial

markets. The recent collapse of the housing market pushed Fannie Mae and Freddie Mac

to the brink of insolvency, requiring federal government intervention.

There is likely to be continuing uncertainty regarding the future of the Federal National

Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation

(Freddie Mac), the two “government-sponsored enterprises” (GSEs) that stand behind

much of the nation’s housing market. “The GSEs, which buy mortgages from banks and

other originators, bundle them into securities and resell them to investors with a guar-

antee, are stuck in a technocratic no-man’s land,” according to The Economist.

Any action in this arena could have profound implications for the building and

construction industry. But given the current state of Congress and its inability to reach

consensus, it seems highly unlikely there will be any significant legislation affecting the

Fed, Fannie Mae or Freddie Mac in the near future.

Yet another issue is the stringent credit-score and down-payment requirements

taking effect in 2016 as prices outrun maximum limits for government backed mortgages.

In most markets next year, Fannie Mae and Freddie Mac can back loans of only $417,000

or less. That is not a problem in most parts of the U.S. where the median home price is

$219,600, but in some markets the so-called “jumbo mortgages”—those that exceed

government limits—make up almost 19 percent of the market.

“Financial markets are still pretty tight,” said Dean Thompson of the Resilient Floor

Covering Institute. “You must have strong credit to get a loan. That is a constraint on

the market.”

Also connected to the cost of homeownership is the future of the housing tax incen-

tives, including the mortgage interest deduction and the property tax deduction. Tax

reform is often cited by policymakers as a potential policy objective that can be achieved

in a bipartisan manner. The tax code has not been reformed since 1986. If tax reform

does happen, policy observers expect a debate to occur about the future of important

housing tax rules, including the Low-Income Housing Tax Credit (which financing the

construction of affordable housing) as well as those tax policies connected to homeown-

ership. Dramatic changes, which can be expected to be opposed by the housing industry,

could result in increasing the cost of purchasing a home. For example, weakening the

mortgage interest deduction would increase the after-tax cost of purchasing a home,

particularly for younger buyers who use smaller down payments and pay more interest as

a percent of their income.

Future Trends—Public Policy


Trade Association

Green BuildingsThe cost of capital for residences and commercial structures is one part of the

puzzle, but the construction industry is also very much engaged in a nationwide quest

for increased sustainability and energy efficiency. In addition to private sector activity,

the Office of Management and Budget (OMB) is deeply involved in strategies to improve

efficiency for the eight billion square feet of space used by the federal government. The

models recognized by OMB are Leadership in Energy and Environmental Design (LEED),

promoted by the United States Green Building Council (USGBC), and the Green Globes

program promoted by the Green Building Initiative. These certification programs are not

driven by federal legislation or regulation, but by nongovernmental organizations that have

influence over consumer design and construction concepts and to some extent over state

and local building codes.

In addition, the National Association of Home Builders (NAHB) endorses the National

Green Building Standard (NGBS) ICC 700 Green Building Certification for homes, apart-

ments and land development. This ANSI-approved standard is a voluntary model for home

builders and developers to improve energy efficiency and materials selection criteria.

The Obama Administration has embraced the concept of green building and

increased energy efficiency as part of its Better Buildings initiative. The official goal of the

initiative is to “make commercial buildings 20 percent more energy efficient over the next

decade by catalyzing private sector investment through a series of incentives to upgrade

offices, stores, schools and other municipal buildings, universities, hospitals, and other

commercial buildings.”

An additional element tied to the future of energy-efficient construction is the prospect

of extension of the energy-efficient tax credits, such as the section 45L new energy effi-

cient home credit. The credit, which is a “tax extender,” routinely expires every two years,

after which Congress typically extends. The credit provides $2,000 to home builders who

build a for-sale or for-lease home that achieves a 50% reduction in energy consumption

relative to the applicable IECC code. An

additional credit, the 25C credit, is also a

tax extender and provides a tax benefit to

existing homeowners who install energy

efficient appliances and other property in

their homes.

