By Emma Peterson. 

Learn about what’s driving the rise of mergers and acquisitions in the modern roofing industry.  

Recently, the roofing industry has experienced a variety of game-changing mergers and acquisitions (M&A). A rise in consolidation to this scale hasn’t been seen since the 1990s and can seem unsettling at first glance. To take a deeper look at what’s going on, Heidi J. Ellsworth hosted Paul Trombitas and Paul Giovannoni of FMI Corp, a leading research firm for the construction industry, for an episode of Contractor Outlook. 

Paul G. gave some context to the history of M&As in the industry, saying, “Over the last 5 to 10 years, you've seen mergers and acquisition activities really ramp up in the broader construction market. While it’s always been present and there's always been certain investors who had interest in the space, it seems like it's steamrolling and gaining momentum.”  Paul G. cites this growth to a change of perception.  

Historically, the roofing industry has been seen as both cyclical and highly volatile – which investors are realizing is not actually true. We saw it happen before our eyes during the COVID pandemic. While much new building and construction work faltered, the service and maintenance side of the market remained strong and resilient. In addition to this shift in perception of the industry, investors realized that the roofing world has a lot of space for growth. Paul G. elaborated, “Investors realized that with family owned businesses, there's a lot of opportunity for improvement both operationally through technology and through growth through acquisition and add-ons.” 

Looking to examples of big M&As in 2025, one of the first ones that likely comes to mind is QXO acquiring Beacon. Paul T. gave some insight into this industry shift, echoing some of Paul G.’s thoughts, saying, “With QXO, I think there was an initial draw because of the idea that roofing was a highly fragmented market. While that’s true for contracting, when you look at it in that roofing distribution space, there's really only three major firms. But it got them interested, and then it turned to a conversation of these digital platforms, everything from configurator tools to full online storefronts and the adoption curve in construction.” In general, the roofing and larger construction industries can be slow to adopt new technology — using AI or online sales. What QXO realized was that acquiring Beacon was a way to get ahead of that curve, to be the ones leading the way into those technologies rather than following.  

Read the transcript, Listen to the episode or Watch the entire recording to learn more about the role of mergers and acqusitions in today’s roofing industry.

Editor's note: The following is the transcript of a live interview with Paul Trombitas and Paul Giovannoni of FMI Corp. You can read the interview below, listen to the podcast or watch the recording.

Intro: Hello and  welcome to Contractor Outlook newscast. This is Heidi Ellsworth with the Coffee Shops and  we are here today to really talk about what is going on out in the industry and how do you know what's going on? Well, sometimes you have to depend on some of the experts out there who really know how to gather information and do the research. And I am so happy to say that we have a great, very special, I would say, relationship with our friends at FMI who do this every single day. So I am really excited to welcome Paul and Paul to our Contractor Outlook Newscast today. Welcome, gentlemen. 

Paul Trombitas: Thank you, Heidi. Great to be here. Always a pleasure to speak with you and  excited to have my colleague Paul Giovannoni on with us. And so, as a bit of background, Paul Trombitas with FMI and  I lead our team that's focused on building product manufacturers and distributors. So we work with those firms on understanding what's happening in the market, trends, drivers, product changes. And my colleague, Paul Giovannoni, I'll turn it over to you for background. 

Paul Giovannoni: Sure. Hi, Heidi. Yeah, so I'm a partner at FMI and  I lead our private equity consulting services. So we work with private equity firms largely when they're making acquisitions within the broader construction space, helping them evaluate companies, helping them think about strategic growth, helping them understand operational improvement opportunities for those businesses. And of course, recently, the last couple of years, roofing has been a pretty hot topic. 

Heidi J. Ellsworth: I tell you what, not since the nineties have we seen this kind of M&A and mergers. I'm telling you what, the roofing world has turned upside down these last couple of years, Paul, so I'm really excited to talk about that. Let's start out with, can you just talk about FMI a little bit? So, Paul Trombitas, could you maybe just take us on who FMI is? And then, let's talk a little bit about how you do what you do. 

Paul Trombitas: Absolutely. So FMI, we have two sides of our business. We have an investment bank which focuses on M&A, so buy side, sale side representation, what you would think of as a traditional investment bank. And then, we have our management consulting side where we have three practices, so leadership or ganizational development strategy where Paul and I sit and  then our performance practice. And what's unique about our business is the 70 plus years we've been in business, the only industry that we work in is construction. So our clients are general contractors, trade contractors, architects, engineers, building product manufacturers, any of the associations that touch the industry and  then investors that are looking at the industry. 

And so, when we think about the type of work that Paul and I do, it's really about getting insights from folks that are in the business and understanding the nuance in the marketplace. So, we have the benefit of the 70 years of clients working in the space, so we're able to leverage that to a great extent. And then, understanding who the right folks are to speak with. So if you're looking at food and bev, the plant manager, the facility managers. And you're looking at healthcare or education, it's the capital planning managers. And so, understanding those nuances. 

And then, we also have our team that's in house that does our economic models. So that's how we get all of our market forecast. And of course, there's traditional secondary sources. Dodge is one that we look at, Construct Connect. So we, pull from a wide range of sources to really gather the right information needed to share the right insights with our clients. Paul, anything to add on that? 

