Insulation Not Insulated From Construction Downturn

North American demand for residential and commercial thermal insulation slipped lOVo last year to an estimated 374 billion sq. ft. valued at $l .4 billion, according to a new study by Principia Partners.

Residential and commercial insulation is comprised primarily of blanket, loose fill, board and spray foam products, made from fiberglass, cellulose and foams and used mostly in walls, attics and floors to reduce thermal conductivity, minimize air infiltration, and provide acoustical benefits.

Residential volumes declined l87o to 231 billion sq. ft., while value dropped 2oo/o to $3.1 billion, driven by a257o decline in U.S. housing starts. The primary residential material is fiberglass, accounting for 8oo/o of volume and JOVa value in 20O1

Last year, commercial insulation demand rose 6.JVo to 143 billion sq. ft. worth $4.2 billion, a 5.57o hike. While new residential construction in the U.S. suffered its worst decline since 1980, the commercial market continued to grow at a rare of l7o. Fiberglass insulation is also the predominant insulation type in commercial construction, at just under 48Vo of total volume. Rigid foam, which is used more extensively in roof and wall insulation, has a 39Vo share of volume but 597o of commercial market value.

On the supply side, significant product volume and revenue are held by a few key players in certain seg- ments. The top l0 suppliers tn 2OO1 provided SlVo of the volume and 837o of the value-over $6 billion. Owens Corning holds a 2OVa share of total insulation sales in North America, while Johns Manville and CertainTeed collectively account for a similar share, followed by smaller fiberglass producers Knauf and Guardian.

US GreenFiber is the largest producer of cellulose insulation, and Dow the leading supplier of foamed polystyrene. Commercial suppliers Atlas Roofing, Firestone Building Products, and Carlisle round out the top 10.

"The major decline in the U.S. residential construction over the past two years has impacted the insulation category, but demand from the commercial segment has helped buffer the impact. Overall, it's a tough market, but will improve with the economic and housing cycles going forward," said John Pruett, director of marketing and new business development at Principia.

The firm projects that overall demand will increase nearly 4Eo annually to reach 441 billion sq. ft. valued at $8.7 billion by 2012.

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