SummaryFor now, the bui ld ing and

construction industry is on a strong

growth curve, regaining ground lost in The

Great Recession, and economists expect

modest but steady growth in the domestic

market. But worldwide economic condi-

tions will inevitably impact the U.S., and

there is a question as to whether the U.S.

economy can remain strong indefinitely in

the face of a global slowdown.

The cost of capital

for residences

and commercial

structures is one

part of the puzzle,

but the construction

industry is also very

much engaged in a

nationwide quest for

increased sustainability

and energy efficiency.

Permanent Change: Plastics in Architecture and Engineering— Columbia University Looks at Material IssuesGeorge Middleton, AIA, CSI Green Globes® Assessor and LEED® Accredited Professional

The Columbia University Conferences on Architecture, Engineering and Materials were part of a multi-year project to explore the changing limits of new and existing materials. The fourth in a series, the conference on plastics called “Permanent Change” was assembled by Dean Mark Wigley and Professor Michael Bell of the Columbia University Graduate School of Architecture, Planning and Preservation (GSAPP). It was held on Columbia’s campus March 30 through April 1, 2011. Previous conferences focused on glass, concrete and metals.

Bringing together more than 300 attendees and 45 presenters, including a wide range of leading architects, engineers, scholars, students and faculty, the conference explored the boundaries between architecture, engineering and material science through symposia, studios, and exhibitions in intensely focused investigations. Containing information that probably doesn’t exist anywhere else in the world, a detailed


timeline of the history of the development of plastics filled the walls of a display room on the way into the auditorium at Columbia’s Avery Hall. The main goal of the conference was to ask the questions, ‘How is a new generation of professionals and manufacturers fusing engineering and architectural practices?’ and ‘How do new materials and material concepts change our professions?’

On July 1, 2014, a special launch event was held at the Center for Architecture in New York to announce the release of a new book covering the conference proceedings. Edited by Michael Bell and Craig Buckley, the book called, “Permanent Change: Plastics in Architecture and Engineering” has now been published by Princeton Architectural Press.

Today’s architects are expected to know more about materials than ever before and young people joining the profession must be equipped to practice in an era when understanding traditional materials used 100 years ago is simply no longer adequate. Computer processing power now enables buildings to be designed like sailboats, and new design tools demand new materials including high performance polymers. A working understanding of design now calls for a working understanding of science and chemistry as well.

There is a long history of working relationships between industries that produce materials and the design professionals who select and specify those materials. There exists a natural co-dependency between designers who choose products and building owners who demand products that perform as they expect at a cost they are willing to pay. The objective of course is to solve design problems and achieve the environmental, economic and social goals of sustainability that we determine necessary, with as little negative impact on the planet as possible.

As the main sponsor of the event, The Vinyl Institute sought to build new and durable alliances with influential partners in design and materials through a highly

credible path into a world-class university system. Utilizing Columbia’s position to help set the benchmark for the higher education of architects and engineers in design, materials, applications and innovation, the conference associated the plastics industry with some of the best and brightest minds in the field. Other sponsorship goals were to facilitate and foster innovation and the dissemination of new ideas for growth of markets and product development. Some important takeaways resulting from the conference included the following:

nn Architects and designers, both at the professional and student level, receive limited instruction about polymers. A common belief is that plastic is basically one material, rather than a complex and talented family of many different materials made possible not by geometry, but by chemistry. This often leads to misunderstandings, misapplications and underutilization.

nn Architects ‘synthesize’ concepts and ideas, and they tend to operate toward the riskier side of design. Engineers ‘analyze’ concepts using the principles of physics and science, gravitating toward safety. While both professionals tend to think differently about a problem and assimilate information differently, amazing and useful outcomes are possible when they work well together.

nn There is a fundamental shift going on in design and construction, made possible by computers that product manufacturers should watch closely. This includes not only form-giving design, but also the design of new and unique materials made possible through the selection of high performance polymers and fiber reinforcements.