Paul Giovannoni: Yeah, I think when it comes to data, the data is always helpful. But what's really valuable to our clients is the context and the why behind it. And I think going back to what Paul mentioned, that 70 years of experience and  when I think about our backgrounds, working within most of these firms, helping them with strategy, we understand the why behind the data, the requests, the needs to a deeper level. And I think that's really where our advantage is and  how we help clients is having that deep understanding of their challenges having seen it multiple times in the past. 

Heidi J. Ellsworth: I think that's so true. Because, people can have data, they can put results out there from surveys, different things, but to really understand the data and understand the market, I think that's one of the things that I've just really been impressed with all of you is your understanding of the markets that you're working in. And a lot of times you don't have that, right and  you can't bring it down to, "Why should I care about this data?" 

"Well, this is why and  this is really what's happening." So, I love that. 

Let's talk about one of the biggest acquisitions, this happened this year, that we have been on all kind of, wow. And that is the Beacon, QXO acquisition. Can you give us some insights on what's going on there, what you all saw in some of your research as that came about? 

Paul Trombitas: It's a very interesting change in the industry, I'd say. When you look at Beacon, in last year, Beacon alone made six acquisitions that were only in the metal space and they weren't distributors. So, there was a mix of firm types that they had acquired. And so, they themselves were going through how they integrate properly a manufacturer into that landscape. And then with QXO, I think there was an initial perception that it was a highly fragmented market, but when you look at it in that roofing distribution space, there's really only three major firms. 

Heidi J. Ellsworth: Yeah. 

Paul Trombitas: And so, I think that fragmentation piece wasn't as big of a case and  it really then turned to, "How do we leverage technology?" 

And that's a big component that we're seeing, is these digital platforms, everything from configurator tools to full online storefronts. And I think it's growing, but there's still that... If you think about construction, right, there's the adoption curve. At the front end, you have the early movers. At the end, you have the laggards and  I'd say about five steps behind is the construction industry. So we're a little slow to adopt in technology. 

Heidi J. Ellsworth: True, true. 

Paul Trombitas: And I think it is a really interesting shakeup. I think there's a lot of interest to see how they do integrate the AI, the technology into that space. But it does add a very unique dynamic, because you have ABC that's privately owned, Beacon now with QXO and  that will be really interesting in the next two to three years. It's yet to be seen. 

But I would add in the new layer that QXO made the request, if you will, to acquire GMS and  that would add a whole nother layer of a consolidated industry from GMS. So talking with folks in industry, it certainly could be the buyer of the future, these massive consolidated firms and  what implications that has, that'll be a hard one to pinpoint. But it certainly throws a very unique, similar to a Katerra, right, in the past where that was going to change the world. But I think there's certainly legs and some really strong power behind QXO. So we'll see what happens. 

Heidi J. Ellsworth: Well and  when you add SRS and Home Depot into that- 

Paul Trombitas: That's right, Home Depot. It's a really interesting time to be in the industry. We have these unique market dynamics going on. You have these massive acquisitions and  you have the bifurcation of, there's the small firms and then the really big firms and  that middle is certainly getting squeezed. 

Heidi J. Ellsworth: Yeah. Oh, definitely. And you see it every day. And you mentioned the metal manufacturing. I think that is really interesting, too, for what you said. I think we're going to see... It's just been interesting seeing all the M&A activity within the roofing industry overall. And we're going to talk more about that. But when we look at what's happening in metal, we're starting to see things with Cornerstone, Central States. We're just seeing a lot of activity there. Paul, you do an excellent report or  your FMI does an excellent report for the Metal Construction Association. Talk a little bit about what you're seeing there and if you're looking at your crystal ball, what are some of the things we should be watching out for? 

Paul Trombitas: Something that I found fascinating is, looking at, in building products alone, the number of M&A deals back to 2009, 2024, they were 406, so it's the highest it's been, I want to say, ever, at least since 2021. And so, in the second most acquisitions or M&A activity was in the roofing space. And so, when I look at metal in particular, Beacon went on a large run of acquiring metal businesses. Wholesome was very involved. Cornerstone with Mueller. Armstrong made two acquisitions into the metal space, certainly around the architectural side. Carlisle is always involved in something there. Tremco made the acquisition. And then you have other firms like Georgia Metals that it's private equity owned, but has acquired other entities itself. 

So you have a very active marketplace in the metal space. And as it has grown over the last 10 years, it's really drawn a lot of attraction from not only the strategic buyers getting in and seeing it as an opportunity, but outside the industry investors like private equity. But then also, you have outside of the US a lot of interest from the Asian corporations to the European corporations to South American corporations. And, we have just seen a flood of interest in the market and  wanting to get into the metal space, particularly metal [inaudible 00:11:27]. 

Heidi J. Ellsworth: Yeah. 

Paul Trombitas: And I think we're going to see continued emphasis and investment in the space. And, I can't see where it's going to slow down just as a result of the number of inquiries we had and  just the activity we've seen this year as well as last year and  the momentum it's gained. 

Heidi J. Ellsworth: That's interesting. And looking into 2026, because really that metal world with the sheet metal shops and what we're seeing out there is still just so many small companies, small regional companies or  even just local, not even regional, that are out there. I agree, it seems like we're going to see that that's going to continue to bring people together just because metal isn't as easy to ship. And so, they're looking for easier ways to deliver the product. And that's a whole different topic that we could talk about. How is metal roofing and metal siding being delivered? How's that going to change in the future, I think is really something that we're going to see a lot of changes in, too. 

