Sustainable Building Material Manufacturing in The US Industry Report

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Sustainable Building Material Manufacturing in the US October 2012 1
Going green: Revenue will soar as customers look to build energy-efficient structures
IBISWorld Industry Report NN005
Sustainable Building Material Manufacturing in the US

October 2012 Andrea Alegria
2 About this Industry
2 2 2 3 Industry Definition Main Activities Similar Industries Additional Resources 18 International Trade 19 Business Locations
32 Key Statistics
32 Industry Data 32 Annual Change 32 Key Ratios
21 Competitive Landscape
21 Market Share Concentration 21 Key Success Factors
33 Jargon & Glossary
4 Industry at a Glance 5 Industry Performance

5 5 7 Executive Summary Key External Drivers Current Performance
21 Cost Structure Benchmarks 23 Basis of Competition 24 Barriers to Entry 25 Industry Globalization
26 Major Companies 28 Operating Conditions

28 Capital Intensity 29 Technology & Systems 29 Revenue Volatility 30 Regulation & Policy 31 Industry Assistance
10 Industry Outlook 12 Industry Life Cycle
14 Products & Markets

14 Supply Chain 14 Products & Services 16 Demand Determinants 16 Major Markets
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About this Industry

Industry Definition
This industry produces sustainable building materials used during the construction and renovation of all types of building structures. Sustainable building materials are composed of renewable (or green) resources, rather than nonrenewable resources. Green materials are more efficient than traditional products because they require fewer resources to produce. Sustainable materials also reduce building energy needs and water consumption.
Main Activities
The primary activities of this industry are Manufacturing engineered lumber Manufacturing wood-plastic composite lumber Manufacturing green insulation materials Manufacturing recycled building materials Manufacturing concrete (insulated concrete forms, dimension stone and recycled stone) Manufacturing sustainable structural materials (recycled metal, other non-toxic products, reusable or recyclable) Manufacturing sustainable interior materials (e.g. linoleum and trass) Manufacturing sustainable exterior materials (e.g. panels made from paper flakes, compressed earth block and adobe) Manufacturing plumbing components and fixtures made of recycled materials Manufacturing building materials using renewable plant materials (e.g. bamboo)
The major products and services in this industry are Exterior building materials Interior building materials Plumbing, fixtures and other products Structural building materials
Similar Industries
32121 Wood Paneling Manufacturing in the US This industry manufactures veneer, engineered wood and other man-made materials used during construction. 32712 Clay Brick & Product Manufacturing in the US The industry manufactures construction materials, including: brick and structural clay tiles and ceramic wall and floor tiles. 32721 Glass Product Manufacturing in the US This industry produces a wide range of glass products used during the construction of buildings and other structures. 32731 Cement Manufacturing in the US This industry manufactures portland, natural, masonry, pozzolanic, and other hydraulic cements used during construction. 32732 Ready-Mix Concrete Manufacturing in the US This industry manufactures concrete materials used during the construction and renovation of buildings.
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About this Industry
Similar Industries continued
33232 Sheet Metal, Window & Door Manufacturing in the US This industry manufactures metal-framed windows and metal doors, sheet metal work and ornamental and architectural metal products.
Additional Resources
For additional information on this industry www.sbicouncil.org Sustainable Buildings Industry Council www.census.gov US Census Bureau www.doe.gov US Department of Energy www.epa.gov US Environmental Protection Agency www.usgbc.org US Green Building Council
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writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com
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Sustainable Building Material Manufacturing in the US October 2012
Industry at a Glance
Sustainable Building Material Manufacturing in 2012 Key Statistics Snapshot
Revenue
$20.6bn 7.3%
Profit
Annual Growth 07-12
Annual Growth 12-17
$1.5bn
Market Share
Exports
$1.1bn
2400 2000
17.0% 1,089
Businesses
Revenue vs. employment growth

40 30
Housing starts
There are no Major Players in this industry

% change
Thousands
06 08 10 12 14 16 18
20 10 0 10
1600 1200 800 400
Year 04 Revenue
p. 26
20
Year 04
06
08
10
12
14
16
18
Employment
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Products and services segmentation (2012)

Plumbing, xtures and other products
Key External Drivers

Housing starts Value of private nonresidential construction Tax credits for energy efficiency Per capita disposable income Trade-weighted index
Exterior building materials
3%
25%
Structural building materials
44%
p. 5
Interior building materials
28%
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Industry Structure
Life Cycle Stage Revenue Volatility Capital Intensity Industry Assistance Concentration Level
Growth High High None Low
Regulation Level Technology Change Barriers to Entry Industry Globalization Competition Level
Light Medium Low Medium Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32
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Industry Performance
Executive Summary
Over much of the past decade, environmental concerns have helped shed light on the importance of developing and utilizing sustainable materials for the construction of homes, buildings and structures. States, counties and cities have tightened building codes to promote the use of energy-efficient products and sustainable materials, thereby driving growth for the Sustainable Building Material Manufacturing industry. Tax subsidies and operating cost savings have also supported this trend, especially in light
Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
Technological
advances and tax subsidies have stimulated demand for sustainable materials
of the rapid rise in Leadership in Energy and Environmental Design (LEED) certified buildings. A LEED-certified building adheres to specific standards related to energy savings, water efficiency, carbon-emissions reduction and indoor environment quality. LEED buildings are also evaluated on the materials that are used during construction with an emphasis on sustainable products. Technological advances have helped drive an increase in demand for sustainable materials; products are now more affordable and more readily
available. Most notably, synthetic products used to mimic wood, stone or other natural resources are often cheaper and easier to install and maintain. Additionally, as technology advances, these products increasingly feel and look like real wood or stone products, which has made them more popular. As a result of these trends, the demand for sustainable materials has increased dramatically over the past five years, even though overall construction has fallen. Consequently, the Sustainable Building Material Manufacturing industrys revenue is expected to rise at an average annual rate of 7.3% to about $20.6 billion in the five years to 2012, including a 30.0% jump in 2012. Over the five years to 2017, the industry is expected to experience exceptional growth, with revenue forecast to increase at an average annual rate of about 17.0% to $45.2 billion. All types of construction projects and activities will drive the use of sustainable materials, as property owners, developers and regulators put a greater emphasis on cost savings, environmental protection and energy conservation. Industry growth will also be supported by a recovery in overall construction activity as demand for new projects rebounds from the aftermath of the subprime mortgage crisis and real estate bubble collapse.
Key External Drivers
Housing starts Housing starts indicate the number of new privately owned houses constructed in a calendar year. An increase in housing starts supports demand for sustainable building materials because these products are used in the construction of new single-family and multi-family homes. This driver is expected to increase during 2012.
Value of private nonresidential construction The value of private nonresidential construction is an important indicator of demand within the commercial, industrial and municipal markets. As investment in nonresidential structures increases, demand rises for industry products used in construction and renovation projects. This driver is
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Key External Drivers continued
expected to increase during 2012, making it a potential opportunity for industry growth. Tax credits for energy efficiency The government uses financial incentives primarily tax credit programs to encourage the use of energy-efficient designs, materials and appliances. As these credits increase in value, a greater incentive is created to use sustainable materials. The government encourages consumers and businesses to reduce the consumption of resources and improve energy efficiency in an attempt to reduce the United States dependency on foreign oil and reduce greenhouse gases. The driver is expected to remain constant over 2012. Per capita disposable income Per capita disposable income determines an individuals ability to purchase goods or services. Increases in per capita
Housing starts
2400 2000
disposable give consumers more income to spend on housing renovations and additions. Disposable income is particularly important for this industry because products are often more costly than traditional non-sustainable materials. The driver is expected to increase slowly during 2012. Trade-weighted index The industry participates in international trade; therefore, the value of the US dollar relative to foreign currencies has a direct effect on industry performance. The industry competes heavily with imports, while exports account for about 5.4% of revenue. Domestic manufacturers benefit from a weaker dollar, which makes exports more affordable and imports relatively more expensive. The dollar is projected to strengthen slightly during 2012, which is a potential threat to the industry.
Value of private nonresidential construction
500 450
Thousands
$ billion
1600 1200 800 400
400 350 300
Year 04
06
08
10
12
14
16
18
Year 04
06
08
10
12
14
16
18
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Current Performance
Over much of the past decade, the United States has been in the midst of a green movement due to environmental concerns regarding carbon dioxide emissions and global warming. In addition, consumers and businesses have become more energy-conscious due to the dramatic rise in energy costs, while the government has tried to reduce the United States dependency on fossil fuels and other non-renewable energy sources. To reduce energy consumption, the federal government and many state and local governments have provided incentives for individuals, businesses and developers to utilize sustainable design and materials for new construction projects and renovations. At the same time, public sensitivity toward environmental issues and concerns has dramatically increased. As a result of these factors, the demand for sustainable building materials has grown considerably during the past decade. In the five years to 2012, revenue in the Sustainable Building Material Manufacturing industry is expected to increase at an average annual rate of 7.3% to total $20.6 billion. In particular, demand has increased for sustainable floor covering products made from cork and bamboo, for precast concrete products that use recycled materials (such as ash from power furnaces), for engineered wood products that use wood from sustainable forests and for energy-efficient lighting fixtures and water-efficient plumbing fixtures. Sustainable building materials also include roofing products, insulation and HVAC materials, and structural building components made with high-recycled content. The Sustainable Building Material Manufacturing industry is fueled in large part by green building
Skyrocketing
growth during the recovery and tax credits have kept revenue on an upward trend
construction. The government has updated building codes and initiated tax credits and other financial incentives to promote the use of sustainable building practices, which has increased demand for sustainable building materials. One of the primary areas of growth for the industry has been in publicly or government-funded projects. Government entities at all levels are investing in sustainable building construction and renovations. The nations single largest real estate owner and office tenant, the federal government, has increased the energyefficiency standards of the buildings it owns and occupies. As of 2011, all new construction and major renovations of eight federal agencies and departments, including the Environmental Protection Agency (EPA), the Department of State, the Department of Energy and the General Services Administration, are required to meet the US Green Building Councils Leadership in Energy and Environmental Design (LEED) certification standards. As building regulations and government incentives in the form of tax credits have transferred over to the private sector, more commercial and residential properties have incorporated sustainable building materials. As LEED certification has gained traction, sustainable building practices have started to influence the market value of properties, further boosting growth for the industry.
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Construction slump hinders growth
Despite the rising popularity of sustainable building materials, the dramatic decline in US building construction activity as a result of the economic recession hindered industry expansion and caused industry revenue to drop 6.0% in 2008 and a further 16.3% in 2009. The residential construction sector is an important market for the industry, and the total collapse of the housing market and the prolonged and substantial slump in new home construction over the past five years hindered revenue. Demand for industry products is largely determined by the levels of new home construction activity and consumer spending on home improvements. Unlike most previous cyclical declines in newhome construction, the past six years have brought historic lows in the level of residential construction. Housing starts will have declined at an annualized rate of 11.6% in the five years to 2012, and total residential construction spending will have dropped at an annualized rate of 9.4% during the same period. The housing market has been characterized by continued softness in demand for new homes, an oversupply of new and existing homes, and more stringent standards for homebuyers seeking financing. The oversupply of existing homes, the high number of foreclosures and uncertainties in the home foreclosure process have contributed to the downward pressure on home prices. All these factors have caused demand for new residential construction to plummet, consequently hurting demand for the industrys sustainable building materials. Additionally, as per capita disposable income shrunk during the economic downturn, people canceled or postponed major investments in home remodeling, further reducing demand for sustainable building products.
The
construction crash hampered growth during the recession in 2008 and2009

