Plastics Market Watch: Building and Construction
Transcript of Plastics Market Watch: Building and Construction
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Building and Construction
A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETSWINTER 2016 | ISSUE IV
WATCHING:
Plastics—Building for a more sustainable future.
© 2016 SPI: The Plastics Industry Trade Association. All rights reserved. 1425 K Street, NW • Suite 500 • Washington, DC 20005-3686
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE iii
Building for a more sustainable future
A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETS
SPI: The Plastics Industry Trade Association
CONTENTS
Foreword .................................................. 1
The Use of Plastics in Building and Construction......................... 5
Future Trends—Economics ....................... 9
Future Trends—Demographics ............... 17
Future Trends—Technology .................... 22
Future Trends—Public Policy .................. 31
Conclusion ............................................. 38
Sources .................................................. 41
Plastics Market Watch Snapshot ............ 43
iv PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
SPI: The Plastics Industry Trade Association publishes a series of
unique Market Watch reports that explore key factors—including demo-
graphics, economics, policy, culture and technology—that impact the
plastics industry’s primary end markets. Plastics Market Watch: Building
and Construction, is the organization’s fourth market assessment
report which was developed in conjunction with National Association
of Home Builders (NAHB) and members of the American High Perfor-
mance Buildings Coalition. The previous Market Watch reports focused
on Plastics in Automotive & Transportation, Plastics in Healthcare &
Medical Devices and Plastics in Packaging about plastics in packaging.
In 2016, Market Watch reports will be published beginning with a
special issue on Plastics Recycling in Automotive. This report will be
released in April 2016 in conjunction with Re|focus, SPI’s new Recycling
Summit & Expo. Subsequent reports will address Bioplastics, Beverage
Containers, and the Electronics market.
© 2016 SPI: The Plastics Industry Trade Association
SPI: The Plastics Industry Trade Association
Special thanks to the SPI Plastics Market Watch work
group and members of the American High Perfor-
mance Buildings Coalition and the National Association
of Home Builders for their guidance and input on this
Building and Construction Report.
Materials compiled, written and edited by Hansel (Hank)
Cox, with editorial assistance from Richard Krock, The
Vinyl Institute, and Terry Peters, Michael Taylor and Kendra
Martin, SPI.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 1
Foreword
As we continue to look for ways to better serve our membership and the broader
plastics industry supply chain, one area of continued discussion is the impact of
consumers on our businesses. A variety of factors impact the way that we make our
products, how they are consumed and how successful our industry will continue to be.
With this as a backdrop, SPI is producing a unique report series that will explore key
factors—including demographics, economics, and technology—that impact the plastic
industry’s key end markets. The first report
about the plastics revolution in transpor-
tation was primarily, but not limited to,
cars and trucks. The second report was
about plastics in healthcare and medical
devices. The third report was devoted to
plastics in packaging. The fourth and final
report for 2015 is this one—on the use of
plastics in building & construction.
Our goal is to publish forward-
looking reports for our members and the
industry that blend economic and demo-
graphic data to paint a picture of where
we are headed in these critical markets.
When relevant, we will weave in other
influencing factors such as public policy,
technology trends, and resource issues.
These reports can then be used to present information on key drivers as input for your
strategic planning activities.
We plan to conduct presentations and webinars in conjunction with each report
to discuss our findings, and hope that these will provide important food for thought,
whether you are an equipment manufacturer, materials supplier, processor, recycler or
brand owner. As always, we welcome your feedback.
SPI: The Plastics Industry Trade Association
Key Drivers for End Markets
Market
Resources
Economic Indicators
Policy
Demographics
TechnologyConsumer Trends
2 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 3
Plastics—Building a more sustainable future
Introduction
SPI: The Plastics Industry Trade Association
4 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
For valves and fittings,
plastics offer superior
corrosion resistance
and are lighter, easier
to install, and more
cost effective than
alternatives. Impervious
to chemicals and sulfur-
bearing compounds,
plastic piping safely
transports everything
from fresh water to salt
water, crude oil and
laboratory waste.
SPI: The Plastics Industry Trade Association
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 5
The Use of Plastics in Building and Construction
SPI: The Plastics Industry Trade Association
One might not normally think of building and construction as a major use of plastics,
yet the construction industry is the second largest consumer of plastics, second only
to packaging. It isn’t difficult to see why this is true. The wide functionality of plastics
provides a distinct advantage over many other traditional building materials in terms of
resistance to weathering, flexibility for many uses and lower costs.
Though basic construction materials such as metal, wood and masonry remain
staples in construction, many plastic materials are as strong if not stronger than certain
metals. Plastic hardware is corrosion
resistant, allowing it to survive outside
in inclement weather indefinitely. Plastic
components used in construction cover
the waterfront from electric wiring,
flooring, wall covering, water proofing,
plastic screws, pipes, valves and fittings,
hinges, and decorative touches to name
only a few.
For valves and fittings, plastics
offer superior corrosion resistance and
are lighter, easier to install, and more
cost effective than alternatives. Imper-
vious to chemicals and sulfur-bearing
compounds, plastic piping safely trans-
ports everything from fresh water to salt
water, crude oil and laboratory waste.
These qualities also have combined with
plastics’ high strength-to-weight ratio to
produce materials for bridge construction,
including tough reinforcement rods,
nonskid surfacing and quickly installed
replacement decking. And for commercial
buildings that contain sensitive electronic equipment, plastics can provide highly protective
housing that won’t interfere with radio frequency or magnetic waves.
Plastics and plastic derivatives are finding a steadily increasing number of uses
that make houses, businesses and factories more airtight, durable, water resistant
and less expensive to construct, maintain and operate. Examples of plastic utility in
construction include: n Roofing—Reflective, light colored roofing membranes made of vinyl or thermoplastic
olefin (TPO) single-ply membranes combined with rigid polyiso board or spray polyure-
6 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
Examples of
plastic utility in
construction include:
• Roofing
• Insulation
• Wall coverings
• Windows
• Piping
• Composite “lumber” planks and rails
• Plastic house wrap
SPI: The Plastics Industry Trade Association
thane foam underneath—offers energy savings, durability and moisture control, espe-cially for commercial buildings in southern climates. Studies show that the surface temperature of a light covered roof is much lower than a darker one. The cooler the building, the less air conditioning is required, and therefore less energy is consumed.
n Insulation—Whether it is spray polyurethane foam (SPF) in the attic or rigid foam polyiso board in the walls, polyurethane based systems offer durability, energy savings and moisture control. When used for retrofit, situations they also help reduce the amount of building waste sent to landfills. In walls, behind walls and under floors, the use of polystyrene foams can provide significant energy efficiency. For example, rigid extruded polystyrene (XPS) is a builder favorite because it can be installed easily and effectively. Structural insulated panels (SIPs) made with expanded polystyrene (EPS) can help homeowners save hundreds of dollars annually on heating and cooling bills. Savings vary by material and products.
n Wall coverings—Vinyl-based materials are commonly used for durable, easy-to-clean hospitality and health care facilities. Vinyl requires only half as much energy to manufacture as the same amount of paper wall coverings.
n Windows—Plastics are used in some surprising ways. Polycarbonate—a material also found in eyeglasses—is used for window panes. These clear, lightweight, shat-ter-resistant plastic products have low thermal conductivity which can help reduce heating and cooling costs. Vinyl window frames are inherently energy efficient and save the U.S. nearly two trillion thermal units of energy per year, helping reduce green-house gas emissions associated with energy generation—and at the same time reducing maintenance time, materials and other costs.
n Piping—Plastic pipe and fittings are relatively easy to install, durable and will not rust or corrode over time. Several types of plastics are used for piping depending on the properties and performance required. Whether they are polyethylene, polypro-pylene, polyvinyl chloride (PVC) or acrylonitrile butadiene styrene (ABS), they each offer excellent fusion integrity when joined properly, in turn helping to eliminate potential leak points where water could be wasted. In home building, flexible blue and red cross-linked polyethylene piping (PEX) has become a favorite of many builders for hot and cold water delivery, all managed and hooked into a central and effective manifold system. The flexibility, lightness and ease of installation allow multiple feed lines throughout a house, bringing hot water more quickly to a sink or shower and saving water.
n Composite “lumber” planks and rails—Recycled plastics or plastic-wood composites are carefully engineered to virtually eliminate warpage and knots. They can outlast traditional materials, often require less maintenance and are resistant to peeling, cracking, splintering or fading. They are also eco-friendly in that much of the lumber is made from recycled materials and/or can be recycled.
n Plastic house wrap—This technology has reduced the infiltration of outside air into the average home by 10–50 percent helping to drastically reduce the energy required to heat or cool a home. These plastic films have helped reduce greenhouse gas emis-sions in the U.S. by as much as 120 to 600 million tons of CO2 since 1980.
Plastics—Building a more sustainable future
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 7
Future Trends
SPI: The Plastics Industry Trade Association
8 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
But there is diversity
of opinion regarding
how strong that growth
will be. Goldman Sachs
has cut its forecast for
2016 U.S. economic
growth to 2.4 percent
from its previous
estimate of 2.8 percent,
which is far less than
in previous recoveries
from recession.
SPI: The Plastics Industry Trade Association
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 9SPI: The Plastics Industry Trade Association
The U.S. construction industry is on an upswing, but is still struggling to recover from
the Great Recession. Building and construction generally are large ticket items and tend
to be the first projects sidelined when the economy hits a rough patch—and the U.S. has
just emerged from the deepest recession since the Great Depression of the 1930s.
“Overall construction—business, residential and non-residential—is about $1 trillion
a year,” said Jack Armstrong of the Structural Insulated Panel Association (SIPA). “Prior
to the downturn, we were building nearly 2 million units a year. In 2014 we did about 1
million, or half.”
The Bureau of Economic Analysis (BEA) reported that the overall economy slowed
down to 1.5 percent growth in the third quarter of 2015 from 3.9 percent in the previous
quarter. Some of this was due to a sudden and overdue depletion of inventories and
softness in energy prices, which sets the stage for more vigorous growth going forward.
But there is diversity of opinion regarding how strong that growth will be. Goldman
Sachs has cut its forecast for 2016 U.S.
economic growth to 2.4 percent from its
previous estimate of 2.8 percent, which
is far less than in previous recoveries
from recession. A major impediment is
weakness in China which has served as
the world’s primary growth engine for the
past 20 years. In particular, China has
boosted growth around the globe by its
major purchases of raw materials from a
variety of nations. But now its reduced
appetite is causing shockwaves near and
far. Brazil, Australia, Russia and other
major markets have faltered as global
demand for commodities, including oil,
iron ore and copper, continue to weaken.
Beijing recently cut its estimate of
economic growth from 7 percent to 6.5
percent, and many believe it is significantly
lower than that. “The Chinese economy
has slowed noticeably during the past few months, with some observers believing the true
pace of economic growth may be lower than that implied by GDP,” Goldman said. Oxford
Economist Oren Klachkin said China’s economic activity is slowing at an “alarming” pace,
adding that the country’s move in August to lower the value of its currency has hurt
investor confidence in China’s economy and worsened capital outflows.
Future Trends—Economics
10 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
In addition to cutting its projection of U.S. growth, Goldman also lowered its earnings
estimates and price targets for the S&P 500 (SPX) which it now expects to end 2015
at 2,000—down from its previous estimate of 2,100. When the Federal Reserve hikes
up short-term interest rates, it will strengthen the dollar and put upward pressure on
mortgage rates. In turn, this will inevitably have an impact on building and construction.
Building and construction is traditionally divided between residential and nonresi-
dential. SIPA data show that residential construction exceeds commercial by a margin of
61 percent to 38 percent. Apartments and multi-family housing are generally considered
to be commercial and thus categorized among nonresidential.
Without question, building and construction comprise a major sector of the U.S.
economy. According to data compiled by the National Association of Home Builders
(NAHB), residential investment recently accounted for about 3 percent of the nation’s
GDP. Housing services contribute another 15 percent of GDP for a total impact of 18
percent of GDP.
At the national level, the economic impact of residential construction is broad-based,
as jobs are generated in the industries that produce lumber, concrete, lighting fixtures,
heating equipment, and other products that go into a home or remodeling project. Other
jobs are generated in the process of transporting, storing and selling these projects.
Still others are generated for professionals such as architects, engineers, real estate
agents, lawyers, and accountants who provide services to home builders, home buyers,
and remodelers.
NAHB estimates that for every 100 single-family homes built, enough economic
activity is generated to support 297 jobs, $28 million in economic income (wages and
business), and $11 million in federal, state and local fees and tax revenue. These are the
first-year impacts.
Similarly, for every 100 rental apartments developed, enough economic activity is
generated to sustain 113 jobs and to produce $10.7 million in economic income on an
annual basis. The activity also generates $4.2 million in fees and tax revenue.
Residential remodeling also provides significant impact to local economies and is
a major contributor to the nation’s GDP. The NAHB model estimates that for every $10
million in remodeling expenditures, 89 jobs are supported for a year. The activity also
yields $8.3 million in economic income and produces $3 million in federal, state and local
taxes and fees.