When we are talking about construction space overall for our contractors, I think we have to look at the history in other areas outside of roofing and  metal, but now what's happened this year with really that focus? So Paul, when you are talking about private equity in the construction space, what are you seeing and what's the attraction really to all the money that is coming in and all the consolidation? 

Paul Giovannoni: Yeah. Well, it's interesting, because like Paul mentioned, there's been... When we look at the acquisition activity, over the last 5 to 10 years, you've seen it really ramp up in the broader construction market. It's always been present and  there's always been certain funds, investors who had interest in the space, but it seems like it's steamrolling and gaining momentum. And as funds see other funds become successful with exits in the space, they're becoming more comfortable. 

Historically, there was a perception that the construction industry was all cyclical and highly volatile. And I think some of that is based off of what we saw with the Great Recession and just how severe that was, but that was really an anomaly. But what we're seeing is private equity funds becoming more comfortable in the space, because they realize that it's not all cyclical and it's not all... The greatest example of that is when you look at roofing and you look at the service and maintenance side and re-roof side of the market, which is really the biggest part of the market and  about 70% of the market opportunity is in those two areas. They're not cyclical. They performed well during the Great Recession. They performed well during COVID. 

And so, they've realized that there's spaces in the industry where there isn't cyclicality. And so, they're focusing on those areas. And at the same time, as they've realized that, they've realized it's highly fragmented with a lot of family-owned businesses, which is really attractive. They've realized that with those family-owned businesses, there's a lot of opportunity for improvement both operationally through technology and through just growth through acquisition and add-ons. And so, through all of that, they become more and more comfortable in our space. And it is just, again, as people have success, others are going to join in just like with anything. And we're even seeing them start to get interested in union firms, which you go back five years and that's taboo with bonding requirements. 

Heidi J. Ellsworth: Right. 

Paul Giovannoni: And so, it is a highly active space and  I don't see an end in sight broadly. And then in roofing, it is the hot area right now. 

Heidi J. Ellsworth: When I'm talking to some of the private equity groups, a number of them reference HVAC as having been the place that a lot of this started, where they were able to see how the roll-ups work. And I love it as they talk about innings. They use that as an example. They're kind of in the seventh inning in HVAC when they're in the second or third inning when it comes to roofing, just starting. To your point, Paul, when you were saying they're getting comfortable, they're even looking at unions and different things, do you see some correlation between the HVAC industry and then them looking at roofing and moving this direction? Do you see any correlation there? 

Paul Giovannoni: Yeah. And the innings metaphor is always the one that's used. Being the dad of a 12-year-old who loves baseball, it makes sense and resonates with me. But if you think about HVAC, yeah, that's sixth, seventh inning. We're starting to see a lot of re-trades for the second and third time. And if I were related to roofing, I think in the residential space, we're probably in the fourth or fifth inning. In the industrial space, we're probably more in the third. So, it hasn't gotten accepted as much. And then, if we're even thinking about the storm side versus more the retail consumer side of roofing, that's probably even a little earlier in the broader roofing space. 

But, to my earlier point about seeing the recurring and reoccurring nature of opportunity, that's where they've really drawn the relationship to HVAC, is because on the HVAC side, the service and maintenance portions of those businesses are what's really attractive. And they see the same similarities with roofing as being non-deferral. Once it breaks and  it's 102 degrees in Raleigh, North Carolina, you're going to get your HVAC fixed. And we're in hurricane season and  it starts raining and we have those issues, you're going to get your roof fixed. 

Heidi J. Ellsworth: Right. 

Paul Giovannoni: And so, they've seen that relationship and that's why they've gotten comfortable with roofing and are really active in it as well as, like I mentioned, the fragmentation is just as great in roofing as it is in HVAC which allows for that roll-up and that ability to scale these businesses into one platform and then trade it again. 

Heidi J. Ellsworth: Which kind of takes us also that same, when you're looking at it, when we're looking at the sheet metal shops, the very local metal manufacturers. Also, very small. Some of them do roofing, some of them don't. A lot of them are just bending metal for HVAC, for roofing, for siding, all of that. 

And another industry that I'm really interested in, too, is siding. Because siding has never really... Just in looking at it and if there's any siding contractors out there, please don't take this the wrong way, but you don't even see as much organization. Really, in roofing, you have the National Roofing Contractors Association, you have a lot of regional and local associations. You don't see that as much on the siding side of it. But yet, there are so many siding contractors out there. I'm just wondering, do you see that continuing to push through to some of these even trades that are not as organized when it comes to private equity or do you see cross... One of the things I've always wondered is, why aren't we seeing more roofing, siding contractors? I know a lot of them do do that, but any trends that direction, Paul? 

Paul Giovannoni: Yeah, you hit on one of the big opportunities that we see with private equity in the construction industry for the next iteration of roofing, the next iteration of HVAC and  I would go broader than siding and really label it exterior services. 

Heidi J. Ellsworth: Okay. Yeah. 

