Building Products Manufacturing Analysis

Part
01
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Part
01

Operational Examples - Mohawk Industries

Operational improvements are important for ensuring the growth and profitability of a company. Mohawk Industries has incorporated a market-driven approach in its operations which has allowed the company to focus on meeting the needs of its target clients. It has also embraced efficiency, differentiation, and portfolio diversification as key ingredients for growth.

Market-driven Operational Approach

  • When a firm adopts a market-driven approach in its operations, its strategy is driven by vertical market segments. This approach allows a company to have streamlined operations that are less costly.
  • The firm is also able to provide specialized solutions to specific customer segments.

How Mohawk Industries Uses a Market-driven Approach in its Operations

  • Mohawk Industries uses its vertically integrated manufacturing and distribution processes to aligning itself with consumer demand for its products. With high inflation slowing the U.S. market in 2018, the company matched the production of ceramic tiles and luxury vinyl tile (LVT) with the reduced demand for the products.
  • In 2019, the company increased the manufacturing of carpet tile and LVT products owing to the increased demand for these flooring styles by commercial clients.
  • The company produces green products for their architecture and design consumers who are keen on getting quality, affordable, and sustainable flooring solutions.
  • In the retail space, Mohawk Industries produces Red List-Free flooring products that promote healthy homes and a cleaner environment. They are also safe to manufacture and install.

Stirring Growth Through Improved Efficiency, Differentiation, and Diversification

  • Operational efficiency measures the costs incurred when doing business, in which low costs signify a higher efficiency. To achieve this, companies seek to manufacture products using the lowest costs possible.
  • Differentiation involves making a company's products unique and different from those of its competitors with the sole aim of attracting more clients. Companies use differentiation by developing products with unique features, quality, and prices.
  • On the other hand, diversification is a risk management strategy where firms strategically invest in multiple products to minimize risks in the event the market for a certain product is not performing well. A well-diversified product portfolio can stir the growth of a company over time.

How Mohawk Industries Uses this Operational Improvement

  • To improve its product mix, in 2018 Mohawk Industries invested $1.5 billion towards new product development, improving production, cost-saving initiatives as well as buying back shares. While these funds were to be invested across the Mohawk group, some funds were used to start quartz countertop production in the U.S.
  • The firm injected $10 million capital to incorporate a new extrusion compounding line in its Glasgow, VA factory in an effort to diversify its products.
  • By adopting the zero waste to landfill (ZLF) program, the company was able to save $4.3 million in costs which would have otherwise been used for landfills, hauling waste, and water treatment before discharging to public sewer systems.
  • In addition to these investments, Mohawk Industries embraced various innovations that differentiate their products from those of its competitors in the market. For example, by embracing the Living Product Challenge in 2018, the company was able to produce high-quality products such as the SmartStrand carpets with less energy and low emissions using recyclable materials. These materials are recycled from 6.6 million plastic bottles every year.
  • Mohawk Industries projected that by 2020, it was to start to realize increased volume and efficiency in production due to these investments.
Part
02
of twenty-four
Part
02

SWOT - Mohawk Industries

Mohawk Industries holds a market leadership position in the North American flooring industry and wields a US market share of 23%. In recent years the company has been facing downward pressure on its revenues and profit margins, owing to industry weakness and intense competition. However, the fast-growing North American flooring market presents an excellent growth opportunity for the company. Below we have presented the detailed SWOT analysis for the company.

Strengths

  • Mohawk Industries is one of the leading companies in the US flooring industry with a market share of 23%.
  • The company is also the global leader in the ceramic business segment and is the largest manufacturer, marketer, and distributor of natural stone and ceramic tile in the world.
  • The company also has an extremely strong presence in the North American flooring business segment and is one of the largest suppliers of rugs, premium carpet, sheet vinyl, laminate, wood flooring, and luxury vinyl tile in North America.
  • The company wields one of the largest product assortments in the industry and is among the largest flooring products suppliers even outside of North America.
  • The company is known for its innovative product offerings and has introduced several new technologically advanced products in the US such as DIY laminate installation system, reveal imaging in ceramic wood planks, unified soft flooring using 'Air.o' technology, and smart strand carpets.
  • The company has fully vertically integrated US operations from design to material sourcing, manufacturing, and distribution. Such end-to-end integration allows the company to realize business advantages such as cost management, quality control, and raw material integrity over its competitors.
  • The company has made colossal investments in capital expenditure and M&A to fuel its sales growth and enhance its margins. It has invested $3.2 billion in capital expenditure and acquisitions since 2016, allowing it to ensconce its market leadership position.

Weaknesses

  • The company's revenue has remained flat and its earning per share has declined by an average of 7.6% annually over the past 3 years. Consequently, the company's market worth has also plummeted by 36% over the past 3 years. This corroborates the weakness in the company's operations.
  • The company has been unable to optimally forecast demand and manage its capacity utilization. It has excess capacity and inventory built-in, with inventory levels rising from $1.9 billion in 2017 to $2.3 billion in 2018. This will require Mohawk to augment its promotional activity and lower product prices, leading to further weakness in the margins.
  • The company's management guidance has missed the analyst expectations in each of the last seven quarters, and consequently, the consensus analyst earnings estimates have moved down by 12.88% since the latest company results.
  • In spite of various initiatives to spur long term growth, the company has been unable to efficiently handle material cost inflation, volume and pricing pressure, and labor and energy costs, along with excessive competition, which impacted its performance.
  • The company has a low employee satisfaction rating of 3/5 on Glassdoor, with many employees highlighting concerns about the higher management.

Opportunities

  • The global flooring market is expected to exceed $450 billion by 2024 and the global construction spending is anticipated to exceed $16 trillion over the next five years. The North American flooring market is estimated to grow by over 5% over the next 5 years. Given the market leader position of Mohawk, such high growth industry presents an excellent growth opportunity for the company.
  • While the company has excellent physical sales and distribution channel, it has an opportunity to develop an integrated digital sales platform and leverage big data analytics like other retailers in the US. This will help Mohawk widen its reach and enhance the customer experience.
  • The company also has an opportunity to enhance its market share further by diversifying into some addendum trending flooring material categories in the United States like 'Terrazzo', 'Stained concrete', 'Marble-look porcelain tiles' and products made from natural and responsibly sourced materials.

Threats

Research Strategy

To give a complete SWOT analysis of Mohawk Industries, the research team first searched through the company website for any relevant market information. Having gathered much about the company, its revenue, and products, the team leveraged compelling information from the companies LinkedIn page, press releases, business reports, and company reports to come up with a comprehensive SWOT analysis.

While most of the findings have a US focus, the research team has also compiled some findings which are global in scope as the company has extensive global operations. It derives 61% of its revenues from the United States and the rest 39% from other geographies. Hence, the global strengths and weaknesses of the company also impact its US operations. For example, a global leadership position of the company is likely to enhance its bargaining power with the suppliers and distributors in the US as well as it can place bulk export orders with them.

Similarly, since the US is the primary market for the company and it converts and reports all its revenues in US dollars, any weakness against US dollar in any of the global market currencies where the company operates can eat into the US earnings in form of hedging costs and hence, pose a threat to the US operations as well.
Part
03
of twenty-four
Part
03

Overview - Mohawk Industries

Mohawk Industries had an annual revenue of approximately $6.1 billion in 2018, in the United States, representing approximately 61% of all revenue. The organizational chart for the company has the following people on its board of trustee CEO Jeffrey Lorberbaum, director, Filip Balcaen, director, Bruce Bruckmann, director, Richard C Ill, director, Joseph Onorato, director, William Runge, and director Karen Smith-Bogart.

U.S. Financial Data

  • The gross profit for Mohawk Industries is calculated by subtracting the cost of sales from net sales in the U.S. for year 2018, and approximately 61% of the global revenue that was generated in the United States.

Organizational Chart

  • The companies organizational chart can be accessed by clicking this link. The organizational chart has the board members at the helm of the company's affairs, then followed by the N-1 departments and the N-2 sub-departments are at the bottom of the workflow.

Mohawk Industries List Of Segments

  • The company has three reporting segments, namely the Global Ceramic segment, the Flooring NA segment, and the Flooring ROW segment.
  • The "Global Ceramic segment designs, manufactures, sources, and markets a broad line of ceramic tile, porcelain tile, natural stone, quartz, porcelain slab countertops, and other products."
  • "The Flooring NA segment designs, manufactures, sources and markets its floor covering product lines, including carpets, rugs, carpet pad, hardwood, laminate, and vinyl products, including luxury vinyl tile."
  • "The Flooring ROW segment designs, manufactures, sources, licenses and markets laminate, hardwood flooring, roofing elements, insulation boards, medium-density fiberboard ("MDF"), chipboards, other wood products, sheet vinyl, and LV."

Other Data Points


Gross Profit Calculation

In year 2018, Mohawk Industries had $6,103,789,000 net sales for the U.S., representing 61% of global sales. The global cost of sale for Mohawk Industries was $7,145,600,000. Therefore, cost of sales in the U.S. for Mohawk Industries will be $7,145,600,000*61%=$7,145,600,000*0.61=$4,358,116,000.
The Gross Profit=Net Sales in America-Cost of Sales in America=[$6,103,789,000-$4,358,116,000]=$1,744,973,000

The calculated gross profit for Mohawk Industries in the U.S. is $1,744,973,000.

CAGR Calculation

To calculate the CAGR for Mohawk Industries, the team made use of the Omni online calculator using years 2016 and 2018. The team also used $5,842,165,000, and $6,103,789,000 respectively. We used a three-year interval since the annual revenue was given for three years, and after filling the appropriate information on the online Omni-calculator, we obtained the CAGR as 1.47% and the total growth as 4.4782%.

Part
04
of twenty-four
Part
04

Operational Examples - Kawneer

Georgia-based Kawneer is a competitor in the North American building products manufacturing market. They are known for efficient walls, windows, entrances, and for continually refining the thermal performance, hurricane resistance, and blast mitigation abilities of their products.

