The future of the roofing industry: Trends, challenges, and opportunities
Introduction
Roofing contractors are an essential part of the construction industry. They are responsible for installing, repairing, and maintaining roofs of homes and buildings. As the demand for new builds and infrastructure continues to grow in the United States, the roofing industry will expand. In this industry report, we will explore the future of roofing contractors in the U.S. and examine the trends that will shape the industry over the next five years.
State of the roofing contractors industry
According to IBIS research, the roofing contractors industry is projected to generate $56.7 billion in revenue in 20231. This represents an annualized decrease of 1.2% over the past five years. Industry profit was reported at $3.0 billion, with a profit margin of 5.3%, reflecting a decrease of 1.2 percentage points over the same period.
The research reported there were 37,340 roofing businesses in the U.S., with an annual growth of 1.2% from 2018 to 2023. The industry employed 212,000 workers, with an annual growth of 1.2% over the same period, and paid $14.3 billion in wages, which increased at an annualized rate of 1.7%.
Table 1: Industry outlook 2023-20281
| Key Factors | Description |
| Revenue Growth | Annualized growth of 0.5% to reach $58.1 billion in 2028 |
| Profit Margin | Slight shrink to 5.2% of revenue in 2028 |
| Housing Market | Stunted growth due to pandemic effects |
| Demographics | Millennials returning to housing market as finances improve |
| Nonresidential Demand | Accelerating due to improved economic conditions and investment in nonresidential properties |
| Eco-friendly Roofing Solutions | Growing demand, diversification for existing contractors, new entrants |
| Market Saturation | Saturated market, but expanding with eco-friendly alternatives |
| Industry Life Cycle Stage | Mature |
| Contribution to gross domestic product (GDP) | IVA to rise an annualized 0.4% over 10 years |
The roofing industry is expected to experience slow growth in the coming years, with industry revenue projected to increase at an annualized rate of 0.5% to $58.1 billion over the five years to 2028. This growth is due to increased investment in housing and commercial building, with the value of residential construction expected to grow at an annualized rate of 0.6% over the next five years.
As a result, roofing contractors are anticipated to increase employment, with the number of workers projected to grow at an annualized rate of 0.8% to 220,989 workers over the next five years.
Roofing contractors industry overview
The roofing contractors industry in the U.S. is highly fragmented and localized. Roofing contractors typically operate on a regional basis and compete with each other for projects. The industry is primarily driven by the residential market, which saw growth during the COVID-19 pandemic as millions of Americans moved into new homes.
Replacement services are responsible for 94% of the roofing projects in North America2. The few larger contractors in the industry focus on long-term commercial contracts rather than one-off residential jobs. Commercial demand took a hit during the COVID-19 pandemic but has since recovered due to the resumption of economic activity in late 2021.
Key success factors in the industry include:
- Having contacts within key markets
- Having a good reputation
- Ability to expand and contract operations rapidly in line with market demand
- Ability to compete on tender
Profitability in the industry is expected to be at 5.3% of revenue in 20231. Wages account for 25.2% of industry revenue in 2023, and purchase costs, including materials and subcontractor payments, account for 43.9% of industry revenue in the same year.
Competition in the industry is high and steady, with companies primarily competing on price, reputation, portfolio of past work, and quality. Barriers to entry are low and steady, with licensing typically required for tiled and metal roofing work but no formal training or qualification needed. Initial capital outlays for starting a business in the industry are relatively low.
The industry's globalization is low and steady, with little to no foreign ownership of companies in the industry. The highly localized nature of the industry and the location-based nature of construction work mean that globalization is very low among contractor industries.
Major players in the roofing industry
The roofing contractors industry is highly fragmented and competitive, with numerous small and large players operating across various segments. However, a few prominent companies stand out in terms of market share, revenue, and reputation.
- Tecta America: As an incumbent in the industry, Tecta America has a strong presence with over 500 employees. With revenue of $960.2 million and a market share of 1.7%, the company has managed to generate a profit of $64.3 million1.
- CentiMark: Another incumbent in the market, CentiMark employs over 500 staff members and has achieved revenue of $777.7 million, holding a 1.4% market share1. The company's profit stands at $52.5 million.
- Baker Roofing Company: With 500+ employees, Baker Roofing Company is an incumbent in the industry. The company has generated $294.8 million in revenue, a 0.52% market share, and a profit of $15.9 million1.
- Nations Roof: As an All Star company with over 500 employees, Nations Roof has earned $185.1 million in revenue and a 0.33% market share1. The company's profit is $12.4 million, demonstrating their ability to provide roofing services across various segments.