Paul Giovannoni: Because on the residential side, yeah, it's siding, but it's also brick repair. And then, if you move to the commercial side, it is waterproofing and masonry and concrete repair. But, we're seeing this move for roofing contractors and roofing contractor platforms that are private equity held to move down the building to the walls basically. That's siding and  that's also windows. 

Heidi J. Ellsworth: Yeah. 

Paul Giovannoni: So, all things, kind of the side of the box. But we are seeing that migration. We're seeing those exterior services firms become their own standalone platforms. And then, the private equity firms have an interest in moving into roofing. Or we're seeing roofing platforms moving into siding and exterior services. Huron Capital has a platform that's doing just that. I believe it's called Rampart. But yes, that market is, I think, the next opportunity, because it is highly fragmented. It is non-deferrable. So, it follows a lot of those same great traits. And there's that opportunity to really grow and improve these businesses through professionalizing them. 

Heidi J. Ellsworth: Yeah, exactly. And I love what you're talking about with the building envelope or  that exterior contractor. We're seeing that a lot. And it goes beyond even that one structure, right, when you look at the outdoor space, the different types of buildings, the pergolas, the outdoor living, the pool and spa contractors. There is so much going on in that market, also, especially since COVID, as people continue to put that money back into their homes to improve their space. It seems like that continues to grow and  that's one of those areas that is not stopping. 

Paul Trombitas: I'd say, also, Heidi, [inaudible 00:21:56] just released a really great white paper on exterior services for private equity. 

Heidi J. Ellsworth: I love it. 

Paul Trombitas: [inaudible 00:22:07] 

Heidi J. Ellsworth: Okay, we're going to need to get that, because I want to see it. 

Paul Giovannoni: I think the one thing that is just a mindset shift that I've seen is historically it's been called business services, this broader contractor space by private equities, business services or industrials. But the pivot has been made to where they're now called essential services. And, I think that really resonates to thinking about how non-deferrable they are, how non-volatile they are. They're not cyclical. All of these different services in our industry are considered essential and  that's what's driving the demand for them, the investment demand from private equity. 

Heidi J. Ellsworth: I really am intrigued as I look at that whole home improvement space, the different directions, that as roofing moves into more that home improvement space of windows and  you brought that up. Because the window space has been a little bit consolidated a lot more dealer models in a lot different way. But now, it's all merging together. And so, it's interesting, because roofing just hasn't had a dealer type model. But now, people are trying to look at that. As you see all these different models coming together through these acquisitions, how is that working or  do you have any insights around that? 

Paul Giovannoni: Yeah, I think if we're talking about a multi-trade model or a roofer's doing windows and roofer's doing siding, I think they're seeing the opportunity for cross-sale. And cross-sale, the ability for greater supply chain efficiency and leveraging relationships. And so, I think they're gaining a lot of traction with that personal experience. We just had all new windows put in our house and  we actually went with a roofing contractor to do it. We knew the roofing contractor had a great reputation. They're a local firm and  they started an exteriors business and  they do windows as part of that. And so, we went with them because of their reputation in the roofing space. They happened to be an FMI client as well. But they knocked out the ballpark. And so, I think it's that cross-sale, the ability to leverage a great brand is really helping them. 

Heidi J. Ellsworth: Yeah, we talk about that a lot on our podcasts, our webinars. We talk about diversifying your business, being able to keep that customer. What's the next thing instead of just a roof? And then, I really think there was a lot in the past where people would go in, if they did siding, they would say, "Okay, the siting is done, move on." 

Now they can say, "Oh, how's your roof? How's your windows? What's going on there?" And even looking at the outdoor space, "Are you thinking about updating your garage or doing different things with your shed?" 

I think we're seeing a lot of that. And so, I guess my last question is, as we're looking at this and  I love the fact that you came out with a report on exteriors, because we are seeing the exact same thing, that's growing. Where are you hearing with all the research and the rumblings, what's kind of the next trade? What's the next big thing that you are really seeing a lot of research being done on and that the investors M&A may be looking at, whether that's distribution, obviously contractors, we're seeing that, but then also in different trades out there? 

Paul Giovannoni: So obviously, I think the biggest one and  the nearest term opportunity, is exterior services. And that's residential, non-residential, even parking garages. Seeing that as that's the next opportunity. I think then you see any of the services around automation, whether that's home automation, commercial, non-residential automation, industrial automation. I see a lot of activity around that. And then, an interesting space is around perimeter security, both the electronic, I think access controls in the simplest format, video cameras, but it's also fencing. And so, we're seeing a lot of interest in the fencing market for installers, which before, we never saw that. 

And we just actually were helping a private equity firm that was looking at a deal and  it became what they call a frothy deal, because there were so many active participants in trying to win the opportunity to buy this company, that the multiples for it became much higher than anyone would ever anticipate, because it was of such great interest. 

So I think those are a couple of them. We're also just seeing a lot of interest in engineering services for the buildings, roofing consultants will be a part of that. And then, we're seeing- 

Heidi J. Ellsworth: That's interesting. 

Paul Giovannoni: ... [inaudible 00:27:19] data centers is just top of mind for everyone. 

Heidi J. Ellsworth: Well, you said, also, about smart homes. Smart homes, smart buildings. There is going to be a need and  I'm sure there's lots of companies out there who are already doing this, who can come in and can install all the different electronics. And is that what you're talking about when you're talking about automation and getting- 

Paul Giovannoni: Yes. 