While demand for sustainable building materials used for institutional building construction (i.e. schools, hospitals, universities and government buildings) held fairly strong throughout the recession, steep declines in commercial and industrial building construction also hurt industry performance in 2009. However, sustainable building materials have continued to gain ground within the building materials market. As the economy started to improve in 2010, the industry quickly rebounded. Domestic growth has been fueled largely by the repairs and renovation market as increases in per capita disposable income led to higher demand for sustainable building materials used for re-roofing projects, new floor installations, and other maintenance and renovation projects. Strengthening environmental regulation and modest improvements in construction spending also boosted industry revenue growth from 2010 through 2012, with the biggest revenue jump of 30.0% expected to occur in 2012, as a result of increased construction activity. The export market has also provided an opportunity for industry firms to increase revenue, as emerging economies with fast-growing populations are experiencing high levels of residential and commercial building construction activity. Growing environmental awareness and increased regulation in developing countries has also boosted demand for sustainable building materials abroad.
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Double-digit growth
The industrys double-digit growth since 2010 is also attributable to product improvements and technology advancements. Firms have continually improved product quality and have made products more affordable. This trend has helped drive growth because a large portion of sustainable materials is now competitively priced in relation to non-sustainable products. The quality of synthetic materials has also improved, particularly in regard to functionality and appearance. For instance, synthetic woods are now largely indistinguishable from real wood products, allowing contractors, architects and homeowners to use these products for surfaces such as flooring, decking, siding, paneling and roofing. At the same time, these products are often easier to install because they come pre-painted or pre-stained. Synthetic products also require less maintenance, as they are less susceptible to water and sun damage. The industrys improved manufacturing processes have also allowed firms to moderate drops in profit margins despite lower prices. IBISWorld expects the industrys profit margins (measured as earnings before interest and taxes) to total about 7.1% of revenue in 2012, down from 8.9% in 2007. Profit declined as firms lowered prices in order to counter the significant drop in demand for building materials,
Product
improvements and new technologies have resulted in doubledigit growth

including sustainable products, in the stagnant US construction market of the past five years. Production efficiencies have allowed firms to maintain lower prices in order to compete with cheaper non-sustainable products and keep healthy profit margins as construction activity picks up. The rapid increase in demand for synthetic products has helped drive growth in the number of industry enterprises. Over the five years to 2012, the number of enterprises is expected to rise at an average annual rate of 2.7% to total 1,089. New entrants often have unique products or technologies that benefit the industry. At the same time, the market is composed of a diverse set of products and materials, with no real dominant player. As a result, new firms continue to enter the market to take advantage of growth opportunities. The number of industry employees has also risen as firms continue to expand operations to meet demand. In the five years to 2012, the number of employees is expected to rise at an average annual rate of 2.9% to 54,620.
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Industry Outlook
Sustainable building materials will continue to gain market share from non-sustainable materials as the trend toward environmental conservation increases, boosted by government regulation and more affordable pricing. As a result, the industry is forecast to experience rapid expansion. In the five years to 2017, industry revenue is forecast to increase at an average annual rate of 17.0% to $45.2 billion, including a 21.3% jump in 2013. During this period, growth will be driven by an upturn in building construction activity as the market recovers from the aftermath of the Great Recession and the real estate market collapse. Additionally, firms are expected to benefit from environmental concerns and consumer sentiment toward energy-efficient products and sustainable materials. This trend will be supported by government incentive programs designed to promote the use of sustainable materials during construction projects. Stronger consumer confidence and lower mortgage interest rates are anticipated to increase the demand for new homes in the next five years. IBISWorld forecasts the number of housing starts to increase at an average
An
increase in renovation activities for existing structures will support industry growth
annual rate of 10.8% to 1.2 million units in the five years to 2017. Similarly, the value of private nonresidential investment is also forecast to rise, increasing at an average annual rate of 7.1% to $466.1 billion over the five year period. The rise in construction activity will help drive growth as more material will be needed to construct buildings, homes, office complexes, schools and other structures. The industry will also benefit from an increase in renovation activities as property owners and landlords will have more capital to refurbish existing structures. Home renovations are also expected to rise as consumer spending benefits from improving disposable income and unemployment levels. These trends will help drive growth as more homeowners, landlords and contractors rely on sustainable materials for their renovation and remodeling projects.
Concerns for energy
In addition to improvements in overall construction, the increased use of sustainable building materials will continue to support industry growth. In the five years to 2012, industry manufacturers benefited from the rapid rise in demand for sustainable materials due to improvements in pricing, quality and product offerings. Over the five years to 2017, this trend is expected to continue, especially as the green movement in the United States gains steam. As a result, the threat from substitute products is expected to diminish, particularly regarding
natural wood and other nonsustainable resources. The green movement has helped spur growth over much of the past decade as consumers, businesses and developers increasingly look to products and materials that have a low impact on the environment or are energy efficient. This trend has been supported by environmental concerns and government programs and incentives designed to promote the use of energyefficient or environmentally friendly materials. The rise in Leadership in Energy and Environmental Design
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Concerns for energy continued
(LEED)-certified structures has helped drive demand, as part of the certification process relies on the use of recyclable or sustainable materials. Consequently, the number of firms is anticipated to rise over the five years to 2017 as the industry remains in the growth cycle. Specifically, the number of firms is forecast to rise at an average rate of 20.9% annually to 2,808 in 2017, while the number of employees is expected to increase at an annualized rate of 21.7% to 145,861. Industry profitability is also
expected to increase as firms benefit fromexceptional improvements to manufacturing processes. Manufacturing improvements will be driven by technology advancements designed to improve productivity and decrease costs. Additionally, firms will benefit from higher business volumes, allowing them to leverage scale to improve overall margins. As a result, the industrys earnings before interest and taxes areexpected to rise to about 9.8% of revenue by 2017.
Imports and exports
Imports are expected to increase over the five years to 2017 as the use of sustainable building materials continues to rise. IBISWorld forecasts that imports will increase at an average rate of 27.0% annually to reach $21.4 billion in 2017, as a rise in new construction projects, in combination with a trend toward energy-efficient and sustainable products, boosts demand for cheap imports from countries like China and Mexico. This trend is expected to adversely affect the industry because firms will likely lose some market share to foreign competitors. Furthermore, this trend is expected to increase pricing pressures as domestic firms are forced to compete with lower-priced goods from foreign markets. Exports will also continue to expand over the five years to 2017, increasing at an average annual rate of 21.6% to $3.0 billion. This trend will be driven by technology improvements in US manufacturing and a weakened US dollar. The dollar is expected to remain
Revenue vs. exports