Operational Decline: Dust Collector Inefficiencies

  • In 2019, Kawneer's North American production engineers noticed that plants were suffering from delays due to inefficient self-cleaning dust collectors on their upcut saws. The upcut saws, a critical link in Kawneer's material assembly line, produced 15 gallons of chips per shift, and vibrating dust collectors proved ineffective at spot-cleaning those chips from the saws.
  • Since the need to stop and manually clean the saws in the middle of production began cutting into the plants' ability to meet quotas, Kawneer decided to seek out a more efficient solution for chip removal. Ultimately, they chose to replace their dust-collectors with vacuum-powered alternatives produced by a third-party company.
  • Once installed, the vacuum cleaners proved far better at spot-cleaning than the older vibrating self-cleaners. Pauses for manual cleanings decreased, saving the facilities between 30 and 45 minutes per shift.

Operational Improvement: Thermal Performance Increase

  • By 2016, Kawneer had earned a reputation for manufacturing sustainable building products, with 11 of their products declared free of red-listed chemicals by the International Living Future Institute. The use of environmentally friendly chemicals to build their products, combined with their focus on efficiency and resiliency, provided Kawneer with a strong foundation for advancements in sustainable construction.
  • Kawneer capitalized on this momentum by involving themselves in the construction of the Kendeda Building at Georgia Tech, one of the most advanced green academic buildings in the United States. By 2019, their effort to build to Kendeda's standards resulted in the Kawneer 1600UT (Ultra Thermal) curtain wall system.
  • Due to Kawneer's previous years of focus on thermal efficiency, they were able to increase the thermal value of the 1600UT by 6 to 8 percent by fine-tuning technology that was already in place, saving time on research and development.

Methodology

After researching Kawneer's website, we conducted searches for case studies in operational improvements at Kawneer. This yielded a description of how Kawneer's US plants addressed inefficiencies in their upcut saws. A broader search for news about Kawneer's products yielded information about their drive toward sustainability, and how that operational momentum allowed them to meet stringent green building requirements. Since further searches for case studies and news yielded little novel information, we decided to cap this report at two data points.
Part
05
of twenty-four
Part
05

SWOT - Kawneer

Kawneer has been recognized for its exemplary products and business practices with its subsidiary in the UK being declared the winner of the Cheshire High Sheriff's Award for Responsible Business Practice in 2017. The company also has a significant social media presence with a combined following of 12.9k across Facebook, Twitter, and LinkedIn. Below is a detailed SWOT analysis of the company.

Strengths

  • Kawneer offers a large portfolio of product solutions including curtain walls, sun control products, interior framing, entrances, windows, storefront framing, overhead glazing, and balcony doors that serve a wide range of markets such as the education sector, healthcare industry, multifamily, and office solutions, hence, greater market presence and customer base.
  • Kawneer was founded in 1906, giving it over 110 years of experience in the industry, making it one of the leading providers of architectural and building solutions in the U.S.
  • Kawneer has a significant geographical presence in the United States, with 18 locations in the United States, 6 of which are major facilities and 6 service centers. This makes it more accessible to their clients across the nation.
  • Kawneer’s parent company, Arconic has a rich legacy of technological and technical innovation, state-of-the-art capabilities and a long-standing customer base, which has also enabled Kawneer to maintain a competitive position in the market.
  • Kawneer has a strong financial position with reported revenue of $633 million in 2018. Strong financial performance ensures business longevity and market dominance as well as giving it leeway for additional market investments.
  • The company has a significant social media presence with a combined following of 12.9k across Facebook, Twitter, and LinkedIn. Such a strong online presence has proved especially important for engaging with clients in this digital era.
  • Kawneer has been recognized for its exemplary products and business practices. In 2017, its subsidiary in the UK was declared the winner of the Cheshire High Sheriff's Award for Responsible Business Practice.

Weaknesses

  • The company has a low employee satisfaction rating of 3/5 on Glassdoor, with many employees citing poor work/life balance, especially for factory workers, and concerns about the management team.
  • Arconic, Kawneer’s parent, has expressed difficulties in developing innovative new products successfully. This may impact Kawneer’s ability to do to innovate to keep up with market demand.

Opportunities

  • There is an upsurge in the construction of commercial buildings in developed and developing economies. Kawneer, with its global locations, has the opportunity to tap into this demand.

Threats

  • Cheaper imports from other global markets pose a threat to Kawneer’s profits and market share.
  • The status of economic relationships between the U.S. and countries that provide some of Kawneer’s key raw materials may pose a threat to Kawneer’s bottom line. A current example is the strained trade relations between China and the U.S.
  • The industry that Kawneer operates in is faced with stiff competition, with other companies using similar manufacturing processes and producing similar products, thus very little product differentiation.
  • Kawneer’s business is subject to cyclical fluctuations in global economic conditions and its target markets. For instance, they import some aluminum raw materials critical to their business from China, which may be affected by the current strained economic relationship between China and the U.S.

Research Strategy

To give a complete SWOT analysis of Kawneer, your research team first searched through the company website for any relevant data and information. This included reviews on the company’s products, reports, press releases, and news bulletins. We then consulted trusted industry knowledge partners for additional details that were not available on the company website. We also leveraged information from the company’s social media pages and verified industry reports to prepare a comprehensive SWOT analysis.

Part
06
of twenty-four
Part
06

Overview - Kawneer

Kawneer's annual revenue exceeds $1 billion. Though Kawneer is part of the publicly traded company Arconic, Arconic doesn't report financials solely pertaining to Kawneer. However, Arconic does report financials (global) about the segment (Transportation and Construction Solutions) that Kawneer is one of the two companies in, so we provided those financials due to their direct applicability to Kawneer.

Kawneer

1. Overview

  • Arconic publishes an annual report, but Kawneer does not.
  • Arconic's annual reports don't specifically provide financials pertaining solely to Kawneer. As an example, in Arconic's 2018 annual report, Kawneer is only mentioned once by name. We also checked Arconic's 2017 and 2016 annual reports, but there was also one or two mentions of Kawneer by name in each of those reports as well.
  • However, there is data about Arconic's two "Transportation and Construction Solutions (TCS) brands" in the annual reports, one of which is Kawneer.

2. Financials

3. Organization Chart

4. Segments

  • Kawneer's product segments are windows, framing, curtain walls, balcony doors, sun control (e.g. awnings), swing entrances, and overhead glazing.
  • Kawneer's industry segments are multi-family, education, healthcare, public/government/civic, corporate ID/retail, leisure & arts, office/commercial, and sports facilities.
  • Kawneer's geographic segments, in terms of locations, are North America, Europe, South America, and Asia.

Research Strategy

The above financials are not specific to the U.S. because Arconic's reporting of TCS financials were global in scope. The revenue estimates and Arconcic's annual reports were the only sources we could find with financials pertaining to Kawneer. We tried to find Kawneer's organization chart on its website, in articles, through Arconic's website, and in an annual report, but we could only find Arconic's organizational chart, so we provided that in lieu thereof.
Part
07
of twenty-four
Part
07

Operational Examples - Carlisle

Carlisle Construction Materials (CCM) is a manufacturer of building products and related technologies. Its key operational improvements were driven by business acquisitions and rebranding products.

The SAP HANA Enterprise Resource System


The CoreView Management Platform


Research Strategy

This study used various CCM's company reports, financial statements and public statements. We further considered information from Forbes, Bloomberg, BusinessInsider, MarketWatch and BusinessWeek. Only operational changes between 2017 and 2020 were considered for CCM. It was found that rebranding and acquisitions were the most frequent changes conducted by CCM. Within three years, CCM has acquired three companies which are Petersen Aluminum Corporation, Drexel Metals and Accella Performance Materials. Rebranding the products is a strategy used to improve the market size and satisfy consumer's demand. Unlike other companies, it seems CCM is focused on a growth through acquisition strategy and rebranding products. These strategic changes created a need for better business systems and processes.




Part
08
of twenty-four
Part
08

SWOT - Carlisle

The SWOT analysis of Carlisle Construction Materials has been organized into four matrices - strength, weakness, opportunities, and threats, as provided below.

Strengths

  • Carlisle Construction Materials a wider geographical presence - 49 locations in the United States, 26 of which are manufacturing locations - makes it reach its target market and eases its customers' accessibility.
  • Through many of its market brands, Carlisle Construction Materials has a wide product portfolio that gives it a wider market presence and allows it to expand its customer base.
  • Carlisle Construction Material's strong financial position with a revenue of $676.3 million for the last quarter of 2018 gives it more latitude for market investments.
  • The company has a significant social media presence with 5,573 followers on LinkedIn alone. 428 of its employees are also on LinkedIn (Source 4). A strong online presence has enhanced its relationship with its customers, especially in this digital era.
  • Carlisle Construction Material has been a recognized leader in the roofing industry offering diverse products to capture a wide range of consumers.

Weakness

  • Carlisle Construction Material operates as a distinct segment from the Carlisle Interconnect Technologies segment, and so no emphasis is put on technological advancement.
  • The elaborate product portfolio by Carlisle Construction Material increases the cost of promotion and advertisement.
  • The warranty qualification, while it is intellectually desirable in regard to increasing sale revenue, is coercive to consumers.

Opportunities

  • Carlisle Construction Material is adopting eco-friendly products to reduce cost and the amounts of carbon footprints for its consumers. This is aimed at maintaining its consumer loyalty at a time of climatic change concerns.
  • Acquisitions are offering opportunities for Carlisle Construction Material to expand its market share and improve its product diversification.
  • The increase in demand for high volume re-roofing projects in North America and acquisitions' contributions are offering an opportunity for Carlisle Construction Material to improve on its organic growth.

