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Despite Market Downturn, Resilient Green Materials Sector May Owe Its Strength to Expensive Oil

As the U.S. housing market continues to cool, Kermit Baker, chief economist of the American Institute of Architects, believes that the continued strength of the green materials sector, despite the downturn, owes itself to the price of oil. Quoted in The Wall Street Journal Online, Baker says that “[f]ifty-dollar- to sixty-dollar-a-barrel oil is the biggest driver . . . . If oil went down to $28 a barrel, I’m not sure how much of this would stick.”

The Journal also notes that a variety of New York City-area companies supplying green building products are navigating the housing downturn quite successfully. Morris Township, New Jersey-based Honeywell International, Inc. manufactures an expanding foam insulation product which is more energy-efficient than fiberglass. It saw sales rise over twenty percent in 2006. Sales at Livingston, New Jersey’s Plastpro, Inc. were up eight percent in 2006; the company manufactures doors made from a dense plastic which are more effective at trapping heat and air conditioning than conventional wooden doors (whose sales were down uniformly last year).

What’s interesting about these numbers is that the sale of traditional building materials, such as lumber, fell by approximately twelve percent in December of 2006 from the previous year, according to the U.S. Census Bureau. The Journal points out that during the 2004 and 2005 housing boom, builders did not have the opportunity to consider using different materials because of the breakneck pace of development. Now that the market has slowed down, builders are paying attention to companies that offer unconventional green products.

One other interesting note from the Journal is its observation of an unfolding competition between concrete and timber producers over whose product is greener.

Concrete is gaining favor among more builders in the Sunbelt, in part, because it holds in cool air better than wood and is more durable against hurricanes, building industry officials say. Homes made out of concrete rose to an estimated 18.6% of the new-home market in 2006 from 17.9% in 2005, according to the Portland Cement Association, a Chicago trade group. In 1993, concrete homes accounted for only 3% of the market.

Manufacturers of traditional building products are trying to fight back. Timber industry executives argue that their products are greener because producing them creates less pollution than, say, a cement plant.

Competition drives innovation, and debates similar to the foregoing will undoubtedly continue moving green building practices further towards the mainstream.

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