80 60
% change
40 20 0 20
Year 04 Revenue
40
06
08
10
12
14
16
18
Exports
weak over the next five years (despite a slight increase in 2012) as a result of the deficits and spending increases that occurred in the aftermath of the housing collapse and Great Recession. As the value of the dollar falls in comparison with the currencies of major US trading partners, US goods become cheaper on the global market, encouraging export growth.
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Life Cycle Stage
Revenue is expected to grow faster than US GDP in the 10 years to 2017 The industry will experience rapid enterprise and employment growth in the 10 years to 2017 Growth continues to be driven by market acceptance and technology advancements
%Growthofprofi t/GDP
30
25
Company consolidation; level of economic importance stable
Maturity
QualityGrowth
High growth in economic importance; weaker companies close down; developed technology and markets
KeyFeaturesofaGrowthIndustry Revenue grows faster than the economy Many new companies enter the market Rapid technology & process change Growing customer acceptance of product Rapid introduction of products & brands
20
15
IndustrialBuildingConstruction
QuantityGrowth
10
Sawmills&WoodProduction
Many new companies; minor growth in economic importance; substantial technology change
SustainableBuilding MaterialManufacturing
Shake-out
5
Decline
10 10 5
WoodPanelingManufacturing ClayBrick&ProductManufacturing
Future Industries 5
Shake-out
Crash or Grow?
PotentialHiddenGems CommercialBuildingConstruction
10 15 20
TimeWasters
Hobby Industries 25 30
%Growthofestablishments
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Industry Life Cycle This industry is Growing
The Sustainable Building Material Manufacturing industry is in the growth stage of its life cycle. Over the 10 years to 2017, industry value added (IVA), which measures the industrys contribution to the overall economy, is forecast to rise at an average annual rate of 12.0%, far outpacing GDPs projected annualized growth of 1.8% over the same period. Industry growth has been aided by technological advancements, as the industrys ability to produce a diverse set of products and materials has dramatically increased over the past decade. This trend has helped boost the scope and function of sustainable materials, allowing contractors, developers, architects and homeowners to increasingly incorporate these materials into new projects, designs and renovations. Improvements in
technology have also helped decrease the costs associated with producing sustainable materials. This trend has helped drive growth as most product prices are now in line or slightly above similar traditional materials. Additionally, firms that produce synthetic woods have been able to mimic the look and feel of wood products. This trend is particularly important for surface materials, such as siding, decking and flooring because appearance of these products is highly important for esthetic design. At the same time, synthetic woods have been able to gain market share from traditional wood products because they are easier to install. Synthetic woods are also easier to maintain because they are less susceptible to water and sun damage.
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Products & Markets

Supply Chain
KEY BUYING INDUSTRIES
23331
Supply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations
Industrial Building Construction in the US Many builders in this industry use sustainable materials during the construction of industrial complexes, buildings and other miscellaneous structures Commercial Building Construction in the US Construction contractors in this industry use sustainable materials during the construction of office complexes, malls and other commercial structures. Municipal Building Construction in the US This industry uses sustainable materials during the construction of municipal buildings, such as schools, courthouses, prisons and other public structures. Home Builders in the US Many single-family homebuilders utilize sustainable building materials during the construction of new homes. Apartment & Condominium Construction in the US This industry uses sustainable building materials during the construction of apartments and other multi-family housing structures..
23332a
23332b
23611a
23611b
KEY SELLING INDUSTRIES

32111 32521 Sawmills & Wood Production in the US Sawmills provide raw materials used during the production of sustainable materials. Plastic & Resin Manufacturing in the US Resin and other plastics are used during the production of many sustainable building products, including manufactured wood and laminated flooring. Laminated Plastics Manufacturing in the US Laminated plastic plates and sheets are used as inputs during the manufacturing of some sustainable building materials.
32613
Products & Services
Products and services segmentation (2012)