Threats

  • Carlisle Construction Material is among the key players in the geofoam market, which are riddled by fierce competition. Carlisle Construction Material also faces competition from many competitors that produce roofing, insulation, and waterproofing products.
  • The segmentation of Carlisle Construction Material consumers risks paralyzing one segment, and hence loss of revenue and operation, in case either of the consumers is lost.
  • The rising cost of raw materials, higher freight, and labor cost risks are decreasing the operational margins of Carlisle Construction Material.
  • ACH Foam Technologies, LLC, a competitor of Carlisle Construction Material, adopted Foam-Control Geofoam favored by roadway constructors. This has threatened the placement of Carlisle Construction Material in this geofoam market.

Research Strategy

To give a complete SWOT analysis of Carlisle Construction Materials, we first searched through the company website for any relevant market information. Having gathered much about the company, its revenue, and products, we leveraged compelling information from the companies LinkedIn page, press release, business reports, and company reports to come up with a comprehensive SWOT analysis.
Part
09
of twenty-four
Part
09

Overview - Carlisle

Carlisle Construction Materials (CCM) had an annual revenue of $2.9 billion in 2018 representing an annual growth of 5.1 percent. Below is more information related to the company. However, the company's gross profit and organizational structure were publicly unavailable.

Revenue

Growth

Some Key Personnel at CCM

List of Segments

Additional Findings

  • CCM 2018 operating income was $435 million.
  • The company achieved a 65 percent growth in sales from new roofing products (in 2018) as compared to 2017 grow.

Research Strategy

From the research conducted, your research team was not able to locate CCM's organizational structure nor its gross profit. To locate the gross profit, your team reviewed the company's website. From this analysis we found out that CCM is a wholly owned subsidiary of Carlisle Companies. Therefore, a review of Carlisle's annual report was done. From this exercise we unearthed CCM's revenue and grow rate but there was no information related to its gross profit. Finally, we consulted third-party databases (like Zoominfo and Hoovers) and news websites (like Forbes and Bloomberg). Unfortunately, gross profit data was publicly unavailable.
In terms of the CCM's organizational chart, your research team commenced research by analyzing CCM's website. However, this technique did not yield any information. Next, we tried checking third-party databases that specialize in providing organizational charts, such as, The Official Board. Nonetheless, this technique only provided the organizational chart of Carlisle Companies not CCM. Finally, we consulted LinkedIn and sought the profiles of some company's high ranking staff.
Part
10
of twenty-four
Part
10

Operational Examples - Armstrong Ceilings

Armstrong Ceilings has recently partnered with the Sustainable Minds transparency catalog in order to showcase its achievements in the reduction of its environmental footprint. The company is also the first ceiling tile manufacturer to launch a Cradle to Cradle CPD.

1. Inclusion Of Armstrong Ceilings Sustain Portfolio In The Sustainable Minds Transparency Catalog

  • In 2017, the global leader in ceiling systems, Armstrong Ceiling Solutions, collaborated with Sustainable Minds for inclusion in its SM (Sustainable Minds) Transparency Catalog
  • SM Transparency Catalog is the first productivity solution that is cloud-based, designed for construction and owners (AECOs), engineering, architecture to make it easy to find and specify cleaner and healthier products for high-performance buildings.
  • It is designed to bring change in the construction environment by rewarding manufacturers whose products credibly reduce the environmental and human health impacts.
  • The solution makes it easier for AECOs to find the exact transparency disclosures, products and brands to meet project and green building rating system requirements in each division and section.
  • Armstrong Ceiling Solutions is the first manufacturer of ceiling to take part in that valuable initiative.
  • The solution is an invaluable tool for AEC professionals to find products that meet the stringent standards of environmental and material reporting in the construction industry.
  • By taking part in this initiative, the company is committed to identifying ceilings that meet the most stringent environmental requirements by using Environmental Product Declarations (EPDs), Health Product Declarations (HPDs), and Declare Labels.


2. Launch Of a Cradle to Cradle CPD

  • Cradle to Cradle is a nature-inspired design concept developed in the 1990s by Dr. Michael Braungart, William McDonough and the scientists of EPEA in Hamburg, in which products are produced according to the principles of an ideal circular economy.
  • It gives companies the opportunity to present their goods as being ready for use and not just for sale. As part of a reprocessing method, the products are taken back after their use, and therefore remain in circulation.
  • As a transformative path for designing and producing products that have a positive impact on people and the planet, manufacturers and brands worldwide rely on the Cradle to Cradle Certified Product Standard.
  • To be certified, products are evaluated for environmental and social efficiency in five essential areas of sustainability: social fairness, material quality, renewable energy and carbon management, water stewardship, and material reutilization.
  • For each category, a product is assigned a level of achievement of basic, bronze, silver, gold or platinum.
  • The Cradle to Cradle certification helps customers in buying products that use environmental friendly manufacturing processes like minimizing water consumption, renewable energy strategies, and social responsibility tactics.
  • Armstrong Ceiling Solutions recently launched a CPD demonstration, approved by RIBA, on the role of Cradle to CradleTM architecture in the built environment.
  • The CPD facilitates the evaluation of the performance features of ceiling systems designed for circularity.
  • According to them, the construction industry has to move on from its traditional process of "take, make, dispose" to building solutions designed for disassembly and reuse.
  • Armstrong Ceilings is the first mineral ceiling tile manufacturer in the world to win Cradle to Cradle certification.
  • The company has also been reducing its environmental footprint systematically by carefully selecting and reformulating raw materials, analyzing the life cycle, reducing pollution waste, increasing the use of renewable energy, and rebalancing existing supplies with lower carbon alternatives.
  • At Farnborough Air Show Armstrong Ceilings has completed three successful recycling projects, which have recycled 24,600 m2 of Dune Supreme tiles.
Part
11
of twenty-four
Part
11

SWOT - Armstrong Ceilings

Armstrong Ceilings has a large portfolio of products and services that have been used in various notable buildings such as Colombus Convention Center, United Healthcare Administrative Building, CIRRUS Office, and INOVA Schar Cancer Institute. The company also offers transparency documents to help owners of buildings complete the administrative requirements needed to fit the Green Building standard. Below is a detailed SWOT analysis for the company.

Strengths

  • Armstrong Ceilings provides various types of ceilings, suspension, and wall systems. This company mainly manufactures products that are based on metals, wool, mineral fiber, and fiberglass, including tiles, planks, and drop panels. Due to the large variety of products that Armstrong Ceilings provides, customers may choose the product that suits their needs and preferences.
  • Armstrong Ceilings' website is very user-friendly, easy to navigate, and is easily accessible on mobile devices. Customers can browse the company's products based on the type of material, shape, system, condition of the area, area capabilities, applications, and performance criteria to find the most suitable product for their needs.
  • Armstrong Ceilings offers transparency documents to help owners of buildings complete the administrative requirements needed to fit the Green Building standard. The available documents are as follows: Health Product Declarations (HPDs), Declare Labels, Environmental Product Declarations (EPDs), GREENGUARD Gold, Formaldehyde Free, Clearchem, and FSC Certificates.
  • The company's products also contribute to the objectives of various sustainability standards, such as LEED, WELL Building Standard, Living Building Challenge, and Living Product Challenge, which are suitable for consumers who wish for eco-friendly materials.
  • Armstrong Ceilings has an extensive portfolio of products and services displayed on their website. Their products are used and implemented in numerous notable buildings, including Colombus Convention Center, United Healthcare Administrative Building, CIRRUS Office, and INOVA Schar Cancer Institute.
  • The company has also been in the market for over 150 years with approximately $1 billion in revenue. The company has also gained large brand awareness due to its consistent product quality over the years.
  • Armstrong Ceilings is considered one of the biggest players in the mineral fiber ceiling market with approximately 17.6% market share in 2018.
  • The company's net sales have been on the increase in 2019, for instance, reaching $242.1 million, $272.0 million, and $277.1 million in the first, second, and third quarter of 2019, respectively. Brian MacNeal, the CFO of Armstrong World Industries, expects the annual sales to reach $1.04 to $1.05 billion by the end of 2019.

Weaknesses

  • According to the reviews on Glassdoor and Indeed, Armstrong Ceilings received 3.5 and 3.7 stars, respectively. Although many former workers admitted that the compensation and benefits they received are considered above average, they complained that the management team needed to improve their skills and treat employees fairly regardless of age and racial background.
  • A former employee claims that the workplace is mainly dominated by men and older workers. The lack of diversity in the workplace may cause miscommunication, create barriers, and hinder the development of innovative ideas.
  • Many workers also complained about the company's outdated workplace policy and how it does not train their workers efficiently before deployment leaving them to learn by themselves.

Opportunities

  • The net sales of mineral fiber and architectural specialties of Armstrong Ceilings are expected to rise due to the favorable average unit volume (AUV) in the mineral fiber segment and the increased volume growth in the architectural specialties segment.
  • In 2019, Armstrong Ceilings acquired Architectural Components Group, Inc., a leading custom wood ceilings and walls solution manufacturer, which will boost the wood, ceiling and wall business. This transaction is expected to add $20 to $25 million to total sales.
  • This company also acquired MRK Industries, Inc., a specialty metal ceiling, wall, and exterior solutions manufacturer, in the same year to penetrate the architectural specialties segment and boost the sales of their products.
  • Due to the rising trends of green construction and buildings, it is expected that there would be an increase in sales of Armstrong Ceilings' products that meet the green standards.

Threats

  • The rising cost of manufacturing materials, such as steel and aluminum tariffs, may impact the production cost of Armstrong Ceilings' products, thus, affecting the overall profits of this company.
  • Due to the ever-changing customer tastes and preferences related to the wall, ceiling, and suspension system, Armstrong Ceilings is pressured to constantly keep up with the trends to meet the needs of their customers.
  • Armstrong Ceilings is among the key players in the ceiling industry in the US expected to face fierce competition from other players such as Chicago Metallic Corporation and ROCKFON.

