January, 2006

In Depth: Insulation

Concerns about heating bills, mold and indoor air quality, coupled with newly instituted tax credits, give inside-the-wall products a higher profile.

By Craig A. Shutt

With recent hurricanes creating dire warnings about energy bills this winter, and an energy tax-credit bill about to take effect, homeowners—and therefore homebuilders and remodelers—are paying closer attention to the insulation used in their projects. What they’re finding is that while energy efficiency remains a top priority, insulation products are providing additional benefits that fit with consumers’ growing awareness of environmental concerns. Educating builders on those benefits and focusing attention on products that meet multiple needs can help dealers better serve their professional customers and up-sell them to higher-quality products.

"The insulation market has grown considerably over the last decade,” says Tom Newton, a spokesman for CertainTeed. To some extent, that has occurred simply because more insulation is required to complete each home, he explains. "Houses have grown in square footage steadily at more than 5% per year. Also, more insulation is needed per house as the traditional 8-foot sidewall is being replaced by sidewalls of 9 and 10 feet—and more.” New codes are requiring that more insulation be used across the board in some cases as well.

Remodelers are using more insulation for many of the same reasons. Major room additions have seen "a sharp increase” in their percentage of the total remodeling market, and those projects use a large amount of insulation, Newton says. The reinsulation market also remains strong.

Certainly, energy efficiency is the key reason that insulation remains an integral part of every project. And energy costs do not show any indication of abating any time soon, as headlines have made clear to consumers nationwide. The Energy Information Agency predicts that costs will rise sharply again this heating season, by 69-77% for natural gas, 17-18% for electricity, 29-33% for oil and 39-43% for propane.

"This will be the unprecedented third year in a row that energy costs have risen in double-digit figures,” Newton points out. "That will cause states to adopt the latest codes for new construction and create a boom for the reinsulation market.” Home heating and cooling bills are the single largest payment for families after their mortgage payments, notes Scott Young, senior market manager for Dow Building & Construction, makers of Styrofoam products. As a result, builders and remodelers can make a strong case for specifying more and higher-quality products.

One way this interest is manifesting itself is through the use of higher R-values in homes, says Scott DeShetler, director of marketing communications with Johns Manville. "R-values are moving up, so you see more R-13 or higher being used and less R-11,” he says. Locations that used R-19 products now are rising to R-21 products that are thicker and more efficient.

Builders also are becoming more interested in spray products, which can produce a higher R-value, by providing more air spaces, and for their ability to reach smaller spaces with better coverage. "These products can provide the highest R-value possible,” DeShetler says, including R-15 in traditional R-11 or R-13 spaces and R-23 where R-19 or R-21 is achieved with batt insulation.

Energy also can be lost through the home’s wood framing, points out Dow’s Young. It accounts for approximately 25% of a home’s wall surface, which is why Dow encourages homeowners and builders to install rigid-foam insulation or house wrap on the exterior walls. House wraps also will help control air leakage, which is a significant factor in keeping energy costs down, says Susanne Robins, a spokesperson for Icynene Inc. R-values alone don’t provide the efficiency that’s necessary to keep a homeowner comfortable. She points out that increasing an R-8 insulation to R-32 reduces conductive heat by only another 7%. "The real problem is heat loss through convection, or air leakage,” she explains.

It accounts for as much as 40% of the total energy lost in a home.”

The Energy Policy Act of 2005 has created tax credits on certain insulation products and construction approaches that will encourage contractors and homeowners to use more insulation in 2006, notes Gale Tedhams, insulation product manager for Owens Corning. Homeowners can save as much as $2,000 for new construction and $500 for upgrades.

"This provides a great opportunity for builders and remodelers,” says Tedhams. Owens Corning marketers spent time in the fall finalizing plans for the program they would offer to help contractors modify their approaches to meet the new needs. Other companies, too, intend to have programs in place shortly after the details of how to apply for the credits are released.

Insulation manufacturers have been promoting other benefits of their products recently, too, as homeowner requirements have grown. Acoustics is becoming a larger concern, brought on in part by the growing size of homes. "More open space in the home is leading to more noise, which can create stress,” says Owens Corning’s Tedhams. Johns Manville’s DeShetler agrees. "Homeowners are more aware of acoustic needs today. How windows are installed and insulated are critical aspects.”

Owens Corning has introduced a line of products, including ceiling systems, batts, floor mats, caulk and framing, designed to help control noise. Johns Manville offers a series of nine videotapes that explain insulation installation techniques, including ways to keep noise levels from becoming a problem. Other companies, too, offer training and educational programs to aid with this growing area of concern.

