Plastering, Drywall, Acoustical, and Insulation Work market report HighBeam Business Arrive Prepared

SIC 1742

Companies in this industry

Industry report:

This category is comprised of special trade contractors primarily engaged in applying plain or ornamental plaster, or in the installation of drywall and insulation. Activities include taping and finishing drywall, applying solar-reflecting insulation film, installing lathing, and constructing ceilings.

The U.S. plastering, drywall, acoustical, and insulation industry includes more than 32,000 establishments, according to industry statistics. Drywall installers and insulations contractors numbered 269,110 in May 2008. Average hourly earnings for drywall and ceiling tile installers were $19.62, while tapers earned an average of $22.19 per hour.

This industry changed noticeably in the twentieth century. In the early 1900s, most walls and ceilings were constructed with wood laths and plaster. Homeowners commonly performed much of the work themselves. Thermal and acoustical insulation, if any, generally consisted of natural materials. After World War II, gypsum wallboard began to replace the lath and plaster in construction, and various synthetic insulation products were introduced. New construction materials, along with a massive demand for plaster and insulation during the post-war building boom, created a specialized industry.

The industry is cyclical as a result of its heavy dependence on new construction. Commercial and residential construction growth during the mid-1980s generated a steady demand for specialty plaster contractors as gypsum wallboard sales surged past $2.6 billion. Conversely, a depression in commercial development and a recession in housing starts quashed industry growth from the late 1980s through the early 1990s. As the demand for gypsum products slipped to about $2 billion in 1992, many wallboard contractors suffered major setbacks. However, sustained growth in housing starts gave the industry a strong boost in the mid-1990s. After dropping to 1.01 million in 1991, housing starts rose to 1.45 million in 1996.

Reflecting the performance of the residential construction industry in the early 2000s, the plastering, drywall, acoustical, and insulation industry performed well in the early 2000s. Although economic conditions in the United States were weak, historically low interest rates boosted housing starts through the early 2000s. In fact, by 2003 single-family housing starts had reached 1.848 million, their highest level since 1978. Although starts were expected to decline slightly in 2004, analysts believed they would continue to sustain growth in many construction industries, including the plastering, drywall, acoustical, and insulation sectors. As a result, employment for the industry was expected to grow 34.3 percent between 2002 and 2012.

In the late 1990s, a shortage of drywall had pushed prices up substantially. At the same time, construction projects fell behind schedule, and some retail outlets limited drywall purchases to 20 sheets per customer. Drywall manufacturers responded by building new factories, re-opening facilities that had been closed, and increasing production at existing plants. Some companies considered importing drywall from Canada, Mexico, and other foreign sources, but this was a difficult proposition because drywall cannot survive accidental contact with rain or other dampness and is so brittle that it tends to break in transit.

Cleveland-based Freedonia Group market research firm acknowledged that global demand for drywall was on target to climb 4.4 percent annually through 2009, with plaster sales expanding at a slower rate of 3.7 percent during the same period. While domestic drywall captured 54 percent of worldwide sales in 2004, the stagnant residential construction market created opportunities for international regions to gain market share through 2009, especially in Asia and the Pacific region, as well as in Portugal and Spain.

Current Condition

In 2009, the U.S. plastering, drywall, acoustical, and insulation industry included an estimated 32,053 firms with industry-wide employment at 275,422 workers. Collectively, the industry recorded $22.94 million in 2009 with drywall contractors responsible for 52.1 percent in market share and $10.77 million of the industry total. Florida, California, and Texas had the most firms in the industry.

Installation firms for buildings held a 14 percent market share with roughly 43,004 workers and a value of $3.14 million. Firms categorized generally as plastering, drywall, and insulation contractors operated 4,031 establishments employing 34,207 workers and generating revenues of $2.71 million. Plain or ornamental plastering firms numbered 2,778, employed 25,822, and generated $2.41 billion in revenues. There were 1,638 acoustical and ceiling work firms, which employed 18,081 and had sales totaling $1.9 billion in 2009. Smaller categories within the industry included interior stucco work, solar reflecting insulation work, and fresco and mantel work.

Of the 237,700 contractors counted by the U.S. Bureau of Labor Statistics in 2008, 151,300 were drywall and ceiling tile installers, 49,000 were plasterers and stucco masons, and 37,400 were tapers. About 19 percent were self-employed independent contractors.

The industry suffered from a lack of demand during the last years of the 2000s due to a very weak residential housing market and poor overall economic conditions. New housing starts fell to a 50-year low of just 554,000 units in 2009, down from a record high of nearly 2.1 million in 2005. The home repair and improvement market also stagnated, showing a lack of growth between 2005 and 2010. While the largest firms moved to cut costs, smaller, independent contractors struggled to make ends meet. In addition, bidding wars drove prices down as more contractors bid for fewer jobs. By 2010, the home improvement market was showing signs of improvement, but the new housing market remained relatively stagnant through the year.

Industry Leaders

The plastering and insulation contracting business was comprised primarily of thousands of small, privately owned firms. Some of the industry leaders, however, were large contracting companies with additional operations in other segments of the construction industry. Top firms in the plastering and insulation contracting business included APi Group Inc. of New Brighton, Minnesota, with $1.6 billion in 2009 revenues; Performance Contracting Group Inc. of Lenexa, Kansas, with $923 million in 2009 revenues; Cleveland Construction Inc. of Mentor, Ohio, with $217 million in 2009 revenues; and Irex Corp. of Lancaster, Pennsylvania, with $243.2 million in 2009 revenues.

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