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State of the Union for 2024 - PODCAST TRANSCRIPT

State of the Union for 2024 - PODCAST TRANSCRIPT
January 8, 2024 at 12:00 p.m.

Editor's note: The following is the transcript of a live interview with Geoff Bernstein of Vicwest, Stephen Gosk of MetalForming and Holly Gotfredson of American Metalcraft and Finishing Dynamics You can read the interview below or listen to the episode.

Heidi J. Ellsworth: Welcome to this month's MetalTalk from MetalCoffeeShop. My name is Heidi Ellsworth and I am thrilled to have you here today to find out more about what's going on looking into 2024 around metal. This is a distinguished panel and we are going to have so much fun today talking about it. But first, let's do our some housekeeping. So this will be available within 24 hours on demand. It is being recorded, and please feel free to share, get this out to your fellow workers, to other roofing and construction professionals or anyone else you want out there, it's easily shareable off of MetalCoffeeShop.

Also, we'll have the chat open, so please either through the chat or the Q&A, ask questions as we go. Thank you so much, and here, let's get going. So today, State of the Union for 2024 in metal construction. We have a great panel here from all parts of the industry, so we're going to get started right now with introductions. So first of all, I would like to welcome Geoff back to our MetalTalks. Geoff, thank you so much for being here. Can you please introduce yourself, tell us a little bit about Vicwest?

Geoff Bernstein: Sure. Hi, I'm Geoff Bernstein. I'm the director of marketing here at Vicwest. Vicwest is a Canadian based business. We're the largest roll former in Canada. We supply into the residential, commercial and agricultural markets. We've got some amazing innovative products in both roofing and siding, all related to single skin steel. And looking forward to talking to you guys today about two of those product lines and how we see them fitting into a unique market going into 2024.

Heidi J. Ellsworth: Yes, very much so. Thank you, Geoff. I'm really excited about that. I also want to introduce Steve. Steve, thank you so much for being here today. If you could introduce yourself and talk a little bit about MetalForming.

Stephen Gosk: Thank you. I appreciate the opportunity. My name is Steve Gosk and I'm the president of MetalForming. MetalForming is a capital equipment distributor for six to seven key suppliers that are European based for equipment including metal folding, shears and roll formers. We serve both the architectural and the industrial fabrication markets.

Heidi J. Ellsworth: Excellent. Thank you so much for being back on the show, Steve. This is going to be amazing. I would also like to introduce Holly. Holly, thank you for joining us on this MetalTalk. So excited to hear what you have to say, but let's start with some introductions and also tell us about your companies.

Holly Gotfredson: Absolutely. Well, thank you again so much for having all of us today. I'm the president and owner of Finishing Dynamics and American Metalcraft. American Metalcraft has been an architectural aluminum leader for over three decades, and we produce products such as rain screens, wet seal systems, column covers, brake metal, ornamental metal, perforated panels, sunshades and custom exterior and interior type of work. We're excited to be a part of the built environment. And on the Finishing Dynamics side, we offer extrusion coating. We're an approved applicator for Sherwin-Williams, Axon, PPG and have one of the largest capability windows in the southeast painting parts up to 38 feet in length. So we're very excited to participate today and thank you again.

Heidi J. Ellsworth: Thank you so much for being here. Okay, let's get started. We've got some great items to talk about and we're going to start wit... Oh, I want to remind everybody the chat is open. Please let us know where you're at, what kind of company you have, introduce yourself in the chat. We love to have that going back and forth. Also, please feel free to make comments, ask questions, just whatever you feel like in the chat as we go along and I will be on bringing those to our panelists. Okay, here we go. First of all, let's talk about the top trends, memorable moments of 2023. We can't really jump to 2024 without talking about that. So I would love to start with Geoff, if you could kind of tell us a little bit about what you really thought was pretty amazing in 2023.

Geoff Bernstein: I'd say for us, we're still seeing a lot of consistency when it comes to color. So for a lot of our roofing profiles, black still is number one for us, certainly in Canada and in the northern parts of the US. As things move further south, we see a gradient effect. As things move further south, the color interest gets a lot lighter and you think of the solar reflectivity and just the heat island effect and why that happens. But as you get into Florida, grays and whites all of a sudden are very much in demand. And for siding, I'd have to say the clear trend which we see continuing into 2024 and beyond is around the wood grain patterns within steel siding.

It's been something that's been part of our product line for a couple of years now. We had some new colors come online in late 2022. Those took off in 2023, and I mean, we're already in the process of developing more of them. And I think that just goes to speak to the interest in biophilic design that a lot of homeowners and commercial architects feel. And that's really where we see the continuation of the trend moving, really is that wood look.

Heidi J. Ellsworth: Yeah, I love it. I love that. I love the patterns. I love the wood look. Holly, you're seeing a lot of this in architectural metals and in colors. So tell us what some of the top trends and moments for you were in 2023.

