Home insulation industry defies housing slump
Recession or no recession, American homeowners apparently are determined to keep saving energy by insulating their attics. But rather than hiring local contractors for the job, they are electing to do it themselves.
Major retailers of building supplies across the United States almost unanimously report that insulation sales are holding strong and look as though they will grow even stronger in the fall. Some are laying in as much stock as their warehouses will hold.
The big manufacturers of Fiberglas insulation, perhaps the most popular form for home use, are shifting their sales strategies from the new-home to the so- called "retrofit" or re-insulation market. And while they admit they have unutilized production capacity now, they are optimistic that demand for their products will soar with the onset of colder weather.
Recent surveys put the number of uninsulated or underinsulated attics in US household at more than 30 million. To try to bring this number down, the Carter administration has focused heavy attention on energy conservation, engineering a federal tax credit that allows a homeowner to deduct 15 percent of the cost -- up to $2,000 - measures used to cut down on fuel use.
The Internal Revenue Service, however, reports that on Form 1040 tax returns for 1979 processed through May 16 -- the latest data available -- slightly less than 10 percent claimed a residential energy credit: 3,165,000 out of 34,283,000 overall returns.
This, coupled with the recession and current unemployment rate, which could tend to discourage new investment in home insulation, leads industry spokesmen to speculate that where sales continue to be brisk it is because of the cost of fuels. In most sections of the US at the end of last winter, home heating oil was selling just below $1 a gallon.
"Our insulation business to the do-it-yourselfer is up 30 percent," says Chuck Bender of Wickes Corporation, which operates 276 building supply outlets in 34 states and is particularly strong in the Northeast and Midwest. "We anticipate a very strong fall. We're trying to squeeze all we can into our warehouses."
Mr. Bender notes that Wickes' sales to professional insulation contractors are down significantly but that "taking the two categories together, the insulation business is still stronger than some of our other lines."
Bob Snow, merchandising manager for Fiberglas building insulation with Johns-Manville Corporation in Denver, one of the leading manufacturers in the industry admits: "Production levels are lower than they would be if we were sold out. There is an unutilized capacity. But we have enjoyed at least level business in the retrofit market, and it will be perhaps stronger in the fall. I think you'll find the retrofil business is alive and well."
Another of the industry leaders, Owens-Corning, is experiencing a seasonal downturn in sales, Guy O. Mabry, vice-president of the insulation operating division. But he says the Toledo, Ohio, firm is planning to turn on extra machines beginning Aug. 1 to support the demand it expects to generate with an intensive new advertising campaign later in the month.
Trying to itnerest Owens-Corning dealers in the retrofit business, Mr. Mabry says, "is the biggest challenge we've had." But, he maintains, "Inflation in insulation is less than inflation in energy."
That would not seem to apply to the professional installers, however -- even those who specialize in retrofit business.
One Philadelphia contractor reports that whereas her firm was turning away business at this time last year, "There's a big slump now. We have only one to two weeks of work on hand." Business in the area is so slow, she says, that 17 out-of-work installers have come to her in recent weeks seeking jobs.
Says a contractor in Dundee, Ill., "If our crews are still in your area when you call up, we could probably do you the next day. For the past six years there hasn't been any real boom; just steady business. But now we're down to the hard core."