January, 2007

In Depth: Insulation

Performance advances mean energy savings for homeowners—and sales for you.

By Craig A. Shutt

Insulation products have long been a staple of the new-home, remodeling, and do-it-yourself industries, creating a strong product category for dealers no matter what their customer base. But recent trends in both the market and the products have moved it from an afterthought in construction design to a more key decision and marketing benefit.

"The value of energy efficiency and the need to control energy costs are being recognized by homeowners,” says Gail Tedhams, product and program manager at Owens Corning in Toledo, Ohio. "Over the past three years, this interest has really grown.” Last winter’s fuel bills, this summer’s gasoline prices, and media coverage of the environment have all helped spark that interest, says Scott Young, North American residential marketing manager for insulation for the Building Solutions division of Dow Chemical Co. in Midland, Mich.

A key ingredient in the growing interest is the heightened awareness of global warming, he notes. "There’s always been an environmental impact on energy use, but now we’re realizing there is a significant economic impact that hasn’t been addressed,” Young says. "We know global warming is happening, so the goal of energy efficiency is broadening its perspective. Insulation is being added not just because of the energy savings for us, but also for the long-term effects on energy that it can produce.”

That awareness has resulted in increased interest and more questions from homeowners about the insulation in their existing or potential homes. A survey conducted by Owens Corning showed that 96% of homebuyers consider energy efficiency when purchasing a new home. Perhaps even more telling, 71% say they are interested in a home that "reduces their overall impact on the environment,” the study says.

The survey also showed that while homeowner interest exists, knowledge lags behind. The study reported that 78% of homeowners had added no insulation to their attic, in part because they believe their homes already had enough. Owens Corning also noted that "80% of homes built before 1980 are not insulated to proper government standards.”

Codes Boost Requirements

In part, that deficiency in insulation has resulted as codes boost their requirements, explains Gary Romes, vice president of business development for Guardian Building Products in Greer, S.C. "Many state codes are increasing the required R-values in new construction for both attics and walls, and that’s happening pretty well across all regions.” Where 2x4 walls might have had R-13 and 2x6 walls featured R19, they now can reach R-15 and R-21, respectively. Meanwhile, attics that used to be considered well-insulated at R-38 are moving to R-49, he says.

For walls, the products are adding more density since the space is limited, while attics are adding depth. To reach R-49, for instance, Guardian has introduced the Fatt Batt fiberglass batt, which has 15 inches of depth. "Before, homeowners had to double up batts to reach that level, so this is much faster to put in and provides a good thermal layer,” Romes says.

The higher insulation levels add comfort as well as energy savings, notes Scott DeShetler, director of marketing and communications for Johns Manville in Denver. "Homeowners want to maximize the comfort of their homes, and that translates into them wanting to increase R values and reduce air leakage,” he says. "They want to get as much R value into their walls and ceiling as possible.”

Certainly aiding that interest is the Energy Policy Act of 2005, which took effect in 2006. The law provides tax credits for increasing energy efficiency, including $2,000 for homes that reduce energy use for heating and cooling by 50% compared to the national model code. The credit is available for homes completed during 2006-2007, but extensions through 2009 are a possibility. There also are cost-based incentives of 10% of the amount spent for "qualified energy-efficient improvements” and up to $300 for each "qualified energy property” improvement up to a maximum credit of $500. The credits can result from installation of insulation, exterior windows or skylights, exterior doors, and reflective metal roofs.

The credits are easier to obtain than some homeowners realize, marketers say, but they need encouragement and reminders that the rebates exist. A number of companies promote the credits, particularly in conjunction with their own rebate programs. They also offer educational materials and explanations at their websites. Icynene in Mississauga, Ontario, for example, has established a separate website to lead homeowners through explanations of different insulation types of insulation, and suggestions for choosing the proper one for their use.

Sales To Grow

The best news for dealers is that insulation sales look to be able to withstand the dropoff in new-housing starts that is enveloping most markets. Projecting a 15- to 20% increase annually for residential insulation, Dow’s Young says, "There is a less cyclical nature to these products than to more traditional wood products such as lumber when housing starts aren’t as robust.”

Remodeling projects and even simple energy retrofits often grow as housing sales drop, with homeowners staying put and adding on or upgrading existing space. Those projects can keep sales moving despite that new-home drop, Young says. "Insulation sales can help insulate dealers from a slowing housing market, and that should be exciting for our customers.”