Holly Gotfredson: Sure. So for a color and PVDF extrusion coating, we saw a lot of neutrals to complement some of that wood grain in addition to the neutrals, the beiges, kind of the off whites, the ivories. We also saw some micas and metallics, not so much the color shift, but just that little bit of sparkle to complement some of those neutral tones. In terms of profile and products we're seeing and we did see over the last 24 months, a huge push towards perforated products, in particular perforated panels, and I do expect to see that continue in 2024.

Heidi J. Ellsworth: Very cool. I love all the architectural and just kind of pushing the edges this last year it felt like. I love it. Well, none of this can happen without the machines to fabricate it. So Steve, what are some of the things, top trends you saw through your experiences with equipment and all the fabricators you work with?

Stephen Gosk: Sure. We continue to see a lot of dialogue around automation, increased productivity, high-capacity hemming and bending and also a real uptick in interest in long folders, which probably as much as anything has to do with some of the growth areas right now out there in the industry with metal building fabrication and metal siding and such. But everyone continues to share the same struggles with finding employees, needing to do more with less and keeping up with some of the demand. So I see that trend continuing on, particularly looking for automated systems to feed into and feed the machines, eliminating again the need for multiple employees at one machine. So that trend has been ongoing this past year and will continue into 2024.

Heidi J. Ellsworth: Yeah. Oh, go ahead.

Geoff Bernstein: I would just echo that. I mean, certainly within our manufacturing environment, the new equipment that we're bringing in not only is heavily automated, but we also find that the equipment with the most automation can actually yield a higher throughput per shift. So just with a challenging labor market, the addition of automation and robotics into a role forming environment really has provided yields that we never would've seen before within an 8 or a 10 person team, we can now achieve far more with even one or two guys running the line. So kudos to Steve and all the equipment manufacturers out there for identifying clear gap in the market and addressing it with some wonderful technologies.

Heidi J. Ellsworth: I think that's such a great point because that really leads to that labor shortage. I mean, I'm sorry, but I'm just going to say this. It's the US, when we see a problem, someone's going to step in and try to start fixing it and it's going to be working with our partners from around the world as MetalForming does to bring in what we need for the labor shortage. So I'd like to talk a little bit more about that, kind of what you're seeing to help that. So Steve, let's start with you again, just talking about how you're finding solutions and then training the workforce to use this automation.

Stephen Gosk: So, we see it on multiple levels. Naturally, as the machines become more sophisticated, the customers who are eventually going to run those machines need a level of training from us to make sure they're optimizing the machine and running it the way it was intended. So we're seeing that interest level there. And again, as they get more sophisticated, they need to have operators who are able to step into those environments and utilize the machines on that end. On the other side, our own employees, whether they be field service techs or technical support, people who are supporting this type of equipment also need a level of training, which we do in conjunction with our suppliers, but also in-house.

All part of bringing in this next generation of employee into this industry that can support the direction the industry's going as you have on here to attract and retain them for this space, which is a challenge for all of us naturally. And from my perspective, the key part of that is you have to have a great company for people to work for and have them tied to. I saw a quote earlier today that says "You're going to get the customers to love your company if your employees don't love it first."

Heidi J. Ellsworth: Right.

Stephen Gosk: That is real particular item that we can all agree with.

Heidi J. Ellsworth: That is so true. So Geoff, kind of continue on that thing. I know when we talked before, I think people are starting to see, yeah, recruitment's important, but retention's the most important. But what are you seeing?

Geoff Bernstein: I mean, we see it across a couple of different factors. So we've got our manufacturing business and then we have the office side of things, our marketing, our accounting, supply chain and so on. In our manufacturing, the training is critical because the importance of safety in the manufacturing environment. We have some employees who have recently celebrated 55 years with the company. So really, their entire career and that's commonplace. Our manufacturing is often in rural environments and that's where it's a job for life in a lot of situations. One of the challenges we have is seasonality. With the winter being down months, we always struggle with how to keep people on through the winter, but we're finding new innovative ways.

One, we're expanding our market further into the US where seasonality isn't a factor. We're ramping up production and building accessories, building trim in the overseas and so we're able to maintain everybody. But in terms of retention, especially when it comes to gen Z's and millennials, one of the key things that we've done at Vicwest, and I'm not sure if everyone is familiar with our Planet Passionate program for our sustainability, but we also have now a People Passionate program. And so, really involving all new hires when it comes to onboarding and training and making them feel like they're part of a community and a company that really has their best interests at heart, that there's a long-term home for them within the business.

And sustainability, I would say has been a key for us in attracting the right type of talent. So it's always top of mind for any young recruit that comes into the business. They're consistently asking us, "What are you doing about sustainability?" Now we're very fortunate, we have a wonderful sustainability program at Vicwest, not a lot of other building materials manufacturers do. So I think as an industry, we could probably do a whole lot better, but that's for us a really good way to differentiate.

Heidi J. Ellsworth: Yeah, I think that's just spot on as retaining the wisdom and the years that we have, but then also doing the things culturally to really attract this next generation and then bring them together. Holly, what do you see throughout? I mean, really, how we can in this new year take on that labor shortage?