nn There is a tendency today for design professionals to look to ‘checklists’ like green building rating systems as they design. But that is becoming more difficult to do as materials knowledge becomes deeper and more nuanced.

nn Materials efficiency equals molecule efficiency, and durability is a virtue in terms of sustainability. So a durable, recyclable bundle of molecules, bound up in a product made of plastic may in fact be a better environmental choice than a product that ends up in the solid waste stream.

nn The way young design professionals are educated is important. They benefit when they are exposed to ideas and experiences that go beyond the traditional.

nn ‘Natural’ and ‘synthetic’ are not as they first appear. All building materials have some aspects of ‘nature’ as well as inputs from the hands of people, whether through mining, processing, cutting, shaping, formulating, coating, laminating, etc. As Dean Wigley said during the conference, “No material is more natural than plastic.”

nn There is a growing focus on reducing carbon pollution. Materials that reduce dependence on carbon, by limiting their carbon footprint across entire life cycles, and helping to reduce carbon emissions by performing well in intended applications, are probably the best choices.

Plastics have become one of the most ubiquitous and increasingly permanent materials in construction. The material capabilities of plastics, both as a generic material and as specific polymers, and the processes that underlie them, suggest a potential to reshape construction and the roles of architects and engineers in construction. While plastics are perhaps the most intensively engineered building materials today, we are still in the early stages of understanding them in terms of their potential applications and uses.

The Permanent Change conference shed new light on these materials and their implications for the fields of architecture and engineering. Materials that enable lightweight, durable, easily molded, re-formable shapes have become a permanent measure at a watershed moment in design.

Learn more about this conference at: http://www.arch.columbia.edu/permanentchange

http://www.arch.columbia.edu/permanentchange


Trade Association

SPI’s Washington headquarters was designed to create the look and feel of a plastics industry manufacturing facility. Some of the furnishings, carpeting and wall designs are made from various forms of plastic and recycled plastics that are commonly used by SPI’s member companies.

For example, visitors may notice the use of Lexan or acrylic rather than glass for features like see-through walls and unique light fixtures. Plastic is used as plastic throughout the space—no tricks or clichés are displayed in this exceptional office.

Through videos, factory-specific steel structures and sounds, SPI hopes its guests gain a more accurate understanding of plastics manufacturing as an updated, sophisticated industry that is necessary to the world’s economic health.

Office hallways boast dramatic wall murals that were carefully selected to celebrate the factory and working environments of SPI’s membership. Using artistic liberties, SPI created a large-scale factory design around a Milacron injection molding machine that integrates products and equipment from its other members. SPI sought to precisely depict the manner in which its member companies function as a means of promoting the industry.

An impressive picture of a modern manufacturing cracker unit is displayed across a large wall in the office breakroom. The zoomed-in look at this engineering feat conveys the intricate details of pipelines configured to break or crack petrochemical molecules to create raw materials used in the plastic production process.

SPI: The Plastics Industry Trade Association’s headquarters was featured in ArchitectureMagazine.com

Remember—#PlasticIsFantastic.

#PlasticIsFantastic—Just Look in SPI’s Washington Offices

http://ArchitectureMagazine.com


Remember—#PlasticIsFantastic


It is critically important

that SPI, companies,

and their employees

always educate about

the advantages of

plastic and advocate for

regulations based on

sound science and the

greatest sustainability.




Conclusion



Trade Association

The building and construction sector is growing and likely to continue its recovery.

Plastics are expected to continue to play a critical role in this sector. In fact, it is quite

possible that the amount of plastics in building and construction will increase in its appli-

cations. In many cases, plastics will be used more because their properties allow for

improved environmental and energy efficiencies in particular.