The issues surrounding green building techniques also can be aided by insulation products. Mold has become a hot button for many homeowners, creating fears that are hard to alleviate. Insulation companies have taken a strong position to help reduce those fears, as their products are often in the locations where mold can grow—behind walls or ceilings.

A Johns Manville product, for instance, promotes that the paper backing is treated with a preservative that is registered with the Environmental Protection Agency as protecting against mold growth due to moisture. "The goal is to protect any weak links in the chain, so that if a pipe leaks, our product isn’t helping to create mold,” DeShetler explains.

According to industry reports, insurance companies are more receptive to insuring homes against mold damage if they know what products are being used in the construction, notes Icynene’s Robins. The company promotes its products as protecting against mold, because they offer an open-flow structure that allows water to flow through them without spreading or retaining moisture, she explains.

Virtually all of the insulation companies are addressing mold concerns in some fashion. CertainTeed offers a product with a high-tech vapor retarder that allows excess moisture to escape wall cavities to reduce the potential for moisture and mold problems. Dow also produces programs to explain how Styrofoam insulation can reduce the potential. It is a concern that builders should address, especially with behind-the-wall products that can leave homeowners worried unnecessarily.

Indoor air quality also has become a high-profile concern for homeowners, ironically brought on in part by the energy efficiency that consumers want to provide. By tightening the air exchanges that allow homes to breathe but that lessen efficiency, indoor air doesn’t have the chance to freshen or to eliminate off-gassing from new products or other particulates that accumulate. Johns Manville has addressed that issue by eliminating formaldehyde from its insulation products and replacing it with an acrylic resin. "Indoor air quality is becoming a big deal, and we’re seeing other categories moving to make changes like this,” says DeShetler.

As qualities such as indoor air quality and mold make clear, "green” building, or building in harmony with the environment, has gained a high profile with some consumers. Builders are missing an opportunity if they are not promoting their use of green products and systems, marketers note. And many of them aren’t.

A recent study sponsored by the NAHB Research Center and Icynene indicated that 46% of those expecting to buy a new home or spend more than $10,000 on renovations in the coming year were eager to incorporate green products into the home, especially if the products will save money. But only 14% of those surveyed indicated that builders or contractors had told them about available options. And of the respondents who said they weren’t intending to use green products, 56% said it was because they weren’t aware of options.

Dealers can help builders provide this information and make their customers aware of the potential in this market, says Icynene’s Robins. "A key finding was that respondents do not consider the cost of efficacy of green building products to be an obstacle to their use,” she points out. Only 14% of respondents said green or energy-efficient options cost too much, and no respondents expressed concerns that green building materials were less effective than conventional materials.

The trend today is to approach the home as an entire building system, in which all aspects must work together, Robins notes. That includes the foundation, walls, roof, doors, insulation and mechanical systems. "If the interaction of these components is ignored, Mother Nature will prevail, and problems will occur,” she says. "For example, if a home is built tightly but without proper ventilation, it will create poor indoor air quality” (for more on this, see the sidebar below).

These trends give dealers a variety of ways to help their builder and remodeler customers, pointing out benefits in each type of insulation product and ensuring the most appropriate ones are specified. They also can show their customers how the benefits provided by these behind-the-wall products can be sold to their own customers to create a more satisfied and less concerned homeowner.

Manufacturers provide a range of programs for dealers, including loyalty incentives, training programs and point-of-purchase materials to aid in selling the best products to their customers. CertainTeed, for instance, offers the Medallion Dealer program that includes reward points, management tools, custom marketing support, financial services, market research and scientific seminars and in-house research support.

All of the companies are looking for ways to work closer with the dealers, because the product category often doesn’t get the attention from which it could benefit. "You’ve got to show the products on the shelves, not keep them in the back room,” says Johns Manville’s DeShetler. "The big boxes show it in the aisle, and that lets customers see new products and benefits.”

Insulation packages are substantial, which works against them being displayed but presents great opportunity to "billboard” the message. "Packages are self-merchandising, so the story is explained right there,” he point out. "If you hide it, you limit sales to requests and miss a chance to sell up a customer to a better product. If you merchandise them, you pique people’s interest. And with energy costs going up, it’s a good time to let them know all the options. Getting customers’ attention is a big part of the battle—and this can be a pretty profitable sale.”

The variety of trends and the high profile for energy costs makes the winter of 2006 a good point to focus on insulation products and ensure that customers are using the best product, both for efficiency and for satisfying their own customers. "This is a great time for dealers to be merchandising these products if they haven’t before,” says DeShetler. "Insulation is a cost-effective way to save money and an important product to be certain is installed correctly.”