Holly Gotfredson: Yeah, so I agree with a lot of what Geoff said, a sense of belonging and a really good company culture is so key for attracting new talent as well as retaining employees. One of the things that we've done pretty much ever since we opened our doors was to offer free healthcare for our employees. Even with all of the changes and the increases as ACA went into effect in 2012, that's something that's really important to us as a team, as owners to make sure that our employees have that benefit. Something that I learned this year, I'm part of several different boards, different organizations. I'm part of the advisory board with an organization called She Built This City. It's a nonprofit based in the Carolinas. They're doing great work. They're getting out to the next generation, in particular young girls and women teaching them about the opportunities in the trades in the built environment and in manufacturing.

So as you can imagine, I'm very passionate about that. And as part of the advisory board, I was able to sit in on a meeting that we had and we were kind of discussing what are the benefits that are important to the next generation? And I really took some of those items to heart and as of January 1, we're going to be offering paid maternity and paid paternity leave and we're adding on some additional vacation for people that have been with us for 20 years. So I think listening to your current team and listening to the needs of your potential team is extremely important. Making sure that you have those right hires, all of that really leads to a successful team and successful production. I think there's so much out there that's ahead of us in manufacturing and so much innovation. And as Geoff mentioned, the sustainability side of things, companies that offer sustainable products, I think that's huge in attracting new talent.

Heidi J. Ellsworth: I agree. And I have to say, within our own company, our CoffeeShop company, we're seeing exact same things. So it's across. When you look at all of our companies here, I'm talking today, they're all a little bit different, but it's all coming down to continuing education, training your employees, making them feel empowered and I love the cultural, getting them involved with giving back I think is also Holly to your point, is such an important thing. And then of course, sustainability. I mean, it always is. So let's pull this a little bit back towards the metal construction industry and some fun things on, let's talk about color and profile developments because there's a lot going on out there as we talked about in 2023. So bringing out our crystal ball, what are some of the things that we possibly are seeing coming in 2024, and Holly? I would love to start with you from that architectural viewpoint.

Holly Gotfredson: Sure. So some of the things that we're seeing in terms of color trends we're looking at, I was looking at some of the colors of the year for 2024. In extrusion coating, Sherwin-Williams is looking at a color called Upward. I believe it's kind of a breezy blue, it's a neutral, but it works in a variety of different ways. PPG has kind of a warm, sunnier neutral. Again, that kind of shifts with what it's connected to. I think both are really beautiful colors. Geoff mentioned earlier before we started this talk today about dark green and his world is also very popular and is going to be trending next year. And to me, it kind of seems like natural things. We're pulling things from nature into our commercial and residential environments, and I really think that's going to be a trend in 2024.

Heidi J. Ellsworth: I like that trend a lot, but I'm from Oregon, so there you go. Geoff, what do you see with color and profile development?

Geoff Bernstein: Yeah, I think in terms of color, I mean, Holly's got it right on. It's just kind of how do we bring that natural environment into the built environment if we're relying on nature, the light blue, like the sky greens like trees and plants for us with siding, the wood, what's the theme? Natural environment, sustainability. It's also interconnected. So I definitely see that as the trend moving forward. The cool grays, I hope we don't see those come back for a while. We could use a little pop of color here and there.

Holly Gotfredson: Agreed.

Heidi J. Ellsworth: Agreed.

Geoff Bernstein: In terms of profiles, I think the metal market is really catching up to bringing profiles to market where metal is now a very suitable replacement for just about any other material out on the market, whether that's a board and batten look and siding, whether that's a lap siding for natural wood, whether it's a shake or a slate profile with stamp tile that instead of natural materials for roofing, we see those continuing. I just think metal in general has now proven that it can outperform just about any other product out on the market. And we've got a bit of an uphill climb to convince the architectural community and the homeowner community that they should take a serious look at metal and steel. But that's our homework for 2024.

Heidi J. Ellsworth: And I think the elements are helping you a little bit there and sustainability, when you look at the recyclability of steel and metal and you're also looking at just how well it holds up. I think to me, that's going to make a big difference in these trends too, that people are going to want durability along with beauty.

Geoff Bernstein: Yeah, it's a resilient product across whatever replacement, whatever product you're considering, the steel version will likely outperform it except for [inaudible 00:20:58]. But you look at a shake roof, for sure, the steel version will outperform. If you look at a fiber cement siding product, guaranteed this steel will outperform in terms of warranty and maintenance and durability. In terms of recyclability contractor experience, I mean, it's a laundry list of features and benefits that we have within our product and the way the equipment manufacturers are developing or are helping profile manufacturers come up with ways to roll form or stamp or brake press, all of these new profiles is critical.

Heidi J. Ellsworth: Yeah, it really is. And Steve, just exactly what we're saying there, these things aren't happening without the right equipment, the right vendors to work through this. So talk a little bit about what you're seeing around color, but definitely profiles and really being able to create new types of looks.