Plumbing, xtures and other products
3%
Exterior building materials
25%
Structural building materials
44%
Total $20.6bn
Interior building materials
28%
Building materials must meet a number of criteria in order to be considered sustainable under standards set by the
US Green Building Council. Environmentally friendly materials must meet guidelines for low toxicity (i.e.
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Products & Markets
Products & Services continued
formaldehyde free), minimal chemical emissions, recycled content, recyclability, durability and moisture resistance. Materials must also help reduce energy and water consumption. Structural building materials Structural building materials are expected to account for about 44.0% of all sustainable building products in 2012. Structural building materials include a diverse set of sustainable products ranging from recycled metal and plastics to concrete and other stone materials. Recycled metal and plastics are re-used to produce beams of all shapes and sizes. These beams are then used to construct ducts, walls or support trusses in homes and buildings. These materials are also used as supports for outdoor decks. In addition to recycled metal, plastic and wood products, this segment also includes concrete foundations, forms and supports. Concrete is considered a sustainable material for a variety of reasons. First, most of the cement in concrete is made of limestone, the most abundant mineral on earth. Concrete can also be made with byproducts from power plants, steel mills and other manufacturing facilities, such as fly ash, sag cement and silica fume. Concrete is also durable, with a lifespan that can be double or triple that of other building materials, such as wood. Concrete also improves the energy efficiency of homes and buildings, and it can be crushed and recycled into aggregate for use in new concrete pavements or as backfill for roads and concrete foundations. Interior building materials Interior building materials are expected to account for about 28.0% of industry revenue in 2012. Most interior sustainable materials are associated with flooring, particularly synthetic wood products. These materials are often
cheaper and easier to install than their traditional wood counterparts because they are pre-stained before installation. In contrast, traditional wood flooring must be stained and sealed after being installed in a home, office or other building. In addition to synthetic wood flooring, sustainable products are also used in kitchens and bathrooms as a substitute for granite or other natural stone materials. Interior materials also include countertops made of recycled materials. Additionally, the industry also includes wallboard, synthetic wood paneling and other materials used for interior walls and surfaces. Exterior building materials Exterior building materials are expected to account for about 25.0% of industry revenue in 2012. Sustainable materials often outperform traditional wood products outdoors as they are more resistant to weather and sun damage. These products are generally made of recycled plastics, but generally reflect the look and feel of traditional wood. As a result, homeowners, property developers and landlords are increasingly using sustainable materials for siding, roofing and decking. In addition to being resistant to water damage, sustainable products also require less maintenance because most outdoor materials can be painted before installation. As a result, landlords and homeowners avoid costly upkeep associated with painting and staining outdoor surfaces. Plumbing and fixtures This segment is largely composed of piping, tubing and wiring made of recycled metals, such as copper and aluminum. Other fixtures include recycled bronze bathroom and kitchen accessories, such as tower hooks, faucets, sinks and bathtubs.
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Products & Markets
Demand Determinants
Construction activity in the United States is the main determinant of industry demand, as sustainable materials are generally installed during commercial, industrial, residential and municipal construction projects. Since the recession, tighter lending conditions have made it difficult for businesses and individuals to finance non-residential constructions. In addition, weak demand for housing since 2007 has created a surplus of new residential properties. As a result, industry growth has slowed. However, despite the recent downturn in overall construction activity, the industry has been able to maintain growth due to increased use of sustainable materials during construction projects. High energy prices and increased concerns about the environment have created a demand for sustainable materials. This has been particularly evident with the rapid rise in LEEDcertified buildings and structures. Additionally, the industry has benefited from improvements plastic wood composites and other products that increasingly look and feel like their traditional counterparts. The composite of sustainable materials has also benefited from better performance under adverse weather conditions, particularly with synthetic wood products used outdoors. These products are often more
durable and less susceptible to water damage than traditional wood products. Changes in household disposable income levels can impact the demand for sustainable materials, as these products are often more costly than traditional building materials. Additionally, fluctuations in disposable income also impact real estate investments in home improvement projects, additions and renovations. This was particularly evident over the three years to 2010 as the collapse of the housing bubble crushed individual wealth and sparked a rapid increase in unemployment. However, as the job market improves and consumer confidence continues to rise, home improvement activities will begin to rebound as individuals start to reinvest money into their properties. The federal government also offers tax credits and incentives to builders and other property owners to promote the use of sustainable building materials and energy-efficient appliances during the construction and renovation of buildings in the United States. State and local governments also provide these incentives. While they are not directly aimed at sustainable building manufacturers, such incentives encourage property owners and developers to use sustainable materials, driving up demand for industry products.
Major Markets
The Sustainable Building Material Manufacturing industry provides products and materials to contractors, developers and property owners of all types of buildings and structures. The industry is composed of a diverse set of products and materials that meet a variety of needs, so operators are exposed to every major facet of building construction, ranging from single-family and multi-family homes to office buildings and retail centers.
Nonresidential construction The construction of new nonresidential structures is expected to account for about 55.0% of industry revenue in 2012, as most sustainable materials are generally associated with large commercial and municipal projects. Within this segment, the commercial and municipal market accounts for about 48.0% due to the steady construction activity of schools, courthouses, hospitals and other public structures. This was
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Products & Markets
Major Markets continued
Major market segmentation (2012)

Other nonresidential construction markets Industrial construction market
7%
7%
New residential construction market
15%
Commercial and municipal construction market
48%
Total $20.6bn
Maintenance and repair market

23%
particularly evident in the healthcare market, which grew steadily even during the economic downturn. The construction of other nonresidential structures, which include transportation buildings, warehouses, stadiums and other miscellaneous facilities, accounts for about 7.0% of revenue. Most sustainable materials used in this segment are related to concrete forms and exterior services. New residential construction New residential homes and apartments account for an expected 13.0% of industry revenue in 2012, down dramatically from 20.0% in 2007 due to the collapse of the real estate bubble. Housing starts are expected to fall at an average annual rate of 11.6% to about 733,200 units in the five years to 2012. However, this trend is expected to reverse in the five years to 2017, as the economy recovers and demand for new homes improves. As a result, this segment is expected to regain market share as housing starts return to normal pre-bubble levels.
Maintenance and repair of existing buildings This segment includes both residential and non-residential structures, with the majority of demand coming from renovations and upgrades of existing structures. This segment is expected to account for about 21.0% of revenue in 2012. Although declining per capita disposable income hurt demand for home improvement projects that use sustainable building materials, this segment has gained a bigger share of revenue in the years after 2010. Even as new construction remained stagnant, slight improvements in the economy, including lower unemployment and improved income levels, encouraged property owners to invest in home remodeling and property retrofit projects. A stronger uptick in this segment is expected over the five years through 2017 as the economy fully recovers and building owners and managers invest in green building renovations in order to reposition their properties and achieve long-term operating cost savings.
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Products & Markets
International Trade
Level & Trend xports in the E
Imports
in the industry are Medium and Increasing
$ million
industry are Medium and Steady
Imports The Sustainable Building Material Manufacturing industry operates at a trade deficit; the value of imported products exceeds the value of exports. The industrys trade deficit is largely the result of domestic firms sourcing sustainable building materials, particularly lighting fixtures and equipment, from low-cost nations, such as China and Mexico. Chinese imports have been on the rise as low labor and overhead costs translate into lower prices. Imports from Mexico have also increased as a result of the favorable trading provisions of the North American Free Trade Agreement. Over the five years to 2017, this trend is expected to continue. Imports are expected to account for about 25.0% of domestic demand in 2012, up from 18.8% in 2007. Imports are expected to grow at an average annual rate of 16.0% in the five years to 2012 to about $1.1 billion. Exports Exports are expected to account for about 5.4% of revenue in 2012, down from 7.9% in 2007. Canada and Mexico will remain
Industry trade balance

10000 0 10000 20000 30000
Year 04 Exports
06
08
10
12
14
16
18
Imports
Balance
the leading destinations for exports, accounting for 38.2% and 7.8% of total exports, respectively. Government efforts to increase exports and shifting economic and labor conditions abroad (i.e. wages in China are rising, encouraging manufacturers to relocate production back to the United States) will contribute to rising exports over the next five years. Exports are expected to grow at an annualized rate of 21.6% in the five years to 2017 to total about $2.9 billion, which represents about 6.6% of revenue.
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Products & Markets

Business Locations 2012
West
AK
0.1
New England Great Lakes MidAtlantic

MI
3.2
ME
0.6
WA
3.7
OR
5.2
Rocky Mountains ID
1.0 1.6
MT
ND
0.6
MN
SD
0.5
Plains
IA
1.1
1.9
1 2 3 NY 1.6 5 4 6 7 8
WI
3.5
PA
3.7
WY
0.5
West NV
0.7
NE
0.3
IL
2.5
IN
3.6
OH
2.8
UT
1.2
CO
2.0
KS
0.8
MO
2.1
KY
1.9
WV VA 3.2
0.7
NC
5.6
CA
7.7
OK AZ
1.9 1.4
AR
2.5
Southeast
2.2
TN
SC
1.9
NM
0.9
Southwest
TX
3.7
MS
1.8
AL
3.3
GA
4.3
LA
1.3
FL
6.5
West
HI
0.4
AdditionalStates(as marked on map) 1 VT

0.5 0.3
NumberofEstablishments(%) Lessthan3% 3%tolessthan10% 10%tolessthan20% 20%ormore

2 NH
0.2
3 MA
0.7
4 RI
0.2
5 CT
6 NJ
0.7
7 DE
0.3
8 MD
1.1
9 DC
0.0
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Products & Markets
Business Locations
The geographic distribution of establishments within the domestic Sustainable Building Material Manufacturing industry is heavily concentrated in the Southeast, West and Great Lakes regions. The concentration of firms within this industry largely mirrors manufacturers of traditional non-sustainable material manufacturers because many of these firms operate specialized divisions that focus on sustainable products. Southeast The Southeast is estimated to hold 34.8% of the countrys establishments with every state represented. The industry is particularly prevalent in North Carolina and Florida, where there is ready access to raw materials. Plant closures have been more common here than in most other regions because this area has been affected by modest demand and strong competition from imports in recent years. West The West is estimated to account for 18.4% of the industrys establishments. California leads the way in establishment numbers, closely followed by Oregon and, to a lesser extent, Washington. This region is particularly significant because the Pacific Northwests forests are one of the richest sources of hardwood. Softwood forest and plantations are also widespread. The proximity to forests is important for this industry because many operators also manufacture wood products made from sustainable forests. Great Lakes The Great Lakes region holds about 15.3% of domestic manufacturing
Establishments vs. population

