Insulation demand trends outlined in industry report

News posted on 05.01.2014

Digitaljournal.com has reported (13/04/2014) on the volatile conditions endured by the Australian Insulation Services industry.

 

Weak downstream building trends and government intervention policies over the past five years have contributed to a downward trend in the insulation industry.

A strong current demand from the commercial building and housing market has meant industry revenue for 2013-2014 is expected to reach $750.0 million, up 3.4 per cent on the year before.

A record peak for revenue was reached in 2009-10 at $1.3 billion. This coincided with the peak of funding for the Home Insulation Program (HIP) from the Federal Government as well as the subsidisation of ceiling insulation into already existing homes as part of the Energy Efficient Homes Scheme.

Anthony Kelly, IBIS World industry analyst said that the quick termination of the HIP at the start of 2010 caused a sharp decline in demand for contractors which left many companies holding huge quantities of insulation stock and commitments to leases for storage, marketing programs and staff payments.

 

Industry revenue is estimated to trend down by an annualised 7.4 per cent over the five years through 2013-14. This is due to adverse trends in the industrial and commercial building markets and volatile fluctuations for installation demand in the housing market.

The insulation industry is characterised by many small firms operating in specialist and narrow geographic markets.

The total workforce in the industry peaked at 50,000 in November 2009, when insulation was installed into 178,000 homes under the HIP. In 2013-14, direct employment has fallen to approximately 7,150 people.

Solid growth is forecast over the next five years for the insulation services industry. "This performance reflects an expected recovery in the downstream building markets and subdued demand from the industrial markets," says Kelly.

Insulation demand is expected to increase due to rising energy costs and increasing environmental concerns. Households and businesses will look to become more environmentally friendly and to cut costs.

Developments in insulation materials and the simplicity of application will increase DIY competition.