Stephen Gosk: Yeah. In total, the equipment is fairly agnostic to the colors or the materials or the profiles as far as what the demand should be. It's the designers and such that are driving that. And Geoff hit the point exactly. It's really the collaboration between those communities and making sure the designers aren't envisioning something that can't be manufactured or materials that can't be run on our machines. So it's vital for the equipment folks to understand where those trends are going and relay that back into our own developments to make sure that we're developing the profiles and ability to run the profiles that are being demanded out there in the market. Certainly, we're seeing things like low gloss or kind of print roller type of material with wood grains and such. You and I were talking before the gala of actually prison cells, old prison cells that are being developed and to be aesthetically more appealing to the prisoners that put more wood grains in the cells.

So whether you care about that or not, I think it's right. Those types of trends are happening out there. But from the equipment side, again, we have to be following these trends, making sure our equipment can run the types of materials, run the types of profiles that are being demanded. The Chip and Joanna Gaines influence of board and batten is still highly sought after at the moment as just an example of one of the profiles that we're seeing a lot of demand for and like everything else we'll cycle over time, I'm sure. Back to something that was popular 10 years ago.

Heidi J. Ellsworth: Well, I have to tell you, I love the board and batten, and I actually, if we kind of put the time clock back, I remember being at the beginning of last this year, so the beginning of 2023 and talking to the different manufacturers, talking to different color and paint and coil coatings, and it was interesting. I can remember going into this one booth and it was camouflage on the steel, and I was like, "So what do you use that for?" Just out of curiosity. And they're like, "Duck blinds." I'm like, "Okay." And I guess, there is obviously a lot of other uses for camouflage on painting.

Geoff Bernstein: [inaudible 00:24:35] in my office. We haven't produced it.

Heidi J. Ellsworth: You haven't produced it yet.

Geoff Bernstein: No.

Heidi J. Ellsworth: Well, you never know. It could be a 2024 thing. It's just interesting to see it come through. Go ahead, Holly.

Holly Gotfredson: Oh, no, that's a great way to bring the outside in, right? Camouflage.

Heidi J. Ellsworth: Inside. Yeah, and that's what we did before, but really looking back at 2023, seeing, okay, well, maybe some of these were induced, but they really didn't happen. Now it's happening. But board and batten, I can tell you that was one that seemed to be the most popular. Everybody was talking about it and it seemed to be moving through. But all of this, putting this together takes some technology, especially for the contractors, but also obviously everyone involved. So I would love to talk through what's happening out there around the technologies that are softwares and technologies that are coming into the metal construction industry. So Steve, maybe you can talk to us a little bit, especially around the machines. I mean, talk about training, they do everything it seems like.

Stephen Gosk: And we're definitely seeing more and more of a trend of folks looking for that complete solution. So the machines that actually that can communicate together and feed into each other in the process flow. We represent a line of software called Bendex, which is very popular in Europe right now. It's starting to gain some more popularity here. But it allows, for example, the slitting machine to feed into the folder machine, and they know the process flow as that comes through so they can interact directly and plan. So we see a lot of solution. We see a lot of the automation and technology being put into the machines to allow them to do more with less. So again, the robotics feeding in or taking items off of the machines. And much of that in the folding world, particularly in some of the slitter role forming world, is really trying to keep up with the speed and the new technology happening on the laser side. And so, the pace of what they can now do in lasers, they need the folders and the rest of process flow to keep up with it.

Heidi J. Ellsworth: Wow. Now, one of the things too, and I know this has been going on for a couple of years. But Steve, what I'm seeing too is a lot of secrecy where you have aerial measurements that are able to come into the design center, that go right into the machinery and drones on top of that who are capturing a lot of this. What are you seeing that way?

Stephen Gosk: Yeah, I would say from our standpoint and at least the machine world we're part of, we're not directly being impacted by that. Certainly as that approach takes hold, the ability to feed in the requirements with more specificity and able to make sure that the machines are performing to higher levels of accuracy as such could be an influence. But as far as direct feeding of information from those types of data acquisition approaches, I've not yet seen that hit our world.

Heidi J. Ellsworth: Yeah, not too much. Now, and Geoff, I know that that has kind of hit your world recently because we're both involved with the MetalVue program, but how are you seeing these new technologies and business solutions really helping you and your customers?

Geoff Bernstein: Sure. So for us as a manufacturer, we run hundreds of thousands of project quotes a year. A lot of that is, it's very manual tedious work because accuracy is critical. But one of the technologies that we're working on as part of with MetalVue is this interconnectivity between drone photography and AI along with estimating tools to essentially take an eagle view report or a blueprint and immediately turn that into a material list. So really, I think from a contractor standpoint, if he's got a prospect, he can take that customer's address before even visiting the job site, plug that into MetalVue and within a few hours have an extremely accurate quote, often down to the dollar of including not only the cladding or the sheathing that he needs for that project, but every accessory, the underlayment, the fasteners. If he inputs his pricing, he could have pricing based on different color options.