40 30 20 10 0 Rocky Mountains Great Lakes Mid-Atlantic New England Southeast Southwest Plains West
Establishments Population
establishments, making it the thirdlargest region. It is also a fertile area for forest growth and thus provides abundant raw materials for wood product manufacturers, including some engineered wood products that are considered sustainable. Establishments are spread evenly throughout this entire region, with every state maintaining multiple facilities. This region offers access to efficient transport routes to nearby markets throughout the eastern United States. Southwest Minor operations of the Sustainable Building Material Manufacturing industry are located in the Southwest, whose share of industry establishments continues to grow with investment across the industry.
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Competitive Landscape
Market Share Concentration
Level Concentration The Sustainable Building Material Manufacturing industry has a low level of market share concentration. No single industry operator accounts for more than 5.0% of industry revenue in 2012. While many manufacturers are dominant players
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
in this industry is Low
in traditional building materials markets, they do not generate enough industry-specific revenue to capture significant market share. As operators start producing larger volumes of sustainable building materials, industry concentration will increase.
Key Success Factors IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Having links with supplies Companies should regularly monitor and study alternative suppliers and materials based on numerous attributes including quality, service and price in order to ensure product quality and control input prices. Having a wide and expanding product range The demand for sustainable materials depends on the application of the products, so it is important for firms to manufacture a wide-range of products that meet various customer needs. Production of goods currently favored by the market Manufacturers need to keep pace with trends in architectural design and green
building construction in order to provide products that meet the needs of downstream construction markets. Ability to quickly adopt new technology Future revenue streams are based on significant investment in research and development, which can result in successful product launches. Successful firms are able to adapt quickly to technological changes and upgrade products on a regular basis. Economies of scale The size and scale of operations and manufacturing locations can be important in keeping production and distribution costs down, build distribution networks and fund design and research and development.
Cost Structure Benchmarks
Profit Profit, measured as earnings before interest and taxes, varies between operators in this industry. Larger operators generally have higher profit margins because they benefit from economies of scale. In the five years to 2012, average industry profit has declined slightly in response to weakened demand for building materials during the prolonged slump in new construction, which forced operators to lower prices. Operators also struggle to keep prices low to compete with more affordable building materials. Because manufacturers in this industry use recycled steel, plastics and
other products to produce goods, volatile raw material inputs also affect profit margins. Average profit is expected to account for about 7.1% of industry revenue in 2012, down from 8.9% in 2007. As construction activity picks up and demand for sustainable building products increases, profit margins are expected to widen. Purchases Purchases of raw materials are the largest expense for this industry, accounting for about 47.6% of industry revenue. This characteristic is typical for manufacturing industries, as operators
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Cost Structure Benchmarks continued
purchase large amounts of raw materials to produce final outputs. The type of material varies between firms because each operator uses different resources to produce sustainable building materials. For instance, some firms use recycled steel, plastics and other products to produce goods, while others rely on natural resources such as bamboo for product inputs. During the five years to 2012, input prices have been volatile, making it difficult for manufacturers to anticipate future spending and reduce costs. In general, rising commodity prices have negatively affected the industry by slightly increasing purchase costs for operators. Wages Employee compensation, including payroll and fringe benefits, accounts for about 11.2% of revenue in 2012. Labor is
Sectorvs.IndustryCosts
AverageCostsof allIndustriesin sector(2012) 100
used to assist in production, packing and distribution of goods, as well as conducting sales, research and development, management and other activities. In the five years to 2012, wages as a share of revenue have declined from 14.2% in 2007 as firms expanded production capacity through technological improvements in manufacturing capabilities, and revenue growth has outpaced employment increases. Average wages have remained fairly constant; in 2012, the average wage for industry employees is about $42,400. Rent and utilities Rent and utilities are estimated to account for 11.9% of industry revenue, with the majority of these costs attributed to energy and fuel. Depreciation charges account for about5.6% of industry revenue.
IndustryCosts (2012)
9.0
7.1 11.2
80
Percentage of revenue
41.3
60
Profi t Wages Purchases Depreciation Marketing Rent&Utilities Other
47.6
40
30.4 2.0 3.6 1.0 12.8
2.0
5.6 11.9 14.6

20
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Cost Structure Benchmarks continued
Other costs Other costs are estimated to account for about 14.6% of industry revenue in 2012. These costs include sales and general administrative expenses and professional fees, such as legal and accounting costs. Industry operators
also incur marketing, logistical costs of new and existing lines and research and development expenses. Firms invest heavily in research and development and marketing designed to better inform and educate downstream markets about their products and uses.
Basis of Competition
Level & Trend ompetition C
in this industry is Medium and the trend is Steady
The Sustainable Building Material Manufacturing industry is fairly competitive. Firms mainly compete on the basis of product innovation, quality, reliability and price. Customer service and product selection are also important differentiators for the industry. The speed with which companies can identify new uses for green raw material inputs in developing sustainable building products for downstream construction markets, can determine success in this industry. Builders, developers, architects and property owners seek environmentally friendly building materials that are high quality, durable and comparable in price to non-sustainable materials. Successful industry firms continually develop new products that meet evolving customer needs and can provide added advantages to conventional building materials in the areas of aesthetics, durability, convenience of installation and maintenance. Retailers and wholesalers also prefer manufacturers that are reliable and can respond quickly to orders. Firms that are able to streamline operations and reduce costs are better able to compete on the basis of price. Firms are often forced to pass cost
increases for commodities and other raw materials on to customers. Those enterprises that are able to mitigate the price volatility of certain commodities and materials and to avoid price increases without sacrificing margins are better positioned to gain market share. Changes in energy costs and certain commodities can also have an adverse impact on production costs, and on the cost to transport products. Operators also compete with low-cost imports of sustainable building materials. Externally, firms compete against manufacturers of non-sustainable materials, which provide products and materials that are often cheaper. The manufacturers of non-sustainable products also benefit from market penetration and familiarity because most sustainable materials are relatively new. Consequently, industry firms must emphasize the benefits of sustainability and differentiate their products beyond price, by emphasizing quality, reliability, product performance, and design innovation. Firms also invest heavily in research and development and marketing designed to better inform and educate downstream markets about their products and uses.
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Barriers to Entry
Level & Trend arriers to Entry B
in this industry are Low and Increasing
Overall, there are only moderate barriers to entry in the Sustainable Building Material Manufacturing industry. There are no licensing requirements, government regulations or resource constraints that are significant enough to prevent firms from entering the industry. There is also a low level of industry concentration, with no true major players in the industry. However, firms must be able to develop the requisite technologies and processes to produce sustainable materials. These processes include the ability to translate recycled and scrap materials into useful products and develop products that are energy efficient or environmentally friendly. Firms must also be able to produce goods in a cost- effective manner because competition is intense among industry operators. Technological changes in the industry may also pose as barrier to new entrants.
BarrierstoEntrychecklist
Competition Concentration Life Cycle Stage Capital Intensity Technology Change Regulation & Policy Industry Assistance
Level
Medium Low Growth High Medium Light None
In recent years, more focus has been placed on energy-efficient products, which involve significant research and development (R&D). In order to remain competitive in the industry, new entrants must be aware of technological changes and have access to resources for R&D investments. Most notably, many firms must produce materials that meet Leadership in Energy and Environmental Design standards.
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Industry Globalization
Level & Trend lobalization G
in this industry is Medium and the trend is Steady
Although this industry features little foreign ownership, industry operators compete on a global scale. For instance, successful firms must have the ability to compete on price with foreign
competitors particularly operators from low-cost countries such as China and India. Additionally, firms benefit from global demand, as exports account for about 5.4% of total industry revenue.
International trade is a major determinant of an industrys level of globalization. Exports offer growth opportunities for firms. However there are legal, economic and political risks associated with dealing in foreign countries. Import competition can bring a greater risk for companies as foreign producers satisfy domestic demand that local firms would otherwise supply.
TradeGlobalization
200 150 100 50 0 Local 0
GoingGlobal:SustainableBuildingMaterial Manufacturing2000-2012
Global
Exports/Revenue
200 Export 150 100 50
Export
Global
Exports/Revenue
Sustainable BuildingMaterial Manufacturing Import

