State of the Roofing Industry: A Conversation with Johns Manville

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It’s mid-way through the year, time to take the roofing industry’s temperature. We recently spoke with Emily Gehrmann, who is Johns Manville’s (JM) Regional Sales Manager for Canada and responsible for national distribution in the US. We have worked for JM for many years and value Emily’s perspective on recent challenges and what the future of the roofing industry looks like.

Here’s a summary of our discussion.

 

The Pandemic Has Affected Every Aspect of the Roofing Industry

The good news is that new construction has been strong, creating healthy demand. However, the impact of the pandemic has made it tough for Johns Manville to service customers—supplying them with what they need, when they need it, at stable pricing.

From a roofer’s perspective, the challenges of the last few years have forced us to juggle and find creative solutions to keep our businesses alive and our customers happy.

 

Sold Out Capacity and Long Lead Times

Supply chain challenges have made it difficult for JM and its competitors to keep up with strong demand, but Canada has been easier to manage than the US market. Johns-Mansville

JM has sold-out capacity in the US for polyisocyanurate (ISO) insulation, resulting in their not taking any new orders with shipping dates prior to the beginning of 2024. The situation is somewhat better for Canada, as the ISO plant in Cornwall, Ontario, has enabled them to reserve products for Canadian roofers—shortening the lead time to July 2022. JM decided not to ship over the border into the US early in the COVID epidemic.

 The shortages have been compounded by new building code requirements in the past few years, which require substantially more ISO insulation–sometimes two or even three layers over the entire roof.

Dealing with long lead times has been difficult for roofers, sometimes causing jobs to be delayed. Also, a customer’s budget may be approved only months before the desired start date, This makes it impossible to place orders far enough in advance to meet JM’s lead times. This is especially troublesome for short-term replacement jobs.

 

Adjusting to Shortages and Rising Costs

Supply chain and skyrocketing prices affect the entire economic landscape, including the roofing industry. Emily described some of JM’s experiences and how it has dealt with them.                                        

Sourcing of Roofing Materials 

There are shortages of certain specialty or raw materials—such as the chemical MDI, a chemical component of ISO. Other shortages include perlite cover board, various roofing membranes including EPDM, TPO, and to a lesser extent modified bitumen and glass felt paper. JM also faces shortages of assembled parts such as screws and fastening plates. As a result, JM is scouring the marketplace for new supply sources and exploring flexible options to avoid delays. In some cases, suppliers are prioritizing loyal, long-standing customers.

 

Price Increases

Pricing: Steep and rapid price increases have caused suppliers and roofers to adjust pricing structures and approach costing issues cautiously. For example, a roofer may guarantee pricing for only 30 days from the date of contract award, or a manufacturer may reprice material costs at the time of shipment. There are almost monthly price increase notices coming out on various items, making it very difficult to price projects in advance. 

 

Inventory and Allocation Challenges

Roofers generally send orders to suppliers a few weeks before job start up—in a just-in-time manner. With longer lead times, however, roofers are now forced to place orders immediately after the job is approved, simultaneously considering alternative options, if needed. The use of substitute products is becoming more common as various elements are often on backorder and in short supply.

JM uses the FIFO (First In, First Out) method for product allocation. They also prefer to deliver all materials for a job in a single shipment. This system works when items are in stock, but it can fall apart when inventory is unstable.  

 

What can happen when FIFO goes wrong? 

Let’s look at a few examples of how FIFO affects roofers.

Example 1—PO Confusion: A roofer puts in the PO with JM when a job is approved. To stay on the safe side, they also look at alternative sourcing. Using a new source means they will have to cancel the PO with JM. But if the new supplier then falls through, the roofer needs to submit a new order to JM—possibly causing a duplicate PO.

 Example 2—Early Shipments: FIFO allocation isn’t based primarily on a job’s planned start date. Again, let’s say a roofer sends the supply order upon receiving approval from the customer. If JM’s has the inventory and ships it immediately, it might arrive at the job site too early—without a proper and safe place to store the material.

Rethinking FIFO: The results of FIFO allocation are causing headaches, especially in the US market, and JM is currently looking at alternative allocation methods to better serve its customers.

 

What’s Next for the Roofing Industry?

 JM is cautiously optimistic. Demand for new construction is up, and hopefully, the supply chain will level out over time. For the foreseeable future, though, the problems related to materials, inventory, and lead times will remain. The best advice is to be creative and flexible to survive and provide our customers with the best service possible.

 

Elite Roofing is on call 24 hours a day to respond to roof leaks and provide after-hours emergency service. Our team is available Monday to Friday 9-5 for all general inquiries.