Research Strategy

To do an in-depth SWOT analysis of Armstrong Ceilings, we consulted expert and professional blogs, market reports, investor reports, press releases, and publications. We also attached several paywalled SWOT analyses of Armstrong Ceilings (1, 2). We found that the answer to this research was straightforward and did not require any triangulation.
Part
12
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Part
12

Overview - Armstrong Ceilings

Armstrong World Industries designs and manufactures custom ceilings and walls for commercial and residential spaces. An overview of the company's most recent financials, organizational chart, and product segments is available below.

Financials

  • The most recent published revenue for Armstrong World Industries is $975.3 million.
  • The company's revenue in 2017 was $893.6 million, showing a growth of 9.1%.
  • Armstrong's 2018 gross profit was $641.8 million and its 2017 gross profit was $578.2 million.
  • Between 2017 and 2018, the company's EBITDA had grown 11% and free cash flow had grown 61%.

Organizational Chart

Product Segments

  • For commercial clients, Armstrong offers fiberglass, wood, translucent, metal, and tectum wood fiber ceilings.
  • Also for commercial clients, they offer fiberglass, wood, translucent, custom metal, and tectum wood fiber walls.
  • They also offer many types of ceilings for residential buildings.
  • Armstrong designs custom TECTUM Roof Decks for various uses.
  • The company offers Structural Insulated Panels for sale to builders.
Part
13
of twenty-four
Part
13

Operational Examples - Firestone

A new facility in Germany and the launch of FullForce EPDM (Ethylene Propylene Diene Monomer) are examples of operational improvements over the past two to three years for Firestone Building Products Company.

A New Facility in Germany

  • On May 06, 2019, the company proclaimed the establishment of its very first greenfield plant situated in Heinsberg, Germany.
  • The facility is situated in Heinsberg's Dremmen District and employs around 20 individuals.
  • It was opened to serve customers better and to meet the expanding demand for building products in not only Germany but Europe. The facility was also constructed to collaborate with consumers within the international, as well as local, market to offer industry-leading roofing solutions.
  • The company commenced the sale and manufacturing of the polyiso (PIR) insulation boards from this facility in the first week of May 2019.
  • Its location enables contractors in the country to buy the company's RESISTA insulation which is utilized with other materials to implement a full Firestone roofing system in all European Firestone markets.
  • As of 2019, the company operates 15 separate manufacturing plants globally, selling around 90 million square meters of insulation materials worldwide annually.

Launch of FullForce EPDM (Ethylene Propylene Diene Monomer)

  • Ethylene Propylene Diene Monomer (EPDM) is the fastest growing synthetic rubber and has a broad array of applications. In the construction and automotive industries, it is utilized for sealing due to its exceptional resistance to general weathering, Ozone, and UV, among other environmental factors.
  • During the International Roofing Expo (IRE) in 2019, the company revealed the launch of its FullForce EPDM, which was referred to as "the next evolution of Secure Bond systems."
  • Using the Secure Bond pressure-sensitive adhesive, FullForce EPDM serves as the sole EPDM membrane with a factory-applied adhesive throughout its surface within the roofing market.
  • It can be installed without the use of seam tape, and it does not have any volatile organic compounds (VOCs), which makes the product an appropriate system for buildings that are inhabited.
  • It is engineered to greatly endure wind uplift pressure, exceeding 180 pounds per square foot and attaining an FM-780 certification.
  • FullForce EPDM is capable of being administered at low temperatures (minimum of 20 degrees).
  • Additionally, the product can be administered about four times quicker than the regular EPDM, which makes it possible for tasks to be finished faster, leading to additional revenue as several jobs can be completed during the roofing season.
Part
14
of twenty-four
Part
14

SWOT - Firestone

With multiple trademarked products under its belt, Firestone Building Products is regarded as a global leading manufacturer of roofing and lining systems since its inception in 1980. The company also boasts of a large following on social media platforms, with 25.8k followers across Facebook, Twitter, LinkedIn, and YouTube. Below is a detailed SWOT analysis of the company.

Strengths

  • Firestone offers a large and diverse portfolio of product solutions including roofing, wall and lining solutions. These products include commercial roofing systems, roofing accessories, green roofing systems, daylighting systems, vegetative roofing systems, metal wall panels, insulation, cavity wall construction, pond liners, geo-membranes, silicone, and acrylic liquid coatings. A patented Firestone roofing system, Full Force EPDM (Ethylene Propylene Diene Monomer), is hailed to be not only an industry-first but also installs four times faster than other traditional EPDMs in the market, which has helped set Firestone apart in the industry.
  • Most of Firestone's roofing and building products on offer are trademarked by Firestone, further assuring their customers of quality, while ascertaining that Firestone products cannot be easily imitated in the market. This helps maintain the quality of its products and Firestone's brand image. Trademarks also help clients to identify Firestone products faster, thus setting them apart from their competition.
  • Firestone is part of the Bridgestone Corporation, which is the largest tire and rubber company in the world. Affiliation with the global rubber conglomerate ensures that Firestone is backed by the assets of a diversified multibillion-dollar corporation, which has helped it to maintain a competitive position in the market and increased its brand credibility.
  • Firestone was founded in 1980, affording it 40 years of experience in the industry, which has contributed to its success as one of the leading providers of roofing and building materials in the United States and globally. It is also up to international standards as each of their locations is registered to the ISO 9001 Quality Standard and each of their manufacturing locations maintains the ISO 14001 Quality Requirements.
  • Firestone has a formidable geographical presence in the United States, with 1 corporate headquarters, 13 plants and 3 distribution centers, spread across different states. This gives them latitude to access more clients across the nation.
  • Firestone has made several acquisitions and owns a number of subsidiaries, which has increased its competitiveness in the industry.
  • Firestone has between 1000-5000 employees and has a very strong financial position with reported revenues of $1.12 billion in 2018. Strong financial performance ensures business longevity and market dominance as well as giving it leeway for additional market investments, such as acquisitions and investments in newer technologies.
  • Firestone's products also contribute to the objectives of sustainability standards such as LEED. This helps its clients minimize environmental impact while maximizing building value.
  • The company has a significant social media presence with a combined following of 12.9k across Facebook, Twitter, LinkedIn, and YouTube. Such a strong online presence has proved especially important for engaging with clients in this digital era.
  • Firestone offers training of contractors in their regional locations. The training, tailored to meet the needs of the contractors, is free of charge, with lunch being provided for the trainees at no extra cost to them. This not only ensures that their products have qualified and up-to-standard contractors to install them but also builds up their brand affinity, as contractors trained by Firestone are more likely to recommend Firestone products to their clients.
  • Firestone was the only collaborator from the building industry in North America to partner in the Official Carbon Partnership with the Dow and International Olympic Committee. The partnership's mission was to create an energy modeling tool to accurately describe and support reductions in cost, energy and greenhouse gas emissions of commercial structures. This initiative was created to be an industry standard, further enmeshing Firestone as a notable leader in the industry and championing its environmental mission to ensure a healthy environment for current generations and those to come.
  • Firestone's website is very user-friendly, easy to navigate, and is easily accessible on mobile devices. Customers can browse the company's products based on use, type of material, applications, and performance criteria to find the most suitable product for their needs. They also have a database of Firestone-trained contractors which helps their clients choose the most suitable contractors for their needs who are based in their locality.

Weaknesses

  • Firestone has a low employee satisfaction rating of 3.5/5 and 3.6/5 on Glassdoor and Indeed respectively, with many employees citing poor work/life balance due to long hours, hurdles in communications and decision-making, little job advancement opportunities as well as poor strategy and leadership.
  • Concerns about the ever-changing management teams were identified as a key cause of employee dissatisfaction. Employees cited that each change in management meant certain changes in policies and operations, which adversely affected operations and employee morale.

Opportunities

  • The global Building Thermal Insulation Industry is expected to grow to $38.95 Billion by 2025 at a CAGR (Compound Annual Growth Rate) of 4.8%. Since Firestone is a major player in this market, its market share and revenues are poised to grow together with this market segment.
  • There is an increase in the construction industry that is marked by the increasing demand to reduce energy consumption, particularly for commercial places. This is motivating growth within the industry in which Firestone, with its industry-first solutions and commitment to the environment, has a great opportunity to tap into and fulfill this demand.
  • The Waterproofing Membranes Market, in which Firestone is recognized as a key player, is projected to grow at a CAGR of 9.5% to reach $70 billion by 2028. This presents an opportunity to further increase Firestone’s market share and revenues.
  • Rapid urbanization in developing countries, especially in the Asia Pacific and Latin America regions, is creating a strong demand for water and waste management activities. Firestone is strategically placed to take advantage of this opportunity, not only because of the desired business solutions they offer but also because of its affiliation with Bridgestone Corporation, which already has a strong presence in these markets.
  •  Acquisitions are offering opportunities for Firestone Building Solutions to expand its market share and further diversify its product offering.

Threats

  • The industry is currently in a ‘mixed signals’ period, where data-backed indicators point to a decline in growth, yet players in the industry seem to be busy. If Firestone does not take preemptive measures to prepare for the inevitable slowdown predicted, this may negatively impact its revenues.
  • The rising cost of labor is proving prohibitive to the building industry profit margins. As a key player in this market, Firestone will be affected by expensive labor. Automation, which may be a solution to the expensive labor, demands intensive capital investment, which may serve to further reduce Firestone’s bottom line.
  • The rising cost of raw materials is keeping margins in the building industry from growing. There is a projected 3% increase in labor costs expected in 2020, thus foreboding lower profit margins for key players in the industry such as Firestone.
  • The observed decline of demand in building products is facilitating stronger competition for the dwindling number of clients in the building products manufacturing industry.

