Demand for painted metal in both residential and commercial construction applications is beginning to blossom

April 2017 - Companies that coat steel and aluminum coils that end up in new and remodeled homes, offices, schools, hotels and industrial plants are—finally—seeing the demand for their products approach levels seen before the Great Recession.

The half-dozen major suppliers that spoke with Modern Metals indicate they are confident enough to expand into new geographies, boost capacity or processing capability, and issue new products.

“There seems to be a lot of optimism from the construction market into the rest of 2017,” says Jim Dockey, CEO for Wismarq Industries Inc., based in Oconomowoc, Wisconsin.  “It was a relatively mild winter, so in the residential building sector—soffit, downspout, fascia, etc.—we had a pretty good first quarter. We are also picking up market share. Combined with the mild winter, which further created demand, we see a strong business cycle overall. We believe things will continue to improve,” he says.

Wismarq acquired Prior Coated Metals, Allentown, Pennsylvania, last fall. “That has allowed us to reach new customers, and new business, and leverage our reach geographically,” Dockey says. The company runs six coating lines at five locations. “We coat everything from 15 inches wide for gutters and downspouts to 56 inches wide.” Typical applications for wide material is trailers and recreational vehicles.

In addition to the acquisition, Dockey says the company has expanded its capacity to produce architecture trim in steel and aluminum.

High-end commercial ventures such as shopping centers, but also luxury residences, government facilities and educational institutions are among the projects specifying metal panels, roofing, soffit, fascia, downspouts, trim and even cupolas in an immense range of colors and textures that simulate different surfaces.

Bid environment

Kit Emert, vice president of business development and government relations for Euramax International Inc., Norcross, Georgia, was similarly upbeat. Euramax’s family of brands includes fabricators of aluminum, steel, copper and other materials, such as its Fabral division, which manufactures metal roofing and wall systems.

Based on industry forecasts and “our own planning, we look for our sales to be up 5 to 6 percent compared with last year,” says Emert. “Based on the current project bid environment, the industry has an opportunity to exceed that level.

“Bid activity is very, very good this year. There is increased activity in the federally funded segment: Military and federal office construction. We are seeing an improvement in the educational space and with general institutional activity,” Emert notes.

Fabral opened a new facility in the Dallas-Fort Worth area, relocating from a smaller shop in Grapevine, Texas. “We are investing in machinery and will continue to do so, both in terms of improving efficiency of the facility and service delivered to customers.”

Lastly, Fabral is researching new service and product offerings to bring to market. “We have several things on the table. We also expect to increase the bandwidth of our technical and engineering department. Some of these projects will come to fruition in the next two to three months,” followed by new product introduction during the second half.

In sum, says Emert, “We are investing heavily in the future of the business.”

Steelscape’s two U.S. plants offer pickling, cold rolling, metallic coating, painting, slitting, embossing and cut to length.

Product development

Scott Cooley, vice president of sales and customer service for Steelscape LLC, based in Kalama, Washington, says the company saw demand grow last year, and “many of our customers in this market segment are very positive on the outlook for 2017.” 

Like its peers, Steelscape continues to invest. Its newest line of Vintage products “has been a big driver for us in both the residential and commercial building markets,” says Cooley. Steelscape works closely with architects, fabricators and partner companies, like Bridger Steel throughout the Great Northwest, to develop and expand its portfolio.

Petersen Aluminum, Elk Grove Village, Illinois, has monitored “steady increases in demand for three years running as commercial construction has gradually recovered from the collapse of the building economy in 2009,” CEO Mike Petersen says. “We are optimistic about demand for most of 2017. Our optimism is supported by surveys such as the Dodge Momentum Index and the Architectural Billings Index.”

Project funding remains attractive, he says, because interest rates on construction loans remain relatively low. “The improved housing market also should lead to more commercial construction,” Petersen predicts.

Following an acquisition last fall, Wismarq Industries Inc. now runs six coating lines across five locations.

Weather resistance

Valspar Corp., Minneapolis, has noticed that all parts of the building products segment—pre-engineered buildings, roofing, components and insulated panels—have grown over the past year.

“We expect this growth to continue throughout 2017,” as the industry at large is forecasting 3 to 5 percent sales gains, says Jeff Alexander, vice president of sales at Valspar’s coil and extrusion division. 2018 is expected to be strong as well.

The company continually develops new colors and textures. These include WeatherXL Crinkle Finish for the commercial or residential roof and wall panel applications; and five new offerings under its Fluropon line, including Fluropon Pure, made with an energy-efficient cool roof formulation and which meets LEED V4 requirements.

Gorgeous metal wraps an expanded recreation center at University of California-Riverside.

Paint, by numbers

Höganäs, Sweden-based Beckers Group, whose North American operations are based in Elk Grove Village, has found a changed market since the recession forced the closure of mill-owned coating lines.

“When the economy was bad, some steel mills with integrated coil coating lines went bankrupt, some divested or closed. Few integrated mills still have their own coating lines and, instead, we have toll coaters that work outside the mills,” says Sean McCue, vice president of sales, North America.

With mill customers, “You had high volumes and long runs and you didn’t change [paint] formats very often. Now you have more tolling—fewer long runs and many setups throughout the day—as coaters book different jobs into their schedule,” McCue says. “It has moved from large campaigns to more frequent, smaller campaigns.”

For a paint producer, that means making smaller batches, and each batch is custom.

“That’s how we adapt to supply chain changes. With more, smaller runs, paint companies have moved further down the value chain and are working with end-use customers about what matters to them,” explains McCue. “Instead of mills making surface condition decisions, end users, with help of the paint company, make those decisions.”

In addition, rather than having a dozen mill customers to call on, paint vendors now have thousands of customers, and “we need many, many more people handling the smaller activities of 5,000 or 10,000 end users. We inherently add more value for the interaction,” McCue notes, but the profits on small batches are more difficult to come by. 

Michael Conway, Beckers Group’s president for North America, says the model has evolved into one of “additional complexity for paint companies. While we work with OEMs to define what coating they need for their product, you must also have good working relationships with toll coaters and metal service centers. So instead of one customer per transaction, we have three customers per transaction.”

Valspar Corp. provided the paint for metal panels that adorn the Polk Penguin Conservation Center at the Detroit Zoo.

Rebound

The good news is that market demand for coatings has been recovering. Conway cites National Coil Coaters Association figures that showed a 5 percent sales improvement from 2015 to 2016, so “we have numbers that appear to be getting back close to peak.” 

In terms of applications, “metal roofing is certainly growing. Very few residential homes use it, but the sector has had very nice increases” and there is extensive room for growth as builders choose metal over asphalt shingles or other materials.

“If metal roofing gains traction,” says McCue, “it would be a rising tide that lifts all boats, for paint companies and coil coaters.”  

February was the third month in a row that single-family building permits came in above the 800,000 mark, a result not seen since 2007, according to IHS Markit, the Lexington, Massachusetts-based economic analysis and consultancy firm. MM