40 80 120 160
0 Local 0
2000
2012
40 80 120
Import
160
Imports/DomesticDemand
Imports/DomesticDemand
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Major Companies
Other Companies
There are no Major Players in this industry | Other Companies
Armstrong World Industries Inc.
Estimated market share: 2.8% Armstrong World Industries Inc. is a global manufacturer of floors, ceilings and cabinets. Based in Lancaster, PA, Armstrong operates 32 plants in eight countries and has about 9,100 employees. In 2011, Armstrongs consolidated net sales totaled about $2.9 billion. The company manufactures a host of sustainable building materials that meet the requirements for the award of Leadership in Energy and Environmental Design (LEED) credits. The companys sustainable building materials include a wide selection of linoleum floors made from natural materials (linseed oil, resins, recycled wood flour, cork dust, limestone and mineral pigments), mounted on jute backing. Such linoleum floor products are naturally anti-bacterial and biodegradable. The company has continued advancing the design and composition of its linoleum products. Most recently, the company introduced its Linoleum with NATURcote product, which it claims to be a breakthrough product that offers easier maintenance and even better durability than the regular linoleum products. In addition, the companys Migrations BioBased Tile flooring is a revolutionary new material made from rapidly renewable ingredients. BioBased Tile contains a patent-pending BioStride polymer made with rapidly renewable ingredients that help reduce the products reliance on petroleum and fossil fuels. It is also manufactured with 10.0% pre-consumer recycled content. The company also offers a large portfolio of ceilings and suspension systems with high-recycled content and low-formaldehyde products. The company does not segment financial information by specific products; however, IBISWorld estimates that sustainable building products will account for about 20.0% of total revenue
in 2012, or $585.9 million. Although total company revenue has declined in the five years to 2012 due to the significant drop in demand from downstream construction markets, the company has significantly expanded its selection of sustainable building products over the past five years. The company is expected to continue expanding its sustainable materials portfolio to take advantage of growing demand for LEED-certified products.
Boise Cascade Holdings LLC
Estimated market share: 1.4% Boise Cascade Holdings LLC is a privately held building products company headquartered in Boise, ID. The company was launched in October 2004, when it acquired the forest products and paper assets of OfficeMax. Its subsidiary Boise Cascade LLC is a US wholesale distributor of building products and one of the largest manufacturers of engineered wood products (EWP) and plywood in North America. The companys EWP segment consists of laminated veneer lumber (LVL), I-joists, and laminated beams used primarily in residential and commercial flooring and roofing systems and other structural applications. Boise Cascade believes it is the second-largest manufacturer of EWP in North America. The company owns and operates the two largest laminated veneer lumber (LVL) and I-joist manufacturing plants in the United States in Alexandria, LA and White City, OR. The companys engineered wood products are made using about half the wood fiber contained in traditional dimension lumber, resulting in products that more efficiently use natural raw materials. Boise Cascade products are eligible for LEED, National Green Building Standard, Energy Star and other national and regional green building program credits, and Boise Cascades engineered wood products can
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Major Companies
Other Companies continued
help builders achieve LEED points under the US Green Building Council standards. The sale of EWPs (considered sustainable building materials) is expected to account for about 36.0% of the companys wood product sales, or $292.5 million in 2012. In the five years to 2012, the company has been significantly challenged by the dramatic slump in US construction activity, particularly in the residential market. IBISWorld estimates that Boise Cascades industry-specific revenue has declined at an average rate of 4.3% per year, from about $363.7 million in 2007.
Homasote Company
Estimated market share: Less than 1.0% Homasote Company, based in West Trenton, NJ, manufacturers building products made from recycled materials. Homasote was founded in 1909. The companys signature product is Homasote, a sustainable structural fiberboard made from recycled post-
consumer paper and hot water, which are mixed together to create a slurry, then poured into molds, baked to remove the water, and cut to various sizes. Waste materials from this process are returned to the system and recycled. Homasote is used in construction for structural purposes, paneling, insulation, concrete forming and expansion joint, sound control in floors and walls and as roof decking. The company also uses Homasote for the packaging and shipping of such industrial items as glass products, stone and metal parts, rolls of paper and film, and metal coils. Homasote estimates that it uses as much as 250 tons of waste paper each day, which translates into the elimination of 65 million pounds of solid waste each year and saves about 1.4 million trees. The companys products are primarily sold to contractors and building material wholesalers. Overall, the company is estimated to generate about $29.7 million in revenue in 2012.
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Operating Conditions
Capital Intensity
Level The level The Sustainable Building Material Manufacturing industry has a high level of capital intensity. On average, firms spend $0.50 on capital for every dollar spent on labor. Capital investment in the industry is mainly associated with equipment used to produce and manufacture sustainable building materials. Industry operators also invest in computer systems, trucks and other capital used to distribute and manage product inventory. Investment in technology helps firms reduce the costs associated with producing various products and materials, with most money allocated to equipment used to improve employee productivity, product quality and production
Capital Intensity | Technology & Systems | Revenue Volatility Regulation & Policy | Industry Assistance
Capital units per labor unit 1.0 0.8 0.6 0.4 0.2 0.0 Economy Construction Sustainable Building Material Manufacturing
Capital intensity
of capital intensity is High
Dotted line shows a high level of capital intensity

efficiency. Such technology reduces the need for labor inputs.
ToolsoftheTrade:GrowthStrategiesforSuccess
NewAgeEconomy Recreation,PersonalServices, HealthandEducation. Firms benefit from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation. InvestmentEconomy Information,Communications, Mining,FinanceandReal Estate.To increase revenue firms need superior debt management, a stable macroeconomic environment and a sound investment plan.
CapitalIntensive
LaborIntensive
IndustrialBuilding Construction Sawmills&WoodProduction
TraditionalServiceEconomy WholesaleandRetail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore firms must use new technology or improve staff training to increase revenue growth.
WoodPaneling Manufacturing
Plastic&ResinManufacturing ClayBrick &Product Manufacturing
SustainableBuilding MaterialManufacturing
OldEconomy
AgricultureandManufacturing. Traded goods can be produced using cheap labor abroad. To expand firms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.
ChangeinShareoftheEconomy
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Technology & Systems

Level The level
of Technology Change is Medium
In terms of manufacturing technology, the types and complexity of technology vary across product segments. However, there are some common technologies that larger manufacturers employ to streamline production and reduce costs. For instance, most large manufacturing operations utilize computer-controlled machinery and other automated handling and assembly technology to perform repetitive tasks. Although these forms of machinery are relatively expensive to set up and install, the associated productivity gains are substantial. An increase in output volume reduces the cost per unit, as fixed costs are spread across more
units. However, many medium- or small-size operators in the industry lack the resources to install such machinery and rely on manual labor instead. The continuing success of many manufacturers relies on their ability to adapt to technological changes. With an anticipated increase in demand for sustainable building materials in the outlook period, it is essential for manufacturers to continue to develop sustainable building products. Expanded product lines will provide industry operators with increased competitiveness and long-term sustainability in the industry.
Revenue Volatility
Level The level
of Volatility is High
The Sustainable Building Material Manufacturing industry has a high level of revenue volatility. The industry is sensitive to changes in economic activity and the cyclical fluctuations of US construction markets. Changes in expenditure on housing construction and in the home remodeling market also affect this industry. The price of sustainable building materials in relation to the prices of other nonsustainable products used in construction influences purchasing
A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment. When a firm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.
patterns and also contributes to revenue volatility. The downturn of the US construction market following the subprime mortgage bubble burst has resulted in volatile industry revenue. Over the five years to 2012, yearly changes in revenue have fluctuated at an average rate of 13.5%. As demand for new commercial and residential buildings subsided, demand for sustainable building products also declined, resulting in a double-digit drop in sales; on the other hand, the
Volatilityvsgrowth
1000
Hazardous
Rollercoaster
Revenuevolatility*(%)
100 10 1 0.1
Sustainable BuildingMaterial Manufacturing