Research Strategy

To give a complete SWOT analysis of Firestone, your research team first searched through the company website for any relevant data and information. This included reviewing the company’s products, reports, press releases, and news bulletins. We then consulted trusted industry knowledge partners and news reports for additional details that were not available on the company website. We also leveraged information from the company’s social media pages and verified industry reports to prepare a comprehensive SWOT analysis.

Part
15
of twenty-four
Part
15

Overview - Firestone

Firestone Building Products has an estimated annual revenue of $1.12 billion USD and covers roofing, wall, and lining segments. Details of the company have been provided below.

Company Overview

  • Firestone Building Products was founded in 1980 when they introduced RubberGard™ EPDM and is headquartered in Nashville, Tennessee.
  • There are 1001-5000 employees working for the company.
  • There are 16 locations in the United States with hundreds of locations world-wide.
  • According to a report released in 2019, the company has 15 manufacturing sites worldwide that sell approximately 90 million square meters of insulation materials per year all over the world.
  • The company's value proposition is "We provide trusted roofing and building solutions. With innovative products such as UltraPly™ TPO self-adhering roofing membranes, SecureBond™ technology, CoreGard™ waterproofing technology, and Gaco waterproofing, we offer solutions for every system, building, and budget."

Company Financials

  • Firestone Building Products is a private subsidiary of Bridgestone Americas. The company has an estimated annual revenue of $1.12 billion USD.
  • Because the company is private, there are no publicly available reports that show the actual growth, however, the parent company saw a 1% decrease in net sales in the diversified products segment from 2017 to 2018 globally.
  • Bridgestone Americas gross profit for 2018 totaled $12.44 billion USD globally. The American regions held 47.6% of the company's profits totaling $5.92 billion USD in 2018.

Organization

Segments

Part
16
of twenty-four
Part
16

Operational examples - Armstrong Flooring

Three operational changes for Armstrong Flooring in the past few years are significant investment in improved technology for its products, shuffling its C-suite and selling its wood flooring segment.

Sale of Wood Flooring Segment

  • In October 2018, Armstrong Flooring formally sold its wood flooring division to American Industrial Partners. The sale included six facilities and 1,700 employees.
  • The goal of the sale was to enable Armstrong to focus more closely on its VCT and LVT products.
  • After the sale, Armstrong Flooring's stock prices dropped dramatically.
  • Results for the financial year after the sale are not yet available. Quarterly filings indicate net sales are down, gross profit is down and losses are greater.
  • Therefore, it's arguable that this move resulted in an operational decline, at least in the short term.

Diamond10 Technology

  • Armstrong Flooring launched one of the first VCT products with diamond technology, rendering it much more scuff/scratch/stain-resistant without polishing.
  • This allows maintenance costs to be reduced by around 40%.
  • The VCT is also fully recyclable and has the lowest carbon footprint among all Armstrong Flooring products.
  • This move represents an operational shift, as Armstrong Flooring are looking for products to help make up for selling its wood flooring division.
  • Net sales for the year are continually down, but there would be many other factors at play besides that of one product line.

C-Suite Reshuffle

  • October last year (2019), Armstrong Flooring made the news when it eliminated one of its five C-suite executive positions, that of Chief Product Officer.
  • The company declined to give any real reason behind the move, simply stating, "We continually evaluate our organizational structure to ensure we are positioned for future growth."
  • Any results from this change are not yet available to determine whether it is positive or negative. Armstrong's first quarter results are not going to be announced until next month.
Part
17
of twenty-four
Part
17

SWOT - Armstrong Flooring

Armstrong Flooring is North America's largest producer of resilient flooring products. Currently, the company operates eight manufacturing facilities globally and leads the global market in design and manufacture of innovative flooring solutions. As a company dominating the market, the company's products could be found across the country in millions of buildings. For example, a building in San Francisco's Tenderloin District features Armstrong floors and acoustics system. This building was featured in the February 2020 issue of ARCHITECT. Besides creating products, Armstrong Flooring also offers installation and maintenance services and markets products to independent wholesale flooring distributors and other retailers.

Strengths

  • Armstrong makes the top 10 companies list in the flooring and carpets 2020 industry (global) report by Foresight. The company is the largest producer of VCT, which is primarily used in commercial environments.
  • Armstrong Flooring has an interest in sustainability efforts. In 2018, the company was awarded the GreenStep International Award by Floor Covering Weekly for sustainability practices at its Braeside, Australia sheet flooring plant. In 2017, the company was voted the "Greenest" by readers of the Green Builder Magazine, and in 2016, it won the Governor's Award for Leadership in Industrial Energy Efficiency.
  • Currently, the company operates eight manufacturing facilities globally and leads the global market in the design and manufacture of innovative flooring solutions.
  • The company has partnered with Thomas Jefferson University on its Master's program in Surface Imaging. Through the program, students are able to gain professional experience with research-based projects. The program was created from Armstrong's desire to work with local organizations in the community.
  • Armstrong Flooring has a large presence selling products online. The company began e-commerce around 2016 and established the digital assets to support the business.
  • As an attempt to be a one-stop-shop for gathering information about products online, Armstrong sought to be a trusted adviser for the flooring market by educating consumers on features, benefits, and installation information on their website. In this way, it began reaching consumers with exceptional education, boosting online presence.

Weaknesses

  • In its Q3 2019 results, the company reported new sales of $165.6 million, but a net loss of $31.4 million and adjusted net loss of $11.1 million. Although these numbers are still high, the net sales decreased by 20.7% to $165.6 million, down from $208.9 million, and was primarily due to unfavorable volumes and mix.
  • Armstrong has not earned a profit since fiscal 2016. The company sold its wood flooring division at the end of 2018 for $100 million. Michel Vermette, the CEO of Armstrong Flooring, was quoted in the third quarter press release as saying, "... it is clear that the current performance does not reflect the Company's potential."
  • The Armstrong Flooring stock value seems to be decreasing as well, as during the last five trading days, the performance of the stock was -4.92% and in the last 12 months was -69.75%. The stock moved to -59.11% in the last six months. As of early January 2020, the stock is at -73.19% from a 52-week high and only at 14.04% from the 52-week low.
  • The beta value, an indicator of market risk from trading, for Armstrong Flooring stock is at 1.99, which is considered high risk. An analyst, John Baugh, described in a recent FloorDaily interview that all but one of the flooring industry stocks are trading at or near a five-year low.
  • In early January 2020, a class action lawsuit was filed on behalf of people who purchased or acquired Armstrong Flooring securities between March 8, 2018 and November 4, 2019. The investigation is based on whether the company issued false or misleading statements or failed to disclose information that would be relevant to investors. This would indicate that Armstrong artificially boosted its sales using what is called a "channel stuffing scheme."
  • Armstrong also has a history of worker protests. In July 2019, Armstrong locked out 180 union workers from its Dillerville Road facility in Lancaster, PA. At the time, the company proposed a contract that includes competitive economic provisions for employees and aligns with current industry standards.
  • A cursory search on the ConsumerAffairs website, which provides consumer news, shows that Armstrong Flooring has had a series of poor reviews, with the most recent ones posted on February 3 and 4 of 2020. The review published on February 4, 2020, describes the poor quality of an Armstrong luxury vinyl plank tile that a customer purchased.
  • The review published on February 3, 2020, describes the Armstrong laminate floor product as "almost immediately... started to deteriorate." The rest of the reviews are mostly either one-star or two-star reviews. The overall satisfaction rating of Armstrong Flooring on ConsumerAffairs is only a little more than one star.
  • On job board and review sites such as Indeed and Glassdoor, the reviews from individuals who worked for Armstrong Flooring are less than stellar. The reviews describe a terrible workplace culture with poor management and direction.

Opportunities

  • Some market drivers that are predicted to be important from 2020 to 2025 are the increasing use of flooring and carpet in the automobile industry, the growing inclination toward interior decoration, and the rising demand for aesthetic flooring materials. High investments by industry players in construction will positively influence the flooring market expansions. Rising consumer preferences for innovative and attractive flooring solutions will propel market growth, which could be an area for Armstrong to look into.
  • For innovation, the market sees a shift towards the development of innovative designed light-weight carpets and flooring. North America is also expected to have substantial growth in the flooring market over the next decade due to the growing number of refurbishing activities.
  • Armstrong also offers many innovative products. Its Total Acoustics panels combine sound absorption and sound blocking in one product.
  • Rejuvenations Restore, a new vinyl sheet designed to provide comfort and sound in a medical setting, eases the discomfort of joints and muscles. It seems that Armstrong has been innovative in its proprietary flooring technologies. Also, a large portfolio of products could only add to the strengths of the company.

Threats and Competitors

  • First and foremost, the increase in pricing of raw material and the increase of basic energy costs continue to pose a threat to the company. Transportation costs are also expected to continue to grow.
  • Relatively few of the major players in the industry currently dominate the market. Some competing companies are: Gerflor Group, Forbo Holding, TOLI Corporation, Dixie Group, Mannington Mills, and Mohawk Industries. Mid-size and smaller companies are attempting to increase their market presence by obtaining new contracts and tapping into new markets.
  • In 2019, one of the drivers of lower sales was the lackluster housing market. Existing home sales are down, and single-family housing starts are flat. The increase in home prices doesn't help flooring sales either.
  • However, the biggest disrupter in the flooring market in 2019 was the threat of tariffs on Chinese-made rigid LVT. This resulted in a considerable impact, as virtually all the 2019 growth in residential flooring was in the LVT category.
  • Because of the competitive market, there are efforts by competitors to price aggressively as a means to gain market share. There was a decline in demand for Armstrong's traditional resilient products such as vinyl sheet products used in residential settings. This was due to the loss of market share to competitors as well as the consumer trend of using LVT products.