Plastics processing and manufacturing is notably dependent on building and
construction, which accounts for 9 percent of plastics production. According to the
American Chemistry Council (ACC), in 2014 building and construction accounted for
12,626 million pounds of plastics on a dry weight basis, compared to 26,081 million
pounds for packaging.
The data on use of polyvinyl chloride (PVC), the third largest volume plastic produced
in North America and the second largest selling plastic in the world, offers a more focused
perspective on the importance of plastics in building and construction. According to
Richard Doyle, president of the Vinyl Institute, “The building and construction sector is
extremely important to the vinyl industry with nearly 70 percent of our industry’s products
being used to in various applications like flooring, siding, wire and cable, windows, wall
coverings, piping and roofing, all of which contribute to sustainable and resilient structures
for people throughout the world.”
Exports are a relatively small but growing segment of the constructions plastic
100 297$28$11SINGLE-FAMILY
HOMESJOBS
ECONOMIC INCOME
FEES & TAXREVENUE
100 113$10.7$4.2RENTAL
APARTMENTSJOBS
ECONOMIC INCOME
FEES & TAXREVENUE
NAHB estimates that for every 100 single-family homes built, enough economic activity is generated to support 297 jobs, $28 million in economic income (wages and business), and $11 million in federal, state and local fees and tax revenue. These are the first-year impacts.
Similarly, for every 100 rental apartments developed, enough economic activity is generated to sustain 113 jobs and to produce $10.7 million in economic income on an annual basis. The activity also generates $4.2 million in fees and tax revenue.
Because residential
construction is a major
market for plastics,
the vitality of the
housing industry is
vital to plastics. And
the overall picture is
a positive one for an
industry recovering
from the most severe
economic downturn
since the 1930s.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 11SPI: The Plastics Industry Trade Association
market. In 2014, the U.S. exported almost $124 million in plastic floor coverings to other
nations. The largest four markets were Canada, Japan, Australia and the United Kingdom.
About $83 million in window, door, deck and railings were sold to foreign countries, the
four largest markets being Canada, Japan, Mexico and the Dominican Republic. And
some $75 million in wall and ceiling products were exported, the four largest markets
being Canada, Hong Kong the United Kingdom and Mexico. The biggest export category
under plastics in building and construction was rigid tubes, pipes and hoses which racked
up about $808 million in foreign sales in 2014. The four leading customers were Canada,
Brazil, Mexico and Japan.
Building and construction took a major hit during the Great Recession, but now all
signs point to a surging recovery. “Business is booming,” said David Stutzman, CEO of
Conspectus, the largest independent architectural specifications outfit in the country. “I
think 2016 will be a good year.”
ResidentialBecause residential construction is a major market for plastics, the vitality of the
housing industry is important to plastics. And the overall picture is a positive one for
an industry recovering from the most severe economic downturn since the 1930s.
Markets in 79 of the approximately 360 metro areas nationwide returned to or exceeded
their last normal levels of economic and housing activity in the third quarter of 2015,
according to the most recent National Association of Home Builders/American Leading
Markets Index (LMI). The index’s nationwide score edged up to .93, meaning that based
on current permit, price and employment data, the nationwide average is running at 93
percent of normal economic activity. Meanwhile, 69 percent of markets have shown an
improvement year-over-year.
“Housing markets are improving gradually as the economy strengthens and job
creation continues,” said Tom Woods, a home builder and developer from Blue Springs,
Mo., and chairman of the NAHB. “In especially encouraging news, markets most affected
by the downturn posted the largest year-over-year increases in their LMI (Leading Market
Index) score. This shows that the recovery is taking hold in those areas.”
“The employment metric of the LMI is making solid gains, with the number of metros
that reached or surpassed their norms rising by 32 in a year,” said Dr. David Crowe, NAHB
chief economist. “Single-family permits keep inching forward, but remain only 47 percent
of normal activity, and continue to be the sluggish component of the index.”
“The number of markets on this quarter’s LMI at or above 90 percent has risen to
175—almost half of all markets nationwide,” said Kurt Pfotenhauer, vice chairman of First
American Title Insurance Company, which co-sponsors the LMI report. “This is a strong
indicator that the overall housing market continues to make headway and bodes well for
the rest of the year.”
The NAHB does not anticipate that interest rates will impede the housing recovery.
“Short-term interest rates will follow the federal funds rate and as the economy picks up
steam. The yield curve will flatten with longer term ranges rising by roughly two-thirds of
the 300 basis point increase in the federal funds rate over the course of 2016 and 2017,”
said Crowe. “The rate on 30-year fixed rate mortgages will end 2017 still below 6 percent,
posing no threat to the housing recovery.”
Census Bureau data show that housing starts have risen steadily from 612,000 in
2011, to 784,000 in 2012, to 928,000 in 2013, to 1 million in 2014. NAHB projects 1.1
million in 2015, 1.3 million housing starts in 2016 and 1.5 million in 2017.
Plastics processing and manufacturing is notably
dependent on building and construction, which accounts
for 9 percent of plastics production. According to the
American Chemistry Council (ACC), in 2014 building
and construction accounted for 12,626 million pounds
of plastics on a dry weight basis, compared to 26,081
million pounds for packaging.
9%PLASTICS PRODUCTION
12,626 MPOUNDS OF PLASTICS
26,081 MPOUNDS OF PLASTICS
BUILDING &CONSTRUCTION
PACKAGING
12 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
NAHB Housing Starts ProjectionsRising house prices pose a potential threat to the housing recovery, but here too the
NAHB sees clear sailing ahead. “House price appreciation since the boom and bust cycle
has followed a clear path during the recovery, rising rapidly in 2012 and 2013, revisiting
double digit annual growth, before softening in 2014 and trending downward to more
sustainable rates more recently,” Crowe said. “The notable exceptions to that pattern
were the sharp decelerations that followed the declines in existing home sales after the
interest rate spike in 2013 and the harsh winter leading into 2015.”
Housing price increases picked up again in July–August coinciding with renewed
strength in existing home sales and bringing the pace of house price appreciation back
in line with the earlier softening trend, NAHB said. “We expect a continuation of this
correction in the near term before the rate of increase in house prices drifts down to a
more sustainable pace near 4 percent over the course of 2016 and 2017.”
The most recent NAHB survey of
members showed that builders’ confi-
dence in the housing market declined
slightly in November 2015, falling three
points to 62, but any reading above
50 indicates most builders are opti-
mistic about conditions in the market
for single family homes. “The November
report is a pullback from the unusually
high October and is more in line with the
consistent, modest growth that we have
seen throughout the year,” said Crowe. “A
firming economy, continued job creation
and affordable mortgage rates should
keep housing on an upward trajectory as
we approach 2016.”
The overall home ownership rate
rose from less than 64 percent in the
late 1980s to more than 69 percent in
the mid-2000s before dropping to below
64 percent again in 2015. If current
ownership rates by age and race persist,
the Mortgage Bankers Association (MBA)
anticipates home ownership to grow
modestly to 64.8 percent. If those rates
of home ownership by group revert to
higher long-term trends, they expect
the home ownership rate to rebound to
66.5 percent.
NonresidentialThe years 2014–2015 denoted
a welcome upswing for nonresidential
construction, a category that generally
encompasses businesses, shopping
centers, hotels, K–12 schools, public
and religious buildings, transportation
terminals, various public works, electric
utilities, hospitals and clinics, etc. “We are
finally in the midst of a sustained recovery,”
wrote Jeff Gavin in Electrical Contractor
(ecmag.com). “Growth is steady, and
momentum assuredly recovers when
events such as unexpected weather hit.
While the pace of the recovery can be
frustrating, last year (2014) marked the
first year where all but one of the major
Thou
sand
s of
Uni
ts
Source: www.census.gov/briefrm/esbr/www/esbr020.html
2000 2002 2004 2006 2008 2010 2012 2014
2,500
2,000
1,500
1,000
500
0
New Housing Units Started in the United StatesSeasonally Adjusted Annual Rate
Total Starts
926
618
Single-Family Starts
Milli
on U
nits
, SA
AR
’79 ’82 ’85 ’88 ’91 ’94 ’97 ’00 ’03 ’06 ’09 ’12 ’15
2.3
2.0
1.7
1.4
1.1
0.8
0.5
0.2
0
NAHB Housing Starts Projections
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 13SPI: The Plastics Industry Trade Association
construction markets made gains or
stayed positive.”
According to the Associated Builders
and Contractors, Inc. (ABC), nonresidential
construction spending in September 2015
was $692.8 billion, down 0.1 percent from
the preceding month, but still representing
a year-over-year increase of 12.4 percent,
the largest increase since April 2008.
“The last several months have generally
been associated with sizable increases in
nonresidential construction,” said Anirban
Basu, ABC chief economist. “While not
particularly upbeat, this does not alter
the fact that nonresidential construction
spending continues to recover and that
most contractors are busier than they
were a year ago.”
Robert Murray, chief economist and
vice president of Dodge Data & Analytics,
said that 2014 “marks the first year where
the institutional sector is no longer pulling
down the other construction sectors.”
The recovery in nonresidential is estab-
lished, he said, adding, “It’s clear we are
in broad-based and recognized recovery
that is cyclical and reminiscent of 1990s
which led to a 20-year period of stability
and growth.” Dodge projects the overall
commercial sector will come in at 15
percent for 2015.
There is a sense in the industry that
there is tremendous room for expansion.
“We’ve lost seven years,” said Ken
Simonson. “We have a lot to catch up.”
Some of the more promising areas: n Energy—It will continue to drive U.S.
construction in 2015 and beyond, primarily due to development of oil and natural gas. “I think oil and gas infra-structure will be a huge construction opportunity,” said Branko Terzic, pres-ident and CEO of Branko D. Terzic & Associates, at a McGraw-Hill panel in Washington. “Over the next 10 years, $275 billion in gas and oil distribution upgrades will be needed; $23 billion for natural gas storage facilities; and $32 billion for gas processing; an esti-
mated $20 billion for crude oil pipe-lines; and $9 billion for rail investment. These and other infrastructure invest-ments will total some $505 billion.” There will also be huge investments in energy efficiency, smart grid devel-opment, and renewables, which are expected to grow rapidly. Green buildings are increasingly seen as both healthier for humans and a positive for the environment.
n Offices—Last year’s square footage gains were at the highest level since 2008. New office starts in 2015 were projected to increase at 18 percent (122 million square feet) and 19 percent ($32.3 billion). In addition, high rise construction—six stories and up—for office space continued a three-year climb as downtown vacancy rates continued to slide.
n Nontraditional building types—Data centers represented five of the 20 top office projects in 2014, generating $1.6 billion in construction value. The largest was a data center for the U.S. Army in Fort Meade, Md., at $861 million. Microsoft broke ground on three data centers—repre-senting $875 million—to support its cloud effort. Travelers Insurance invested in a $200 million data center in Omaha, Neb.. Technology companies are leading the parade. The top states for office construction were Texas (by a large margin) followed by California and Illinois.
n Hotels—These were on a roll, building on strong activity in 2013. Growth in 2014 registered 32 percent (56 million square feet) and $11 billion. 2015 is not expected to finish quite as strong, but should include a healthy gain of 14 percent (64 million square feet) and 17 percent ($12.9 billion). This industry is strong. According to Smith Travel Research, occupancy rates during the first nine months of 2014 were 65.9
Both residential and
nonresidential building
and construction are
constricted by a severe
shortage of skilled
labor. For example,
NAHB survey data of
the industry for 2015,
revealed that access
to labor was the top
builder challenge.
