Market Survey: What Lies Ahead

Survey Results for the 2020 Western Roofing Industry

by Marc Dodson, editor

 

Our roofing contractor survey results are in, and according to the majority of our readers, the outlook for the 2020 Western roofing market is very good. The construction economy is still on the rise in the West, and Western roofing contractors are reaping the benefits. The signs are all there, including increasing resale prices of homes, decreasing mortgage rates, and the steady rise of new building permits. Additionally, architects are reporting more work on the boards, the auto industry is having a great year, and the sale of consumer goods is on the rise. As the months go by, we’re hearing of more roofing jobs on new construction, and more homeowners are willing to part with a few bucks to reroof their home.

Construction is definitely going strong, and along with it, roofing in the West is also thriving. Western roofing contractors that specialized in new construction, as well as those focusing on reroofing and recover, should continue to see an upswing in their business during 2020.

While most comments from our annual survey elicited many more positive than negative responses, it was still a mix. In some areas of the West, the market is not as strong as others. Many contractors hinged the 2020 economy on the upcoming elections. As a group, manufacturers seem very optimistic about the construction economy for the coming year, with some stating that the last several months were the best they have seen in years.

The vast majority of roofing contractors we spoke with are predicting their business to remain the same, or even see an increase for 2020. Most roofing contractors stated that they had been busy during the past year and expected the increase in business to continue. On the residential side, they’re seeing more high-end projects being built. While new construction is on the rise, as always, reroofing, recover, roof maintenance, and service will still take the lion’s share of the market in both the residential and commercial sectors.

Once again, the biggest problem roofing contractors face is finding enough trained workers, or workers willing to be trained in the art of roof application. This ongoing problem of not enough boots on the roof is limiting the growth of the industry.

 

The View from the Roof

What do Western roofing contractors have to say about this next year and what they see on the road ahead? Here are a few of their responses.

  • Leo Ibarra, Blue’s Roofing, Milpitas, California, and current president of the Western States Roofing Contractors Association (WSRCA), commented, “We anticipate business to be up. There is a lot of bidding going on right now and I think the economy will continue to boom in our area. I assume there will be a slow down coming at some point, but I don’t anticipate it in 2020. We will continue to take advantage of this great economy for as long as we can.”
  • Brad Baker, Professional Roofing, Bellevue, Idaho, noted, “Business will probably be the same as last year due to the labor shortage. We refuse to steal other companies’ employees, so we make do with the ones we have and let them work as much as they feel they can. We use the same products year after year, and we believe that if it’s not broke, don’t mess around with it. The economy in our area is overheated, so anybody who wants to call themself a roofing contractor can get work.”

“Our biggest problem with all the new roofing contractors is they are one-man or two-man shows, so the state lets them be exempt from workers’ compensation coverage as owners. They tell general contractors they have a workers’ compensation certificate, but they don’t pay payroll against their account. We are trying to convince the state that if they are not using their account properly, then don’t issue them an account number and let general contractors think they have a legit account. If the general contractor gets caught with an accident, most likely they will have to pay for the accident unless their contract stipulates otherwise.”

  • Bill Baley, CI Services, Irvine, California, commented, “I believe our business should remain about the same with a small amount of drop off. It is an election year, so it is difficult to predict what the economy will do, but hopefully people will vote with their wallets. Our business mix is already pretty diverse. We chase as many opportunities as we can, provided we have the skills to perform the work. I don’t see that changing for next year. I believe our local economy should hold about the same as the rest of the West, but that depends on the economy’s strength.

“We are gaining this year due to a lot of delayed reroofing and maintenance work that came to light in last year’s rain storms. Owners are trying to make up for the last five years by performing a lot of work this year while the economy is strong. It looks like we may experience a good level of rain this season and that, combined with a level economy, will definitely help keep us busy again in 2020.”