Conclusion

Armstrong Flooring's strength relies on a seemingly ubiquitous presence in buildings worldwide and its longevity as a company that is more than 100 years old. However, despite the establishment of the company as a dominant player in the flooring market, many management issues and decreasing product quality appear to be undermining the company's reputation. As technology expands in the next few years, more competitors will continue to enter the market with novel, innovative technologies. As the consumer landscape shifts, the buying habits of flooring will change as well.
Part
18
of twenty-four
Part
18

Overview - Armstrong Flooring

The following is a high-level overview of the finances of Armstrong Flooring, Inc. (AFI), a major North American retailer of resilient flooring. The data below summarizes AFI's current revenues, gross profits, and growth, along with their company organization, reporting segments, and notes on how they fit into the larger floor covering market.

Overview of Armstrong Flooring, Inc. (AFI) finances

  • The revenue (net sales) generated by Armstrong Flooring's global operations in Q3 2019 was $165.6 million. In the same quarter of 2018, revenue totaled $208.9 million.
  • Armstrong Flooring's gross profit in Q3 2019 was $11.8 million. In the same quarter of 2018, gross profit totaled $45.2 million.
  • Armstrong's Q3 2019 revenue represents a 20.7% decline from the previous year.

Notes on AFI's finances

  • In the Q3 2019 press release, President and CEO Michel Vermette stated: "It is clear that the current performance does not reflect the Company’s potential. I have begun working with the teams to initiate a comprehensive review of all aspects of the business."
  • While Armstrong Flooring did not announce geographically separated results for Q3 2019, their FY 2018 annual report states that 80% of their 2018 sales came from the North American commercial and residential markets.

AFI organization

  • A list of Armstrong Flooring's board members and executive officers can be found here. Armstrong Flooring's president and CEO is Michel S. Vermette, and its board chairman is Larry Scott McWilliams.

AFI reporting segments

  • In 2016, Armstrong Flooring Inc. (AFI) became an independent company after Armstrong World Industries (AWI) decided to separate its resilient flooring and wood flooring segments from its building products segment. The building products segment was retained by AWI, while AFI operated as an independent company managing resilient flooring and wood flooring.
  • In December 2018, AFI finalized the sale of its wood flooring business to Tarzan Holdco, Inc., retaining only the resilient flooring reporting segment.

AFI in the market

  • Armstrong Flooring competes in two main markets in North America, commercial and residential. In FY 2018, the company projected that the majority of their revenue in both these markets came from renovations as opposed to new purchases (70% of their total revenue, and 87.5% of each market).
  • According to a report by Floor Covering News, AFI's new sole focus -- resilient flooring -- is a key driver of growth in the general flooring industry, accounting for a 21.4% share of the total market.

Research Strategy

We began with a search for Armstrong Flooring's annual reports, which yielded their 2018 annual report and results for the first three quarters of 2019. An additional search for org charts yielded one in traditional org chart format hidden behind a paywall. Several others in list form were fully accessible; we chose to use the Reuters information as it was the most up to date. A final search for general reports on resilient flooring to use as context revealed the Floor Covering News report on its commanding market share.
Part
19
of twenty-four
Part
19

Operational Examples - Apogee

Some operational declines for Apogee include manufacturing issues and revenue shortfalls in major projects, while a significant improvement lies in their Architectural Glass segment, with new facilities established in Texas already giving the company a favorable response in the market since becoming operational.

Operational Declines

#1

  • During the Q3 2020 financial period, Apogee Enterprises reported operational difficulties and sales shortfalls in their Framing Systems business department. These revenue shortfalls and manufacturing issues were in a subset of their Architectural Framing Systems businesses, with the company stating "we had higher-than-expected manufacturing costs on some projects."
  • To improve upon these declines, Apogee created a new overall segment leader for Framing Systems, in charge of six operating businesses and responsible for "driving integration, synergies and improved financial performance." The company also made changes to the individual business leadership of several of these businesses, especially those that did not perform up to standard, while developing an integration and performance improvement plan.
  • To improve upon the revenue shortfalls, the company started to lower their cost structure through savings, overhead reductions, and minimizing any controllable costs across the enterprise. The company has also increased their efforts toward "commercial excellence," which is focused on integrated product management, strategies for marketing and pricing, sales, along with applying what the company learned from their Architectural Services segment to improve the selection of projects. Lastly, revenue will be saved through integration of their operational and supply chain, optimizing their manufacturing abilities, and building upon their Lean Enterprise program to "drive productivity in key value streams" across the businesses.

#2

  • Apogee states there were issues regarding EFCO's (an acquired company of Apogee) participation in construction of the Vista Tower in Chicago. This project, known as the "Wanda" project, is a 93-story mixed use building on the east side of Chicago that is jointly developed by Magellan Development Group and China's Dalian Wanda Group, and had already been purchased by EFCO when the company was acquired by Apogee. The project cost $70 million, much more than anything EFCO had ever purchased previously, and was thus underbid by EFCO's prior leadership due to a lack of understanding about the complexities of the project, according to EFCO President John Klein.
  • To improve upon this, the company stated in their Q3 2020 statement that the EFCO team has made great progress in increasing their quality and productivity, controlling their costs, improving their pricing, and making significant progress toward completing the last of the EFCO projects. This was part of Apogee's company wide procurement savings program, working with AlixPartners, a leading global advisory firm helping them identify cost savings opportunities throughout the company.

Operational Improvements

  • In their Architectural Glass factories, Apogee saw improvement in overall operational performance, enough to absorb the cost of a newly built factory. They successfully launched a new facility in Texas, part of their strategy to grow in the small projects portion of the market, the largest portion of the Architectural Glass market. This new facility is a "critically important milestone" in their aim to diversify and expand the Glass segment of the market, especially with pricing pressure from foreign competitors leveraging weaker currencies to compete in the United States.
Part
20
of twenty-four
Part
20

SWOT - Apogee

Some of Apogee's strengths, weaknesses, opportunities, and threats are discussed. The firm's strengths include a strong distribution channel and reach, strong financial position, and a wide product portfolio.

Strengths

  • Apogee Enterprises has a geographic presence in almost every state in the United States and other locations, supported by a strong distribution network, including a direct sales force, independent sales representatives, and distributors, that ensure the availability of its products to a large number of customers.
  • The company has four reporting segments: Architectural Framing Systems, Architectural Glass, Architectural Services, and Large-Scale Optical Technologies, that consist of a wide product portfolio that allows it to grow the customer base and offset losses in one product category with profit from the other.
  • From its annual reports, Apogee has generated profits consecutively for five years, along with accumulated reserves, suggesting the firm has a strong financial position. Additionally, the accumulated profits can be used in future to offset or finance capital expenditures.

Weaknesses

  • Apogee Enterprises has leased a significant portion of its major properties, including manufacturing facilities, warehouses, and administrative offices in the United States. This has led to an increase in the firm's costs, due to large amounts of rent expended on these leased properties.
  • The company's Architectural Framing Systems and Architectural Glass segments in the United States are facing competition from foreign suppliers who are attracted by the "relative strength of the U.S. dollar." As a result, the company's net sales and margins are impacted negatively.
  • Apogee has an insufficient budget for marketing and advertising activities ("$1.5 million in fiscal 2019, $1.4 million in fiscal 2018 and $1.1 million in fiscal 2017") as compared to firms in the manufacturing industry who spend about 8% of their revenue on marketing; weakening its ability to encourage repeat purchases.
  • Some of the firm's manufacturing facilities are located in areas that have historically experienced low levels of unemployment. Therefore, if the firm is not able to "retain existing employees and/or recruit and train additional employees with the requisite skills and experience, its operating results could be adversely impacted."

Opportunities

  • The growth of e-commerce and the rise in the number of e-commerce users in the United States provides an opportunity for Apogee Enterprises to expand its distribution channels beyond independent sales representatives and distributors to make use of e-commerce platforms like Amazon to reach a wider customer population.
  • There's also been an increase in the number of monthly active users of social media platforms like Facebook, Twitter, and Instagram in the United States. Apogee Enterprises, with about 500 followers on Facebook, for example, can maximize its use of these platforms to interact with customers, collect feedback, and promote its product portfolio.
  • There's a long term opportunity for the company "to grow revenue and increase profitability in the Architectural Framing Systems" segment, according to CEO Joseph F. Puishys. Already, Apogee is taking several steps to "improve performance in that segment through supply chain integration, capacity optimization, and driving synergies in product development, sales, and marketing."

Threats

  • Apogee's operations rely highly on various information technology systems. With ever-increasing threats toward information technology security, the firm faces the possibility of its systems and networks, the integrity, and confidentiality of its data compromised, manipulated, and destroyed, along with "production downtimes, disruption in the availability of financial data, or misrepresentation of information via digital media."
  • The firm faces the threat of increased foreign competition when the U.S. dollar strengthens against foreign currencies. When this happens, "imports of products into the U.S. produced by international competitors become more price competitive and exports of its U.S.-fabricated products become less price competitive."
  • The rising environmental sustainability trend poses a threat to Apogee when the business environment or products offered are not environmentally friendly — Apogee uses "hazardous materials in its manufacturing operations". This can negatively impact the brand's image in the competitive market should environmentalists criticize and publicly condemn its activities.
Part
21
of twenty-four
Part
21

Overview - Apogee

The revenue generated from Apogee Enterprises’ United States operations grew by 6% from FY 2018 ($1.188 billion) to FY 2019 ($1.259 billion). The company’s global gross profit for FY 2019 was $294 million. Apogee Enterprises has four reporting segments, which include architectural framing systems, architectural glass, architectural services, and large-scale optical technologies.