Per
cent
’79 ’82 ’85 ’88 ’91 ’94 ’97 ’00 ’03 ’06 ’09 ’12 ’15
70
68
66
64
62
60
Homeownership
14 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
percent, a 3.5 percent increase from the year before. Several large projects were underway in 2015.
n Retail—Store and shopping center construction slowed some 6 percent in 2014 after three consecutive years of strong growth. Though declining 2 percent to 113 million square feet, dollar values increased 2 percent to $17.1 billion. Growth in 2015 is projected to come in at 11 percent (125 million square feet/$18.9 billion). Some major retail chains did move ahead with expansion plans in the first nine months of 2015. Walmart built new stores and began remodeling existing stores ($1.8 billion). Discount stores including Dollar General, Family Dollar and Dollar Tree all grew, breaking ground on construction projects totaling $82 million to $161 million. Costco and Target reawakened in 2014 with $116 million and $99 million in new construction respectively. Home supply stores expanded, including Menards ($193.3 million) and Lowe’s ($47.8 million). Considered part of the retail sector, commercial warehouses grew 9 percent in 2014 (160 million square feet) and 15 percent ($10.3 billion). In 2015, activity is expected to expand to 12 percent (179 million square feet) and 14 percent ($11.7 billion). E-commerce, which represented 6.4 percent of all retail activity in 2014, continued to fuel this sector in 2015.
n Institutional—This area reversed a five-year decline in 2014 growing by 1 percent (288 million square feet) and 4 percent ($95.3 billion). Education in 2014 saw an increase of 6 percent (117 million square feet) and 7 percent in dollar value ($40.8 billion). Growth in 2015 is projected to come in at 8 percent (127 million square feet) and dollar value gain between $44.6 billion and $55 billion. Construction of K–12 schools outpaced that of higher education, up 10 percent in 2014. Junior high schools rose 18 percent, senior high schools 15 percent and primary schools 4 percent. Another factor in K–12 spending is rehab work, a growing sector because many schools are old and deteriorating. Construction starts for four-year colleges rose 7 percent in 2014. A subsector representing college related laboratories and research facilities rose 45 percent due in part to funding for STEM (science, technology, engi-neering and math).
n Healthcare—Construction fell 7 percent to 68 million square feet in 2014, though the dollar value rose 3 percent ($22.8 billion). Stronger growth is projected for 2015. Several factors have been holding this sector down, including cuts in federal spending for Veterans Administration hospitals, and hospital mergers. The elections should resolve some of these issues and that, together with an aging population, strongly suggest this sector will rebound.
n Public buildings—This category emerged from four years of double-digit declines, thanks largely to major courthouse projects. In 2014 public building grew by 2 percent (17 million square feet) and 8 percent ($7.1 billion). This year starts were expected to rise 5 percent (18 million square feet) and 6 percent ($7.5 billion).
n Religious buildings—These showed continuing weakness in 2014, dropping 6 percent (10 million square feet) and 7 percent ($1.7 billion). The numbers in 2015 were expected to be stronger showing a 3 percent gain in space (11 million square feet) and 4 percent in spending ($1.8 billion). Rising donations to charities, including reli-gious-based, are expected to influence this category.
n Amusement/recreational buildings—This area grew by 8 percent in 2014 (39 million square feet) and 9 percent ($5.3 billion). Those data were expected to grow in 2015 by 13 percent (44 million square feet) and 14 percent ($14 billion). Six projects valued at more than $100 million each broke ground in 2014 and continued into 2015. The largest is the new football stadium under construction for the Atlanta Falcons, valued at $948 million.
There is a sense in the
industry that there
is tremendous room
for expansion in the
commercial sector. Some
of the more promising
areas are:
• Energy
• Offices
• Nontraditional building types
• Hotels
• Retail
• Institutional
• Healthcare
• Public buildings
• Religious buildings
• Amusement/recreational buildings
• Transportation terminals
• Manufacturing plants
• Electric utilities
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 15SPI: The Plastics Industry Trade Association
n Transportation terminals—There were some big projects in 2014 though overall starts were down 8 percent from 2013. The market size stood at 17 million square feet and dollar value at a seven year low of $5.3 billion, an 18 percent decline. In 2015, starts and dollar value of this sector were expected to increase for the first time since 2006.
n Manufacturing plants—These have provided a roller coaster ride for several years, but in the first nine months of 2014, work began on 25 manufacturing plants worth $100 million or more. Of those, 15 were chemical and/or energy related. Overall manufacturing construction jumped 3 percent (54 million square feet) and 57 percent ($29.1 billion) in 2014. With the completion of some big projects, the numbers were expected to come in lower in 2015, but the future looks bright. “I see a big turnaround down the road for manufacturing that should remain strong for several years,” said AGC’s Simonson.
n Public works and electric util-ities—This category had a strong 2013 but took a major hit in 2014 landing at $113.4 billion. The CMD Group placed starts higher in 2015 but the results are unclear. Congress recently passed a transportation bill, which offers hope for positive gains, but it remains to be seen how quickly that money will hit the streets. Envi-ronmental public works saw a 14 percent increase in 2013 but fewer big projects in 2014 dropped that down to 4 percent ($31.8 billion). That includes a 9 percent decline in water supply systems and a drop of 6 percent for river/harbor development. Stronger performance was projected for 2015.
n Electric utilities—This area saw a whopping decline of 56 percent for utility construction in 2013, firming up somewhat in 2014 for only a 3 percent drop. A dip to $20.5 billion, or 9 percent, was projected for 2015 primarily because of uncertainty about President Barack Obama’s Clean Air
Act carbon-pollution standards. Stricter pollution standards may lead to more util-ities building natural gas fired plants, retrofitting coal plants to use natural gas and more investment in alternative energy sources. Ongoing efforts to create smart grids and integrate renewable and alternative power sources will promote construction of new transmission and distribution lines. In its most recent Long-Term Reliability Assessment, the North American Electric Reliability Corporation (NERC) reported that the electric power industry plans to build 18,300 miles of new transmission and distribution capacity between 2013 and 2018. Another 6,800 miles of transmission capacity is under review.
Labor ShortagesBoth residential and nonresidential
building and construction are constricted
by a severe shortage of skilled labor.
For example, NAHB survey data of the
industry for 2015, revealed that access to
labor was the top builder challenge. This is
a residual of the recession when there was
a dramatic drop in work projects and tens
of thousands of workers left construction
for other fields. “We’re coming back,” said
Armstrong, “but it’s half of what it was.
You still need carpenters, plumbers, and
electricians. Right now the construction
market is labor constrained. There are
not enough workers because so many
left the market. The people we have now
have not been engaged in this work for
long and often lack the necessary skills
and training.”
For example, according to NAHB
analysis of government data, total payroll
employment in the residential construction
sector declined by nearly 1.5 million during
the recession. The industry is rebuilding
its workforce, but it is taking time. NAHB
estimates that over the 12-month period
ending with November 2015, home
builders and remodelers added 128,000
net jobs to the industry, bring the total to
2.511 million. However, only 524,900 jobs
have been added since the industry low
point of employment.
“Overall demand for construction
continues to grow at a very robust rate,”
said Simonson. “It appears, however, that
many firms performing private nonresi-
dential work could not find enough qual-
Job Growth
CONSTRUCTIONUP
3.8%compared with 2% across all categories
PROFESSIONAL
SERVICESarchitecture, computer systems design
and legal services
UP
3.5%
CONSTRUCTION WORKERS
$27.54 an hour
UP
2.6%
16 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
ified workers in September to keep pace with growing demand.” There were only 479,000
unemployed construction workers in September 2015, “the smallest total in 15 years,”
he added.
According to data compiled by the Bureau of Labor Statistics (BLS), construction
is showing the strongest job growth for the 12 months through October 2015, up 3.8
percent compared with 2 percent across all categories. Professional services—that
includes jobs in architecture, computer systems design and legal services—came in
second with 3.5 percent growth. Strong demand for construction labor is reflected in pay
scales. Construction workers made $27.54 an hour in October based on U.S. Department
of Labor data, up 2.6 percent from the year before.
Further, BLS projections show strong growth for the construction labor force over
the next 10 years. According to the government estimates, the overall construction sector
is expected to add, on a net basis, almost 800,000 jobs through 2024. That places the
construction sector second in terms of expected growth on a percentage basis.
“Demand may be starting to outstrip the industry’s capacity given the severe and
growing shortages of available, qualified workers,” said Stephen E. Sandherr, CEO of the
Associated General Contractors (AGC). He called upon government leaders to act on
measures recommended in the AGC’s Workforce Development Plan designed to make it
easier to prepare, recruit and train new workers.
Turner Construction, which has 45 offices throughout the U.S., and hires from 325
to 350 recruits out of college each year to be field engineers and other types of managers,
is seeing stiffer competition for workers and is paying more in response. “Is the compe-
tition greater—absolutely,” said Katie Igoe, Turner Recruiting Director. “They’re wanting
more money. They’re getting multiple offers.”
SummaryBuilding and construction has not regained its prerecession vigor but is making
steady progress with promise of more to come in the years ahead. Consumers are more
confident as unemployment continues to fall and wages are at last on the upswing, and
there is clearly much deferred demand to be met. Worldwide economic conditions, the
prospect of an interest rate hike and an acute labor shortage appear to be the major
clouds on an otherwise sunny horizon.
Building and
construction has not
regained its prerecession
vigor but is making
steady progress with
promise of more to
come in the years
ahead. Consumers
are more confident
as unemployment
continues to fall and
wages are at last on the
upswing, and there is
clearly much deferred
demand to be met.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 17
Future Trends—Demographics
SPI: The Plastics Industry Trade Association
“Build it and they will come” has
a mixed record as a business strategy,
but the growth of “they” generally
leads to an increase in construction,
as growing populations spur the need
for more housing and the infrastructure
needed to support the population. While
numerous other factors—such as interest
rates, employment, per capita income,
GDP growth, and urbanization, among
others—play a significant role in the rates
of housing and construction growth,
absent population these other factors are
moot, said Ken Gronbach, KGC Direct,
a multi-generational marketing/demo-
graphic expert and author of The Age
Curve: How to Profit from the Coming
Demographic Storm.
As of 2010, the value of global
construction output was said at between
$7– to $7.4-trillion, depending upon the
analyst and/or timing of the analysis, and
estimates for future construction growth
suggest annual global output will more
than double to reach $15 trillion sometime
between 2020 and 2025.
Analysts generally agree that China,
the U.S. and India will be the primary
drivers of global construction growth, with
India expected to overtake Japan as the
world’s third largest construction market
sometime between 2017 and 2022, again
depending upon the analyst. Overall,
analysts feel that China, the U.S. and India
will account for somewhere between 51
to 64 percent of all global construction
growth. While not as large as the above
mentioned markets, other Asia-Pacific
countries—such as Indonesia, the Philippines and Vietnam—are expected to experience
some of the fastest rate of construction growth over the next 10 years.
Some countries in Sub-Saharan Africa are also expected to have high rates of
growth, while construction growth in Latin America is expected to be slower than the
global average. Forecasts for western and eastern Europe are mixed, with a range
between outright stagnation to modest growth. On a strictly demographic basis,
Gronbach believes that the high-end $15 trillion estimate in annual global construction
can certainly be reached, if not well exceeded, by 2025.
The world’s population, currently estimated to be nearing 7.4 billion, continues to
grow and will likely reach at least 8.5 billion by 2030 and 9.7 billion by 2050, according
to United Nations forecasts. While all of these people will need housing as well as infra-
structure to support them, the levels of additional housing and infrastructure construction
will rely to a large extent on their local economies.
Approximately half of the projected population growth going forward to 2050 is
expected to occur in nine countries: India, Nigeria, Pakistan, Democratic Republic of
Congo, Ethiopia, United Republic of
Tanzania, United States, Indonesia and
Uganda, listed here according to the size
of their contribution to total world popu-
lation growth. Thus, while many of these
countries can support—and will benefit
from—an expansion in their housing and
construction industries, others will struggle
to provide basic housing and infrastructure
for their expanding populations.
Nevertheless, the housing and
construction industry will need to expand
in all of these countries to accom-
modate their growing populations. For
the purposes of this report, Gronbach
reviewed data and projections offered by
four different studies, but he found Global
Construction 2025: A Global Forecast
for the Construction Industry to 2025 to
be the most insightful due to its pointed
consideration of demographics.
Less clear is how the housing and
construction industry will fare in those
“Build it and they will
come” has a mixed
record as a business
strategy, but the growth
of “they” generally
leads to an increase in
construction, as growing
populations spur the
need for more housing
and the infrastructure
needed to support
the population.
18 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
countries facing stagnating population shifts or outright population decline. While many
analyst projections tend to look for positives for the industry in those countries, Gronbach
believes that such forecasts may be overoptimistic. He notes it is hard to believe that
housing and infrastructure construction will expand in the face of declining populations.
Construction DynamicsThe notion of “Build it and they will come” actually tends to work in the U.S. With
the population currently estimated to grow from 321 million to 347 million by 2025, and
then by another 51 million to reach 398 million by 2050, the U.S. will need to do some
serious building.
As of the 2010 U.S. Census, there were just over 130 million housing units available
for the 308 million or so people living in this country. To maintain a rough approximation of
existing housing unit characteristics, the housing unit stock would need to rise to at least
140 million by 2025 to account for the increase in population. With about 2.8 million new
units built from 2011 to 2014, and an estimated “removal” rate of 400,000 housing units
per year, the U.S. will need to build about 1.3 million new housing units per year for the
next 10 years, which is several hundred thousand more than has been built annually for
the past few years since the Great Recession.
The two groups that will undoubtedly
impact U.S. housing and construction
the most going forward to 2025 are the
estimated 79 million baby boomers (born
1946–1965 and currently aged 50 to
69) and the 87 million or so members of
Generation Y (born 1986–2005 and now
ages 10 to 29), sometimes called millen-
nials, about 80 million people. These
generations, the two largest in U.S.
history, have continually confounded
marketers, and will likely continue to do
so going forward.
Perhaps largely because of the
2008 housing collapse and subsequent
recession, boomers didn’t start retiring
and members of Gen Y didn’t enter the
job market in the numbers expected.
That has now changed and boomers are
reportedly retiring at a rate of one every
eight seconds, and Gen Y is entering the
job market in droves. Gen Y, which made
a mark by living “at home with the parents”
longer than previous generations, is now
“leaving the nest” in increasing numbers.
Gen Y is also just entering the peak years
for first-time home buyers.
A major weak link in the residential
industry is the buying pattern of millen-
nials. This group has been struggling to
find jobs in a weak economy and are often
saddled with onerous debts from college.