Stagnant
30 10 10 30 50
BlueChip
70
Fiveyearannualizedrevenuegrowth(%)
* Axis is in logarithmic scale
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Revenue Volatility continued
industry has experienced years of skyrocketing growth. In the five years to 2012, revenue dropped by as much as 16.3% in 2009 and is expected to grow by a peak of 30.0% in 2012. As the construction markets improve over the five years to 2017, revenue volatility is expected to moderate. The demand for green buildings has been supported by the desire of builders, consumers and businesses to reduce the consumption of natural resources in light
of the harmful effects associated with greenhouse gas emissions. Improvements in technology have also supported growth; sustainable materials often perform better than non-sustainable materials, particularly with regards to the products lifespan. This attribute is particularly noteworthy when comparing traditional wood used in decks and other outdoor structures to composite or artificial wood materials, which are far less susceptible to weathering and rain.
Regulation & Policy

Level & Trend he level of T
Regulation is Light and the trend is Steady
The industry has a low level of regulation, which is similar to other traditional manufacturing industries. Most regulations are related to environmental laws, which cover noise pollution, air pollution and waste emissions and removal. Notable regulations include the Clean Water Act (CWA), the Resource Conservation and Recovery Act (RCRA), the Clean Air Act (CAA), the Cluster Rule, and noise pollution control legislation. Under the CWA and RCRA, the industry is responsible for assuring that appropriate water and solid waste discharge rules have been followed. The industry is also subject to specific provisions relating to airborne pollution emissions. The CAA is designed to protect and enhance the nations air resources to protect public health and welfare. It establishes limits to air pollutants such as carbon monoxide, nitrous oxides, sulfur oxides and other particulate matter. The Cluster Rule is an environmental standard that prescribes integrated concentration limits for a wide variety of environmental parameters. The rule applies to most manufacturers in the United States and is enforced by the Environmental Protection Agency (EPA) with coordination and participation from state regulatory agencies. The Final Cluster Rule protects human health and
the environment by reducing toxic releases to the air and water. Noise regulation is governed by the United States Code, which is a source of federal law enacted by Congress. The law lists the types of industrial machinery considered, and requires the EPA to monitor progress through a developed noise emission standards. In addition, the EPA may regulate noise from unlisted products if necessary to protect the public health and welfare. Noise regulations consider the nature of the product, noise reduction from the best available technology, and the cost of compliance with those standards. The code allows for the consideration of other standards where appropriate and the participation of interested parties. In addition to various federal regulations, the industry is also subject to various state and local laws, ordinances and regulations. For example, the Bay Area Air Quality Management District in California is the states first regional agency dealing with air pollution. The agency enforces specific rules that limit the emission of volatile organic compounds (VOC) from the application of coatings and adhesives to various manufactured wood products. Indirectly, the industry is also regulated and supported by the US Green Building Council (USGBC), which
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Regulation & Policy continued
determines whether a structure meets Leadership in Energy and Environmental Design (LEED) certification. LEEDcertified structures must meet guidelines and efficiencies related to energy savings,
water efficiency, CO2 emissions reduction, improved indoor environmental quality. The use of sustainable materials is needed to meet LEED certification.
Industry Assistance
Level & Trend he level of T
Industry Assistance is None and the trend is Steady
The federal government offers tax incentives to builders and other property owners to promote the use of sustainable building materials and energy-efficient appliances during the construction and renovation of buildings in the United States. States and local governments also provide these
incentives. However, these incentives are not related to sustainable building manufacturers; instead, the tax credits are generally directed toward property owners and developers as an incentive to use sustainable materials and design, thereby raising downstream demand for sustainable materials.
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Key Statistics
Industry Data
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sector Rank Economy Rank Revenue ($m) 8,995.2 9,984.8 11,463.3 13,853.2 14,508.7 13,636.0 11,415.8 12,798.1 15,849.6 20,601.0 24,995.0 31,325.0 36,067.0 40,006.0 45,235.0 26/36 341/706 Industry Value Added ($m) 2,150.4 2,335.7 2,865.2 3,487.2 3,705.1 3,142.8 2,603.0 2,888.8 3,407.6 4,152.4 5,265.8 6,871.2 8,245.9 9,491.0 10,496.4 33/36 433/706 Establishments 651 725 841 1,102 1,208 1,195 1,122 1,104 1,258 1,382 1,748 2,401 2,884 3,217 3,527 35/36 499/705 Enterprises Employment 515 25,403 578 28,776 670 34,240 867 45,126 953 47,350 936 44,363 889 38,687 875 41,968 993 47,344 1,089 54,620 1,383 68,997 1,891 96,242 2,280 110,942 2,564 132,302 2,808 145,861 36/36 33/36 482/705 422/706 Exports ($m) 335.4 377.6 452.7 739.5 1,140.4 1,270.6 1,000.2 1,020.7 1,011.1 1,118.4 1,314.5 1,920.4 2,500.0 2,807.8 2,976.0 1/1 147/226 Imports ($m) 1,154.3 1,222.6 1,560.3 2,191.3 3,091.5 4,363.0 4,532.6 4,757.7 5,500.0 6,492.0 8,314.1 10,841.0 15,210.8 18,173.4 21,408.3 1/1 63/226 Wages ($m) 1,232.9 1,317.3 1,558.3 1,894.1 2,065.6 1,915.6 1,632.7 1,762.6 1,933.6 2,315.9 2,841.3 3,895.3 4,819.5 5,690.4 6,199.1 33/36 411/706 Domestic Demand ($m) 9,814.1 10,829.8 12,570.9 15,305.0 16,459.8 16,728.4 14,948.2 16,535.1 20,338.5 25,974.6 31,994.6 40,245.6 48,777.8 55,371.6 63,667.3 1/1 84/226 Value of Construction ($m) 1,118,937.5 1,220,757.4 1,287,504.6 1,328,328.6 1,257,788.5 1,135,117.3 982,321.2 832,435.5 801,501.9 822,073.7 870,843.6 928,754.8 1,016,986.5 1,084,616.1 1,167,046.9 N/A N/A
Annual Change
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sector Rank Economy Rank Revenue (%) 11.0 14.8 20.8 4.7 -6.0 -16.3 12.1 23.8 30.0 21.3 25.3 15.1 10.9 13.1 1/36 1/706
Industry Value Added (%) 8.6 22.7 21.7 6.2 -15.2 -17.2 11.0 18.0 21.9 26.8 30.5 20.0 15.1 10.6 3/36 6/706
Establishments (%) 11.4 16.0 31.0 9.6 -1.1 -6.1 -1.6 13.9 9.9 26.5 37.4 20.1 11.5 9.6 3/36 8/705
Enterprises Employment (%) (%) 12.2 13.3 15.9 19.0 29.4 31.8 9.9 4.9 -1.8 -6.3 -5.0 -12.8 -1.6 8.5 13.5 12.8 9.7 15.4 27.0 26.3 36.7 39.5 20.6 15.3 12.5 19.3 9.5 10.2 3/36 3/36 10/705 4/706
Exports (%) 12.6 19.9 63.4 54.2 11.4 -21.3 2.0 -0.9 10.6 17.5 46.1 30.2 12.3 6.0 1/1 32/226
Imports (%) 5.9 27.6 40.4 41.1 41.1 3.9 5.0 15.6 18.0 28.1 30.4 40.3 19.5 17.8 1/1 16/226
Wages (%) 6.8 18.3 21.5 9.1 -7.3 -14.8 8.0 9.7 19.8 22.7 37.1 23.7 18.1 8.9 1/36 1/706
Domestic Demand (%) 10.3 16.1 21.7 7.5 1.6 -10.6 10.6 23.0 27.7 23.2 25.8 21.2 13.5 15.0 1/1 2/226
Value of Construction (%) 9.1 5.5 3.2 -5.3 -9.8 -13.5 -15.3 -3.7 2.6 5.9 6.7 9.5 6.7 7.6 N/A N/A
Key Ratios
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sector Rank Economy Rank IVA/Revenue (%) 23.91 23.39 24.99 25.17 25.54 23.05 22.80 22.57 21.50 20.16 21.07 21.94 22.86 23.72 23.20 34/36 544/706
Imports/ Demand (%) 11.76 11.29 12.41 14.32 18.78 26.08 30.32 28.77 27.04 24.99 25.99 26.94 31.18 32.82 33.63 1/1 95/226
Exports/Revenue (%) 3.73 3.78 3.95 5.34 7.86 9.32 8.76 7.98 6.38 5.43 5.26 6.13 6.93 7.02 6.58 1/1 173/226
Revenue per Employee ($000) 354.10 346.98 334.79 306.99 306.41 307.37 295.08 304.95 334.78 377.17 362.26 325.48 325.10 302.38 310.12 6/36 247/706
Wages/Revenue (%) 13.71 13.19 13.59 13.67 14.24 14.05 14.30 13.77 12.20 11.24 11.37 12.44 13.36 14.22 13.70 34/36 504/706
Employees per Est. 39.02 39.69 40.71 40.95 39.20 37.12 34.48 38.01 37.63 39.52 39.47 40.08 38.47 41.13 41.36 3/36 178/705
Average Wage ($) 48,533.64 45,777.73 45,511.10 41,973.59 43,624.08 43,180.13 42,202.81 41,998.67 40,841.50 42,400.22 41,180.05 40,474.01 43,441.62 43,010.69 42,500.05 27/36 393/706
Share of the Economy (%) 0.02 0.02 0.02 0.03 0.03 0.02 0.02 0.02 0.03 0.03 0.04 0.05 0.06 0.06 N/A 33/36 433/706
Figures are inflation-adjusted 2012 dollars. Rank refers to 2012 data.
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Jargon & Glossary
Industry Jargon
LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN A building certification program that focuses on five key areas: energy efficiency, indoor air quality, material selection, sustainable site development and water savings.
GREEN BUILDING CONSTRUCTION The construction of buildings that meet various standards related to resource conservation and energy efficiency. SUSTAINABLE DESIGN Architectural design that seeks to reduce the negative impacts on the environment, and the health and comfort of building occupants.
IBISWorld Glossary
BARRIERS TO ENTRY Barriers to entry can be High, Medium or Low. High means new companies struggle to enter an industry, while Low means it is easy for a firm to enter an industry. CAPITAL/LABOR INTENSITY An indicator of how much capital is used in production as opposed to labor. Level is stated as High, Medium or Low. High is a ratio of less than $3 of wage costs for every $1 of depreciation; Medium is $3 $8 of wage costs to $1 of depreciation; Low is greater than $8 of wage costs for every $1 of depreciation. CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using 2012 as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the real growth or decline in industry metrics. The inflation adjustments in IBISWorlds reports are made using the US Bureau of Economic Analysis implicit GDP price deflator. DOMESTIC DEMAND The use of goods and services within the US; the sum of imports and domestic production minus exports. EARNINGS BEFORE INTEREST AND TAX (EBIT) IBISWorld uses EBIT as an indicator of a companys profitability. It is calculated as revenue minus expenses, excluding tax and interest. EMPLOYMENT The number of working proprietors, partners, permanent, part-time, temporary and casual employees, and managerial and executive employees. ENTERPRISE A division that is separately managed and keeps management accounts. The most relevant measure of the number of firms in an industry. ESTABLISHMENT The smallest type of accounting unit within an Enterprise; usually consists of one or more locations in a state or territory of the country in which it operates. EXPORTS The total sales and transfers of goods produced by an industry that are exported. IMPORTS The value of goods and services imported with the amount payable to non-residents.
INDUSTRY CONCENTRATION IBISWorld bases concentration on the top four firms. Concentration is identified as High, Medium or Low. High means the top four players account for over 70% of revenue; Medium is 4070% of revenue; Low is less than 40%. INDUSTRY REVENUE The total sales revenue of the industry, including sales (exclusive of excise and sales tax) of goods and services; plus transfers to other firms of the same business; plus subsidies on production; plus all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); plus capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded. INDUSTRY VALUE ADDED The market value of goods and services produced by an industry minus the cost of goods and services used in the production process, which leaves the gross product of the industry (also called its Value Added). INTERNATIONAL TRADE The level is determined by: Exports/Revenue: Low is 05%; Medium is 520%; High is over 20%. Imports/Domestic Demand: Low is 05%; Medium is 535%; and High is over 35%. LIFE CYCLE All industries go through periods of Growth, Maturity and Decline. An average life cycle lasts 70 years. Maturity is the longest stage at 40 years with Growth and Decline at 15 years each. NON-EMPLOYING ESTABLISHMENT Businesses with no paid employment and payroll are known as non-employing establishments. These are mostly set-up by self employed individuals. VOLATILITY The level of volatility is determined by the percentage change in revenue over the past five years. Volatility levels: Very High is greater than 20%; High Volatility is between 10% and 20%; Moderate Volatility is between 3% and 10%; and Low Volatility is less than 3%. WAGES The gross total wages and salaries of all employees of the establishment.
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Sustainable Building Material Manufacturing in The US Industry Report

