US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Strong Year for Asphaltic Roofing Industry Indicative of US Construction Market

The recent production report of the Asphalt Roofing Manufacturers Association showed that US firms – after a solid year in 2020 – posted even stronger sales in 2021. Domestic production of asphalt shingles (the most commonly installed roofing material in the US) rose nearly 5% in 2021, while US manufacturing of modified bitumen membranes (MBMs) – one of the leading low-slope roofing materials installed in the US – advanced at a double-digit pace in 2021.

For asphalt shingles, this increase in production was spurred by high levels of housing starts as builders capitalized on demand for housing by erecting as many houses as they could (which, given shortages of lumber and other materials, was often a challenge!). Furthermore, reroofing activity in the US remained robust. While some of this work was in response to the many storms that occurred late in 2020, much of this demand for shingles was spurred by homeowners – flush with cash and buoyed by record home values and low interest rates – opting to fix and repair their residences. Many homeowners decided that 2021 was a good time to finally replace that aging roof – not only boosting home values, but adding a more durable and weather resistant product.

In the MBM segment, production was supported by a number of factors, key among them:

  • growth in the construction of such structures as manufacturing plants, warehouses, and self-storage centers, where MBMs are frequently specified due to their moisture resistance
  • the ease of installing these membranes, many of which feature self-adhesive peel-and-stick backings that facilitate use, especially by modestly trained installers
  • shortages (and higher prices) for plastic single-ply roofing membranes due to refinery shutdowns in Texas and Louisiana that lowered production of many of the plastic resins needed to make roofing membranes – MBMs were a much more affordable and available alternative

While it is still too soon to make broad predictions about the US roofing market for 2022, initial signs look good. Demand for housing remains high, while homeowners continue to invest in their residences, thus supporting demand for asphalt shingles. In the commercial market, the prospect of rebounding construction activity as the COVID-19 pandemic recedes should bode well for manufacturers of MBMs.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of Roofing studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


December Retail Sales Report a Positive One for Building Materials Retailers

The release of the December 2021 retail sales report was in general a positive one for retailers of building materials and garden equipment and supplies. Sales in December declined around 3% from their November level. This monthly fall in sales activity can be attributed to a number of factors, such as:

  • supply chain difficulties that led to shortages of popular items often purchased at these stores, such as appliances
  • the onset of winter weather, which causes many DIYers and some contractors to put off outdoor work, such as the installation of decks – thus affecting lumber sales
  • the muted nature of many holiday gatherings due to the COVID-19 pandemic – many people delayed large family gatherings to minimize the risk of COVID, and thus put off purchases of gifts

For the year, though, overall retail sales by building materials and garden equipment and supplies were up 13.5% from 2020. This surge was spurred by:

  • high lumber prices – for most of the year, lumber prices remained well above their historical average
  • continuing high levels of housing starts and home remodeling activity, fueling demand for a wide range of building materials most often purchased at big-box retailers and hardware and garden stores
  • increased homeowner interest in outdoor activities, such as gardening, supporting purchases of seed, fertilizer, and related products

Industry professionals are remaining optimistic that the strong sales of 2021 will carry over to 2022. Home building and home remodeling activity remains high, while many consumers – despite rising inflation – are looking to upgrade their homes by replacing older appliances, applying a fresh coat of paint, and – once the weather clears – engaging in some landscaping work. 

TFG analysts will continue to monitor retail sales – as well as numerous other indicators – to gauge their effects on the US economy going forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Automation & the Changing Workforce: Robots as Employees?

Automation efforts have long targeted simple repetitive tasks in a manufacturing process. Now, more sophisticated sensors and software, including artificial intelligence and analytics, are allowing automation to cover even more tasks, and capital-rich larger manufacturers are benefitting.

But what about smaller firms, many have been producing their components or products in much the same way for decades? Many smaller operators do not have the capital or cash on hand to pay for robotic equipment up front.

Solution: robots as a service.

Many other high tech products – most notably in the security area – have already made significant moves away from buying to leasing, renting, or otherwise paying for technology (equipment and software) on an ongoing rather than up-front basis. This business model allows the customer to leave programming, maintenance, and upgrades to the specialists. It will allow faster diffusion of automation into more businesses that either couldn’t afford to buy it outright or saw the technology as too intimidating or outside their own experience to handle themselves.

Formic is one company offering robots in this way. Customers “pay” the robot an hourly rate in exchange for having these robots in operation.

With the ongoing need to better deploy our resources and our workers for optimal efficiency, along with challenges from a pandemic to  that stress our workforce, the need for automation isn’t going away. The outstanding question is more about how best to do it and where to employ it…and how best to use the workers who shift out of those tasks.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly titles such as Global Off-Road Equipment Technology and Global Material Handling Equipment. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Electric RVs: Next Step For Zero-Emission Travel

Winnebago and Thor Industries both announced a new type of concept recreational vehicles this week: all-electric, zero emission RVs.

RVs are a hot business right now as Americans are looking for pandemic-safe ways to travel and are enjoying a resurgence in camping and outdoor leisure. Since manufacturers are flush with cash, it's a good time for them to invest in next-gen technology and EVs have to be part of that.

Although the current range is still too limited to accommodate a traveler looking to cover maximum miles in a day, many RVers wouldn't mind stopping every couple of hours to have a meal, take a nap, stretch their legs, or see a tourist spot. As fast-charging stations proliferate, this will become less of a challenge. Additionally, some RV travelers use their vehicles within a few hundred miles of their homes (e.g., tail gating at sports events/concerts, day trips, as a weekend retreat), so the range isn’t a problem if they can recharge at their destination.

Plus, the range is bound to improve along with battery innovations and additional changes to RV design. Current versions of RVs use a lot of fuel (gasoline or diesel) anyway and have to stop regularly to refuel... there is certainly a market for cleaner and more efficient vehicles, including those that make use of solar panels to recharge off the grid.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly titles such as Global Batteries, Global Hybrid & Electric Vehicles, Recreational Vehicles, and Outdoor Living. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Consumer Goods    

Initiative to Repair Bridges to Benefit Construction Industry

The US government’s announcement of a $27 billion plan to repair older and unsafe bridges across the US is welcome news not only to state and local agencies charged with fixing and repairing these structures but to the US construction industry – those companies responsible for providing the materials and labor for these projects.

It’s long been known that the national network of bridges is in need of repair. While less than 10% of the bridges in the US were considered to be “structurally deficient” in the most recent report card of US infrastructure by the American Society of Civil Engineers, more than 40% of the nation’s bridges are more than 50 years old – and these structures will eventually some repair (if not outright replacement).

Many state and local governments tried to take advantage of the COVID-19 pandemic-related emptying of America’s roads and highways (due to the surge in working from home) by accelerating work on bridge repair since it is easier to complete projects when fewer vehicles are zipping by workers. However, this decline in road and highway traffic meant that consumers were spending much less on gasoline. This was an issue in many states, as taxes on gasoline play a major role in funding highway projects. Thus, less funds were available for bridge repair – making this spending initiative important for states looking to perform crucial infrastructure repairs.

This increase in funding will boost for a wide range of construction projects, such as:

  • cement and concrete
  • prefabricated concrete products, such as piers, pilings, and bridge sections
  • metal pillars, posts, and other structural supports
  • steel rebar to reinforce poured and prefabricated concrete components
  • lumber used as supports for concrete pours

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.