- Holland Roofing: Holland Roofing, an incumbent in the industry, employs 100 to 499 workers. The company has generated $97.7 million in revenue, a 0.17% market share, and a profit of $6.5 million1.
Other notable players in the industry include Empire Roofing, Douglass Colony, Sutter Roofing, KPost Company, and Beldon Roofing Company. These companies have established themselves as key players in their respective segments.
As the industry evolves and environmentally friendly products become more prevalent, companies that can differentiate their offerings and capitalize on emerging market trends will continue to grow and strengthen their positions within the roofing industry.
Table 2: Top 10 roofing contractors in the U. S.1
| Competitors | Company Type | Employee Segment | Revenue ($M) | Market Share (%) | Profit ($M) |
| Tecta America | Incumbent | 500+ Employees | 960.2 | 1.7 | 64.3 |
| CentiMark | Incumbent | 500+ Employees | 777.7 | 1.4 | 52.5 |
| Baker Roofing Company | Incumbent | 500+ Employees | 294.8 | 0.52 | 15.9 |
| Nations Roof | All Star | 500+ Employees | 185.1 | 0.33 | 12.4 |
| Holland Roofing | Incumbent | 100-499 Employees | 97.7 | 0.17 | 6.5 |
| Empire Roofing | All Star | 500+ Employees | 7.6 | 0.16 | 5.9 |
| Douglass Colony | All Star | 100-499 Employees | 73.8 | 0.13 | 4.9 |
| Sutter Roofing | All Star | 100-499 Employees | 64.5 | 0.11 | 11.9 |
| KPost Company | Golden Goose | 100-499 Employees | 49.8 | 0.09 | 3.3 |
| Beldon Roofing Company | Golden Goose | 100-499 Employees | 39.6 | 0.07 | 2.7 |
Roofing industry outlook
The roofing industry is projected to grow at an annualized rate of 0.5% over the next five years, reaching$58.1 billion in revenue in 20281. However, profit margins are expected to slightly decrease to 5.2% of revenue.
Key factors shaping the industry's future include shifts in housing market dynamics, nonresidential demand, eco-friendly roofing solutions, industry life cycle, and technological advancements.
Table 3: Key industry characteristics1
| Factor | Description |
| Market Saturation | Saturated market with expansion due to eco-friendly alternatives |
| Innovation | Solar panels and eco-friendly technologies becoming more popular and affordable |
| Consolidation | Limited consolidation, larger contractors focused on commercial roofing |
| Technology & Systems | Moderate level of technology change driven by the rise of environmentally friendly roofing products |
| Industry Life Cycle | Mature stage, IVA expanded due to downstream demand, moderate technological change, products accepted by downstream markets |
Industry life cycle
The roofing industry is considered to be in the mature stage of its life cycle. Over the 10 years to 2028, the industry's overall contribution to the U.S. economy, measured as industry value added (IVA), is expected to rise at an annualized rate of 0.4%1. In comparison, U.S. GDP is projected to rise at an annualized rate of 1.5% over the same period.
Market saturation and innovation
The roofing market is saturated but expanding. Legacy services, such as corrugated metal, ceramic, tile, or asphalt roof replacement and construction, are offered by all contractors. A burgeoning market for eco-friendly alternatives is beginning to alter the industry's landscape, allowing contractors to move in amore specialized direction.
The proliferation of solar panels and other cutting-edge eco-friendly technologies have found their way into the industry, becoming more affordable and commercially available to homeowners and businesses alike. The installation of solar panels has become an increasingly lucrative service for roofing contractors.
Consolidation and technology
There is little consolidation in the roofing industry, with larger contractors specializing in commercial roofing and having little incentive to acquire smaller roofers and independent contractors serving households.
The roofing industry experiences a moderate level of technology change, driven largely by the rise of environmentally friendly roofing products. Eco-friendly roofing products have grown more popular over the past five years3, including those that reduce energy consumption by reflecting heat and those that use solar power panels to generate electricity for structures.
As these technologies become more affordable and widely adopted, roofing contractors will need to adapt and expand their service offerings to stay competitive in the market.
Stunted housing market
The housing market is expected to recede as the effects of the pandemic continue to abate. Roofing contractors will likely shift focus from new home construction to maintenance and roof replacement. Climate change-induced natural disasters and extreme weather events will drive demand for roofing services in affected areas.
Demographics will also play a significant role in determining housing demand. While millennials currently prioritize homeownership less than previous generations6, their financial situation may change as the economy expands, leading them back to the housing market in greater numbers.
