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Advancing Growth

Roofing State of the Industry Tracking

ProgramOctober 2013

Committed to securing the future strength and excellence of the

roofing industry

Confidential - © Ducker Worldwide 1250 Maplelawn | Troy | Michigan | 48084 248.644.0086 www.ducker.com

PROGRAM BACKGROUNDRoofing State of the Industry Tracking Program

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Background

Call to Action

The roofing industry is one of the most diverse industries in terms of the materials, products and value chain involved. Although there is a wealth of information available, the information is fragmented. In addition, most of the statistics available today from the product

or material-related associations report metrics differently, making it difficult to marry the sources and plan for future changes and

shifts.

Goal of The Roofing Alliance for Progress

The goal for the Alliance is to provide access to new and improved industry data to its members to support the industry in making

informed decisions. Sales of the data to non-Alliance members will also generate some additional revenue.

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Program Goal

Market Information & Analysis – the Foundation for Market-Driven Strategy

Provide a comprehensive

market understanding and baseline

review

Provide a forecasting tool to measure external changes/ impact

on roofing system/ services demand

Allow for member and nonmember

engagement

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Benefits

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Position the Roofing Industry Alliance for Progress as the “go to”/ information hub for the roofing industry.

Address key challenges that the industry faces to help make more informed decisions.

Allow the Alliance and its members to be forward looking toward innovative growth opportunities but also have a process to be strategic and intelligent in the way that growth strategies are pursued.


The Process – a three pronged approach

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Internal Audit

• Define data sources readily available and being used (e.g. construction, census, etc.)

• Identify associations to target for program buy in. For example:• ARMA• SPRI• PIMA• RCMA

Feasibility

• In-depth telephone interviews with Association Directors to determine• Likelihood to participate• Information available• Requirements• Format of data output and

frequency• Preliminary member interviews

to define:• Program appeal• Ideal offering/ content• Frequency

• Determine what knowledge gaps exist and how to define/ pursue for full program rollout

Program Rollout

• If the Alliance votes to further pursue this program, rollout will entail:• Define final program

parameters for implementation:• Qualitative and quantitative

data points• Analysis, modeling,

forecasting• Delivery of information (e.g.

hard copy, electronic copy, web-based dashboards, etc.)

• Approach and resources needed to fulfill program deliverable

• Sample strawman/ deliverable format

• Key milestones/ rollout dates • Annual review meetings


Feasibility Discussions – Interviews were conducted with all levels of the value chain

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Assoc Mfgs

Distri-bution

Contr-actors

• ARMA• MCA• PIMA• RCMA• SEIA• SDI• SPRI

• ATAS• Canam• CertainTeed• Derbigum• Duro-Last• Firestone• GAF• JM

• New Millennium

• OMG• Owens

Corning• Sika

Sarnafil• Soprema

• Barr• Centimark• Commercial Roofers• King of TX• Kirberg• Nations

• ABC Supply• Allied• Beacon• Roofing Supply

Group


Agenda

The goal of this meeting is to address the following

questions:

1. Is a roofing industry tracking program appealing?

2. What information gaps exist?

3. What content should be considered?

4. What are next steps?

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IS A TRACKING PROGRAM APPEALING?

Roofing State of the Industry Tracking Program


The concept of a tracking program is extremely appealing…

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Manufacturers

Distributors

Contractors

Associations

High Levelof Interest

Low Levelof Interest

Level of INTEREST


… the roofing industry is seeking MORE, and BETTER information

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• Material trend and regional forecasts• Building and market segmentations• Staying ahead on product technology trends• Identify and expand into markets with growth opportunities• Local market intelligence to plan effectively• Data serves as a scorecard to compare with overall market trends• Legislative clout and credibility to the roofing industry• Information clearinghouse for roofing industry• Foundation to respond to and create codes as well as communicate to all

segments of the industry“This is the worst industry in terms of data that I have been a part of. It’s spotty

data, you’ve got to be a member of ARMA or SPRI or both and some manufacturers don’t want to be a member of both and virtually no contractors are members of those. So I think this is very worthwhile and needed project.” -Manufacturer

What is Driving Interest?


Based on the each channel’s willingness to participate, this program is likely feasible to execute successfully.

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100%

90%

85%

65%

WILLINGNESS to Participate(% of Respondents)

Contractors

Distributors

Associations

Manufacturers

“Very useful if the geographic scope is narrowed so we can act on it and know where to focus our resources.” –Distributor“Aggregating the ARMA, SPRI and PIMA data in a meaningful way will be great.” – Manufacturer“This would create more information sharing between manufacturing, contracting, and specifying.” –Roofing Contactor“Yes, we are starved for data to make data driven decisions.” -Manufacturer“That’s something the board would have to approve. If the data is guarded I think it will be fine. We would release it to our members and then we’d use it to help estimate the size of any particular issue coming up.” -Association


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WHAT GAPS EXIST?Roofing State of the Industry Tracking Program


On an unprompted basis, several gaps exist…

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What Information Gaps Exist?


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1. Industry Information Construction spending

System definitions – value vs. costPublic spending, release of fundsCapital improvement spending

Education of Industry:Benefits of “roof systems”, warranties, materialsDefining a roof “system” and relationship between value and cost

2. System Data Segmentations: Construction TypeMaterial SegmentationsRegional: Canada-USExport Unit and $ VolumePerformance and efficiency trendsCosts (installed cost)

… however key themes emerge. The use of and need for Business Intelligence centers around specific industry market size and segmentation data along with industry information. Intelligence provides an understanding of materials/companies’ relative position in the industry, guides strategy and budget development.