  • Tom Asbury, Summit Roofing, Manteca, California, stated, “My business will be just under last year, which was my best year ever. I’m still in the same business mix, which is 100% commercial reroofing with only a few selected manufacturers. I’m hoping to add more service work, coating, and preventive maintenance roof programs. As always, we’re still looking for good field roofing contractor or even new employees to become contractors and salespeople/estimators.”
  • Chuck Chapman, Tecta America, Phoenix, Arizona, said, “We’re hoping to remain the same as 2019, but we are seeing some signs of weakening in the market. Our economy is similar to the rest of the Western United States. Overall, I see some weakening or unsettledness in the marketplace. I’m not sure if that is a temporary political issue, or if it is a true reflection of the economy. The 2020 election will most definitely set the tone for the next four years.”
  • Danny Cornwell, CC&L Roofing, Portland, Oregon, stated, “Last year was our best ever and we were successful in obtaining numerous large and profitable projects. This year we are still busy and bidding on work with some sizable projects lined up, but we don’t have the backlog we had amassed last year. We still find that the economy is strong and we believe that we will have a great year again, but not quite as robust as the last one.

“The list of products we install is very diverse, including numerous steep-slope and various low-slope materials. We intend to stay diversified but may be looking into more low-slope work, including installing pedestal pavers, which fits nicely with our crew’s tile roofing layout experience.

“We still have a large influx of people moving to Oregon, especially into the Portland area, which may bolster our economy more than other areas in the West. However, our highway and street infrastructure has been overrun with too much traffic, so it takes twice as long for our service crews to make it across town. This cuts down our production due to hours of sitting in traffic instead of working.

“The economy as a whole seems to be on a steady, ongoing growth cycle which normally, based upon our more than four decades of business experience, should have slowed down by now. The tax and regulatory cuts made by the Trump Administration seem to be keeping the economy on an unprecedented sustained growth pattern with no foreseeable end in sight.”

  • Ken Dillon, D&D Roofing & Sheet Metal, Sparks, Nevada, noted, “Our revenue should be fairly flat from 2019 to 2020. Our focus continues to narrow. We have concentrated on commercial single-ply and all types of residential systems. The economy in Northern Nevada continues to be strong, even though we may see some slowing in the second half of 2020. We are still bullish for 2020, but becoming cautious due to the decreased influx in the industrial sectors. Also, like most contractors, our growth is limited by the availability of qualified labor. In many cases we are competing with the same companies relocating to our area for workers.”
  • Frank Lawson, Jr., The Lawson Roofing Company, San Francisco, California, stated, “Work in the San Francisco Bay Area is still very busy. Our sales will be up about 10% from last year. We see more single-ply and SBS modified specs than before and built-up roofing is losing its market share. We anticipate that the economy will continue to be strong next year, and our biggest issue is getting manpower for our projects. The labor shortage is across all trades, not just roofing.”
  • Ron Lloyd, Kokua Roofing Services, Kailua, Hawaii, said, “I expect our business to continue growing as it has over the past eight years. With regards to the market in which we operate, I believe that 2020 will be slightly better than this year, for no other reason than people are still investing in Hawaii. What will differentiate those that prosper in this market from those that don’t will be based on relationships, service, and professionalism. In my opinion, the economy in our area will remain the same, but there are unknowns that can affect the economy that we can’t anticipate. Next year is an election year and we don’t know what kind of weather will occur. What we can do is focus on our core strengths and remain committed to the community in which we live.”
  • Everett Martin, Empire Roofing, Billings, Montana, commented, “Our business on the low-slope side will be up this coming year due to some leftover hail work and a fair amount of bid work coming through on the reroofing in the commercial sector. New commercial work for the first quarter will be slow but will probably pick up late in the second quarter.

“As a general rule we look to all types of roofing and waterproofing to fill out our year. I don’t think that will change. We always look to new products, but we also want to know how well they are expected to perform. With new products, we use them in smaller quantities to hopefully confirm their qualities. I think our economy is stable and our growth is average in this area and the indications for the year look to be the same.”

  • Travis Nelson, Brown Roofing, The Dalles, Oregon, said, “Our business will remain the same next year. I do expect it to move from a bidding culture to a more conventional negotiating type of selling like we normally have had. I think we have run the course from the bubble of demand that was created from deferred work during the slower times that started around ten years ago.

“I always like to think I will be adapting and changing due to new products and technology entering the market. I feel we do that to some extent. But, in reality, we are expecting to continue offering what has worked over the last 10, 20, and 30 years. The shift toward environmental concerns certainly dictates that we will be using different products at times, and we embrace that. However, solutions for the everyday customer will look the same for us, which includes focusing on what has worked for us in the previous four decades.