About a fifth of millennials still live with their
parents. Many are unemployed, underem-
ployed and/or underpaid. Not surprisingly,
they are delaying marriage and family,
which are usually triggers for buying a
home. (Investors.com, August 27, 2015)
The share of U.S. homes sold
to first-time buyers in 2013 and 2014
declined to 28 percent, its lowest level
in almost three decades, according to
the National Association of Realtors,
suggesting young people, in particular
Generation Y, are being left out of the
housing recovery. In better times, the
average was nearly 40 percent, said
28%
In 2013-2014First-time buyers declined to
39%
In 2009First-time buyers spiked to
Share of U.S. homes sold
The share of U.S. homes sold to first-time buyers in 2013 and 2014 declined to 28 percent, its lowest level in almost three decades, according to the National Association of Realtors, suggesting young people, in particular Generation Y, are being left out of the housing recovery. In better times, the average was nearly 40 percent, said Selma Hepp, chief economist with Trulia, a home information website that is part of Zillow Group. The numbers spiked to nearly 39 percent in 2009, but that was due to a one-time tax credit for first-timers.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 19SPI: The Plastics Industry Trade Association
Selma Hepp, chief economist with Trulia,
a home information website that is part
of Zillow Group. The numbers spiked to
nearly 39 percent in 2009, but that was
due to a one-time tax credit for first-timers.
But things are looking up. A survey
by Trulia indicated that nine out of 10
millennials plan to buy a home, but not
necessarily today,” said Hepp. In the
survey, 50 percent of those married with
kids said they plan to buy sooner than
later—within the next two years. “The
ones that have gotten married and have
kids are trickling in now,” Hepp said. “Our
data and numerous data indicate they are
coming back into the market and contrib-
uting a bigger share to the new-buyer
market. The thing is, in many markets
where they would be buying, they may be
constrained by affordability.”
This is especially true in markets with good job growth, such as New York, San Fran-
cisco, Los Angeles and Austin, Texas. “That is where you are also seeing low inventories
and hence higher price appreciation,” said Hepp.
A more positive attitude toward home buying by millennials would appear to be part
of a larger overall trend. According to the Mortgage Bankers Association (MBA), by 2024
the U.S. will create between 14 and 16 million new households. Of those, as many as 13
million will be owners and as few as three million will be renters.
As reported by Laura Kusisto in The Wall Street Journal, the MBA expects as many
as 1.3 million additional households will be created each year. That would be a significant
pickup from the recession when the number of households was essentially flat. “It’s a
huge amount of housing demand any which way you cut this,” said Lynn Fisher, MBA’s
vice president of research and economics.
Some economists have predicted that the home ownership rate will continue to
decline given that Hispanic families are expected to constitute the largest share of new
households and that demographic historically has had comparatively low rates of home
ownership. But the MBA says the downward spiral will level off or reverse in part because
the U.S. population is growing older and older people are much more likely to buy than
to rent. Four out of five households headed by someone age 25 or younger are renters
compared with only 44 percent of those aged 35 to 39. Two-thirds of the population
growth among Hispanics will be among people 40 years or older.
One of the oddities in the MBA analysis is that most new households formed over
the coming decade will not be young people striking out on their own, but rather older
people north of 60. Baby boomers are expected to form nearly 13 million new house-
holds, netting 10 million additional owner households. That compares to just over five
million households formed by millennials, netting an additional four million owners.
This trend is driven somewhat by people over the age of 60 living longer and healthier
lives, said Fisher. These boomers are thinking about downsizing, and many of those in
northern climates are interested in seeking out warmer pastures. Some are likely to stay
in their current homes but others may choose to sell and become renters or divorce and
9 out of 10
Millennials
plan to buy a home
50%married with kids plan to buy
A survey by Trulia indicated that nine out of
10 millennials plan to buy a home, but not
necessarily today,” said Hepp. In the survey, 50
percent of those married with kids said they
plan to buy sooner than later—within the next
two years.
14-16 Mnew households
13 Mowners
3 Mrenters
By 2024
A more positive attitude toward home buying by millennials would appear to be part of a larger overall
trend. According to the Mortgage Bankers Association, by 2024 the U.S. will create between 14 and 16
million new households. Of those, as many as 13 million will be owners and as few as three million will
be renters.
20 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
form separate households, driving growth
in housing demand. While this portends a
period of flux for the housing industry, it
should also mean growth, albeit growth
in certain sectors and regions, not
uniform growth.
Gronbach based his estimate on
10-year projections made in a 2004
report. As those projections were
considered “modest,” the actual annual
number of removals is likely higher, and
thus the number of new housing units
needed as expressed here should be
considered conservative. In fact, the
Global Construction 2025 report puts the
U.S. new housing unit need at 1.5 million
annually. Note that the U.S. housing
market has been in flux since its 2006
peak prior to the housing bubble collapse.
In that year almost 2 million housing units were constructed, with the number of annual
units constructed falling to a low of about 584,000 in 2011, and since rising to about
883,000 units constructed in 2014.
Plastics industry analyst IHS, of Englewood, Co. believes it will take the U.S. nine
more years before annual prerecession construction levels are restored, which coincides
with Gen Y entering its peak earning years. With boomer retirement comes a desire for
one-level living and “active living retirement” communities, not to mention warm weather
locales. So look for building booms in retirement style housing throughout the Southeast
and Southwest, wherever the climate is temperate.
Gen Y, meanwhile, is going to need a lot more starter homes than are currently
available. So, what of all those baby boomer mini-mansions that popped up from the
1990s to 2000s? Well, not all boomers will move, and Generation X (born 1966–1985 and
now ages 30 to 49) are now in the key earning years in which they can afford them. Add
in high-net-worth immigrants and the current inventory is likely adequate, but in another
10 years demand should grow again as Gen Y starts entering its peak earning years.
Infrastructure and Nonresidential ConstructionWhile housing is the primary driver of U.S. construction, new housing and a growing
population will drive the need for new infrastructure and nonresidential structures (offices,
factories, medical facilities, schools, etc.). However, infrastructure needs will also be driven
by the advanced age of existing infrastructure. According to the American Society of Civil
Engineers, the U.S. needs to invest $3.6 trillion to upgrade existing infrastructure, with
roads, wastewater treatment, levees, drinking water, inland waterways, dams, aviation,
and hazardous waste all scoring poorly on the society’s quadrennial report card on the
nation’s infrastructure.
Canada’s population dynamics are very similar to the U.S., but with a population
of only about 33 million. However, Canada often lags behind the U.S. in many metrics,
including the state of its economy and housing market. The country did not experience
the housing bubble collapse due to strict lending requirements and the subsequent
recession was not as severe as it was in
the U.S. However, the country now faces
a significant housing price decline and its
economy may have entered a recession
due to global declines in oil prices. Thus,
Canada will likely suffer a decline in
housing and construction spending for at
least the next few years, and, if it follows
the usual lag time, should recover and
start to trend back upwards.
With regard to infrastructure
spending, though, Canada is ahead of the
U.S., as the federal and provincial govern-
ments have already made investment
commitments to refurbish and replace
aging infrastructure.
China, India and Asia-Pacific Countries
China tried the “build it…” but they
didn’t come, as evidenced by dozens of
“ghost cities” in the country. Nevertheless,
China, with the world’s largest population
at just under 1.4 billion residents, is a
construction powerhouse, and is believed
to account for up to 20 percent of annual
global construction spending.
While China will remain a global
construction powerhouse, growth in
construction is expected to slow over the
next 10 years, and then slow even more
after 2025. The country also faces a likely
slowing of its economy as it rebalances
more from investment and export-led
growth to household consumption;
however the latter will serve to increase
affluence, driving demand for larger homes
and additional infrastructure. Meanwhile
India, with explosive growth in both its
overall population and number of middle
class households, is expected to become
the world’s third-largest construction
market—overtaking Japan—sometime in
the next five to eight years.
Analysts at Oxford Economics and
Global Construction Perspectives forecast
that China and India will need more than
250 million new housing units by 2025.
Industry analyst
IHS believes it will
take the U.S. nine
more years before
annual prerecession
construction levels
are restored, which
coincides with Gen
Y entering its peak
earning years.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 21SPI: The Plastics Industry Trade Association
Japan’s expected fall from third place is
likely due in large part to its accelerating
population decline and aging population.
With no reversal in sight, and extensive
growth in other areas of the world,
Japan’s comparative level of construction
spending will likely continue to decline.
South Korea and Taiwan, as fully
developed and industrialized countries,
are not likely to experience significant
increases in construction spending for
the foreseeable future. Indonesia, Vietnam
and the Philippines, with growing popula-
tions and rapidly expanding economies,
are expected to be among the fastest
growing construction markets in Asia. In
fact, Indonesia, which is ranked as the
world’s 10th largest construction market,
is expected to become the fifth largest by
2025.
Europe and RussiaMost European countries are
facing population declines, with some
facing population contractions of up
to 15 percent by 2050. Again, Oxford
Economics and Global Construction
Perspectives analysts recognize this
as being detrimental to the region’s
future housing and construction industry
growth, and forecasts that construction
growth will decline by 5 percent by 2025.
However, some other analysts seem to
ignore population dynamics and assume
that the region can return to moderate
construction growth as long it can solve
its debt issues.
Eastern Europe in many cases is
facing more drastic projected population
declines than Western Europe, yet analysts
see better construction growth prospects
for the region due in large part to ongoing
modernization efforts to become fully
developed. Russia, which was considered
the ninth largest construction market in
the world as of 2012, is projected to have
among the strongest construction growth
within the Euro-Russian region, with two analysts believing it will become the sixth largest
construction market in the world. Gronbach questions these assumptions about Russia
because of its low birth rate, high death rate, and projected significant decline in popu-
lation, which is expected to fall by up to 20 percent by 2050. With declining populations
comes a likely reduction in the need for housing and infrastructure, along with a probable
reduced capacity to pay for it. This should be kept in mind when considering construction
growth rates for the entire Euro-Russian region. It is unclear to what extent the recent
immigration wave will have on Europe’s population dynamics, but the large numbers could
mitigate projected population declines for some countries.
AfricaAnalysts generally seem quite upbeat about Africa’s housing and construction
market, with Sub-Saharan Africa considered the second fastest construction growth
market after Asia. This would make sense given that Africa’s population is among the
fastest growing in the world. The continent currently has a population of just over 1 billion
people, and some projections estimate the population to more than double to 2.4 billion
by 2050. While political and economic stability remain concerns, many African countries
are experiencing strong economic growth, rapid urbanization and a rising middle class.
These factors are expected to foster significant construction of housing, non-residential
buildings (offices, factories, medical facilities, schools, etc.), and related infrastructure.
Latin America presents a mixed bag as far as forecasts for future housing and
construction growth. Birth rates across the region have been falling for two decades
and population growth has slowed signifi-
cantly. Most Latin American countries are
also already highly urbanized, which limits
construction growth potential, and many
of the countries have stagnating econ-
omies. While overall construction growth
is expected to be slower than the global
average, opportunities for growth do exist,
and there is definitely a need for housing,
albeit “affordable” housing. By some esti-
mates 60 million Latin Americans live in
substandard housing considered unfit for
habitation, and it is estimated that popu-
lation trends will dictate the need for more than 25 million new homes in Brazil and Mexico
alone by 2025.
Overall, Chile, Columbia and Mexico are considered to be the Latin American coun-
tries with the most potential for construction industry growth, while Brazil could be added
to the list if it were to resolve some economic impasses such as a difficult bureaucracy
and complex tax structuring.
Summary“Build it and they will come” may not generally prove true, but build the popu-
lation and you have impetus for expanding the economy and encouraging the growth of
housing and construction. In short, the continued growth of the housing and construction
industry seems strongest where populations are experiencing healthy growth. On the flip
side, static population or actual declines likely presage contraction in construction growth.
Continued growth of the
housing and construction
industry seems strongest
where populations
are experiencing
healthy growth.
22 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
Roofing
Plumbing
Flooring
Insulation
Plastics appear in a broad array of building
products other than piping—such as insulation,
flooring, and roofing. One of the most significant
uses of plastics in building and construction—
and one conspicuously evident to anyone driving
past a building site—is house wrap, a general
term that denotes a synthetic material used to
protect buildings.
SPI: The Plastics Industry Trade Association
Plastics have made steady inroads into building and construction for a variety of
reasons—mainly issues of utility, cost, ease of installation and longevity. The shift has been
aided by the propensity of the plastics industry to constantly develop new products to
supersede traditional building materials in many phases of the building process.
Construction Specifiers are people responsible for selecting and organizing appro-
priate materials for individual projects. “There are always new things being introduced,”
said David Stutzman of Conspectus. “We go out of our way to look at new things.”
But human health and environmental concerns are ever present, especially when
considering new products. “Our job as specifiers is to select the most appropriate mate-
rials for our clients’ projects, which requires us to verify that components have passed all
the tests,” said Elias Saltz of Eckenhoff Saunders. “We see plastics as more economical
in certain circumstances.”
