Editor’s note: A brief summary of IFAI’s State of the Industry report appeared in the March 2018 issue of Specialty Fabrics Review. The summaries for the awnings/canopies and fabric structures appear here. For the summary of all 11 market areas covered by IFAI, visit www.SpecialtyFabricsReview.com. To purchase the entire report, visit www.ifai.com/marketresearch.
Economic growth in 2017 increased in key advanced economies such as the United States, Canada, Japan, and Europe. The emerging economies of China and Russia were also up in 2017, but a decrease in those countries’ economic prospects is widely anticipated in 2018. Worldwide growth in GDP came in at 3.6 percent in 2017-well ahead of the 3.2 percent growth experienced in 2016; it is expected to recover to 3.7 percent in 2018. This growth in key economies across the world should propel continued growth in specialty fabrics markets in 2018. All but one of the end-product market segments IFAI monitors achieved sales growth in 2017. (The automotive market was down 2 percent.)
The impetus for growth for specialty fabrics companies has been and remains their unwavering commitment to innovation. Organizations focusing their resources on developing and delivering innovative products and services directed at satisfying unmet customer needs are much more likely than to realize above average growth in 2018 and beyond.
Awnings and Canopies
In 2017, growth in the awning market increased, in the low single-digit range. Contributing to the growth was an approximate 6.5 percent rise in housing values in 2017; a 4.1 percent increase in home values is anticipated in 2018.
Many homeowners used their rising home equity to remodel in 2017. According to the National Association of Home Builders Remodeling Market Index (RMI), the RMI figure for third quarter 2017 was 57. (An RMI above 50 indicates that more than half of remodelers reported that market activity is increasing.) Remodelers across the U.S. are seeing increased demand for residential repairs and expect to be busy well into 2018-especially in the southern states, due to damage caused by hurricanes.
U.S. construction activity increased 4.2 percent in 2017 over 2016. Residential construction was up 11 percent in 2017 over 2016; nonresidential construction was down slightly at -0.5 percent.
In 2016 and 2017, the U.S. and Canada had good weather conditions in April through June. The result was a longer selling season for awnings, which translated into an improvement in awning sales in 2017-helped by a much stronger U.S. economy compared to 2016.
In November 2017, a survey was administered to U.S. and Canadian awning suppliers and end product manufacturers. Eighty-three percent of the suppliers and end product manufacturers surveyed reported that the outlook for the awning and canopy business will be somewhat better in 2018 than it was in 2017. This year, a 4.1 percent increase in home values, unemployment hovering close to 4.4 percent, and (weather permitting) an earlier start to the awning selling season should lead to an increase in sales in the U.S. and Canadian awning/canopy markets.
U.S. GDP increased to 2.2 percent in 2017 and is expected to reach 2.3 percent in 2018. Consumer confidence increased significantly in 2017. Developments like these helped fuel growth close to the mid-single-digit range in the U.S./Canadian fabric structures market in 2017. A similar rate of growth in the fabric structures market is expected in 2018.
Trends and Opportunities
- The U.S./Canadian fabric structures market is projected by survey participants to be somewhat better in 2018 than in 2017
- We’re continuing to see robust demand for residential remodeling work (2014-2018)
- There was an uptick in demand in 2017 for temporary fabric structures used in by emergency response teams in response to hurricanes in the southern United States and fires in California.
- More projects are occurring in infrastructure development such as stadiums and shade structures for schools, automotive dealerships and sporting events such as golf and tennis
- There is a continuing increase in demand for engineered structures
- The quality and performance of fabrics has improved. They are more colorful and more durable; coating applications are being applied to fabrics that give them value-added enhancements, such as making them waterproof, fire-resistant and even self-cleaning
- Too many manufacturers make distorted claims about their fabrics-especially overseas firms
- Strict, hard to interpret U.S. building codes can increase the cost of business
- The continuation of inexpensive imports of shade structures from Asia, especially China
The U.S. and the rest of the world continue to struggle operating in what’s been a tepid economic environment over the past 10 years. The weak global economy has made kindling the expansion of the specialty fabrics industry challenging for market participants to overcome-especially when considering that the sluggish growth in worldwide GDP is likely to last another five years.
Most of the players in the specialty fabrics industry are keenly aware of the economic impediments to achieving their sales and profitability goals each year. These manufacturers work tirelessly and commit substantial time and resources to ensure continued growth and better positioning to compete for and stay relevant to new and existing customers.
A business climate centered on an unending pursuit of innovation is critical. Innovation exists in every phase of any business-technologies, markets served, products, processes and services created and delivered to increasingly demanding customers. Using innovative products and processes to deliver innovative products and processes to customers, building credibility and strong market relationships, are the most important tools for business growth, driving industry expansion over the long run.
Some examples of working innovations include working with architects, designers and builders to develop innovative looks and styles or designs for awnings; actively promoting the benefits of shade products with built-in UV protection to protect people (especially school children) from skin cancer; and developing and using multifunctional fabrics that provide water repellency, flame resistance, durability and sustainability, yet still offer eye-popping aesthetics and graphics for a personal (and promotional) touch.
Specialty fabrics companies that keep innovation in every aspect of their businesses are building iconic brands that live.
Jeffrey C. Rasmussen, IFAI Director of Market Research