Heidi J. Ellsworth: Because, you're seeing that where you're doing everything from your phone, but someone has to set it up. 

Paul Giovannoni: Well, somebody has to set it up and  somebody has to get it all to talk to each other. Because I, probably on my phone, have five or six different apps for different systems in my house, whether it's the Ring camera or the Train thermostats or ADT. 

Heidi J. Ellsworth: Right. 

Paul Giovannoni: I would love to have just one app. Get it all to talk to each other. So yeah, there's a significant opportunity there, integrators. 

Heidi J. Ellsworth: I have to tell you, we could go on and on. I find this fascinating. Thank you both so much. This is so interesting. Any last thoughts? Any last things that you want to share with the audience around M&A and what's happening in specifically metal roofing, where the coffee shops are living starting with you, Paul Trombitas? 

Paul Trombitas: One of the things I would just echo is, we've done a number of studies recently on the fencing space. And that has really become an interest for the private equity firms. And we've seen a number of deals just in the last two years. And it's from the installer dealers to the distributors. And it goes both on the residential side, when we talk about the integration of multiple trades, if you will. So being able to do the fencing, but also the railing and the decking and additional outdoor living. 

Particularly from COVID, we now have the extension of outdoor living, right? [inaudible 00:29:19] decking and  that has been a huge part of a growth area. And then on the non-res side, the high security or perimeter, high speed gates, all the electronics and AI that's been added into that and  it's now not only on the data centers, but it's going to smaller facilities, warehouses, institutional. And so, that's become a really big space as well and very attractive. So I would just say that's an area we're seeing is working with the building product manufacturers as well. 

Heidi J. Ellsworth: So interesting, fencing, I've been hearing the same thing. It's crazy. And definitely on the outdoor living space, that is just hot right now. And a lot of the different trades can get into it. That's the thing. It's something they can diversify into with not that much investment. And so, it's really, really fun to watch. 

Well, gentlemen, thank you so much. This has been so interesting. This Contractor Outlook newscast, I tell you what, you nailed it. This was awesome. Thank you so much. 

Paul Trombitas: Thank you. Always a pleasure, Heidi. 

Outro: Always great. Thank you all for listening. Please check out all of our Contractor Outlook Newscasts on all the Coffee Shops. You can find them there. This is the kind of information that goes across the trades that is for everyone to really see what's happening out there, whether it's in mergers and acquisitions or weather or politics or advocacy, you name it, we talk about it. So also, be sure to check out the FMI directory on Roofer's Coffee Shop and Metal Coffee Shop and  see what they're doing. Because their research and  you'll hear, because we have more research coming out, we try to get that out all the time. It's so interesting and so great for your business. 

So, please also follow all of our podcasts on Cross the Coffee Shops. You'll be able to subscribe and  set those notifications on your favorite podcast channel so you don't miss a single episode. We'll be seeing you next time on Contractor Outlook newscast. 

Editor's note: The following is the transcript of a live interview with Paul Trombitas of FMI Research. You can read the interview below or listen to the podcast.

Intro: Hello and welcome to Contractor Outlook newscast. This is Heidi Ellsworth with The Coffee Shops and we are here to talk about what's happening in construction. I have to tell you, so much is happening out there. Whether it's weather, economics, government, it is across the board changing rapidly. So we have to always get with our experts in the field to be able to really understand what's happening. And our favorite every day is Paul Trombitas of FMI Research. Paul, thank you for joining us again. 

Paul Trombitas: Heidi, thanks for having me. I love being on the podcast and it's always a pleasure talking with you. We always have such great conversations. So, excited to be here. 

Heidi Ellsworth: I know, I love it. I love these conversations. I look forward to them all the time. I really enjoy the fact that this is across the entire construction industry. FMI is so in tune to everything that's going on across construction. I always love to hear what's happening. Today we really wanted to talk about your 2025 North American Construction Outlook report, which is very exciting. So let's start out with, if you could do, introduce yourself and tell us about FMI Research. 

Paul Trombitas: Absolutely. So if you're not familiar with FMI, we're a management consulting and investment banking firm. What's unique about our organization is that for the 70 years the company's been in business, the only industry we work in is construction. We call it the built environment. So our clients are general contractors, trade contractors, architects, engineers, building product manufacturers, distributors and any of the associations that are involved in the industry. 

So on our investment banking side, they work on the M&A buy side, sell side, ownership transition. And then on our consulting side, where I sit, we focus on strategy development with organizations. We also work with companies on leadership and development as well as performance. How do we improve our operations as a business? So the consultants and bankers that work at FMI are essentially living in these businesses every day. And it gives us a really great perspective on how they're operating, what they care about, what are their pain points and challenges. And that all feeds into our overview, outlook as well as on a quarterly basis when we update it. So it gives us a good boots on the ground sense, if you will. 

Heidi Ellsworth: Yeah, it really does. I mean, one of the things I love is how much you work with the associations because I think that's where a lot of that information lies, is in the strength of those associations. And that's how you and I met, was through Metal Construction Association, where you've done a lot of research for them. 