High-Level Overview of Apogee Enterprises

  • The FY 2019 revenue (net sales) generated from Apogee Enterprises’ United States operations was $1.259 billion.
  • The company's export revenue from its United States operations was $56.3 million for FY 2019.
  • The revenue growth rate for Apogee Enterprises’ United States operations from FY 2018 ($1.188 billion) to FY 2019 ($1.259 billion) is 6%.
  • Apogee Enterprises has published the gross profit for its global operations only, which was $294 million for FY 2019.
  • An organizational chart of the company can be accessed via this link.
  • Apogee Enterprises’ reporting segments are architectural framing systems, architectural glass, architectural services, and large-scale optical technologies.
  • The architectural framing systems segment focuses on designing, engineering, fabricating, and finishing the “aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional, and high-end multi-family residential buildings.”
  • The architectural glass segment focuses on fabricating “coated, high-performance glass used globally in customized window and wall systems comprising the outside skin of commercial, institutional, and high-end multi-family residential buildings.”
  • The architectural services segment offers “full-service installation of the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.”
  • The large-scale optical technologies segment focuses on manufacturing “value-added glass and acrylic products for framing and display applications.”
Part
22
of twenty-four
Part
22

Building Products Manufacturing Industry SWOT

The expected 1.3 million various housing starts indicate an increase in sales in the U.S. building products manufacturing industry. However, housing data shows a slight retreat in housing starts, and thus, a decline in the industry market share.

Strengths

  • The building product manufacturing industry has a strong financial position with an increasing revenue that offers it more latitude for market investments. The metal and aluminum building manufacturing market is predicted to reach $61.906 billion by 2026, while the iron and steel building manufacturing market will reach $27.239 billion by 2026. Meanwhile, the prefabricated metal buildings, panels, and structural product manufacturing market will be valued at $63.815 billion by 2026, and the general plastic manufacturing market will be at $146.311 billion by 2026.
  • The building products manufacturing industry has a wide geographic presence in the U.S. that gives it an advantage of reaching its target market and eases its customers' accessibility. Truss manufacturing and architecture and design building products manufacturing alone encompasses 613 and 2,365 companies, respectively.
  • The building products manufacturing industry has witnessed increased growth in revenue with the rise in product price index for construction material since 1982. The product price index for construction materials reached 235.7 in 2018.
  • The wide range of companies involved in the building products manufacturing industry is indicative of an extensive product portfolio that expands its consumer base.

Weakness

Opportunities

Threats

  • The rising cost of labor and commodity risks decreasing the operational margins of the building products manufacturing industry. The increased cost of labor has compelled most companies in the industry to increase the prices of their products, and thus disrupting their consumer base.
  • Technological advancements and the shift from traditional building product, especially by the new generation, is posing a threat to the building products manufacturing industry.
  • The decline of demand in building products in the recessionary environment is facilitating stronger competition against the building products manufacturing industry.
  • The entry of foreign companies in the U.S. building products manufacturing industry has increased competition by altering the local project pricing/margins.
  • The rising cost of raw materials is keeping margins in the industry under pressure.

Research Strategy

Since a direct search for a SWOT analysis of the building products manufacturing industry yielded limited information, we expanded our search to include industrial reports, market trend analysis reports, press releases, and company reports. We leveraged the information we obtained from these sources to come up with a general and comprehensive SWOT analysis of the building products manufacturing products industry.
Part
23
of twenty-four
Part
23

Building Products Manufacturing Industry Growth

The compound annual growth rate (CAGR) of the building products manufacturing industry in the United States is 2.88%. It is predicted to have a slight slowdown at a 0.88% CAGR between 2019 and 2023. Details on these figures, as well as some key drivers, are presented below.

Current Growth Rate

  • Historically, the market size of building products used for residential buildings in 2016 was valued at $52.9 billion, while it was valued at $60.6 billion for nonresidential building products.
  • In 2019, the total market size of the whole building products industry in the US was valued at $123.3 billion.
  • From 2016 to 2019, the market indicated a CAGR of 2.88%.

Predicted Growth Rate

  • The projected market size of building products used for residential buildings in 2023 is $63.6 billion, while it will stay at $64.1 billion for nonresidential building products.
  • This equates to a total of $127.7 billion market size projection for 2023.
  • From 2019 to 2023, the predicted CAGR of the building products manufacturing industry in the US will be 0.88%.
  • It is anticipated that the windows and doors category will still have the highest volume in the residential sector until 2023, followed by the heating, ventilation, and air conditioning (HVAC) product category.
  • On the other hand, the "HVAC and duct" product category is expected to remain strong in the nonresidential sector until 2023, followed by windows and doors category.

Key Drivers and Other Findings

  • The current growth rate in the US building products industry is driven by the increased demand for "green building materials" as American consumers prefer building materials that are sustainable, for a low carbon footprint.
  • The industry's accommodation of organic architecture using biodegradable materials in commercial spaces and home designs also contributed to growth.
  • On the other hand, the slight slowdown in the predicted growth rate (0.88%) of the market in the United States, compared to its current growth rate (2.8%), is due to some indications of the construction industry slowdowns in the North American region.
  • The increasing building material cost of about 9%, specifically for iron, steel, softwood lumber, and steel mill products, is due to the decrease in supply as the demand increases.
  • The changes in the tariffs of aluminum and steel in 2018 have also led to a higher building material cost. This factor, as well as the controlled mortgage environment in the US, is limiting the growth.
  • In the nonresidential sector, the slowdown will be felt in private constructions, while institutional portions of the market are expected to grow at a certain degree or will remain stable.

Research Strategy:

To get the current and predicted growth rate of the building products manufacturing industry in the United States, we initially searched for the historical data around the industry's market size from industry and market reports from sources like S&P Global, Business News Wire, Market Watch, and Go Contractor among others. However, market sizes and growth rate predictions are on a global scope which may not directly reflect the same figures specific to the US. Therefore, we looked for other recent articles and found useful data from a report published by FMI. From this source, we were able to determine the market size of the US building products manufacturing industry in 2016 and 2019 and the projected market size for 2023. From this data, we then calculated for the current and predicted growth rates and included the key drivers and other factors in line with the growth.

We derived the current growth rate using the 2016 market size and the 2019 market size and applied them using a CAGR calculator.
Starting value: $113.5 billion (2016)
Ending value: $123.3 billion (2019)
No. of periods: 3 years (2016 to 2019)
CAGR: 2.8%

For the predicted growth rate, we used the 2019 market size and the projected 2023 market size by FMI. These figures were applied using a CAGR calculator.
Starting value: $123.3 billion (2019)
Ending value: $127.7 billion (2023)
No. of periods: 4 years (2019 to 2023)
CAGR: 0.88%

Part
24
of twenty-four
Part
24

Building Products Manufacturing Market Size

The market size of building products manufacturing industry in the United States was valued at $123.3 billion in 2019. More than half of the market (52%) accounts for building products used for the nonresidential sector. These and other details are presented below.

US Market Size

  • The total market size of the building products manufacturing industry is divided into two segments: those used for residential buildings and the other one is for nonresidential buildings.
  • In total, the market size of building products manufacturing industry in the United States in 2019 was valued at $123.3 billion.

Market Size per Segment

  • The market size of building products used in the residential sector was valued at $59.2 billion in 2019.
  • It accounts for about 48% of the total building products market.
  • Among different product categories, windows and doors had the highest volume in the residential sector.
  • The market size of building products used in the nonresidential sector was valued at $64.1 billion in 2019.
  • It accounts for about 52% of the total building products market.
  • In the nonresidential sector, the heating, ventilation, and air conditioning (HVAC) equipment and duct category had the highest volume.

Research Strategy:

To determine the market size of the building products manufacturing industry specific to the United States, we initially sought for market research and industry reports published by credible sources such as Business Wire, IBIS World, Market Watch, Grand View Research, and PR Newswire among others. However, reports are mostly behind paywalls. These reports indicate an overview of the market but mostly has a global scope such as those published by Market Watch and PR Newswire. We found a research report from Business Wire focused in the US market, but it details only the market size of the whole construction industry, in which building products or building materials is just a component of.

In the course of our search, we found a 2019 report released by FMI discussing the building products market update in the US at the manufacturer level. This report is focused on major product categories such as windows and doors, HVAC, insulation, plumbing, and roofing system. It is also divided into two segments, the market size of products used for residential buildings and those for nonresidential buildings.

To get the total market size of building products manufacturing in 2019, we added the size of these segments:
— Residential building products market size = $59.2 billion
— Nonresidential building products market size = $64.1 billion
Therefore, the total building products market size is equal to $123.3 billion.

Accordingly, the market share of building products per segment, as part of the total market was calculated as:
— Residential buildings = $59.2 billion / $123.3 billion x 100 = 48%
— Nonresidential buildings = $64.1 billion / $123.3 billion x 100 = 52%
Sources
Sources