A major use of plastics in building and construction is piping—supplying fresh water
to houses and buildings and providing drainage from structures into local sewers. “The
traditional approach was to use copper pipes for supplying water to houses and buildings
and iron pipes to drain it away,” said Lance McNevin, director of engineering for the
Building and Construction Division of the Plastic Pipe Institute. “But when copper prices
shot up so high, the genie was out of
the bottle. Polypropylene pipe had been
widely used in Europe for decades. It took
the spike in copper prices to allow the
European solution to come here. We will
not go back to copper pipes.”
Tony Radoszewski, president of
the Plastic Pipe Institute, also sees the
price of copper as a turning point in
the shift to use plastic piping in building
and construction. “Plastic was not well
received in the housing industry when
copper dominated,” he said. “But during
the commodity boom, the price of copper
shot through the roof. It was being stolen
from job sites. Home builders got fed up,
began looking for alternatives. Almost
overnight, plastic piping became a
dominant product in the market.”
“You must judge your product as to
how well it is suited to the specific situ-
Future Trends—Technology
Plastic was not well
received in the housing
industry when copper
dominated. But during
the commodity boom,
the price of copper shot
through the roof. It was
being stolen from job
sites. Home builders got
fed up, began looking
for alternatives.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 23SPI: The Plastics Industry Trade Association
ation,” said Mike Cudahy, head of the
Regulations and Sustainability Section
of the Plastic Pipe Fittings Association.
“Some products are more important than
others. Appropriate insulation and piping
will enable that building to save energy
and water. People worry a lot about
counter tops, but things like that really
have little impact. Architects use lifetime
cycle analysis (LCA) to compare various
products. The important thing is to make
sure your functional units make sense.”
The various challenges related to
supplying and draining from residences
and other buildings call for a variety of
plastic piping developed according to
specific uses. Also, plastics appear in a
broad array of building products other
than piping—such as insulation, flooring,
and roofing. There are specific plastics
appropriate to handle any building chal-
lenge. And the next month or year will
likely bring forth a new plastic composite
that is more effective and less expensive.
House WrapOne of the most significant uses of
plastics in building and construction—
and one conspicuously evident to
anyone driving past a building site—is
house wrap, a general term that denotes
a synthetic material used to protect
buildings. The wrap materials are generally
lighter in weight than previous asphalt felt
material used for protection. House wrap
functions as a weather-resistant barrier
preventing rain from getting into the walls
while permitting water vapor to pass to the
exterior. If moisture from either direction is
allowed to build up within stud or cavity
walls, mold and rot can ensue and the
fiberglass or cellulose insulation will begin
to lose its R-value.
“House wrap has been around for
at least 20 years,” said David Stutzman
of Conspectus. “There are many different
types. Just asking for building wrap will
not guarantee the best result. You must be careful to match the product with the project.”
“House wrap provides an air barrier used to cover the entire building,” said Elias
Saltz, head of specifications for Eckenhoff Saunders Architects. “It prevents air and water
from getting through. For example, brick is porous and water will work its way through,
but house wrap will keep it out. By preventing the movement of air, it also serves to inhibit
the loss of energy from the building. The plastic is thin, inexpensive and it works. A plastic
membrane is especially useful for underground water proofing. Buried underground it
never sees ultraviolet light and lasts a long time.”
The first house wrap was Tyvek developed by DuPont. “Tyvek had all the market,
but its patent has run out,” Stutzman said. “There are today multiple types of Tyvek,
depending on the specific need.”
Some critics contend house wrap is oversold as an air barrier because workers
seldom seal all of the edges or repair cuts at rough openings. “Because there are so
many places that air can move across the house wrap, it doesn’t really perform as an air
barrier when installed,” said Paul McGovern of energyvanguard.com. “There is one type
of air leakage that it does help reduce, however—infiltration, air moving into the house
(as opposed to exfiltration, air moving out of the house).” McGovern said the best use
of house wrap is to act as the drainage on a building. “It stops liquid water from going
through, but it allows water vapor to pass so when the building materials do get wet, they
can dry through the house wrap.”
Plastic house wrap technology has reduced the infiltration of outside air into the
average home by 10–50 percent, helping to drastically reduce the energy required to heat
or cool the home. These plastic films have helped reduce greenhouse gas emission in the
U.S. by as much as 120–600 million tons of CO2 since 1980.
Vinyl FlooringFlexible PVC flooring is inexpensive and used in a variety of buildings covering the
home, hospitals, offices and schools. Complex and 3D designs are possible as prints can
be created and then protected by a clear wear layer. A middle vinyl foam layer also gives
a comfortable and safe feel. The smooth, tough surface of the upper wear layer prevents
the buildup of dirt which prevents microbes from breeding in areas that need to be kept
sterile, such as hospitals and clinics.
Vinyl flooring was invented in the 1930s and by the 1950s largely replaced linoleum
due to its water resistance, longevity, attractiveness and low cost. The colors and pattern
24 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
options available with vinyl flooring are nearly endless.
Solid and composite vinyl can be combined to create
a number of unique, random patterns. Printed vinyl
is even more versatile, allowing the look of natural
stone, hardwood, or any other material. One can
even mix and match material facades to make it look
like different elements. Vinyl does not feel cold in the
winter, and is generally soft beneath your feet. Some
vinyl sheets and tiles have a padded layer that can
make walking on these floors pleasurable.
Vinyl is generally considered to be a highly durable
material that, if properly installed and maintained, can
last upwards of 10 to 20 years. However, the quality
of the material used and the way it was manufactured
will determine how well the floor lasts over time. Solid
vinyl and composite vinyl tiles are homogeneous, with
colors permeating every layer making them scratch
resistant. Printed vinyl will be as durable as the clear
wear layer that protects the surface. Fiberglass rein-
forced vinyl sheets are extremely durable while also
pliable and resistant to damage. It is also easy to
replace individual vinyl pieces when/if necessary.
“Resilient flooring remains a leader in the overall
floor coverings industry recovery as consumers
respond positively to new luxury vinyl tile (LVT) and
fiberglass-backed sheet vinyl products,” said Dean
Thompson of the Resilient Floor Covering Institute. “As a result, resilient flooring’s growth
rate is estimated to be close to 33 percent more in square feet and nearly 50 percent
more in dollars between 2012 and 2015 than overall floor coverings industry rates.”
He also pointed out that “carpet still has the biggest share of the flooring market,
but its share is declining. Carpet’s share historically exceeded 50 percent but today it is
less than 45 percent,” said Thompson. “Hard surfaces like hardwood and vinyl are taking
a bigger share.”
“The resilient flooring market is about 55 percent commercial and 45 percent resi-
dential and on the commercial side, the big market is institutional—hospitals, schools,
government. Resilient flooring continues to make inroads in commercial markets as users
turn to resilient flooring as a low-cost durable flooring material,” Thomson added.
At the low range vinyl can cost as little as 50 cents per square foot. However higher
end premium vinyl materials can cost as much as $10 a square foot. The difference in
price is determined by the quality of the tile and the design options.
For some applications, such as flooring and wall covers, PVC must have added
plasticizer to make it more flexible, transparent, and durable. Without plasticizers, the
vinyl would be rigid and lose all flexibility. Commonly used plasticizers called phthalates
have come under criticism for possible reproductive effects. In October 2007, California
became the first state to pass a bill banning certain phthalates from toys and the U.S.
Consumer Product Safety Commission imposed a ban on some phthalates. But the U.S.
Food and Drug Administration said it found no compelling evidence to suggest phthalates
The resilient flooring
market is about 55
percent commercial and
45 percent residential
and on the commercial
side, the big market is
institutional—hospitals,
schools, government.
Resilient flooring
continues to make inroads
in commercial markets
as users turn to resilient
flooring as a low-cost
durable flooring material.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 25SPI: The Plastics Industry Trade Association
posed a safety risk. While none of this action affected the flooring industry, building
owners are becoming more aware and conscious of the chemicals in the products they
use. The flooring industry is one step ahead, developing non-phthalate plasticizers to
serve its needs.
“The trend toward sustainable flooring signals industry growth in the vinyl tile category
as specifiers and designers seek the material’s aesthetics and sustainable materials
contributing to improved indoor air quality and occupant safety,” said The Construction
Specifier. “Some flooring manufacturers are taking steps to ensure the ability to capitalize
on market growth. For example, by ensuring the switches of plasticizers on the production
line are seamless, manufacturers are able to avoid surprises
on the line—not all plasticizers are interchangeable.”
New flooring options such as luxury vinyl tiles and
planks can benefit everyone, said The Construction Specifier.
“Consumers can enjoy clean indoor quality, designers have
more flooring choices and options unheard of just a decade
ago. Raw materials suppliers have found ways to make
products that provide a healthy working environment without
sacrificing performance and aesthetics. The combination
of these factors creates an optimistic economic outlook for
the industry.”
PipingPlastic pipe first became a real alternative to traditional
plumbing pipe, usually copper or iron, with the introduction of
cross-linked polyethylene in the early 1970s. The use of plastic piping really took off early
in this century when the price of copper skyrocketed, making plastic materials a pref-
erable substitute.
Plastic pipe and fittings are relatively easy to install and inexpensive. They are
durable and will not rust or corrode over time. Several types of plastics are used for piping
depending the properties and performance required. Some of the more common types
are cross-linked polyethylene (PEX), polypropylene, polyvinyl chloride (PVC), Chlorinated
Poly (Vinyl Chloride) CPVC, and acrylonitrile butadiene styrene (ABS). Each offers excellent
fusion integrity when joined properly, helping to eliminate potential leak points where water
could be wasted.
Roughly half the U.S.s PVC resin is used for producing pipes for municipal and
industrial applications. It accounts for 66 percent of the water distribution market in the
U.S. and 75 percent of sanitary sewer pipe applications. PVC pipe is lightweight, low cost
and low maintenance. It is used primarily for drains, sewers, water mains, irrigation and
other low pressure applications.
PEX is a form of plastic piping that can handle pressure and heat, and is becoming
a builder’s favorite for hot and cold water delivery all managed and hooked into a central
and effective manifold system. It is flexible, light and easy to install—allowing multiple
feed lines throughout a house which allows hot water to arrive more quickly to a sink or
shower. PEX can run straight from a distribution point to an outlet fixture without cutting
or splicing the pipe—reducing the need for potentially weak and costly joints and also
reducing the drop in pressure that can result from turbulence introduced at transitions.
Because PEX pipes typically have fewer sharp turns, there is greater water pressure at the
sinks, showers and toilets where it is needed.
Roughly
HALFthe world’s PVC resin is used for
producing pipes for municipal and industrial applications.
66%of the water distribution market in
the U.S.
75%of sanitary sewer pipe applications
PVC pipe is lightweight, low cost and low maintenance.
26 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
“PEX and CPVC account for about 90 percent of all plumbing distribution pipe in
residential construction, while copper accounts for the other 10 percent,” said PPI’s
Lance McNevin. “In commercial buildings, it’s the other way around with PEX and CPVC
having less than 10 percent of the market and copper most of it. There is no technical
reason for this, it’s just traditional among builders of commercial structures.”
Polypropylene (PP) is used in piping systems concerned with high-purity and those
designed for strength and rigidity—intended for use in potable plumbing, hydronic
heating and cooling, and reclaimed water. PP is sometimes preferred for its resistance to
corrosion and chemical leaching, its resilience against most forms of physical damage,
including impact and freezing, its environmental benefits and its ability to be joined by heat
fusion rather than gluing.
Overall, the future prospects for plastic piping in building and construction are bright
as a growing number of builders become aware of its advantages over metal—including
greater life expectancy, resistance to degradation, ease of installation, weight advantage
and significant cost savings. All major building codes allow plastic piping.
InsulationHeating and cooling costs amount to 56 percent of the energy used in the average
American home, according to the U.S. Department of Energy which highly recommends
strict attention to insulation for both construction of new structures and retrofitting of
older ones. Historically, the standard forms of insulation have been fiberglass, rock wool
and slag wool, but now polyurethane is coming on strong. The insulating quality of rigid
polyurethane foam is high compared to other forms of insulation, and enables builders to
make walls thinner, but just as quiet, warm and sturdy. It also allows for lower roof profiles.
Polyurethane, the most common form of spray foam insulation, was developed by
the military in the 1940s and originally applied to aircraft. There are two basic types of
spray foam insulation—open cell and closed cell. Open cell is a type of foam in which the
tiny cells are completely closed. It is less expensive because it uses fewer chemicals. It
provides an excellent air barrier but does not provide any type of water vapor barrier. It is
generally used for interior walls and is not recommended for outdoor applications.
Closed cell insulation is much denser than open cell with a smaller, more compact
cell structure. It is a good air barrier and also a good water barrier. It is often used in
roofing projects and other applications, but can be used anywhere.
Sprayed polyurethane foam provides weatherproof sealants, forms a seamless layer
of insulation, fills gaps and seams during application and covers irregular, hard-to-insulate
shapes. Closed cell spray polyurethane foam insulation forms both an air barrier and
moisture barrier. Spray foam insulation also reduces drafts while helping create sturdier,
quieter buildings. Polyurethane insulation also can be structurally self-supporting, and can
be attached to a wide range of substrates while requiring no additional adhesive.