Paul Trombitas: Absolutely. Yeah. So MCA is a great association. And we also work with a number of others. So MCA, DBI, DBIA, AGC, ABC, AWCI, a wide range of all the organizations and associations in the industry, which is great because you get a great perspective on what everybody's seeing, what are their pain points, challenges, opportunities. So it's really beneficial for us. 

Heidi Ellsworth: That's the part I love, is that you really see every single part and why these conversations are so great. So let's get started with that. Can you give us a brief overview of the 2025 North American Construction Outlook report, kind of what you saw on key trends and your forecasting? That's the part I love. 

Paul Trombitas: Absolutely. So when we look at the market, there's a number of factors right now. It's the political climate, affordability rates, technological trends and advancements. You have generational transitions. All of these converging together. Right now we're creating a very unique dynamic in the market. When we think about what are the top trends, so first being and I'm sure most folks are familiar with data centers and the growth in that space. So if we look at just 2025, data center spending is anticipated to be $30 billion, which is substantially higher than it was in 2020. And we continue to see that as a very favorable growth market. We also see on the manufacturing side the reshoring, the investment in high-tech manufacturing, everything from battery to EV, semiconductor pharma. And that is what I found really interesting, Heidi and I think you'll appreciate this, is from 2022 to 2024, a hundred percent growth. 

Heidi Ellsworth: Wow. Wow. 

Paul Trombitas: Incredible. Also, on top of that, there are more companies and we get several inquiries really over the... We've had several over the last couple months of companies, especially in the building product space, looking to greenfield facilities in the US. So we see the reshoring and manufacturing as a big trend, certainly data centers. But also, there's the efficiency sustainability factor that's continuing to be top of mind for folks. Across all industries, they're looking at how do we reduce carbon footprint or the low impact products and materials that we can utilize on projects. So that remains a big topic of conversation and also technology, everything from the complexity of buildings with smart buildings and the integration of sensors and technologies to monitor efficiency. And then the adoption of AI on project sites and how that's being utilized. 

And then I'd say the last big topic would really be around the M&A environment. This is specific to just building products, but when we look at the number of M&A or deals in the building product space from 2020 to 2024, by count, grew 50%. So reaching 380 deals last year, which that we see as continuing to grow, particularly as we see the private equity investment in the marketplace. So those altogether really the high level key trends that we're seeing that will continue to shape the industry. 

Heidi Ellsworth: And really are going to keep that industry growing. 

Paul Trombitas: Absolutely. 

Heidi Ellsworth: Yeah, across the board. Because when you've mentioned 2% overall growth in construction spending for 2025, I think there's people out there who are kind of like going, "Okay, wait a minute, are we really growing? Are we going to stay? Is it recession?" I mean, we've been trying to be in a recession for the last five years, it feels. So as you're kind of looking at that, what are some of the stabilization? I mean, I know there's a lot that's not stable, there's a lot of uncertainty, but what are some of the stabilizers that you're seeing? 

Paul Trombitas: So when we look from '23 to '24, we saw 6% growth. And then moving from '24 to '25, it's 2%. So slowing of growth. But what I think is important to note when we look at the large sectors, so the residential, nonres and non-building, over the forecast period, we see residential seeing growth, over three and a half percent in our average annual spending of 975 billion. And that's being driven by single-family and improvements. 

Now, when we look at the non-building space, it's continuing to grow. Now, what's key to keep in mind here is that for manufacturing, we saw very substantial growth, '21 to '22, '22 to '23 and '23 to '24. And same on the data center side, we saw extremely high growth from '23 to '24, '24 to '25. So although the annual growth rates are slowing, these segments are at a new unprecedented level of construction spending. So we're seeing more stabilization in several of these segments. What we anticipate is '25, '26 to be lower growth years and then really a return to more higher-digit annual growth rates into '27, '28. 

It is interesting though, particularly with manufacturing, I thought this was really interesting, is that manufacturing of nonresidential spending, manufacturing represents 62% of spending in '25 and that is significantly higher than it has been in the past. And then the next highest segment is education at 33%, followed by commercial and office. Those are all seeing unique dynamics at play from data centers to the high-tech to warehousing. So those are going to have implications for that lower growth rates and then an uptick there in '27. 

And then on the non-building side, it's a smaller portion of the market. So on average, roughly 400 billion per year through the forecast period. But it's being driven a lot by the IIJA funding, government incentives and we see that as a much more stable market. Particularly, where we see attractive growth is in the water wastewater space and power. So when we think of the overall market, residential, certainly on the single-family improvement side, we're seeing favorable growth and it's a spread across nonresidential. And then in non-building, a lot of that infrastructure is certainly going to see favorable or at least stable growth over the forecast period. 

Heidi Ellsworth: Wow, wow. So let's talk a little bit about the infrastructure, I mean when you're talking about the non-building segment. We had our huge infrastructure bill and there's been, like you said, a lot of money put into that. What are you all seeing? Do you see that drying up? Is that going to continue? I know you just made mention of that, but I'd like to go a little bit deeper. How are some of these programs that we saw when it comes to chips and data centers and all these different things? Are we still seeing that input of federal funding into a lot of these segments? 