A recently released market study by Freedonia Group in Cleveland supports the idea that slowing housing starts doesn’t mean insulation sales will falter. Indeed, it forecasts that insulation products of all types throughout all markets are expected to rise about 5% per year through 2010.

"Greater insulation use per structure and upgrades of insulation for existing buildings (both residential and nonresidential) will boost insulation demand,” the study says. Fiberglass insulation remains the leading insulation material, it notes, accounting for more than half of demand in both dollar totals and volume in 2005. "Growth will be driven by more intensive use of fiberglass insulation per new housing unit, sparked by expanded concern about energy efficiency, ease of installation, and favorable cost factors,” it reports. Those gains will be moderated because of the weakness in the housing market during this period as fiberglass accounts for a large percentage of the insulation installed in new homes.

Loose-fill fiberglass is becoming more popular, marketers say, because it can provide more depth and therefore higher R-value than batts. It also can fill every nook and cranny without the need for the careful cutting and placing that batts can require. "Spray products are definitely taking hold, says J-M’s DeShetler. The company in 2004 introduced a sprayed-in fiberglass product to meet demand. "It provides the high R value of fiberglass in a form that will fill all spaces.”

Foamed-plastic insulation is the second-largest product, accounting for about 45% of demand in value and about 30% in volume, the Freedonia report says. Manufacturers stress its ability to expand to fill an entire space, ensuring no cracks or thermal breaks. Foamed-plastic’s key markets, in nonresidential building and other markets outside of construction, will help keep its share steady the report says, while marketers indicate it also is making major inroads in residential markets.

Reflective insulation and radiant barriers also will see good growth (from a small base), the report continues, as those products are used more often in metal buildings and other nonresidential construction, as well as in other markets such as pipe wrap and duct insulation which will not be affected by a single-family downturn.

According to the report, gains will be more robust in replacement markets as "the decline in single-family home construction will inhibit demand in new residential building. Nonresidential construction will provide the greatest growth opportunities.”

Moisture Control Vital

But energy efficiency isn’t the only factor homeowners consider when they make a purchasing decision. "CertainTeed is working to help builders and homeowners think not just in terms of thermal efficiency, but also about moisture management,” says Mike Loughery, communications manager for the Valley Forge, Pa.-based company. "We want people to understand that thermal insulation can also be a moisture-management system to help protect against mold and mildew. Whenever you talk about mold and mildew, it raises eyebrows and gains attention.”

OC’s Tedhams agrees. "The interest in moisture management started with the hysteria over mold, and that has now changed how houses are built. The issues have calmed down some, but the potential for liability is still there.” Adds Dow’s Young: "Mold-litigation issues are costing homebuilders tremendously, but mold problems are still very much misunderstood.”

A number of companies present seminars aimed at helping builders understand moisture-control issues. Dow’s programs, which are approved by the American Institute of Architects for professional learning credits, are generic in nature, using little Dow product information, Young notes.

"We want to drive education,” he says. "We know that if we can grow the size of the market pie, we’ll get our part.”

System Approach Necessary

Tedhams notes that moisture management is a complicated issue because it involves a relationship among many products. "We stress that you have to look at the whole house as a system, not just at the insulation,” she says. That includes housewrap, flashing, sill sealers, and other products. "Moisture control is a critical part of construction of a home. Builders have to look at how they will keep water out and, just as importantly, how to drain and dry it when it does get in, because it will.”

Guardian promotes a "best of both worlds” approach by suggesting the use of several products, including its 1/2-inch polyurethane closed-cell foam to create an air barrier up against the sheathing to prevent big leaks, followed by the company’s fiberglass insulation to provide thermal performance. "It’s an air-tight system that works better than any one product can provide,” says Romes.

In part, some of the high profile given to mold concerns has tapered off because homeowners think of moisture problems associated with mold as a catastrophic event, not something they have to consider every day, notes J-M’s DeShetler. "It tends to arise with a roof leak or a pipe breaking or wind-blown rain that penetrates in a storm,” he explains. "There’s a lot of concern but it’s not seen as a day-to-day problem. The building-science community is more concerned about it than the construction community.”

Even so, shifts are occurring in how vapor and moisture barriers are considered in a home, he says. In the South, for instance, the need to allow walls to breathe to ensure moisture doesn’t become trapped has become better recognized. Each region has its own requirements based on the seasonal environment. "The building science is changing rapidly to focus on performance overall.”