Whether it is spray polyurethane foam (SPF) in the attic or rigid foam polyiso board
on the roof, polyurethane based systems offer durability, energy savings and moisture
control. When used for retrofit situations, they also help reduce the amount of building
waste sent to landfills.
Used in walls, behind walls and under floors, polystyrene foams can provide signif-
icant energy efficiency. Rigid extruded polystyrene (XPS) is favored by many builders
because it can be installed easily.
Buildings treated with spray foam insulation typically insulate as much as 50 percent
better than traditional insulation products, according to ecotecinsulation.com. Spray
Whether it is spray
polyurethane foam (SPF)
in the attic or rigid foam
polyiso board on the
roof, polyurethane based
systems offer durability,
energy savings and
moisture control.
polyurethane insulation typically has an
R-value—a measure of the resistance
of an insulating or building material to
heat flow—around R-5 to R-6 per inch
compared with blown fiberglass which
typically has an R-value of only R-2 to R-4
per inch. Sprayed insulation also protects
buildings against moisture, reducing the
likelihood of wood rot or mold, and also
serves as a barrier to unwanted noise.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 27SPI: The Plastics Industry Trade Association
“The environmental benefits of rigid
polyurethane foam are significant, and
include increasing energy efficiency and
reductions in energy-efficient construction
costs, reducing project weight and
savings of all construction components
that the material replaces,” according to
the American Chemistry Council (ACC).
“Given the widespread adoption of rigid
polyurethane foam in today’s construction,
these savings can continue to grow
around the world.”
Structural Insulated PanelsStructural insulated panels (SIPs)
are a small but growing sector of the
construction market. SIPs typically consist
of foam interiors between two skins, either
wood or metal, that provide ready-made
walls. “These panels really are the
structure,” said Jack Armstrong, director
of the Structural Insulated Panel Associ-
ation. “You can build with wood up to five
stories. Many hotels and warehouses are
built with SIPs.”
There is a variation of SIPS that
has only one rigid side. “You can have
a one-sided panel with exposed foam
on one side called a retrofit insulated
panel or RIP,” Armstrong said. “You can
nail down one sided panels on a roof or
skim existing buildings with it.” About
93 percent of SIPs are made with poly-
styrene, 6 percent polyurethane and 1
percent extruded polystyrene. The panels
are 5–7 inches thick using 4–4.5 inches
of foam.
“This technique has been around
since the 1970s, ever since plywood was
invented, more or less,” Armstrong said.
“The panels are built in a factory. They are
precision cut, very fast to install and very
energy efficient. Nowadays it’s not enough
to build a great building. It must stand the
test of time. These plastic foams do not
rot. They do not fall apart from exposure
to water.”
Jim McMahon, a construction specifier, said in 2014 the SIPs industry produced
almost 19 million square feet of panels. “That number was up about 5 percent from
2013,” he said, “reflecting a pickup in the industry. That breaks down into 61 percent
residential, 38 percent non-residential and 1 percent non-buildings such as silos and
chicken coops.“
There is some disagreement in the industry about the cost effectiveness of SIPs. “We
have to convince homebuyers that SIPS are more energy efficient,” McMahon said. “They
provide a direct saving in labor and energy costs which pay out in 5–7 years.”
“The construction market right now is constrained by a shortage of skilled labor,”
Armstrong said. “You still need carpenters, plumbers, electricians and many of them
left the market in the downturn. The panelized systems help builders get around the
labor shortage.”
“There were about 6,700 homes built in the U.S. in 2014 that had some form of SIPs
panel,” McMahon said. “There were about 650,000 single family home starts, so only
about 1 percent used them. The SIPs industry has developed an efficient product that
should be used more often, but builders and framers don’t want to be bothered learning
something new.”
WindowsThe unique properties of plastics make them suitable for extensive use as windows
in residences and other structures, and highly competitive with other materials such as
aluminum and wood. Vinyl windows are impervious to rust, rot, blistering, corrosion and
infestation by termites or other insects.
Plastic windows are all plastic. Polycarbonate—a material used in eyeglasses—
is used as panes. These clear, lightweight, shatter-resistant plastics have low thermal
conductivity which helps reduce heating and cooling costs, while still protecting against
inclement weather.
The vinyl used as dressing for the panes, usually solid vinyl or vinyl-clad frames,
serves to minimize condensation which helps discourage mold. One study showed
that vinyl window frames require three times less energy to manufacture than aluminum
window frames. Also, use
of vinyl window frames
saves U.S. consumers
nearly two trillion BTUs of
energy per year—enough
to meet the yearly elec-
trical needs of 18,000
single family homes. The
design of vinyl window
frames further enhances
energy eff iciency by
creating chambers in the
frame that provide addi-
tional resistance to heat transfer and insulating air pockets.
The energy efficiency of vinyl windows and glass doors can mean less electricity is
used to heat and cool a home or building which can help reduce the greenhouse gas
emissions associated with coal-fired power plants. Also, the low maintenance require-
28 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
ments of vinyl windows and glass doors eliminate the need for paints, stains, strippers
and thinners.
Vinyl windows also can mimic wood patterns to the degree that most people are
unable to tell the difference.
RoofingFor many homeowners, asphalt shingles continue to be the roofing material of
choice, at least for sloped roofs. But asphalt shingles are expensive to install, wear out
after 15–20 years, and then are expensive to remove. A growing number of consumers are
opting for plastic roofing, especially where flat or almost flat roofing surfaces are in play.
There are three basic plastic competitors for roofing honors, each with its own
supporters and critics. n Thermoplastic Polyolefin (TPO) is actually a broad family of roofing materials. TPO is a
blend of polypropylene and ethylene-propylene rubber.
n Ethylene Propylene Diene Monomer (EPDM) is a synthetic rubber derived from oil and natural gas (ethylene propylene). When the ethylene propylene is combined with diene (an unsaturated hydrocarbon alkene containing two carbon-to-carbon double bonds) the flexible EPDM results.
n Polyvinyl chloride (PVC) is produced by polymerizing vinyl chloride monomer, which in turn is derived from abundant natural resources—salt and natural gas.
This critique is based on information supplied by RTN Roofing Systems of
Loveland, Colo.
TPO may be the most widely used roofing product on the market today because it is
relatively cheap and because it is white. But TPO has been known to shrink and pull away
from curbs. “Our investigations of our clients’ roofs continue to identify issues with some
TPO membranes: splitting and crazing along rows of fasteners, accelerated aging along
walkpads, polymer erosion to the point of exposing scrim reinforcement, enough issues
for us to have concerns,” wrote Jeff Evans in Perspectives magazine in May 2010. People
in the TPO business insist they are correcting the problems.
TPO comes in relatively small rolls—about 8 feet by 50–100 feet. Small sizes means
there are many seams created during installation. Seams are where leaks happen. The
good thing about TPO is that it does have
reasonably high resistance to animal fats,
some hydrocarbon and vegetable oils,
and microbial growth. It is available in
various thicknesses.
EPDM can be either vulcanized or
non-vulcanized. Vulcanized EPDM is used
as a roofing membrane. Non-vulcanized
EPDM is usually used for detail work or
flashing of the cured roofing material. Its
distinguishing characteristic compared to
TPO is that EPDM is almost always black.
There is a perception, at least in northern
areas, that black roofs tend to absorb
more heat than white, and then reduce
heating bills.
A properly seamed and installed
black EPDM roof is very good at handling
rain, snow, UV rays, abrasions, ozone
and temperature fluctuations. In higher
temperatures, however, some critics
contend the membrane—especially at
the seams—can begin to shrink and
pull apart.
PVC is a relatively hard substance,
so plasticizers are added to PVC used
for roofing to make the membrane
more pliable. Most PVC membranes are
mechanically attached, though fully-ad-
hered or even ballasted PVC roofing
systems are occasionally found. Almost
all PVC membranes are welded at the
seams. This creates a monolithic durable
structure able to withstand constant
expansion and contraction of the building
structure throughout the day.
PVC has excellent puncture and heat
resistant properties, but is incompatible
with asphalt-based products. Anytime
PVC is combined with asphalt shingles,
a separator must be installed to keep the
PVC from directly contacting the asphalt.
“While most other roofing products can
come in either reinforced or non-rein-
forced materials, PVC is often reinforced
right out of the box,” says RTN Roofing
Systems. “While some manufacturers’
reinforcement may be better than others,
it’s good to know that there is a little more
structural integrity from the get-go with a
PVC roofing membrane.”
RTN says PVC is a bit more
expensive than TPO and competitively
priced against EPDM. “If overall quality
is the criterion used to decide what your
next roofing system should be,” RTN
says, “then PVC should be at the top of
your list.”
Composite WoodIt seems unlikely that plastics will
ever supplant traditional heavy building
materials like brick and mortar, but it is
It seems unlikely
that plastics will ever
supplant traditional
heavy building materials
like brick and mortar,
but it is making inroads
as an alternative to
many traditional uses
of wood.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 29SPI: The Plastics Industry Trade Association
making inroads as an alternative to many
traditional uses of wood. Polyurethanes
play a major role in composite wood
which is a combination of synthetic and
natural materials, according to ACC. Poly-
urethane-based binders, typically used
both with wood and rubber, are used in
composite wood products to permanently
glue organic materials into oriented strand
board, medium-density fiberboard, strand
lumber, laminated veneer lumber and even
strawboard and particleboard.
Oriented Strand Board (OSB) is
made from fast-growing trees such as the
aspen poplar, southern yellow pine, mixed
hardwoods and other suitable species.
OSB is frequently made by coating wood
chips (known as strands) with methylene
diphenyl diisocynate (MDI), then arranging
consecutive strand layers roughly perpen-
dicular to each other, and finally pressing
the strands under high temperature and
high pressure to form boards. The MDI
binds the strands together by reacting
with water on the strands to form polyuria
and reacting with hydroxyl groups in the
wood lignin to form polyurethane. OSB
panels measure 4' by 8' and are typi-
cally ¼" to 23/32". OSB is widely used
as construction sheathing as the web
material for wood I-joists, as struc-
tural membranes or structural insulated
panels (SIPs).
Medium-Density Fiberboard (MDF)
is widely used to manufacture furniture,
cabinets, door parts, moldings, millwork
and laminate flooring. MDF panels are
manufactured in a variety of dimensions
and densities, providing opportunity to
design the end product with the specific
MDF needed.
As with other composite wood
products, MDF typically consists of cellu-
losic fibers combined with a synthetic
resin or other suitable bonding system and
joined together under heat and pressure.
Additives may be introduced during
manufacturing to impart additional characteristics. The surface of MDF is flat, smooth,
uniform, dense and free of knots and grain characteristics. The homogeneous density
profile of MDF allows intricate and precise machining and finishing techniques for superior
finished products. Trim waste is significantly reduced when using MDF compared to other
substrates. Stability and strength are important assets of MDF and it holds precise toler-
ances in accurately cut parts.
Long strand lumber (LSL), also known as Oriented Strand Lumber (OSL), is similar
to OSB except the strands used in LSL are longer than those in OSB. Also, all of the
strands are arranged parallel to each other so that the product is very strong along its
entire length. LSL is much thicker than OSB because it’s intended to serve as a substitute
for dimension lumber. It is suitable to use in place of 2x4” studs in residential construction.
Another major use is the flange portions of wooden I-joist beams.
Laminated Veneer Lumber (LVL), also known as Structural Composite Lumber (SCL),
is an engineered wood product created by layering dried and graded wood veneers with
waterproof adhesive into blocks of material known as billets. Cured in a heated press, LVL
is typically available in various thicknesses and widths, and is easily worked in the field
using conventional construction tools.
In LVL billets, the grain of each layer of veneer runs in the same direction rather than
cross-lamination which is typical of other engineered woods products such as plywood.
The resulting parallel-laminated lumber has excellent performance characteristics. LVL is a
solid, highly predictable and uniform engineered wood product that is sawn to consistent
sizes and is virtually free from warping and splitting.
One important benefit of LVL is that
the veneering and gluing process enables
large timbers to be made from relatively
small trees of many species, thereby
providing for efficient use of wood fiber
resources. Some of LVL’s many uses are
headers and beams, hip and valley rafters,
scaffold planking and the flange material
for prefabricated wood hoists.
SummaryThe myriad uses of plastics in building
and construction detailed in this section
is by no means exclusive. Plastics are
enjoying increased usage in walls and
ceilings, as well as polyurethane coatings,
adhesives and sealants. No modern
structure would be even thinkable without
plastic insulation of electric wiring. The
flexibility of plastics and the creativity of
people in the industry have fostered a
steady stream of innovation. For as long
as people are engaged in building and
construction, it stands to reason that
plastics will have an important role to play.
The flexibility of
plastics and the
creativity of people
in the industry have
fostered a steady stream
of innovation. For
as long as people are
engaged in building and
construction, it stands
to reason that plastics
will have an important
role to play.
30 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
100+ YEARS
4-8 TONSSAVED
Replacing plastics is undesirable. According to the Denkstatt report (2010), plastics have the greatest
potential for reducing CO2. For every ton of CO2 produced, over
their usage and end-of-life phase, plastics save on average 4-to-8 tons of CO2. This figure
can be further improved to 9-to-15 tons.