So based on paint system, they're able to add accessories and labor and tear offs and all sorts of different components into this technology that really essentially allows them to show up at the home with the contract pre-populated with a dollar value to get the homeowner to sign on and then submit to us a very accurate material list. And that way that can turn into an order and we can take that XML file and plug it into SAP without really any human intervention because the onus is on the contractor to ensure that the material is accurate and he's getting what he needs. And that for us tremendously speeds up the amount of quotes that we can put through the system, but it also helps our conversion rate. And again, a reliance on human interaction, which is prone to mistakes. I don't want to get into how many order entry errors we had last year as a business, but a lot. So-

Heidi J. Ellsworth: The technology.

Geoff Bernstein: Anyway, we get technology here to help improve our business processes. We're in it, we're ready and we want to onboard it. And to Steven's point earlier, just regarding the equipment and the lasers, and not only to ensure measurements are in place, the product is consistently coming off the line. One of the pieces of equipment that we're looking at right now is an AI that can actually kit all of the different wood grains based on scanning the face of those. So it can actually mix the boxes together to ensure that a contractor gets a mixed box instead of a box of face number one. And right now that's completely manual process where someone is actually kitting from these huge stackers, all these panels, as our capacity increases and as demand increases. You can't do it. You need technology, you need robots.

Heidi J. Ellsworth: Wow. So that's some huge changes and growth you're going to be seeing.

Geoff Bernstein: Yeah, it's transformational to the market.

Heidi J. Ellsworth: Holly, what are you seeing with your manufacturing and also as you're using all these tools?

Holly Gotfredson: We're seeing what's real interesting is there's these one-stop shop business solutions that have been around for the last couple of years, but they're starting to incorporate AI within them. So, business solutions that will manage the manufacturing floor that also connect to an accounting system that also connect to a payroll system, timecard system and some of that moving the product from one process to the next. AI will be able to start monitoring when those products are, oh, we're at the next stop. Okay, we're going to move this on and so forth. So some of those products are coming available I believe next year, and that's going to be real interesting to see how that all works out in the manufacturing space. For us, we're a custom manufacturer. We don't keep inventory, so everything is custom-made for a job, so we're a little bit more of a niche type of market. And so, we'll be using those types of solutions in unique ways to kind of meet our needs.

Heidi J. Ellsworth: Yeah, we are seeing the use of AI and business is coming at us so fast and how do you use it and how do you use it responsibly is really going to be, I think a big part of 2024 for sure. Along with that, as we all know, is every business is dealing with regulations and government. And so again, kind of really looking, and Steve, you had some great thoughts about insurance, how that's changing the market, all the tax incentives that you have on machinery or that possibly sheet metal shops can get. Maybe you can start us off on your crystal ball of what you're seeing coming in 2024.

Stephen Gosk: Sure. And certainly part of it will be part of the political landscape as well, but our industry and the machine side does benefit from the current tax incentives that are annual that are provided to people who do procure the equipment before year-end in which they can write down a portion of that. Those are starting to be phased out over the next few years, but at the moment they're still pretty active. And as I look at my window, I'm seeing a lot of equipment moving out of here that was procured this month out of our inventory that the people are taking advantage of just that. So those types of things are definitely good for any capital equipment type of business that are there.

But as I look at it, I think the insurance aspect of what's going on now and the insurance just in some cases not operating in certain parts of the country, I should say more very few choices in certain parts of the country, I think is really a direction that could benefit the metal roofing market just from a sustainability of the product and the longevity of the product. So something to watch and see if that trend holds. And as we were talking before the call, some of the products that these manufacturers are coming out with in design that they're just fantastic looking items, so it's not an ugly old metal roof any longer. I mean, there's some fantastic products to be putting on both residential and commercial property that I think will add some longevity and performance characteristics that will align with what the insurance companies are pushing from their end.

Heidi J. Ellsworth: Yeah, a lot man. Certain parts of the country, it's really crazy. Geoff, what are you seeing around regulations and government?

Geoff Bernstein: For us, we're seeing regulations around product certifications, so performance testing, a lot of contractors really looking to standards like Miami-Dade, and regardless of where they're located, the fact that a product has been through the Miami-Dade certification, which is by far the most rigorous battery of tests that a roofing or siding product can go through, even if it's not their code, regardless of what state it is that they see it as the gold standard. So trusting a product that has been through either Miami-Dade or a Florida building code or a Texas department or insurance or here in Canada or CCMC certifications, I think those are differentiators, right? It's not just that, "Yeah, you could put this product on the wall and it's okay if you're a local building code," but what happens when a hurricane hits or what happens when a wildfire hits or a hailstorm?

Is this product certified to 130 plus miles an hour or does it have a Class 8 fire rating that can it withstand a Class 4 hail rating? And these are all things that any homeowner should really be doing their due diligence and their homework or a building owner should really understand what products they're putting on their building and how it's going to perform for the years and decades to come. From an insurance standpoint, it's very fragmented. We'd like to see some more consistency from the insurance companies to say specifically around fire, wildfire risk in the western part of the continent is a huge issue. We've seen some backwards thinking when it comes to fire insurance.