Concerns about mold and mildew are part of a larger ecological interest in the home that envelops indoor-air quality of all types. J-M has met these concerns by eliminating all formaldehyde from its products to eliminate off-gassing that can create problems. "Our research told us that after [homeowners] received maximum energy efficiency, the next big thing they looked for was the health and wellbeing of the family,” he says. (See Insulation Goes Green to learn how the insulation industry is meeting the needs of "green” building.)

Foam products often raise concerns about moisture because of their application method and composition. Companies such as Icynene educate consumers not only about the thermal effectiveness of the product, but also its moisture-control properties. "Homeowners have a lot of questions about mold,” says Teresa Crosato, marketing communications supervisor. It’s of particular concern in southern areas, she notes, where homeowners want to insulate the underside of the attic to create more livable space. The product has an open-cell structure, she explains, so water drains through rather than being trapped and causing unseen problems.

Icynene also promotes its environmental friendliness, stressing its 100-percent water-blown approach to application; its lack of ozone-depleting substances and off-gasses, and its certification by Envirodesic for its contribution to improving air quality.

Acoustic Benefits Explained

Acoustics also has grown in importance for homeowners, to the extent that many consider insulating interior walls, marketers say. "Especially as home theaters grow, sound is becoming a more important aspect,” notes CertainTeed’s Loughery. Adds Owens Corning’s Tedhams, other high-quality amenities also add to the effect. "Granite countertops, higher ceilings, solid floors—all have an effect and can make noise a real issue.”

As homes are built tighter to help control thermal heat loss, room-to-room noise becomes more noticeable, she says. The company has introduced a Quiet Down America campaign to highlight the differences that insulating can make in a home’s acoustics. "Consumers change their lifestyle due to noise,” she says, noting one example in the company’s program describes a woman who went to a closet to read a book to escape from noise around her. "Insulating for acoustics can make people much more comfortable and they don’t realize it.”

J-M’s DeShetler distinguishes between "outside-in” noise, such as airplanes and cars, and room-to-room noise, such as from the kids in the playroom or a loud home theater. "There’s much more interest in acoustic control than there was five years ago,” he says. Much of it derives from move-up luxury buyers, who have come to realize that noise-preventing insulation can make a difference in the livability and comfort of their homes.

Tedhams points to recent Owens-Corning research that indicates acoustics can make a big difference for builders looking for an edge. Their study showed 70% of homeowners were unhappy with the noise level of their home and were disappointed that builders didn’t discuss solutions with them.

DeShetler adds that acoustic control can enhance a home’s overall image: "If you slam a door and you hear a solid sound, the perception is that the home is well built,” he says. The same situation holds true with cars, he notes, where slamming a door and hearing a solid thunk gives drivers a better perception of the car overall.

Insulation aids acoustics in two ways, by plugging air leaks that cause noise to travel from room to room, and by providing more mass in the wall to prevent reverberation. Insulation can’t achieve those results by itself, DeShetler notes. "Insulation is only part of the solution to controlling acoustics,” he says. "Good, solid design is required to start, and insulation can’t solve design problems.”

Guardian’s Romes agrees that it can provide a differentiator in today’s market. "Our sales staff talks with builders about the benefits and options for insulating interior walls, especially around bathrooms, utility rooms, master bedrooms, and other key spaces. We suggest it as an upgrade package. Many are taking advantage of it because they are looking to enhance the total-home comfort.”

Packaging Improves

Ensuring the right product gets to the home can be a challenge, marketers agree, with education needed both on the value of insulation and on which product to use in each location. Owens Corning currently is rolling out new packaging starting in the Northeast that uses a home diagram to show where different R-values can be achieved with different products. The packaging will be extended across the country as production is available, Tedhams says.

J-M also has focused on its packaging says DeShetler. "We spend a lot of time designing it to get good information to the customers to ensure they are buying what they need.” He notes that homeowners and contractors often ask similar questions, so the packaging can work for both.

Displays also are offered by all of the marketers in a variety of sizes and shapes. "Lumberyards tend to have less space for displaying products, so we rely more on good product training for them,” DeShetler says.

Getting builders’ attention is easier today with these new products, packaging, and display materials, marketers note, because differentiation has become critical. "Getting the builders’ attention is easier right now with the housing-market slowing down,” says CertainTeed’s Loughery. "They have more time to talk with us, and they’re more receptive to hearing about products that can help them.”

CRAIG A. SHUTT, senior contributing editor of the magazine, has nearly 30 years experience covering the LBM industry.