a seven billion dollar industry-now you know!
Outside caller: "Is this the National Insulation Association?"
NIA: "Yes it is, how can we help you?"
Outside caller: "I’m working on a piece of government research trying to evaluate the economic impact on and/or value of certain segments of the construction industry. Could you tell me the approximate size of the mechanical and industrial insulation industries?"
NIA: "Well, ummmm well, it depends on how you define it, and we can provide you, perhaps with individual industry participants and, well…actually we just don’t have that figure at this time."
Until just recently, this phone conversation would take place several times a week. Now the answer is at hand-the mechanical and industrial insulation industry is seven billion dollars big!
Measurement, Value & Pride Finally Coming Together
Getting an assessment of the size and dollar value of the mechanical and industrial segments of the insulation industry was a challenge that the individuals spearheading the National Insulation Association’s (NIA) Growing the Insulation Industry Program (GIIP) were determined to undertake for a number of reasons.
The primary objective of the "Putting the Power of Insulation to Work" public relations campaign is to raise the awareness of mechanical insulation systems and build a platform on which our industry can grow. Measuring growth is critical in assessing the performance of a campaign that has the commitment of over 75 investors. The GIIP Committee needed to establish benchmark figures in order to measure campaign effectiveness.
A secondary, more long-term objective of the "Putting the Power of Insulation to Work" campaign is to be in a position to effect change in the regulatory arena. Without knowing our own industry’s worth and our own economic value, we lack the information and tools to be an effective player in any government or allied industry forum. As NIA joins forces with the Department of Energy and other industry allies to impact change that will help our industry grow, a clear understanding of our industry worth is essential.
Finally, it’s part of the role of an association to regularly assess the size and economic contribution of its membership.
Results Carefully Approached, Confidentially Measured
GIIP’s Marketing Outreach Committee and NIA’s Associates Committee carefully worked through a survey process to assess the industry. They understood that financial reporting within an industry has to be carefully approached, confidentially measured, and accurately tabulated. Initially, there were many who were tentative about trusting the process. Others still questioned the value of reporting. But, 36 companies represented said "it’s about time!"
Finally, after several spirited discussions, the committees agreed on the following parameters and definitions:
- The survey would include insulation and accessory manufacturers only. (Measuring distribution and contracting is more difficult because the database is much larger and the diversified nature of the distribution and contracting business makes it more difficult to accurately assess the data.)
- Industrial insulation products were defined as batt, blanket, board, block, wrap and shaped (pipe covering, curved segments, etc.) products manufactured from fibrous glass, ceramic wool, mineral wool, calcium silicate, perlite, cellular glass, polyurethane/polyisocyanurate, polystyrene, phenolic foam, cellular rubbers and elastomerics.
- Mechanical systems include all piping systems, process equipment boilers, chillers, heating, ventilation and air conditioning (HVAC) systems and exterior ductwork (but excluding interior duct lining, tanks, spheres and storage vessels.)
- Industrial insulation product sales include any/all accessory products when sold as an integral part of the manufacturers products (i.e. ASJ and other facing on blanket, board or pipe covering.) Metal building is excluded for the purpose of this survey.
- "Insulation accessories" was defined as all manufacturers’ direct sales to distributors, fabricators (including removable pad fabricators), contractors, and owners of the following product categories: adhesives, fabrics/reinforcing membranes, fasteners, insulating cements, jacketing/facing, lagging, mastics, rigid fitting/pipe jacketing, sealants, tapes, wire/strapping/banding.
- Manufacturers’ original equipment manufacturing (OEM) sales to other insulation product manufacturers for resale as integral parts of their products were not included.
- Respondents would report 1997 and 1998 gross sales dollars only.
Independent & Confidential Requirements
NIA hired Industry Insights, a Columbus, Ohio based firm, to conduct and prepare the study and to assure strict confidentiality of responses. Confidential survey forms were sent to industry manufacturing companies in February of 1999, and completed responses were received through the end of May 1999. A total of 36 completed survey forms was received from 22 insulation product manufacturers and 14 insulation accessory manufacturers.
"All responses were kept confidential. And while it seems like 36 companies is a limited number of respondents, we feel confident that the data estimations represent close to 80 percent of the mechanical and industrial insulation industry," said William Pitkin, executive vice president of NIA.
About the Study’s Report
Industry Insights compiled an industry assessment report based on its survey findings. The goal of the report was to provide valuable data regarding sales, market size and sales growth for the United States mechanical and industrial insulation market (see Figure I).
Total Industry Sized Then Extrapolated
Market sales growth represents the estimated growth of the entire mechanical insulation industry as we defined it and is based on the change in total sales represented by all respondents in this survey. This survey confirms the base numbers-manufacturer sales-but that is only about 20 percent of the total industry.
In order to communicate the total industry size, the NIA Survey Working Group took the core data from the survey, met informally with key representatives in manufacturing, distribution and contracting and extrapolated the data. Figure II shows these results.
Seven Billion Dollar Industry-So Now What?
"This was an extrapolation process. Members may or may not agree with the numbers. We encourage members to use this process with their own data and see what their results would be. But, we’re in the "ball park" and the value of this exercise is to give some credibility and validation to the mechanical insulation industry. As we continue the survey process from year to year, we will be able to benchmark growth, monitor industry specific economic trends and understand our value in the construction arena," Pitkin concluded.