Roofers Can Expect Growth in 2023 But Labor, Inflation Woes Keep Pressure On

Brad Bush, Senior Vice President, HUB International

The US roofing industry can expect to see continued growth in 2023 and further into the future. But even a healthy backlog of work won’t be sufficient to offset the forces keeping the squeeze on profit margins. Protecting the bottom line and building resilience for the long-term will be the challenge. Here are the forces facing the roofing industry in 2023.

The predictable growth of the past – about 2.2 percent annually since 2017 – can be counted on to drive the roofing business into the future, as the size of the market holds steady at $56 billion. The majority of companies are small to mid-sized with a local or regional footprint and replacement services comprise 94 percent of roofing projects. As buildings age, the potential for work expands. However, the economic pressures in 2023 abound. Not only are workers hard to come by, but they’re more expensive, too – with labor costs easily up 10 percent in recent years. There continue to be shortages of roofing insulation and materials, although supplies are stabilizing from the long lead times in 2022.

Inflation is having an across-the-board impact on costs. Adding to the pain are ongoing boosts in interest rates, making revolving credit lines and other types of financing more expensive. All combined, roofers will have to manage more strategically in the face of these risks as their profit margins are diminished.

The struggle to find and keep qualified workers is relentless and roofing’s reputation as the most dangerous segment of construction doesn’t make the task any easier. Construction, as a whole, needs an additional 650,000 workers to meet the current pace of demand.

Making the job more attractive will take a renewed emphasis on safety, no small order for one of the most hazardous industries in the US. While construction workers comprise 7.3 percent of the workforce, they accounted for nearly 22 percent of fatal injuries in 2020, according to the Center for Construction Research and Training. And roofers had the highest fatality rate at 47 per 100,000 full-time employees.

A business with a reputation for unsafe working conditions can’t be sustainable. The cost of neglecting safety is not just the burden of government fines but higher insurance costs, the loss of contracts and people willing to do the work. Creating a culture of safety shows workers their employer cares about their well-being and gives them a sense of security in their job.

Also important, especially for non-union and smaller shops, are enriched benefits. Paid leave policies like vacations and sick days, along with employersponsored retirement plans, will go a long way toward attracting and retaining workers.

Roofers should be prepared for uncertainties ahead and there are plenty of them. They need to be aware of what’s on the horizon and secure sufficient insurance against the risks.

Overall, the construction insurance marketplace is stabilizing, but certain coverages are under pressure. Those in areas prone to catastrophic losses such as severe storms, flooding, wildfires and record heat need to be ready. Builder’s risk insurance will likely jump 40 percent in 2023 and the potential for subcontractor default is growing. Roofers need to tighten their operations so they are well-positioned as preferred partners, because general contractors will be extra choosy in awarding contracts in this environment.

On another front, the industry needs to step into the times. It is behind other segments of the construction industry in its deployment of technology. Only 57 percent of roofers use estimation software for bid preparation. Fewer than 20 percent use drones to inspect or measure. Only a third use wearables for mobile devices on the job site.

Tech solutions are essential if the roofing industry expects to streamline its operations, keep up with other segments of construction and appeal to current and new workers who want to learn and use new skills. The downside is the risk of cyber intrusions: construction is a big target for hackers. Cyber insurance is increasingly necessary but also expensive. It makes cyber security planning essential, with an eye to managing and training staff in safety protocols.

Brad Bush is a Senior Vice President in the Jacksonville region for HUB International Florida. He works throughout the Southeast and specializes in construction, working with contractors on both their surety and insurance needs.

unless the loss was caused solely by owner negligence. For example, if the owner is 90 percent at fault for the damages, the contractor is responsible for the entire loss. However, if the owner is 100 percent at fault, the contractor is not obligated to make any payment. The contract language will state the damage was “caused in part” by the contractor. The intermediate form clause uses a contributory fault analysis, meaning that if the contractor contributed to the loss in any way, the contractor is wholly liable. Many states have restricted intermediate form provisions, preventing owners from being entirely unaccountable for their negligence.

This type of indemnity is the most extreme. Under a broad form clause, the contractor agrees to be fully responsible to the owner for any damage, liability or cost, no matter who is at fault. The contract language will state the damage was caused “in whole or in part” by the contractor. The broad form indemnity is seen by many as incredibly unfair and has become rare. The majority of states have adopted anti-indemnity statutes, deeming the broad form indemnity to be against public policy.

Florida has specific laws and requirements on the use of broad form indemnity contained in Section 725.06, Florida Statutes, which requires, among other things, that there is a commercially reasonable monetary limit to the indemnity.

Before you sign your next contract, be sure to read the indemnity clauses carefully. A limited form clause can seem reasonable, whereas the intermediate and broad form clauses could be financially devastating for you if a third party files a damage claim. It is crucial that you know the laws in your state, verify your insurance coverages and exclusions and are familiar with which form types are legal in other states where you do business.

If you have any questions about indemnity clauses, take advantage of your FRSA member benefit and contact me at 813-227-5501 or email me at trent.cotney@arlaw.com. FRM

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Trent Cotney is a Partner and Construction Practice Group Leader at the law firm of Adams and Reese LLP and FRSA General Counsel. For more information on this subject, please contact the author at trent.cotney@arlaw.com.

Adams and Reese LLP is a full-service law firm dedicated to serving the roofing industry. FRSA members can contact Trent Cotney to discuss and identify legal issues and to ask general questions through access to specialized counsel. They offer free advice (up to 15 minutes) for members. If additional legal work is required, members will receive discounted rates. This is a pro bono benefit provided to FRSA members only. To use this service, contact Trent Cotney, 813-227-5501.