Smart homes and home automation are developments driving an increased use

of plastics. A smart home system requires a smartphone app or a web portal as a user

interface. Smart home systems can be grouped into six primary categories: energy

management and climate control systems; security and access control systems; lighting,

window and appliance control systems; home appliances; audio-visual and entertainment

systems; and healthcare and assisted living systems.

North America recorded strong growth in the smart home market during 2014. The

installed base of smart home systems in the region increased by 75 percent to reach 10.2

million at the year-end. An estimated 1.8 million of these were multifunction or whole-home

systems whereas 8.3 million were point solutions designed for one specific function. As

some homes have more than one smart system in use, the installed base totaled an esti-

mated 7.9 million smart homes at the end of the year. This corresponds to 6.0 percent

of all households, making North America the most advanced smart home market in the

world. Between 2014 and 2019, the number of households that have adopted smart

home systems is forecasted to grow at a CAGR of 37 percent, resulting in 38.2 million

smart homes. The market is expected to grow at a CAGR of 34 percent between 2014

and 2019, reaching US$ 18.2 billion in yearly revenues at the end of the forecast period.

The European market for smart home systems is still in an early stage and 2–3

years behind North America in terms of penetration and market maturity. At the end of

2014, there were a total of 3.3 million smart home systems in use in the EU28+2 coun-

tries, up from 1.75 million in the previous year. Around 0.34 million of these systems were

multifunction or whole-home systems whereas 2.93 million were point solutions. This

corresponds to around 2.7 million smart homes when overlaps are taken into account,

meaning that 1.2 percent of all households in the region were smart at the end of the year.

The number of European households that have adopted smart home systems is fore-

casted to grow at a compound annual growth rate (CAGR) of 61 percent during the next

five years, resulting in 29.7 million smart homes by 2019.

Another positive development for more plastics usage is an increased awareness

of sustainability in construction. In general, the awareness is growing that sustainability

in construction must be evaluated on a building level. To this end, the social, ecological

and economic impact of a building must be taken into account. At the same time, every

material (regrowable, recyclable, etc.) must meet the same strict technical requirements

and be able to present the necessary guarantees for this.

Can plastic pave the way to greener

global infrastructure? In July 2015, the

Dutch city of Rotterdam announced that

it was considering a proposal to replace a

stretch of its roads with what may become

the world’s first all-plastic avenue.

In an effort to develop new and inno-

vative ways to recycle plastic, we have

managed to create strong, lightweight,

and cost-effective building materials (like

polymeric timbers, used in many cheap

Conclusion

The building and

construction sector is

growing and likely to

continue its recovery.

Plastics are expected

to continue to play

a critical role in

this sector. In fact,

it is quite possible

that the amount of

plastics in building

and construction

will increase in

its applications.


modern tables and fences). Small, inter-

locking, and fully recycled plastic blocks

have been on the mass construction

market since the early 2000s, allowing

almost anyone to incorporate such mate-

rials into their projects.

Over the past half-decade, espe-

cially, prefabricated plastic blocks have

become into vogue in home construction,

where they have demonstrated their

utility again and again. By 2011, multiple

companies had developed several vari-

ations on plastic bricks—some of which

poured like concrete and others that

stacked like it—often for use in low-cost

and emergency housing. Experimen-

tation with these bricks has shown they

cost up to 30 percent less than tradi-

tional construction materials, providing

greater insulation, resiliency in the face of

disasters, and reusability if a building was

torn down. When facing a weather-re-

lated disaster, these plastic barriers can

outperform concrete walls, then break

down into a foot-and-a-half-high stack

for rapid construction, dramatically short-

ening the disaster site’s recovery time.

Plastic bricks have become so

common and accessible that they have

become a part of the DIY movement.

Given the scale of use, simplicity, and

proven utility of recycled plastic materials,

it is not difficult to see how someone might

attempt to incorporate them into roads.