We've seen insurance companies actually increase rates when metal roofing gets put on because it actually increases the value of the home. And then they also sometimes... One anecdotally, we had a homeowner say that they want to increase the rates because the metal roof makes it more... Like if the house catches on fire, it's going to burn and the roof will actually keep the fire inside the house. So it's going to be a total loss rather than saying, well, if you're in a wildfire area, wouldn't you rather it not spread the fire to anyone else? You don't have a larger area of homes that are affected. But I mean, whatever. A bit of a strange one there.

Heidi J. Ellsworth: Yeah, I think 2024 is going to become a tipping point for a lot of that.

Geoff Bernstein: And especially with the tax incentives that you've got around solar, they're some really interesting schemes within the residential market for hetero retrofit homes and add a metal roof and solar to them. And local contractors are doing a great job on identifying those areas because it allows them essentially subsidize the project with tax rebates.

Heidi J. Ellsworth: Holly, what are you seeing around regulations and government?

Holly Gotfredson: Well, as Geoff mentioned, performance testing is key and I think we may start to see some mandates around that. As Steve mentioned, there's going to be different types, the tax incentives that were there for a long time are 100% accelerated depreciation. We may be moving away from that a 100%. Maybe next year it's 60% depending on the political landscape. Me personally, I hope it comes back to a 100%. I think that incentivizes businesses to really take on that new technology, those new machines really update their capabilities. I think there's a lot of positives from that. Looking at what the current administration was implementing in terms of appliances and some of the more sustainable type of mandates that they were looking at, I think that's kind of a crystal ball into what we may start to see.

And this may be a topic that we're going to talk about and just hear shortly, but HPDs and EPDs for manufactured building products. Right now, an HPD is something that you can do as a self-report. It's optional, it's not required, but it's encouraged. And with the architectural community, I'm seeing where more and more firms really want to see, at least at bare minimum an HPD. And if you want to be more of the gold standard of their choice of building products, then an EPD is really going to get you to that level. I think we may see some regulations and some mandates around that in the near future.

Heidi J. Ellsworth: Yeah, I think so too. We're going to go that slide next. Before we do, I do have a question from Alina. Thank you Alina for being on. This is great. The question is for Holly on the topic of custom manufacturing. "What technology or processes have you seen implemented helping you measure margin, productivity, quality control when every order in your business is custom?" Very interesting question.

Holly Gotfredson: That's a great question. So we have some different systems in place. We have kind of a process where we've got one point of contact for a project and then that person is the communicator and kind of manages the job and is the point runner. And from that, we have kind of a process depending on the type of product that we're producing, that product goes through. We have engineering, we're going to look at the calcs for all types of products. Then we're going to go into approval of shop drawings and we're going to go and have reviews and we're going to have some meetings with the whole team about what that product is going to look like, looking at field dimensions, looking at measurements versus the architectures, how much are those off? Let's adjust for those accordingly, and then going into fabrication. So although the products are all custom, the process or at least the organizational aspect of the process is the same.

Heidi J. Ellsworth: Yeah, that's great. Great question. And that kind of leads us into what we were just talking about, but that is sustainability going into 2024. And Geoff, at the very beginning, you talked about Planet Passionate. I think I just said that wrong, but I'll let you say it. Talk to us a little bit about that and what you see in your crystal ball for sustainability next year.

Geoff Bernstein: Sure. Yeah, so in case anyone's not aware, I mean, we are part of a global initiative called Planet Passionate, which is part of Kingspan Group's sustainability program, which is essentially focused around four key areas, carbon, water, energy and waste. The long and short of it is essentially to strip carbon out of the built environment entirely. One of the key things that we've been focused on over the past couple of years is taking carbon out of the energy mix in our manufacturing environment. So we have direct renewable energy programs that are going on at all of our own facilities. So in Stratford, Ontario, we've got a solar array that's capable of producing around just about over 90% of the energy needs of our manufacturing operation. So you think no reliance on coal fire or natural gas fired plants within the energy requirements. We have manufacturing in Quebec, so we're actually quite fortunate.

Their grid already is entirely carbon-free through hydro, so all direct renewable carbon-free energy. And when we go speak to any stakeholder, whether that's an architect or a buyer at a dealer or the Home Depot or a homeowner, sustainability is often the second thing we talk about right after who is in the room. And it's proven to be such a differentiator for us and such a key component in how we win business that it is not something that's going away. In fact, we're going to continue to double down on it. We think that we're already far ahead of our competition when it comes to our sustainability and certainly in the building material sector, pretty traditional business or even working towards a lower and embodied carbon steel, that's something you'll see really a crystal ball thing for a few years out.

But you're seeing it in Europe already. We're starting to see some of it come online in North America. When you talk to a specifier, but a lower embodied carbon steel product that is drastically lower carbon than any concrete product out in the marketplace, immediately their interest is peaked. They have goals that they need to hit the companies that are employing them. You think of Microsoft and Google and Meta, brands like that. This is also things that are top of mind for them. So don't think it's going away in terms of solar, if it's solar panels or thin film solar, however you want to apply solar, there's solar roofing. You're going to start seeing a lot of solar walls come online.