Nonresidential demand accelerates
Demand for roofing services in the commercial building market is expected to strengthen during the outlook period, reflecting improvements in economic conditions and increased investment in nonresidential property. Contractors with long-term maintenance and repair arrangements with property managers or developers will fare better than those focused solely on installation.
Sluggish growth is anticipated in the oversaturated industrial building market1. Offshoring of manufacturing to countries with low labor costs will moderate growth in industrial facility construction and maintenance.
Greener pastures
Demand for eco-friendly and energy-efficient roofing solutions will drive existing contractors to diversify and new companies specializing in green solutions to enter the market. Solar power and energy-conserving roofing are expected to become more common for smaller projects like single-family1 housing.
As eco-friendly roofing gains momentum, contractors will have the opportunity to add greater value to contracts and differentiate their service offerings based on factors other than price or reputation. They will also be able to pass on the rising cost of these new materials to consumers.
| Eco-friendly Roofing Solution | Advantages | Disadvantages |
| Green Roofs |
|
|
| Solar Roofs |
|
|
| Cool Roofs |
|
|
| Recycled Roofing Materials |
|
|
The roofing industry is poised to experience moderate growth in the coming years, driven by shifts in housing market dynamics, nonresidential demand, eco-friendly roofing solutions, and technological advancements. To succeed in this changing landscape, contractors will need to adapt to new market conditions, diversify their services, and stay up-to-date with emerging technologies and trends.
Strategies for roofing contractors to overcome challenges and seize opportunities
The roofing industry faces various challenges, such as labor shortages, increased competition, and fluctuating material costs. However, by adopting effective strategies, roofing contractors can overcome these obstacles and capitalize on the available opportunities. The following strategies can help roofing contractors navigate the industry's challenges and embrace new opportunities for growth:
Invest in training and certification programs
With labor shortages being a significant concern in the industry, roofing contractors should invest in training and certification programs to attract, retain, and develop skilled workers. Contractors can enhance their workforce's skills, improve safety standards, and increase overall work quality through continuous professional development opportunities. This investment will ultimately lead to higher customer satisfaction and a better reputation in the market.
Market sustainable roofing solutions
As the demand for eco-friendly and energy-efficient buildings grows, roofing contractors can differentiate themselves by developing and marketing sustainable roofing solutions. Offering green roofing options like solar panels, cool roofs, or garden roofs, contractors can cater to environmentally conscious clients and gain a competitive edge in the market. Eco-friendly products are becoming more cost-effective4, which will increase their use over the next five years. This provides more opportunities for growth.
Use technology
Roofing contractors should use innovative solutions to improve their operations and efficiency. This includes software for project management and estimation, drones for roof inspections, and integrating other cutting-edge technologies into their processes. Contractors who can streamline operations and provide more accurate, timely, and cost-effective services through technology will be more competitive in the market.
Focus on customer experience
Strong customer service is essential for success in the highly competitive roofing industry. Roofing contractors can differentiate themselves by emphasizing communication and keeping customers informed throughout the roofing process. Simple steps such as responding promptly to inquiries and complaints quickly, addressing concerns immediately, and ensuring customers have a positive experience during projects, can build a solid reputation and generate repeat business and referrals for contractors. By becoming BBB Accredited, a roofing business can distinguish themselves as an honest, trustworthy business that stands out from the rest by adhering to the BBB Standards.
Build strategic partnerships
Roofing contractors can foster strategic partnerships with key stakeholders, such as residential developers, building-services management companies, and industry suppliers. Establishing strong relationships with these partners can help generate repeat business and create a steady flow of new projects.
Adapt to market demands
Successful roofing contractors must learn to adapt to changing market demands, such as fluctuations in residential and commercial construction activities. Expanding or contracting their operations in line with market trends, contractors can better manage their resources and maintain profitability.
By implementing these strategies, roofing contractors can overcome the challenges facing the industry and seize new opportunities for growth and success.
Next steps for roofing contractors
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Sources
- US INDUSTRY (NAICS) REPORT 23816 / CONSTRUCTION Roofing Contractors in the US Report by: Caleb Clark | January 2023
- https://roofinginsights.com/roofing-industry-statistics/
- Research and Markets US Green (Vegetative) Roofing Market 2022-2030 Report
- FLL (2020). Guidelines for the Planning, Construction, and Maintenance of Green Roofing.
- US Department of Energy. (2018). Sustainable Roofing Materials.
- Retirement Reimagined Study (2023). Charles Schwab.