Plastics are not only made from petroleum and natural gas.
Hydrocarbons are increasingly extracted from biomass. Other alternative raw materials for plastics are starch, cellulose,
sugars, lactic acid, organic waste, vegetable oils, microorganisms
and algae.
Plastics make integral water management possible. From
infiltration systems to drainpipes and rainwater tanks: plastics offer
all possible systems for a sustainable water policy.
Plastics are increasingly being recycled and reused as plastics.
Thanks to the optimization of their unique properties including barrier function, design freedom, insulation and acoustic properties
and recyclability, plastics help save natural raw materials and
consume less energy.
Plastics have a long lifespan. Plastic pipes for water have a lifetime of at least 100 years, plastic joints last at least 50
years. Over the last 15 years, the lifespan of PVC roof coverings has
increased by 50 percent.
Plastics offer lightweight solutions for structures. With
renovations, buildings are often demolished because the structure cannot handle the
additional load needed to meet the current insulation
requirements, for example. Plastics can play an important
role in this respect.
Plastics lie at the basis of renewable energy. Plastics are essential for the blades of wind turbines, solar panels, fuel cells,
and breeder reactors for oil extraction from algae.
Plastics are increasingly using fewer materials. Thanks to
plastics, applications can be ‘miniaturized’. Just think of
computers, cooling installations, communications equipment and the thermal breaks in metal and
wooden profiles.
Plastics form the basis for optimized building components.
The sector is encouraging plastics producers to get together with other companies, in order to
optimally harmonize the materials for a building element.
Plastics distinguish themselves with
regard to sustainability in
construction in many respects.
SPI: The Plastics Industry Trade Association
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 31SPI: The Plastics Industry Trade Association
Building and construction comprise a
major portion of the economy accounting
for millions of jobs, and are also a critical
factor in the quality of life for all of the
nation’s residents—from the homes we
live in to the businesses we patronize to
the offices, buildings and factories we
work in.
Building and construction are
subject to a wide variety of public policies
that affect every aspect of the building
process from the selection of building
sites to the size and composition of the
construction in question to the choice
of building materials. Policies can come
from the federal, state and local levels,
and frequently overlap. Contradictions are
not unheard of. Those in the construction
business must be aware of the potential
for public policies to appear out of
nowhere and to impact their enterprise in
unforeseen ways.
The most obvious public policy issue
that impacts building and construction
is interest rates. The Federal Reserve
sets short-term interest rates which
are separate from long-term rates set
by market forces, but nevertheless can
influence the overall trends of rates. The
Federal Reserve’s recent decision to hike
short-term rates by a quarter percent
reverberated throughout financial markets
and helped boost long-term mortgage
rates, which in turn nudged the cost of
mortgages up a notch.
Long-term fixed interest rate mort-
gages are not standard throughout the
world. Indeed, they are not available
in many countries. Fixed rate mortgage rates provide security for borrowers, but leave
lenders vulnerable to dramatic swings of rates in financial markets. Most home mortgages
end up being sold to Fannie Mae and Freddie Mac, semi-government entities that hold
title to millions of mortgages and are hence vulnerable to swings in the fortunes of financial
markets. The recent collapse of the housing market pushed Fannie Mae and Freddie Mac
to the brink of insolvency, requiring federal government intervention.
There is likely to be continuing uncertainty regarding the future of the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation
(Freddie Mac), the two “government-sponsored enterprises” (GSEs) that stand behind
much of the nation’s housing market. “The GSEs, which buy mortgages from banks and
other originators, bundle them into securities and resell them to investors with a guar-
antee, are stuck in a technocratic no-man’s land,” according to The Economist.
Any action in this arena could have profound implications for the building and
construction industry. But given the current state of Congress and its inability to reach
consensus, it seems highly unlikely there will be any significant legislation affecting the
Fed, Fannie Mae or Freddie Mac in the near future.
Yet another issue is the stringent credit-score and down-payment requirements
taking effect in 2016 as prices outrun maximum limits for government backed mortgages.
In most markets next year, Fannie Mae and Freddie Mac can back loans of only $417,000
or less. That is not a problem in most parts of the U.S. where the median home price is
$219,600, but in some markets the so-called “jumbo mortgages”—those that exceed
government limits—make up almost 19 percent of the market.
“Financial markets are still pretty tight,” said Dean Thompson of the Resilient Floor
Covering Institute. “You must have strong credit to get a loan. That is a constraint on
the market.”
Also connected to the cost of homeownership is the future of the housing tax incen-
tives, including the mortgage interest deduction and the property tax deduction. Tax
reform is often cited by policymakers as a potential policy objective that can be achieved
in a bipartisan manner. The tax code has not been reformed since 1986. If tax reform
does happen, policy observers expect a debate to occur about the future of important
housing tax rules, including the Low-Income Housing Tax Credit (which financing the
construction of affordable housing) as well as those tax policies connected to homeown-
ership. Dramatic changes, which can be expected to be opposed by the housing industry,
could result in increasing the cost of purchasing a home. For example, weakening the
mortgage interest deduction would increase the after-tax cost of purchasing a home,
particularly for younger buyers who use smaller down payments and pay more interest as
a percent of their income.
Future Trends—Public Policy
32 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
Green BuildingsThe cost of capital for residences and commercial structures is one part of the
puzzle, but the construction industry is also very much engaged in a nationwide quest
for increased sustainability and energy efficiency. In addition to private sector activity,
the Office of Management and Budget (OMB) is deeply involved in strategies to improve
efficiency for the eight billion square feet of space used by the federal government. The
models recognized by OMB are Leadership in Energy and Environmental Design (LEED),
promoted by the United States Green Building Council (USGBC), and the Green Globes
program promoted by the Green Building Initiative. These certification programs are not
driven by federal legislation or regulation, but by nongovernmental organizations that have
influence over consumer design and construction concepts and to some extent over state
and local building codes.
In addition, the National Association of Home Builders (NAHB) endorses the National
Green Building Standard (NGBS) ICC 700 Green Building Certification for homes, apart-
ments and land development. This ANSI-approved standard is a voluntary model for home
builders and developers to improve energy efficiency and materials selection criteria.
The Obama Administration has embraced the concept of green building and
increased energy efficiency as part of its Better Buildings initiative. The official goal of the
initiative is to “make commercial buildings 20 percent more energy efficient over the next
decade by catalyzing private sector investment through a series of incentives to upgrade
offices, stores, schools and other municipal buildings, universities, hospitals, and other
commercial buildings.”
An additional element tied to the future of energy-efficient construction is the prospect
of extension of the energy-efficient tax credits, such as the section 45L new energy effi-
cient home credit. The credit, which is a “tax extender,” routinely expires every two years,
after which Congress typically extends. The credit provides $2,000 to home builders who
build a for-sale or for-lease home that achieves a 50% reduction in energy consumption
relative to the applicable IECC code. An
additional credit, the 25C credit, is also a
tax extender and provides a tax benefit to
existing homeowners who install energy
efficient appliances and other property in
their homes.
SummaryFor now, the bui ld ing and
construction industry is on a strong
growth curve, regaining ground lost in The
Great Recession, and economists expect
modest but steady growth in the domestic
market. But worldwide economic condi-
tions will inevitably impact the U.S., and
there is a question as to whether the U.S.
economy can remain strong indefinitely in
the face of a global slowdown.
The cost of capital
for residences
and commercial
structures is one
part of the puzzle,
but the construction
industry is also very
much engaged in a
nationwide quest for
increased sustainability
and energy efficiency.
Permanent Change: Plastics in Architecture and Engineering— Columbia University Looks at Material IssuesGeorge Middleton, AIA, CSI Green Globes® Assessor and LEED® Accredited Professional
The Columbia University Conferences on Architecture, Engineering and Materials were part of a multi-year project to explore the changing limits of new and existing materials. The fourth in a series, the conference on plastics called “Permanent Change” was assembled by Dean Mark Wigley and Professor Michael Bell of the Columbia University Graduate School of Architecture, Planning and Preservation (GSAPP). It was held on Columbia’s campus March 30 through April 1, 2011. Previous conferences focused on glass, concrete and metals.
Bringing together more than 300 attendees and 45 presenters, including a wide range of leading architects, engineers, scholars, students and faculty, the conference explored the boundaries between architecture, engineering and material science through symposia, studios, and exhibitions in intensely focused investigations. Containing information that probably doesn’t exist anywhere else in the world, a detailed
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 33SPI: The Plastics Industry Trade Association
timeline of the history of the development of plastics filled the walls of a display room on the way into the auditorium at Columbia’s Avery Hall. The main goal of the conference was to ask the questions, ‘How is a new generation of professionals and manufacturers fusing engineering and architectural practices?’ and ‘How do new materials and material concepts change our professions?’
On July 1, 2014, a special launch event was held at the Center for Architecture in New York to announce the release of a new book covering the conference proceedings. Edited by Michael Bell and Craig Buckley, the book called, “Permanent Change: Plastics in Architecture and Engineering” has now been published by Princeton Architectural Press.
Today’s architects are expected to know more about materials than ever before and young people joining the profession must be equipped to practice in an era when understanding traditional materials used 100 years ago is simply no longer adequate. Computer processing power now enables buildings to be designed like sailboats, and new design tools demand new materials including high performance polymers. A working understanding of design now calls for a working understanding of science and chemistry as well.
There is a long history of working relationships between industries that produce materials and the design professionals who select and specify those materials. There exists a natural co-dependency between designers who choose products and building owners who demand products that perform as they expect at a cost they are willing to pay. The objective of course is to solve design problems and achieve the environmental, economic and social goals of sustainability that we determine necessary, with as little negative impact on the planet as possible.
As the main sponsor of the event, The Vinyl Institute sought to build new and durable alliances with influential partners in design and materials through a highly
credible path into a world-class university system. Utilizing Columbia’s position to help set the benchmark for the higher education of architects and engineers in design, materials, applications and innovation, the conference associated the plastics industry with some of the best and brightest minds in the field. Other sponsorship goals were to facilitate and foster innovation and the dissemination of new ideas for growth of markets and product development. Some important takeaways resulting from the conference included the following:
nn Architects and designers, both at the professional and student level, receive limited instruction about polymers. A common belief is that plastic is basically one material, rather than a complex and talented family of many different materials made possible not by geometry, but by chemistry. This often leads to misunderstandings, misapplications and underutilization.
nn Architects ‘synthesize’ concepts and ideas, and they tend to operate toward the riskier side of design. Engineers ‘analyze’ concepts using the principles of physics and science, gravitating toward safety. While both professionals tend to think differently about a problem and assimilate information differently, amazing and useful outcomes are possible when they work well together.
nn There is a fundamental shift going on in design and construction, made possible by computers that product manufacturers should watch closely. This includes not only form-giving design, but also the design of new and unique materials made possible through the selection of high performance polymers and fiber reinforcements.
nn There is a tendency today for design professionals to look to ‘checklists’ like green building rating systems as they design. But that is becoming more difficult to do as materials knowledge becomes deeper and more nuanced.
nn Materials efficiency equals molecule efficiency, and durability is a virtue in terms of sustainability. So a durable, recyclable bundle of molecules, bound up in a product made of plastic may in fact be a better environmental choice than a product that ends up in the solid waste stream.
nn The way young design professionals are educated is important. They benefit when they are exposed to ideas and experiences that go beyond the traditional.
nn ‘Natural’ and ‘synthetic’ are not as they first appear. All building materials have some aspects of ‘nature’ as well as inputs from the hands of people, whether through mining, processing, cutting, shaping, formulating, coating, laminating, etc. As Dean Wigley said during the conference, “No material is more natural than plastic.”
nn There is a growing focus on reducing carbon pollution. Materials that reduce dependence on carbon, by limiting their carbon footprint across entire life cycles, and helping to reduce carbon emissions by performing well in intended applications, are probably the best choices.
Plastics have become one of the most ubiquitous and increasingly permanent materials in construction. The material capabilities of plastics, both as a generic material and as specific polymers, and the processes that underlie them, suggest a potential to reshape construction and the roles of architects and engineers in construction. While plastics are perhaps the most intensively engineered building materials today, we are still in the early stages of understanding them in terms of their potential applications and uses.
The Permanent Change conference shed new light on these materials and their implications for the fields of architecture and engineering. Materials that enable lightweight, durable, easily molded, re-formable shapes have become a permanent measure at a watershed moment in design.
Learn more about this conference at: http://www.arch.columbia.edu/permanentchange
34 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
SPI’s Washington headquarters was designed to create the look and feel of a plastics industry manufacturing facility. Some of the furnishings, carpeting and wall designs are made from various forms of plastic and recycled plastics that are commonly used by SPI’s member companies.
For example, visitors may notice the use of Lexan or acrylic rather than glass for features like see-through walls and unique light fixtures. Plastic is used as plastic throughout the space—no tricks or clichés are displayed in this exceptional office.
Through videos, factory-specific steel structures and sounds, SPI hopes its guests gain a more accurate understanding of plastics manufacturing as an updated, sophisticated industry that is necessary to the world’s economic health.