If you do a deep dive into what's going on in the solar market, there's almost too much solar capacity right now on roofs. So they need to find other parts of the day to capture solar. So think of a solar wall product and steel is a 100% recyclable at the end of life, and that's still a huge takeaway for us. You're talking to a homeowner about an asphalt roof that's going to end up in a landfill for 300 years or 50 years down the road when your steel roof needs to be replaced, it's going to go get turned into more steel.

Heidi J. Ellsworth: Right.

Geoff Bernstein: That's a pretty good story to tell.

Heidi J. Ellsworth: It's very true. And Holly, go ahead because you had talked about HPDs and EPDs. I'd love you to keep going on that.

Holly Gotfredson: Yeah, well, to Geoff's point, I mean, I love that both steel and aluminum are a 100% recyclable. They both just bring so much to the table in terms of sustainability. I love that the sheet metal we typically bring in as raw sheet is 70 to 90% recyclable content. So it's just this wonderful circular economy that we have with metal and which is one of the reasons I really love working in it. In addition to aluminum, we also do zinc and stainless, but getting back to HPDs and EPDs, I think it's really almost like reading an ingredients list on the back of a medicine bottle is really what these reports are. And I think looking at health, the health, overall health of the building and the health of the occupants as well as the environment, really putting all of those pieces together so that you can make an informed decision is going to be really important now and into the future.

Heidi J. Ellsworth: Yeah, boy, do I agree. Steve, just bring us home a little bit on what you're seeing with sustainability.

Stephen Gosk: Again, from a machine perspective, we're somewhat agnostic other than we pay attention to the trends in the industry and where things are going to make sure that we're conveying it, we're changing, altering the machines to be able to support the products that are being looked to be run in the space. So we think all of these items listed certainly have some value and benefit for the overall industry and the bandwidth in the industry going forward, and we'll continue to watch that and make sure that we're aligned with those trends.

Heidi J. Ellsworth: The recycling, even within manufacturing. I know Geoff talked a little bit about that, but that's just going to be key that it can be throughout the whole thing. We are actually going to talk a little bit about codes, but you know what we already did, so we talked quite a bit about this. So considering we're getting to the end of our hour, I'm going to take us to economy because this is a great topic that I want to make sure we cover what we're seeing, predicting for the next year. Holly, what are your thoughts?

Holly Gotfredson: I was fortunate enough to be at a conference in Orlando a couple of months ago and listened to a top economist talk about his predictions for 2024. And I've heard some of those predictions echoed in other reports and in other news programs. And I think interest rates, we're going to see a correction with the housing market, which I think is well overdue. It may be a little painful, and typically, what everybody's saying is we're going to start to see maybe a slowdown around March, but I don't think the bottom's going to fall out of the market. I think what that's going to do is as interest rates drop, some of these projects that have maybe been on hold because the owners were really concerned about the higher interest rates and what that was going to do to their project and their project budget, I think they'll feel more confident and more ready to go ahead and break ground and move forward once again with those projects.

So what may start as a slow first or second quarter? I think by third and fourth quarter you'll start to see some of those projects that have been on hold for the last 24, 36 months start to begin again. As far as supply chain goes, it feels like we're almost back to normal. I'm not hearing anything more about allotments or alternative supply, but I do think COVID and the overall pandemic taught us a lot about be prepared for the unexpected. And so, I think we will not be caught unaware again. And I think that's a good lesson for everybody.

Heidi J. Ellsworth: I do too. And to your point, we just heard recently that there're expecting who knows what will actually happen, the interest rates to come down and with what you said, kind of figuring out the housing that's going on. But I think it's interesting because a lot of the commercial real estate has changed with people working more remote, people working in a lot of different places. And so, I've heard a lot on that front too, to your point of adjustments and how are they repurposing those properties? What are the shifts that we're going to have to do?

Holly Gotfredson: Absolutely. Adaptability is the word of the day and the word of the future. And I love to see that some of the office spaces and we've seen all different types of businesses go from having five floors in a building to one and office buildings that are now sitting vacant. But it's a great opportunity for us to reuse those spaces to kind of reimagine the interior and exterior. And in some instances, they're being used as assisted living and different mixed use properties are coming out of those. And so, I think it's just going to be a wonderful way for us to reinvent some of the older buildings that we were used to.

Heidi J. Ellsworth: Right. I think that's going to have a big effect on the economy. Steve, what are you seeing coming into this next year?

Stephen Gosk: Yeah, I think the most recent direction on interest rates really helps, even though it's not backed down to the low levels and they won't be backed down to those levels again. But I think the timing and direction is really helping people now get off dead center and start to feel comfortable enough to move forward in different directions. Supply chain with our suppliers, I'd say while they're not back to a 100%, it's very predictable. And so, they now have a good understanding of the timing it takes to get electronic components and the like that in the past year really were the holdup in some of the production areas that our suppliers had. So that's settling in from both the residential and commercial real estate side. I would echo what Holly said.