From Part 04
Quotes
  • "Despite the use of self-cleaning, vibrating dust collectors, work at the upcut stations was constantly interrupted by the need to spot clean the saws of debris due to insufficient airflow and suction."
  • "After significant research, Hogan decided to purchase several cyclone dust collectors made by Oneida Air Systems, including the V-System 1500, V-System 3000, and the High Vacuum."
  • "Better dust collection decreased the need for constant cleanup on their upcut saw stations, resulting in less interruption to the production line."
Quotes
  • "Hunter acknowledges that increasingly stringent code requirements have driven Kawneer and its competitors to improve their thermal performance, and he expects that trend to continue to push thermal performance higher."
  • "A slight change in the standard configuration of the product increased the thermal value by 6 to 8 percent without altering the overall profile of the installation, according to Hunter."
From Part 08
Quotes
  • "In November 2015, Carlisle Construction Materials (CCM), launched a new geofoam product that is used as green-roofs. These help in natural cooling, water treatment, and air filtration. Thus green-roofs provide better aesthetics along with the advantages mentioned above."
  • "Carlisle Construction Materials (CCM) (US), Amvic Building Systems (Canada), ACH Foam Technologies, LLC (US), Jablite (UK), Expol Ltd. (New Zealand), Foam Products Corporation (US), Harbor Foam (US), Airfoam Industries Ltd. (Canada), Pacific Allied Products Ltd. (US), Thermafoam LLC (US), Groupe Legerlite Inc. (Canada), and Insulation Corporation of America (US) are some of the leading players operating in the geofoams market."
Quotes
  • "CCM has 26 manufacturing facilities across the U.S., in addition to several administrative office locations and international manufacturing operations."
  • "Carlisle has been a recognized leader in the roofing industry for nearly half a century, offering high-performance single-ply roofing solutions that include EPDM, TPO, PVC and roof garden systems."
  • "Carlisle Construction Materials LLC (CCM) is a diversified manufacturer and supplier of premium building products and related technologies for the commercial and residential construction markets."
  • "very Carlisle Company offers sustainable, eco-friendly products that help reduce a building’s carbon footprint, and often minimize its energy consumption and costs."
  • "CCM is a $2 billion division of Carlisle Companies (NYSE:CSL). It employs over 2,400 people and operates 26 plants in North America and 5 in Europe."
Quotes
  • "Carlisle Construction Materials is a global leader in the building materials industry —and we’re growing. "
  • "5,573 followers"
Quotes
  • "Carlisle companies include: Carlisle SynTec, Carlisle Residential, Carlisle Coatings & Waterproofing, DynAir, Hardcast, Hunter Panels, Insulfoam, Carlisle International, Premier Building Systems, Versico, and WeatherBond."
  • "1,001-5,000 employees, 428 on LinkedIn"
Quotes
  • "We acquired four businesses during 2018, which complement our existing Carlisle Construction Materials (“CCM”) and Carlisle Interconnect Technologies (“CIT”) segments. (Pg. 3)"
  • "CCM serves a large and diverse customer base; however, in 2018 two of CCM's largest customers represented 18.4% and 14.2% of this segment’s revenues. One of these customers also represented 11.8% of the Company’s consolidated revenues. The loss of either of these customers could have a material adverse effect on this segment’s revenues and operating income. "
  • "This segment faces competition from numerous competitors that produce roofing, insulation and waterproofing products for commercial and residential applications. (Pg. 4)"
  • "On January 11, 2019, we completed the acquisition of Petersen, a privately-held manufacturer of high-quality metal roofing products. Petersen's primary business is the manufacture and distribution of market-leading architectural metal roof panels, steel, and aluminum flat sheets and coils, wall panels, perimeter roof edge systems, and related accessories for commercial, residential, institutional, industrial and agricultural markets in the United States (Pg. 5)"
  • "CCM’s operating margin percentage decrease was driven by rising raw material inflation, higher freight and labor costs, acquired unfavorable mix and one-time executive retirement expenses, partially offset by continued price discipline, increased volumes and operational improvements in the legacy CCM businesses. (Pg 22)"
Quotes
  • "At CCM and CIT, demand remains strong within Commercial Roofing, Architectural Metals, Commercial Aerospace, and our Medical Technologies platforms. We drove solid incremental margins by leveraging our volume growth, combined with continued pricing traction, a favorable raw material environment, efficiencies gained from prior years' restructuring efforts, and savings from COS."
  • "At CCM we continue to be encouraged by the underlying demand, backlog, and re-roofing momentum in the North American non-residential roofing markets. These factors, along with tight labor markets, a historically wet spring, and tightening manufacturing capacity in the industry are driving contractors and distributors to the Carlisle Experience, which delivers the right product at the right place at the right time."
  • "Revenues of $893.5 million, up 15.0% (+8.8% organic) year-over-year, were driven by continued strength in U.S. commercial roofing demand, new product introductions and contributions from acquisitions."
Quotes
  • "Revenues of $676.3 million, up 9.3% (organic +2.8%) year-over-year, were driven by continued strength in U.S. roofing demand and contributions from acquisitions."
  • "Operating income was $97.3 million, up 10.9% year-over-year. Operating margin of 14.4%, a 20 basis point improvement, benefited from price discipline, benefits from COS, and operational improvements in legacy CCM businesses, offset by raw material inflation, higher labor and freight costs, and acquisitions."
Quotes
  • "Of late, one of the company's major segments, Carlisle Construction Materials, has been witnessing significant improvement on account of solid organic growth, and high volume of reroofing projects in the North American non-residential construction markets."
From Part 09
From Part 11
From Part 14
From Part 17
From Part 18
Quotes
  • "--Net Sales of $165.6 Million --Net Loss of $31.4 Million and Adjusted Net Loss of $11.1 Million"
  • "It is clear that the current performance does not reflect the Company’s potential. I have begun working with the teams to initiate a comprehensive review of all aspects of the business."
Quotes
  • "On April 1, 2016, we became an independent company as a result of the separation by Armstrong World Industries, Inc. ("AWI"), a Pennsylvania corporation, of its Resilient Flooring and Wood Flooring segments from its Building Products segment (the "Separation")...The Separation and Distribution (together, the "Spin-off") resulted in AFI and AWI becoming two independent, publicly traded companies, with AFI owning and operating the Resilient Flooring and Wood Flooring segments and AWI continuing to own and operate a ceilings business."
  • "In November 2018, we entered into a definitive agreement to sell our North American wood flooring business to Tarzan Holdco, Inc. ("TZI"), a Delaware corporation and an affiliate of American Industrial Partners ("AIP")."
Quotes
  • "Much like the past few years, the resilient category continues to be the locomotive powering the industry, with WPC/rigid core serving as the catalyst for this explosive growth."
From Part 22
Quotes
  • "Metal and Aluminum Windows and Doors, and Metal Architectural Products Manufacturing Industry (U.S.) to reach $61,906 million by 2026."
  • "1) Comprehensive overview of an industry's financial results, ratios, vital statistics and metrics in one package"
Quotes
  • "Over the past 3 years, the industry has grown at an annual rate of 5%"
  • "There are 613 companies in the industry"
  • "Employee productivity is $228,712"
Quotes
  • "There are 2,365 companies in the industry"
  • "Over the past 3 years, the industry has grown at an annual rate of 2.8%"
Quotes
  • "The construction materials industry consists of a wide range of companies involved in the mining, quarrying, and processing of raw materials used for both heavy and building construction. Materials such as cement, sand and gravel, clay, concrete, and marble are used in this industry."
  • "The construction industry is expected to continue to grow in the United States, thus, fueling the construction material industry. The construction market is expected to reach over 1 trillion U.S. dollars in 2020 worldwide."
Quotes
  • "The production price index (PPI) for construction materials and components in the United States has risen fairly steadily, reaching 235.7 in 2018, compared with the baseline of 100 in 1982. "
Quotes
  • "[...]which were characterized by full work pipelines and healthy growth in both the commercial and residential construction sectors"
  • "Right now, we’re seeing indicators that certain end-user segments are slowing and certain geographic pockets of North America are experiencing construction slowdowns. In June, for example, Construction Dive reported that construction spending decreased 0.8% in May to a seasonally adjusted rate of $1.29 trillion (down from April’s $1.3 trillion)."
  • "During the same period, construction spending was down 2.3% compared to May 2018 and, year to date, fell 0.3% from the same January-May period last year. Month over month, May nonresidential spending for both private ($453.3 billion) and public construction ($334.2 billion) fell 0.9%. This represented the largest monthover-month drop in spending since November 2018."
Quotes
  • "Recessionary impact on pricing and specifications—Total market demand will decline in a recessionary environment, driving stronger competition. Installing contractors and end users will be more willing to entertain alternative products or brands in order to save money, and specifications will likely become harder to hold. (Pg 5)"
  • "Technology adoption—Dramatic investments are beginning to reshape how we build. In some cases, this will be reflected in new product offerings. In other cases, traditional products will be challenged to adjust to emerging construction processes and techniques. Builders and contractors are looking for efficiencies and a way to gain competitive advantage enabled through technology."
  • "Rising home prices, debt levels and slow wage growth have resulted in significant affordability concerns for single-family homes"
Quotes
  • "After two years of reasonable input costs, labor and commodity costs rose in 2018 as the economy reached full employment, tariffs set in, and demand for products increased. So far, most building materials companies have been able to offset the cost increases with higher pricing, but it remains to be seen if companies can continue to maintain higher prices in 2019."
  • "In the U.S. in 2019, we expect 2.3% real GDP growth, 3.6% unemployment, and 1.3 million housing starts. We further expect mid-single-digit growth in repair and remodeling activity, and only 2.8% growth in nonresidential construction, with infrastructure spending to be flat. "
  • " Recent housing data indicates a possibility that housing starts could actually retreat slightly in 2019, due to affordability issues and high price of new homes. However, we think builders will attempt to address this by offering more value-based entry-level housing. "
Quotes
  • "2018 witnessed a notable jump in U.S. homeownership rates despite an environment of rising mortgage rates. Recent wage growth along with higher consumer confidence encouraged first-time homebuyers to enter the market and transact. "
  • "Residential construction continues its healthy build from the 2009 trough. Confidence among homebuilders continues to rise and relatively low mortgage rates are boosting demand. "
  • "Across the building products landscape, shortage of labor continues to be a challenge, and glass fabricators are grappling with the issue. Based on a recent Glass Magazine survey, 71% of fabricators cited lack of labor as a major challenge in 2018. A tight labor market, coupled with increased overseas competition (particularly from South America), has impacted local project pricing/margins (Pg 19). "
  • "In a bid to differentiate themselves from competitors and create enduring customer relationships, corporates are acquiring companies that can provide a foothold in the smart building and Internet of Things (“IOT”) sector. Navigant Research suggests that 2017 was a tipping point where building owners and key decision makers accelerated investments in intelligent building solutions that embody the technology foundation of digital transformation. "
  • "In November 2018, The Sterling Group acquired Tangent Technologies, a provider of plastic lumber solutions (made from recycled HDPE) serving the outdoor living market. Tangent’s plastic lumber products are wood-free and tout sustainability, lower maintenance, and durability as competitive advantages over wood-based building products (Pg. 24) "
Quotes
  • "As the industry’s prospects are highly correlated to U.S. housing market conditions and repair and remodeling activity, the prevailing slowdown may prove detrimental. "