“I think the economy in our area is as strong as ever. However, we are always hesitant to make bold predictions during an election year, as people seem to be unsure in general about where things are going. That can add some hesitation for certain businesses and individuals.

“I feel the roofing industry is the strongest it’s been in awhile. The high participation in recent years in educational and enrichment opportunities, such as the Western Roofing Expo and other regional and national events, gives me hope that we’re learning as an industry that the best way is found through knowledge, improvement, and sharing of the best practices that are out there.”

  • David Montross, Montross Companies, Rancho Santa Margarita, California, stated, “We increased our business and revenue approximately 18% over 2018. We will be using a lot of the same products. It seems like we did a lot more silicone coating work. We are hoping the economy will continue the upward trend. With the building boom continuing out West and the need for more housing and apartments, someone has to maintain and replace the existing inventory of homes and buildings.”
  • Bruce Radenbaugh, Bilt-Well Roofing, Los Angeles, California, noted, “Los Angeles will remain very busy in 2020. We have had a backlog of two to three months on both commercial and residential applications. The Los Angeles economy is strong and will remain strong depending on the outcome of the presidential election.”
  • Stan Robinson, Pacific West Roofing, Tualatin, Oregon, commented, “We will see 2020 be the same as last year. People are less likely to pull the trigger due to it being an election year. Last year was down 15% from 2017, and 2019 is even with 2018. We have more ventilation work due to mold issues, but it’s isolated because we’re being fed by a mold abatement company that we teamed up with.”
  • Pete Schmautz, Star Roofing, Phoenix, Arizona, said, “Based on what we have under contract now, we see 2020 as being on track to exceed our 2019 revenue. The outlook remains strong, at least until we get closer to the elections. We will be using primarily the same materials as last year. We are seeing single-ply dominate the market, but modifieds are making a comeback and BUR is almost non-existent. I can’t speak to the rest of the West, but Arizona is full of activity right now. We are experiencing one of our biggest backlogs ever. The amount of bid requests we are receiving is not slowing down, but we sure do need some more skilled labor.”
  • Rob Winkle, Roof Asset Management, Thousand Palms, California, stated, “I believe that our business will remain the same for 2020. We do not anticipate any changes in products or business mix. The economy here is strong and is more likely similar to other areas of the West. Material prices continue to rise and taxes in California are out of control. This adversely affects the end cost to the consumer.”
  • Michael Trotter, Front Range Roofing, Greeley, Colorado, commented, “The market is strong in Colorado and looks to remain strong through 2020. Workforce continues to be an issue. Demand for work is stronger than workforce can supply, and the construction industry is at a critical point. Regarding this, I am fearful that we as an industry waited too long to address this issue.”
  • Dennis Ryan, Waterproofing Associates, Mountain View, California, stated, “Well, 2019 turned out to be pretty much what we were predicating and hoping for, which was a repeat of 2018. Of course, the hope now is for more of the same in 2020. Looking at our current bid list of opportunities, it looks like it could be more of the same for 2020. The sales force here is feeling confident, but remaining cautious. The bid list opportunities need to be turned into backlog, and that part is the wild card. As long as the bid list remains robust, the backlog should follow based on past history.

“Waterproofing projects are definitely taking a larger role in what we do. There are some fairly large waterproofing projects in the pipeline, and other opportunities of the same size and larger pending in the next year. Steep-slope sheet metal roofing is still a growing segment of our market, and the industry in general. Our sheet metal division has grown each year since we entered that market and based on current backlog and opportunities, this part of our business will grow more in 2020. We are still in the hot and cold BUR market. The opportunities in the BUR market keep presenting themselves, so we will go with it as long as it does.

“Growing and continuing to develop segments of our market all sounds good until you need to find the workforce to take on more growth. We have to be careful how we move forward with growth and hope that we don’t start going backward from the lack of workforce or a downturn in the economy. Workforce development is an issue in the construction industry, and other industries as well. There is a groundswell of activity aimed at working and trying to remedy the workforce situation. As far as the economy goes, the upcoming presidential election could make an impact, but I wouldn’t attempt to predict the direction that will be. I can only hope for all of us that it continues as it has for the last four or five years. Here’s to wishing you all well in 2020.”

That would be great. Here’s to wishing us all bigger margins in 2020.

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