Paul Trombitas: So before we get into that, there's one additional item I wanted to note, so we have an index that's the Nonresidential Construction Index and we capture insights and input from firms operating in nonresidential market. And Q1 for 2025 was 56.9 on the index score, which is the highest it's been in over a year. One of the key topics that they noted was a lack of projects in the mid-range size, so that 150 to 200, even 300 and a lot more on the end. So the smaller maintenance upgrade projects and the large 750 million-plus, which another interesting aspect there is, the labor required per dollar is much higher for those projects than they are for that mid-size project, which adds another layer of complexity and challenge to the market given the labor constraints. So I wanted to make sure to call that out as well. 

Heidi Ellsworth: Yeah, no, I think that's really important. 

Paul Trombitas: And then on the non-building side, power. Power is one that we anticipate seeing growth from '24 to '25, 7% growth there. A lot of that is being fueled by energy demands from data centers, from manufacturing, artificial intelligence. So that growth in those segments is going to fuel investment in upgrading infrastructure to support them, because right now we're seeing an increase in consumption of power from all of those segments and to support them moving forward, that's going to be a major emphasis. And the other one on the non-building side is the water wastewater. And that's a big emphasis on improving the drinking water infrastructure as well as repairing transmission and distribution networks for housing. And that's a big emphasis right now. So we anticipate the water wastewater space to be very favorable through the forecast, upwards of 6% plus growth. 

Heidi Ellsworth: Wow. It's funny, when you kind of think about this, coming from RoofersCoffeeShop, CoatingsCoffeeShop, MetalCoffeeShop, you don't think about, okay, yeah, we're all excited to hear that the single-family residential and residential improvement overall, multifamily. So we are all, coming from our side, more in the sub-trades with the roofing, metal, coatings and we get... Of course that is great news to hear the single-family is going to be growing, but you don't think about all the other things that go around that. I mean at least I don't, that's why I love talking to you. When you think about public safety, water supply and all of that is happening, plus then all the manufacturing that is also going on to get the materials that we need for this multifamily and we still have a housing shortage. I mean there's still a housing shortage out there, which is driving that. Let's talk just a little bit more. I would love... You and I talked about this at the IBS show too, International Builders' Show, but let's talk just a little bit about what's driving that single-family residential and how it's playing with multifamily too. 

Paul Trombitas: So there's a couple of factors here. So when we look at net migration, so the number of people leaving versus coming into a state and you look at the trend over the last 20 years, it's a very clear depiction of the population growth in the southern states. In particular, when we look at single-family total housing starts, the most favorable markets for '24 were Dallas, Houston, Phoenix, San Antonio, Atlanta, Austin, Tampa, Charlotte, Raleigh. So they concentrated in more of the secondary cities, if you will, as opposed to your historic primary cities like LA and New York and Chicago. And there's a large shift outside of those areas. 

In addition to that, we look at the median age of a house, which this is really interesting to me, is it was more than 40 years old. When we think about improvements, there's going to be a continued investment in upgrading, maintaining and investing in homes due to the age. But also given the affordability dynamics over the last several years, over the next three to five years, homeowners that purchased a home that maybe wasn't what they exactly wanted given the cost to buy a home, so over the next three to five years we'll see more investment, particularly around upgrading fixtures, facade, interior flooring to get it to where folks want the home to be or what they had hoped for over the last several years. 

Heidi Ellsworth: Right. 

Paul Trombitas: It's going to be a big one. In terms of population net migration, we see a higher volume of folks in the southern states: Texas, Florida, Carolinas, Georgia. And then you have the other dynamic of affordability that's folks have purchased homes where they're one to upgrade. And then you have others where the homes are older and they want to increase the value as well as maintain and upgrade those. So we'll continue to see investment on the single-family side as a number of those key drivers. 

But the other piece is on the office. In the office sector, the SEC released a report where last year was the highest number of corporate relocations in the last 15 years. And they were all two cities that I just mentioned that were seeing growth in housing. 

Heidi Ellsworth: Yeah. 

Paul Trombitas: So that's only going to spur the housing growth, but from an office standpoint, TI, it's going to require infrastructure needs, institutional needs, water wastewater demand. So they all kind of tie together to support the growth in population in these various MSAs and areas. 

Heidi Ellsworth: Yeah. What do you see with the buildings that are being left behind from some of these number one cities that people are moving out of? What does that look like? 

Paul Trombitas: That's an interesting piece and we haven't seen a whole lot on what's happening with those facilities. There are occasions where they're retrofitting them to serve as, maybe it was office and now they're transitioning them to- 

Heidi Ellsworth: Lofts. 

Paul Trombitas: Yeah, the lofts, but also on the pharma side, I can't think of the term right now, but where they're in the development process of new drugs, labs space. 

Heidi Ellsworth: Oh, labs. 

Paul Trombitas: We've seen a lot of transition from maybe it was office to transition to lab or to retrofitting them to be kind of a higher end apartments. So that's one of the aspects, but we haven't heard a lot of what's happening with those buildings. And given the vacancy rates in a lot of those cities, I imagine that they're likely sitting empty. 

Heidi Ellsworth: Yeah, it's going to be interesting, because really when we start talking about housing and multi-use, these old buildings at some point need to either be rehabbed or torn down, most likely, is what's going to happen. 

