Drywall and Insulation Contractors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 18,900 drywall and insulation contractors in the US perform drywall work, plaster work, and building insulation work for residential and nonresidential buildings. They may also install ceiling tiles, perform fireproofing work for buildings, and do framing or painting work. Work is performed for new building construction, renovations and additions to existing buildings, and maintenance and repair of existing installations.

Dependence on Construction Activity

Demand for drywall and insulation contractors is highly dependent on residential and nonresidential construction activity.

Reliance on Immigrant Workers

The construction industry in general and drywall and insulation contractors in particular, are highly dependent on immigrant workers to fill lower skilled positions.

Industry size & Structure

The average drywall and insulation contractor operates out of a single location and generates $2-3 million in annual revenue.

    • The drywall and insulation contractor industry in the US consists of about 18,900 companies that employ 242,600 workers and generate $45 billion in annual revenue.
    • The industry consists primarily of small companies - 61% of firms have less than five employees.
    • Small firms may specialize in residential or commercial construction, while larger firms typically target both markets.
    • Major US companies include KHS&S, Performance Contracting Group, Standard Drywall, Inc. and The Raymond Group.
                                Industry Forecast
                                Drywall and Insulation Contractors Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Feb 13, 2024 - Residential, Nonresidential Construction Outlooks Mixed
                                • Total nonresidential building construction spending is projected to rise 8% in 2024 over 2023, according to FMI’s first-quarter 2024 North American Engineering and Construction Outlook. At growth of 18%, manufacturing will lead 2024 nonresidential building construction, followed by lodging (+12%), educational (+10%), and healthcare (+8%). Some other segments of the nonresidential building sector face headwinds, including high interest rates, inflation, and tighter lending standards. These pressures and high vacancy rates will reduce office project spending by 2% in 2024. Commercial project spending is forecast to decline by 4% in 2024. High interest rates will also challenge the housing market. Single-family construction spending is forecast to drop 5% in 2024 after falling 14% in 2023. Spending for multifamily is expected to decline 15% in 2024 after projects in development peaked at 1 million units in mid-2023. Home improvement project spending will drop 4% in 2024 from 3% growth in 2023.
                                • Some of the top challenges homebuilders faced in 2023 are expected to ease in 2024, while others may get worse, according to a recent survey for the NAHB/Wells Fargo Housing Market Index (HMI). At 90%, high interest rates was the most-cited challenge builders said they faced in 2023, and 77% expect them to remain an issue in 2024. About 83% of builders ranked inflation as their second-biggest headache in 2023, but only 52% think it will be a problem in 2024. In 2023, 73% of builders said the cost and availability of labor was a significant issue, and 71% believe this problem will persist in 2024. In 2023, 71% of builders said potential buyers believed interest rates and home prices will fall if they postpone buying, but for 2024, 77% of builders think buyers believe they can save by waiting. The cost and availability of developed lots was a problem for 57% of builders in 2023, but 64% of builders think lot shortages will be a major challenge in 2024.
                                • Demand for building design services was flat in December compared to the prior month, according to a January report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 45.4 in December from November’s reading of 45.3. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 53.1 in December compared to 56.9 in November, and the index for the value of new design contracts increased to 50.0 from 48.1. The AIA’s Chief Economist, Kermit Baker said, “Billings at firms declined for eight months of the year, and the last four months saw this overall weakness accelerate. Fortunately, project backlogs at firms eased only slightly through the year despite the overall reported softness in billings.”
                                • In 2024, total office construction starts will drop 6% year-over-year to about $37 billion, according to a recent webinar by Dodge Construction Network. At 18%, office vacancies are up 140 basis points higher than they were a year earlier, according to Dodge economist Richard Branch, and they are expected to keep rising. Weak demand for office space is putting downward pressure on the speculative office construction market, which develops projects before a tenant is secured. The spec market accounts for over 60% of total office construction spending. Amid a weak market for new space, office construction activity will be propped up by renovations of existing buildings and owner-built office projects.
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