The building and repair of roads

produces up to 1.6 million tons of carbon

dioxide per year, almost 2 percent of total

emissions. With increasing urbanization

globally, most especially in the developing

world, this is only likely to rise. Roads

are not just a one-shot drain on the envi-

ronment, either. Roads actually break

apart within two or three decades on

average, even though they are supposed

to last 50 years. Roads usually decay for

years unfixed as repairs and resilient addi-

tives are often expensive. In the end, they

just have to be replaced entirely, compounding the pollution and waste of each new foot

laid (by many times).

But, according to KWS Infra, recycled plastic materials have proven up to three times

more durable than asphalt. They should be able to withstand temperatures from -40 to

176 degrees Fahrenheit without cracking, preventing erosion. Instead—as the roads will

be hollow—they will provide space for safe water retention. All told, this should allow a

plastic road to last three times as long as a normal road (surviving 50 years at least rather

than at the outside). Since the roads will be constructed out of pre-existing plastics, their

construction will put far less carbon into the air than asphalt and require less polluting

maintenance in the long run. As they can be recycled again into a new road when they

break down, the environmental cost of replacing them will be minimal. In the end, the

technology could potentially eliminate the bulk of a major source of pollution.

KWS Infra’s plastic roads will be far lighter than asphalt, which means it will require

less energy to transport and install. They will not require a foundation of concrete over

soft land. This, along with the interlocking and prefabricated nature of the road, means it

Proposed by KWS Infra, a subdivision of the Dutch firm VolkerWessels, the

project, simply dubbed “PlasticRoad,” will use entirely recycled materials

reclaimed from ocean dumps and incineration plants. The raw materials

will then be used to create Lego-like building blocks, which the company

claims may prove cheaper, easier to work with, and more durable than the

asphalt used in existing boulevards. For the Rotterdam city council, Plasti-

cRoad is just part of a broader climate initiative that includes and encourages

innovative experimentation to help the densely populated Netherlands avoid

undue pollution. If it takes off, KWS Infra’s project could revolutionize infra-

structure across the world, simultaneously evening economic playing fields

for developing nations and sparing the earth a huge chunk of pollution.


Trade Association

will only take weeks to install a new road, rather than months, and will require less compli-

cated tools. The same hollowness that helps make them lighter also makes the installation

of fiber-optic cables, sewage mains, and other complementary pieces of infrastructure

easier. These plastic roads can even include high-tech apparatuses, like heating blocks

to prevent icing or load monitors to better record traffic data.

This innovation is not simply about the ease of construction for Dutch developers; it

is potentially a great equalizer for developing countries, for whom infrastructure projects

are a necessary but slow-moving headache, holding back wider economic development.

If a road can be constructed without pouring a foundation or leaning on excessive

expertise, all on the cheap, with openings built into the prefabricated blocks for sewage

or IT connections, then this would allow these countries to rapidly accelerate the devel-

opment of new economic corridors.

Unfortunately KWS Infra’s technology is not ready for the mass market yet. Plasti-

cRoad is still in its conceptual infancy. The firm, however, is confident that they will be able

to start their experiment in Rotterdam within three years.

The PlasticRoad illustrates the amount of significant promise for plastics when it

comes to building and construction. As this study suggests, traditional demand in the

building and construction sector will grow, along with the opportunity to build on that

demand by utilizing the inherent material property advantages of plastics, and finally the

opportunity to grow demand even further by incorporating recycled materials in new and

innovative applications.

This report assumes the U.S. economy continues on a positive growth trajectory,

so the main trend working in opposition to the increased role of plastics in building and

construction focuses on the materials themselves. NGOs, regulators, members of the

public as well as some elected officials do not believe plastic is the environmental material

of choice, thus they often try to restrict or even eliminate it. It is critically important that

SPI, companies, and their employees always educate about the advantages of plastic and

advocate for regulations based on sound science and the greatest sustainability.


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Working Paper No. ESA/P/WP.241. 2015.