Office hallways boast dramatic wall murals that were carefully selected to celebrate the factory and working environments of SPI’s membership. Using artistic liberties, SPI created a large-scale factory design around a Milacron injection molding machine that integrates products and equipment from its other members. SPI sought to precisely depict the manner in which its member companies function as a means of promoting the industry.
An impressive picture of a modern manufacturing cracker unit is displayed across a large wall in the office breakroom. The zoomed-in look at this engineering feat conveys the intricate details of pipelines configured to break or crack petrochemical molecules to create raw materials used in the plastic production process.
SPI: The Plastics Industry Trade Association’s headquarters was featured in ArchitectureMagazine.com
Remember—#PlasticIsFantastic.
#PlasticIsFantastic—Just Look in SPI’s Washington Offices
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 35SPI: The Plastics Industry Trade Association
Remember—#PlasticIsFantastic
36 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE
It is critically important
that SPI, companies,
and their employees
always educate about
the advantages of
plastic and advocate for
regulations based on
sound science and the
greatest sustainability.
SPI: The Plastics Industry Trade Association
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 37
Plastics—Building a more sustainable future
Conclusion
SPI: The Plastics Industry Trade Association
38 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
The building and construction sector is growing and likely to continue its recovery.
Plastics are expected to continue to play a critical role in this sector. In fact, it is quite
possible that the amount of plastics in building and construction will increase in its appli-
cations. In many cases, plastics will be used more because their properties allow for
improved environmental and energy efficiencies in particular.
Smart homes and home automation are developments driving an increased use
of plastics. A smart home system requires a smartphone app or a web portal as a user
interface. Smart home systems can be grouped into six primary categories: energy
management and climate control systems; security and access control systems; lighting,
window and appliance control systems; home appliances; audio-visual and entertainment
systems; and healthcare and assisted living systems.
North America recorded strong growth in the smart home market during 2014. The
installed base of smart home systems in the region increased by 75 percent to reach 10.2
million at the year-end. An estimated 1.8 million of these were multifunction or whole-home
systems whereas 8.3 million were point solutions designed for one specific function. As
some homes have more than one smart system in use, the installed base totaled an esti-
mated 7.9 million smart homes at the end of the year. This corresponds to 6.0 percent
of all households, making North America the most advanced smart home market in the
world. Between 2014 and 2019, the number of households that have adopted smart
home systems is forecasted to grow at a CAGR of 37 percent, resulting in 38.2 million
smart homes. The market is expected to grow at a CAGR of 34 percent between 2014
and 2019, reaching US$ 18.2 billion in yearly revenues at the end of the forecast period.
The European market for smart home systems is still in an early stage and 2–3
years behind North America in terms of penetration and market maturity. At the end of
2014, there were a total of 3.3 million smart home systems in use in the EU28+2 coun-
tries, up from 1.75 million in the previous year. Around 0.34 million of these systems were
multifunction or whole-home systems whereas 2.93 million were point solutions. This
corresponds to around 2.7 million smart homes when overlaps are taken into account,
meaning that 1.2 percent of all households in the region were smart at the end of the year.
The number of European households that have adopted smart home systems is fore-
casted to grow at a compound annual growth rate (CAGR) of 61 percent during the next
five years, resulting in 29.7 million smart homes by 2019.
Another positive development for more plastics usage is an increased awareness
of sustainability in construction. In general, the awareness is growing that sustainability
in construction must be evaluated on a building level. To this end, the social, ecological
and economic impact of a building must be taken into account. At the same time, every
material (regrowable, recyclable, etc.) must meet the same strict technical requirements
and be able to present the necessary guarantees for this.
Can plastic pave the way to greener
global infrastructure? In July 2015, the
Dutch city of Rotterdam announced that
it was considering a proposal to replace a
stretch of its roads with what may become
the world’s first all-plastic avenue.
In an effort to develop new and inno-
vative ways to recycle plastic, we have
managed to create strong, lightweight,
and cost-effective building materials (like
polymeric timbers, used in many cheap
Conclusion
The building and
construction sector is
growing and likely to
continue its recovery.
Plastics are expected
to continue to play
a critical role in
this sector. In fact,
it is quite possible
that the amount of
plastics in building
and construction
will increase in
its applications.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 39SPI: The Plastics Industry Trade Association
modern tables and fences). Small, inter-
locking, and fully recycled plastic blocks
have been on the mass construction
market since the early 2000s, allowing
almost anyone to incorporate such mate-
rials into their projects.
Over the past half-decade, espe-
cially, prefabricated plastic blocks have
become into vogue in home construction,
where they have demonstrated their
utility again and again. By 2011, multiple
companies had developed several vari-
ations on plastic bricks—some of which
poured like concrete and others that
stacked like it—often for use in low-cost
and emergency housing. Experimen-
tation with these bricks has shown they
cost up to 30 percent less than tradi-
tional construction materials, providing
greater insulation, resiliency in the face of
disasters, and reusability if a building was
torn down. When facing a weather-re-
lated disaster, these plastic barriers can
outperform concrete walls, then break
down into a foot-and-a-half-high stack
for rapid construction, dramatically short-
ening the disaster site’s recovery time.
Plastic bricks have become so
common and accessible that they have
become a part of the DIY movement.
Given the scale of use, simplicity, and
proven utility of recycled plastic materials,
it is not difficult to see how someone might
attempt to incorporate them into roads.
The building and repair of roads
produces up to 1.6 million tons of carbon
dioxide per year, almost 2 percent of total
emissions. With increasing urbanization
globally, most especially in the developing
world, this is only likely to rise. Roads
are not just a one-shot drain on the envi-
ronment, either. Roads actually break
apart within two or three decades on
average, even though they are supposed
to last 50 years. Roads usually decay for
years unfixed as repairs and resilient addi-
tives are often expensive. In the end, they
just have to be replaced entirely, compounding the pollution and waste of each new foot
laid (by many times).
But, according to KWS Infra, recycled plastic materials have proven up to three times
more durable than asphalt. They should be able to withstand temperatures from -40 to
176 degrees Fahrenheit without cracking, preventing erosion. Instead—as the roads will
be hollow—they will provide space for safe water retention. All told, this should allow a
plastic road to last three times as long as a normal road (surviving 50 years at least rather
than at the outside). Since the roads will be constructed out of pre-existing plastics, their
construction will put far less carbon into the air than asphalt and require less polluting
maintenance in the long run. As they can be recycled again into a new road when they
break down, the environmental cost of replacing them will be minimal. In the end, the
technology could potentially eliminate the bulk of a major source of pollution.
KWS Infra’s plastic roads will be far lighter than asphalt, which means it will require
less energy to transport and install. They will not require a foundation of concrete over
soft land. This, along with the interlocking and prefabricated nature of the road, means it
Proposed by KWS Infra, a subdivision of the Dutch firm VolkerWessels, the
project, simply dubbed “PlasticRoad,” will use entirely recycled materials
reclaimed from ocean dumps and incineration plants. The raw materials
will then be used to create Lego-like building blocks, which the company
claims may prove cheaper, easier to work with, and more durable than the
asphalt used in existing boulevards. For the Rotterdam city council, Plasti-
cRoad is just part of a broader climate initiative that includes and encourages
innovative experimentation to help the densely populated Netherlands avoid
undue pollution. If it takes off, KWS Infra’s project could revolutionize infra-
structure across the world, simultaneously evening economic playing fields
for developing nations and sparing the earth a huge chunk of pollution.
40 PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURESPI: The Plastics Industry
Trade Association
will only take weeks to install a new road, rather than months, and will require less compli-
cated tools. The same hollowness that helps make them lighter also makes the installation
of fiber-optic cables, sewage mains, and other complementary pieces of infrastructure
easier. These plastic roads can even include high-tech apparatuses, like heating blocks
to prevent icing or load monitors to better record traffic data.
This innovation is not simply about the ease of construction for Dutch developers; it
is potentially a great equalizer for developing countries, for whom infrastructure projects
are a necessary but slow-moving headache, holding back wider economic development.
If a road can be constructed without pouring a foundation or leaning on excessive
expertise, all on the cheap, with openings built into the prefabricated blocks for sewage
or IT connections, then this would allow these countries to rapidly accelerate the devel-
opment of new economic corridors.
Unfortunately KWS Infra’s technology is not ready for the mass market yet. Plasti-
cRoad is still in its conceptual infancy. The firm, however, is confident that they will be able
to start their experiment in Rotterdam within three years.
The PlasticRoad illustrates the amount of significant promise for plastics when it
comes to building and construction. As this study suggests, traditional demand in the
building and construction sector will grow, along with the opportunity to build on that
demand by utilizing the inherent material property advantages of plastics, and finally the
opportunity to grow demand even further by incorporating recycled materials in new and
innovative applications.
This report assumes the U.S. economy continues on a positive growth trajectory,
so the main trend working in opposition to the increased role of plastics in building and
construction focuses on the materials themselves. NGOs, regulators, members of the
public as well as some elected officials do not believe plastic is the environmental material
of choice, thus they often try to restrict or even eliminate it. It is critically important that
SPI, companies, and their employees always educate about the advantages of plastic and
advocate for regulations based on sound science and the greatest sustainability.
PLASTICS MARKET WATCH: BUILDING A MORE SUSTAINABLE FUTURE 41SPI: The Plastics Industry Trade Association
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Trade Association
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RTN Roofing Systems, “Which Is A Better Roofing System—TPO, EPDM or PVC?” http://www.rtnroofing.com/learning/article-library/perspectives/77-which-is-a-better-roofing-system.html. Accessed Dec. 18, 2015.
Sherter, Alain, “Goldman Sachs: 2016 looks like a dud for the economy.” CBS News, Sept. 29, 2015.
Smialek, Jeanna and Rich Miller, Rich, “Wages Bounce Back.” Bloomberg/BusinessWeek, Nov. 22, 2015.
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Russolillo, Steven, “Rate Hike Won’t Sink Housing.” The Wall Street Journal, Nov. 29, 2015.
The Economist, “A Funny Form Of Conservation,” November 21, 2015.
The Vinyl Institute, “What is Vinyl.” http://vinylinfo.org/the-vinyl-institute/about-vinyl-institute/. 2015.
United Nations, Department of Economic and Social Affairs, Population Division. “World Population Prospects: The 2015 Revision, Key Findings and Advance Tables.” http://esa.un.org/unpd/wpp/publications/files/key_findings_wpp_2015.pdf
Working Paper No. ESA/P/WP.241. 2015.
U.S. Census Bureau, Housing Vacancies and Home Ownership. http://www.census.gov/housing/hvs/index.html
U.S. Census Bureau. New Residential Construction. http://www.census.gov/construction/nrc/historical_data/index.html
U.S. Green Buildings Council, “Better Buildings Are Our Legacy.” http://www.usgbc.org/. Accessed Dec. 18, 2015.
White House Press Office, “President Obama’s Plan To Win The Future by Making American Businesses More Energy Efficient through the ‘Better Buildings Initiative.’” https://www.whitehouse.gov/the-press-office/2011/02/03/president-obama-s-plan-win-future-making-american-businesses-more-energy. February 3, 2011.
Confi
denc
e Le
vel
Mod
erat
ely
Pess
imis
ticLo
wEx
trem
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Low
Mod
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Optim
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High
Extr
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y Hi
gh
Increasingly optimistic outlook for all sectors; construction industry on an upswing— residential and non-residential markets.
Export market for construction plastics is growing.
Plastics provide wide functionality, flexibility, strength and low costs as construction materials.
DEMOGRAPHICTRENDS
PUBLICPOLICY
BIGPICTURE
Growing populations spur the need for more housing and necessary infrastructure.
New households being formed not just by young people moving out, but boomers—living longer and healthier—retiring and creating new households.
Gen Y is just entering the peak years for first-time home buyers, and will need more starter homes than currently available, as well as new non-residential infrastructure to support it.
ECONOMICS TECHNOLOGYTRENDS
Neut
ral
Globally, some countries are seeing falling birth rates and slowing population growth.
Residential and nonresidential building and construction are constricted by a severe shortage of skilled labor.
Worldwide economic conditions and the recent interest rate hike could have negative impact.
NGOs + regulatory authorities continuing challenges, though surmountable.
Fed decision to hike short term interest rates will push up the cost of mortgages; tax reform could also impact homeownership.
Despite lack of factual evidence, environmental activists continue challenges to the use of plastics.
Human health and environmental concerns are addressable, but ever present.
Technological advances continue to make buildings more airtight, durable, water resistant and less expensive to construct, maintain and operate.
Industry is constantly developing new products to supersede traditional building materials.
Industry focus on recyclability and sustainability has never been greater, resulting in new materials and methods for achieving energy efficiency.
No credible evidence of real world health and environmental hazards associated with plastic products.
As building and construction sector continues its recovery, plastics use will be increased particularly because of their improved environmental and energy efficiency properties, as well as low cost.
Economic growth and technological advances strengthen plastics packaging position.
Plastics Market Watch Snapshot
A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETS
SPI: The Plastics Industry Trade Association1425 K Street NW., Suite 500Washington, DC 20005202.974.5200202.296.7005 faxplasticsindustry.org
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