Global Insulation Demand to Rise
4.6 Percent Annually Through 2012

World demand for insulation materials is projected to increase 4.6 percent annually to $36.6 billion in 2012. This represents a deceleration from the rapid gains posted in the 2002?2007 time frame, reflecting decreased gains in new construction activity in most geographic markets, as both economic growth and capital investment slow. The vast majority of demand is concentrated in construction markets, with the remainder used in industrial, appliance, and heating, ventilating, and air conditioning (HVAC) applications.

Foamed plastic, fiberglass to post above-average gains

Foamed plastic and fiberglass represent the most widely used insulation materials on a global level, accounting for more than three-quarters of total demand in 2007 in dollar terms.

These materials will continue to post above-average gains through 2012, thus increasing their shares of the market, reflecting the higher insulation values and versatility of these products. While foamed plastics are already widely used worldwide, fiberglass demand remains highly concentrated in North America, although penetration of other geographic markets will continue to expand.

Developing regions to see most rapid gains in demand

North America and the Asia/Pacific region are the largest markets for insulation materials, accounting for nearly two-thirds of demand in 2007. At more than 20 percent of demand, Western Europe is also important. Nevertheless, other regions of the world (Latin America, Eastern Europe, and Africa/Mideast) will post the most rapid gains through 2012. Other markets that hold opportunity include the United States (where demand will advance from a weak 2007 base) and China (where gains will decelerate, but will still outpace the global average). Western Europe and Japan will continue to post below-average gains.

This new Freedonia industry study, World Insulation, is priced at $5,800. It presents historical demand data (1997, 2002, 2007) plus forecasts for 2012 and 2017 by product (e.g., foamed plastics, fiberglass, mineral wool), market (e.g., residential building, nonresidential building, industrial, HVAC), world region (e.g., North America, Western Europe, Asia/Pacific), and major country. The study also considers market environment variables, evaluates company market share, and profiles 36 industry participants. For more information, contact The Freedonia Group at 440-684-9600 or info@freedoniagroup.com or visit www.freedoniagroup.com.

FMI Nonresidential Construction Index: 35.6, Expect More Delays, Cancellations, and Layoffs in 2009

The first quarter FMI Nonresidential Construction Index (NRCI) score remains in bearish territory with a reading of 35.6, with few panelists expecting business to return to growth before 2010. While a few companies represented in the NRCI have plans to hire in 2009, most continue to expect significant decreases in full-time employees. With project delays and cancellations rising, contractors are looking to the new stimulus bill to help make up for sharp reductions in private capital projects.

NRCI First Quarter 2009 Highlights:

• Eighty percent of panelists reported the overall economy was worse than last quarter, but appears to be declining at a slightly slower rate than last quarter
• With 76 percent of panelists reporting the local economy where they work is worse than last quarter, and 77 percent thinking the nonresidential building market in their region is worse than last quarter, we can see the problems in the broader market settling in on Main Street
• While panelists continue to see their business as doing better than the overall and local economies, dwindling backlogs and difficulties finding new work are now hitting home, with 58 percent of panelists reporting their local business is worse than last quarter
• Seventy percent of panelists report the cost of construction materials is lower than last quarter
• Eighty percent of panelists report their labor costs have remained the same with some signs of going lower
• Delays are running at 20 percent, or four times the normal rate. Project cancellations have doubled since our last reading to 10 percent
• Nearly 65 percent of panelists are planning reductions of full-time direct employees for 2009 or have already made significant reductions in the latter half of 2008. Twenty-five percent are planning to reduce full-time direct employees by more than 10 percent in 2009. The remaining companies are taking a wait-and-see approach or adding employees while anticipating the next market upswing.

FMI is the largest provider of Management Consulting and Investment Banking to the worldwide construction industry. FMI is headquartered in Raleigh, North Carolina, and has offices in Denver, Phoenix, and Tampa. For more information about this report, visit www.fminet.com or contact Phil Warner at pwarner@fminet.com or 919-785-9357.