U.S. Census Bureau, Housing Vacancies and Home Ownership. http://www.census.gov/housing/hvs/index.html

U.S. Census Bureau. New Residential Construction. http://www.census.gov/construction/nrc/historical_data/index.html

U.S. Green Buildings Council, “Better Buildings Are Our Legacy.” http://www.usgbc.org/. Accessed Dec. 18, 2015.

White House Press Office, “President Obama’s Plan To Win The Future by Making American Businesses More Energy Efficient through the ‘Better Buildings Initiative.’” https://www.whitehouse.gov/the-press-office/2011/02/03/president-obama-s-plan-win-future-making-american-businesses-more-energy. February 3, 2011.

https://www.nahb.org/en/news-and-publications/Press-Releases/2015/november/housing-markets-continue-



http://www.benjaminobdyke.com

https://www.plasticsmakeitpossible.com

https://www.plasticsmakeitpossible.com

http://www.rtnroofing.com/learning/article-library/perspectives/77-which-is-a-better-roofing-system.

http://www.rtnroofing.com/learning/article-library/perspectives/77-which-is-a-better-roofing-system.

http://www.sips.org/downloads/176CPMA_2014_SIP_Industry_Production_Survey.pdf

http://www.sips.org/downloads/176CPMA_2014_SIP_Industry_Production_Survey.pdf

http://vinylinfo.org/the-vinyl-institute/about-vinyl-institute/

http://vinylinfo.org/the-vinyl-institute/about-vinyl-institute/

http://esa.un.org/unpd/wpp/publications/files/key_findings_wpp_2015.pdf

http://esa.un.org/unpd/wpp/publications/files/key_findings_wpp_2015.pdf

http://www.census.gov/housing/hvs/index.html

http://www.census.gov/construction/nrc/historical_data/index.html

http://www.census.gov/construction/nrc/historical_data/index.html

http://www.usgbc.org/

https://www.whitehouse.gov/the-press-office/2011/02/03/president-obama-s-plan-win-future-making-american-businesses-more-energy



Confi

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Increasingly optimistic outlook for all sectors; construction industry on an upswing— residential and non-residential markets.

Export market for construction plastics is growing.

Plastics provide wide functionality, flexibility, strength and low costs as construction materials.

DEMOGRAPHICTRENDS

PUBLICPOLICY

BIGPICTURE

Growing populations spur the need for more housing and necessary infrastructure.

New households being formed not just by young people moving out, but boomers—living longer and healthier—retiring and creating new households.

Gen Y is just entering the peak years for first-time home buyers, and will need more starter homes than currently available, as well as new non-residential infrastructure to support it.

ECONOMICS TECHNOLOGYTRENDS

Neut

ral

Globally, some countries are seeing falling birth rates and slowing population growth.

Residential and nonresidential building and construction are constricted by a severe shortage of skilled labor.

Worldwide economic conditions and the recent interest rate hike could have negative impact.

NGOs + regulatory authorities continuing challenges, though surmountable.

Fed decision to hike short term interest rates will push up the cost of mortgages; tax reform could also impact homeownership.

Despite lack of factual evidence, environmental activists continue challenges to the use of plastics.

Human health and environmental concerns are addressable, but ever present.

Technological advances continue to make buildings more airtight, durable, water resistant and less expensive to construct, maintain and operate.

Industry is constantly developing new products to supersede traditional building materials.

Industry focus on recyclability and sustainability has never been greater, resulting in new materials and methods for achieving energy efficiency.

No credible evidence of real world health and environmental hazards associated with plastic products.

As building and construction sector continues its recovery, plastics use will be increased particularly because of their improved environmental and energy efficiency properties, as well as low cost.

Economic growth and technological advances strengthen plastics packaging position.

Plastics Market Watch Snapshot

A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETS

SPI: The Plastics Industry Trade Association1425 K Street NW., Suite 500Washington, DC 20005202.974.5200202.296.7005 faxplasticsindustry.org

Program Partner

http://plasticsindustry.org

plastics market watch: building and construction

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