I think there will be definitely a slowdown. I don't see a cliff or catastrophic fallout in either market, and both of those markets have a high level of demand that's basically refurbishment and replacement of older product. Commercial real estate's one I'd watch closely though. I think that there's some financial exposure there and risk. And if those properties go unleased or unutilized, will the people reinvest in some of the updating of roofs and some of the building upgrades that they may need. But also, it could be an opportunity as well as those properties get repurposed into doing exciting things. So 2024 will be an interesting year, but we're planning on from our perspective a year that maybe slightly down, but not dramatically.

Heidi J. Ellsworth: It does seem it's doing it. Geoff, thoughts?

Geoff Bernstein: Well, I mean, 2023 was a heck of a year. So was 2022. Why would 2024 be any different? I think that it's going to be a different market that we saw in previous years, but a year with opportunity, an opportunity for smart-minded manufacturers and contractors and designers to align on where the market is shifting. It may not be the same projects that you're going to see going. I don't know if there'll be that much office, but maybe the mix will be a little bit more to industrial or warehousing. There seems to be an insatiable demand for warehouse space in a lot of markets that we're in. And then on the residential side, even a little bit of softness there, even if the pie shrinks overall, there's still an opportunity for metal manufacturers to continue to grow their share. We still see metal as a growth product in both roofing and siding. There's just too much market out there, and we are growing.

So, it's a matter of us finding ways to convert away from asphalt, to convert away from fiber cement, to convert from vinyl and find those opportunities where they exist and be smart about them and understand that we have a product that works in a lot of places and a material that does need a bit of an education in the marketplace. But once people are on board with it, they love it. Contractors love it, specifiers love it. So that's where we just need to put the focus for next year, and we're now not expecting a huge amount of growth for next year. I think the economy's still a little shaky, but now we're resilient.

Heidi J. Ellsworth: We are resilient. I think that's adaptable and resilient are the two words.

Holly Gotfredson: Yep, for sure.

Heidi J. Ellsworth: Yeah. So we are almost at the end of our hour, so I'm going to ask a favor of our panelists. I would like you to just... We'll round this up with what's the number one thing that you think is going to be unexpected in 2024 that people should maybe keep an ear out for to watch? So Steve, let's go ahead and start with you.

Stephen Gosk: Yeah, I think we've touched on a lot of subjects today that I think we all expect and will continue to evolve like the automation and other things. I see perhaps unexpected in 2024 as a lot more industry consolidation. And as these companies consolidate, I think they move towards more standardization and really rationalization of their offering, but standardization of how they manufacture. And I would see 2024 being ripe for that.

Heidi J. Ellsworth: You are so right. I just had a call about that this morning, Steve. That is so true. Geoff.

Geoff Bernstein: [inaudible 00:57:45] that Nippon Steel was going to acquire US Steel. That wasn't in my crystal ball, but yet here we are a couple of days before the end of the year, huge consolidation within the steel and metal business. So we'll see if that gets through regulators, but that's a big deal and an added good value on that acquisition.

Heidi J. Ellsworth: Do you have any others along with that?

Geoff Bernstein: I just expect some surprises from Vicwest. How about that? Not let the cat out of the bag yet, but maybe on another episode of MetalTalk.

Heidi J. Ellsworth: Yes, we will be talking about this. I love it, perfect.

Geoff Bernstein: We're at IRE.

Heidi J. Ellsworth: Yeah, they're at IRE. You can join all of these folks there. So Holly on, bring us home. What's something unexpected that you're kind of keeping an eye on?

Holly Gotfredson: I think there's going to be... Depending on the political landscape, again, we could see less regulation for some of these uniform businesses, those that are merging and getting larger and larger. The regulations team seem to get looser and looser for some of those really big conglomerate companies, whereas small to medium businesses are going to start to maybe have some challenges around that 50 to a 100 employee mark versus a 1,000 employees and above. There's kind of this wasteland of in between those two sizes. And a lot of times with regulations, lawmakers tend to turn the blind eye to those that are kind of in that space. So again, depending on what happens in 2024 with the election, that may be something unexpected that creates some new challenges for people that are in between those sizes.

Heidi J. Ellsworth: And I have to tell you, I think going into an election year, just expect the unexpected.

Geoff Bernstein: There's an election?

Heidi J. Ellsworth: That's just kind of how it is.

Holly Gotfredson: Exactly.

Heidi J. Ellsworth: There's an election down here in the States, Geoff. Yeah, there's an election. I would like to say thank you all. Thank you, Steve. Thank you, Geoff. Thank you, Holly so much for being on this panel today. Really great stuff.

Holly Gotfredson: Thank you so much for having us.

Stephen Gosk: Yeah, thanks. [inaudible 01:00:06] together.

Heidi J. Ellsworth: Thank you. And thank you all for listening. This will be on demand within 24 hours. Please share it. Please let people know that this is the kind of continuing education that is on MetalCoffeeShop all the time. And we will be seeing you all next year for MetalTalk, which will always be happening the third week of every month. I hope you have a wonderful holiday season and we look forward to seeing you in the new year. Thank you so much and have a great day.



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