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Sustainable Building Material Manufacturing in the US October 2012 1

IBISWorld Industry Report NN005

Sustainable Building Material Manufacturing in the US

33 Jargon & Glossary

4 Industry at a Glance 5 Industry Performance

21 Cost Structure Benchmarks 23 Basis of Competition 24 Barriers to Entry 25 Industry Globalization

26 Major Companies 28 Operating Conditions

10 Industry Outlook 12 Industry Life Cycle

14 Products & Markets

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Sustainable Building Material Manufacturing in the US October 2012 2

About this Industry

Sustainable Building Material Manufacturing in the US October 2012 3

About this Industry

Similar Industries continued

Sustainable Building Material Manufacturing in the US October 2012

Annual Growth 07-12

Annual Growth 12-17

Revenue vs. employment growth

There are no Major Players in this industry

1600 1200 800 400

Products and services segmentation (2012)

Key External Drivers

Structural building materials

Interior building materials

SOURCE: WWW.IBISWORLD.COM SOURCE: WWW.IBISWORLD.COM

Growth High High None Low

Light Medium Low Medium Medium

Sustainable Building Material Manufacturing in the US October 2012 5

Key External Drivers

Sustainable Building Material Manufacturing in the US October 2012 6

Key External Drivers continued

1600 1200 800 400

400 350 300

Sustainable Building Material Manufacturing in the US October 2012 7

Sustainable Building Material Manufacturing in the US October 2012 8

Construction slump hinders growth

construction crash hampered growth during the recession in 2008 and2009

Sustainable Building Material Manufacturing in the US October 2012 9

improvements and new technologies have resulted in doubledigit growth

Sustainable Building Material Manufacturing in the US October 2012 10

Concerns for energy

Sustainable Building Material Manufacturing in the US October 2012 11

Concerns for energy continued

Imports and exports

Revenue vs. exports

Sustainable Building Material Manufacturing in the US October 2012 12

Company consolidation; level of economic importance stable

Sustainable Building Material Manufacturing in the US October 2012 13

Industry Life Cycle This industry is Growing

Sustainable Building Material Manufacturing in the US October 2012 14

Products & Markets

KEY SELLING INDUSTRIES

Products & Services

Products and services segmentation (2012)

Exterior building materials

Structural building materials

Interior building materials

Sustainable Building Material Manufacturing in the US October 2012 15

Products & Markets

Products & Services continued

Sustainable Building Material Manufacturing in the US October 2012 16

AdditionalStates(as marked on map) 1 VT

NumberofEstablishments(%) Lessthan3% 3%tolessthan10% 10%tolessthan20% 20%ormore

Profi t Wages Purchases Depreciation Marketing Rent&Utilities Other

Sustainable BuildingMaterial Manufacturing Import

IndustrialBuilding Construction Sawmills&WoodProduction

Plastic&ResinManufacturing ClayBrick &Product Manufacturing

Sustainable BuildingMaterial Manufacturing