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The use of information Measurement & Tracking of Policy Making includes understanding the impact of technological advancements (audit) and education effectiveness

3. Measuring Effectiveness - Shifts and changes in data (by material or region) provide “fact base”

- ‘Fact base” supports or refutes necessity of continuation or changes to policies (correlation)- Examples: thermal performance, use of solar products, shifts to metal roofing materials, etc.

4. Other Industry Measures

- Penetration of technology improvements- Level of adoption/contribution to growth- Audit technologies – contribution to efficiency, etc. - Clearinghouse of information that serves as the foundation for industry communication and support- Education quotient: determine level of “education” and understanding within industry for systems, policies, technologies, etc.


Though several gaps exist, it is important to define which elements should be prioritized for further consideration based on frequency of mention and potential value.

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Must Haves

Mentioned Frequently, High

Value

Further Differentiated

Lower Frequency of Mention, High

Value

Already Accessible

Mentioned Frequently, but Not

as Important

Not Necessary

Low Mentions, Not as Important

Mentioned Frequently

High ValueLower Value

Low Mention


High Value


The higher value issues are centered around issues that impact and promote unity of the industry.

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o Construction Spending o Material Segmentationso Regional Splits

o Export data

o Unit and $ Volume

o Performance and Efficiency Trends

o Installed Cost

o Public Spending

o Capital Improvement Spending

o Defining Roof System

o Benefits of a system (education)

o Measure Policy Effectiveness

o Fact base to Refute/Support Policies

o Penetration of Technology Improvements

o Adoption Level/Growth Contribution

o Technology Audits/Efficiency Improvements

o Industry Understanding of systems/policies/technologies

o Foundation of Information to Support Industry

o Green Construction, Energy Efficiency


High Value


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WHAT CONTENT SHOULD BE CONSIDERED?

Roofing State of the Industry Tracking Program


Focus on “must haves” and areas of differentiation

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• Total North American low slope and pitched roofing market (in squares, roofing surface area)

• Total North American roof coating market

• Product usage/ practices to include specialty systems and sub-assemblies

• Pricing index to track fluctuations and trending

• Material/system perceptions

• Needs assessment – what is important and what gaps exist?

• Trends assessment

Note: See handout for additional details


Methodology – aggregate of existing data available (associations, construction, Census), primary research with 1,000+ stakeholders annually.

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Aggregate existing data

Manufacturers/ Suppliers

Distribution

Contractors

Builders/ architects/

consultants

Owners

Alliance Industry Tracking Program


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WHAT ARE NEXT STEPS?Roofing State of the Industry Tracking Program


Next Steps

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Alliance vote on go/ no go

Formal approval from association directors/ boards

Prioritize content

Structure and format of deliverable

Method of delivery

Others to be discussed/identified


Key Success Factors

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PARTICIPATION is the key to success of this program:

• Formal approval and contracts from all key associations• Develop a task force to align on objectives, standards and delivery• Incentivize to encourage participation of both member AND

nonmember participation

PRIORITIZATION of the most impactful information to track over time

• Ducker will likely will not be able to include ALL gaps identified by the industry, but will prioritize the most critical elements for tracking purposes

• Additional ad hoc projects can be executed upon request to address some areas not covered in the tracking program


This concludes our report. Thank you.

Katie Janness, Principal, [email protected]; 248.530.2073

Diane Dickinson, Project Manager, [email protected]; 248.530.2065

This presentation was prepared by Ducker Worldwide LLC. Opinions and estimates constitutejudgment as of the date of this material and are subject to change without notice. Anyinterpretations derived from these findings are the sole responsibility of the client.Reproduction without the explicit consent of DuckerWorldwide LLC is strictly prohibited.

For over 50 years, Ducker Worldwide has enabled clients to navigate and thrive in a dynamic, globalmarketplace. Our unique and proven combination of custom market intelligence, critical thinking andstrategic consulting create valuable opportunities that deliver critical results.

For more information regarding our strategic services, expertise and to learn how Ducker Worldwide can helpyou, please contact one of our team members at 248-644-0086 or visit our website at www.ducker.com

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Ducker Worldwide Page 1

Sample Objectives for Roofing Alliance for Progress Industry Tracking Program

Total North American Low Slope and Pitched Roofing Market (in squares, roofing surface area) o Total Pitched Roofing Market

Residential vs. Nonresidential By product type New construction vs. recover vs. total tear off By U.S. Census region (includes an assessment of material usage by region)

o Total Low Slope Roofing Market Residential vs. Nonresidential Nonresidential by building type By product type (including SPF) By attachment method New construction vs. recover vs. total tear off By U.S. Census region (includes an assessment of material usage by region)

Total North American Roof Coating Market o By product type/ technology o By application (e.g. membrane vs. surface work)

Product Usage/ Practices to Include Specialty Systems and Sub-Assemblies o Average project size o Penetra tion and size of vegetative/ garden and solar roofing (current installed base and

tracking of annual installs) o Skylights/daylighting o Insulation type and usage o Decking o Underlayment o Coverboard penetration and segmentation o Vapor barrier penetration and segmentation o Fastening methods

Pricing Index to track fluctuations and trending o Raw material impact o Components/ systems

Material/ System Perceptions o Strengths and weaknesses o Best in class o Baseline understanding of each channel’s level of education/ knowledge of a quality

roofing system Materials System of integrity Warranty Value vs. cost First time vs. lifecycle cost

Ducker Worldwide Page 2

Needs Assessment – what is important and what gaps exist? o Architects/specifiers/ consultants o Builders o Distribution o Contractors o Owners

Trends Assessment o Market

Forecast by material type Overall trend in distribution inventory and sales levels Trends in material/ system usage (practices, type, quantities, etc.)

Contractor product type shifts o Codes/ Green Building Programs and their Impact on Product Innovation/ Technology

Energy/thermal efficiencies Cool roof Solar Sustainability Vegetative/ green roofs Government based rebates/ incentives

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