Paul Trombitas: Exactly and repurposed. It goes to the trend in adaptability of facilities. So as the technology changes within the construction space, how do you upgrade and change the purpose of a building? Given a lot of these buildings are aged facilities, so I would imagine there's going to be a lot of tear down or a lot of investment in repurposing them. 

Heidi Ellsworth: Yeah, I find that... To me, I want to watch that one, Paul. We got to watch that. That's going to be really interesting as we're moving forward. So as we're looking at other areas, I kind of want to talk a little bit about healthcare, education and transportation because... And I'm just going to kind of bring it back to roofing. That's big, right? Every year there is reroof on schools, on health care. So what are you seeing in those areas? 

Paul Trombitas: So healthcare, big thing here, the aging population is a big driver. So over the last year or two years, we've seen a transition back to investment in hospital expansions as well as medical office buildings. Now we see medical office buildings slowing in construction growth. However, there is a wave of large hospital expansion projects over the next two years. So we anticipate that to underpin a lot of demand in the healthcare space. And then on the education side, this was a really eye-opening report that the government accountability office shared, is that 36,000 school buildings were in need of an HVAC upgrade. 

Heidi Ellsworth: Wow. 

Paul Trombitas: With IRA funding, a lot of those projects will be moving forward in 2025. And that's everything from energy solutions, HVAC upgrades and emphasis on sustainability. So we'll see a lot of the work that's in the education space focused on those types of upgrades. And we're seeing a lot of investment both at the state and local level for public K through 12 as well as universities. So it's going to be a mix there, but very heavy influence from the IRA and the upgrading of essentially the infrastructure and the HVAC of these facilities. 

Heidi Ellsworth: That's interesting because we've been hearing a lot of that too on the HVAC side of it. And clean buildings, also being sure that it's not just cooling and heating anymore, it's also how is it cleaning the building and the health of the students. 

Paul Trombitas: Absolutely. And then monitoring. Interesting talking to some of the universities. So Arizona State has invested a significant amount of money on monitoring, upgrading of their energy, HVAC, lighting. Same as University of Pennsylvania, Northeastern. And Princeton is the other one that has a major program that they're pushing forward and it's going to be using geothermal. So it's a lot of that investment focus on alternative energy as well as how do we make these facilities more efficient and draw in student population, as well as making sure their needs are addressed to the greatest extent possible. 

Heidi Ellsworth: Great, great. Okay, as we're talking to contractors out there, all types of contractors, general contractors, to our sub-trades, from this report, really looking at the 2025 outlook report, what are some of the things that contractors should be aware of and really be kind of practicing to stay ahead of what may be happening in this coming year? 

Paul Trombitas: So I like the quote by Darwin that says, "It's not the smartest nor the strongest that survive, it's the ones that are most adaptable to change." Given all the dynamics in this market, the ability to be flexible and adapt is going to be absolutely critical. So understanding where the strengths for the company are. And with their current customers, do they have an adequate share wallet? Can they increase their share of wallet with current customers? And in their markets, what is their market share? Is there opportunity to further penetrate and gain share? What are the areas that are growing in terms of the segments that they can capitalize on? 

Also the other thing is, as we've been talking with folks, given the tariff situation and just the dynamics going on in the market, a lot of firms have seemed to stray away from focusing on their strategic initiatives that are more focused on the long term and reverted more to short-term wait and see mentality given everything that's occurring. But with this, if that lasts several months, you're going to see companies in a state where they'll be behind the market. And as the market moves and changes and evolves, they're going to be in a position that's going to be very challenging to address the opportunities. So I think maintaining your efforts on that long-term strategic vision and efforts for the organization and understanding that it's important to understand short-term what's happening, but continuing on with that strategic, those initiatives. Otherwise, I think this wait and see mentality will catch up to a lot of firms and put them in a position where they're less likely to win share and capture the market that they can. 

Heidi Ellsworth: I think that's brilliant. Honestly, that's one of the things... Because we talk a lot about differentiating your business. So if you are a residential contractor, if you're doing roofing, adding, siding windows, really kind of looking at that, share the wallet. I love that. I think that's exactly, we talk about that all the time. But I also really, really hit with what you're saying about be careful, don't be too far behind the curve on this watch and wait. And we saw a lot of that right around the elections. But the people who kind of kept going and kept pushing and were there on the front, that when it does break, they're getting the jobs, they're getting the quotes, they're moving forward. I think that's brilliant. That's exactly... If we let fear rule, it doesn't work too well. 

Paul Trombitas: It doesn't work too well and you'll eventually be in a position where you're behind the market and you'll get left behind. Maintaining the sales and the long-term focus on where we're capturing market share, it's going to be a real challenge, because there are firms out there that are going to continue with that emphasis. 

Heidi Ellsworth: Yeah. And that comes across, I've talked to a lot of contractors who are like, "We're hiring. We're continually hiring because we know we need to get the talent now and have them ready to go for when the projects are there." And then they are the ones ready, where then other folks who have put in hiring freezes or stopped are kind of like 100% behind the eight ball. 

Paul Trombitas: A hundred percent. 

Heidi Ellsworth: Yeah. Wow. Great advice as always, Paul. Man, I love these conversations. 

Paul Trombitas: Likewise. 

Heidi Ellsworth: So great. Okay, so now you said earlier when we were talking that obviously this was the 2025 North American Construction Outlook report, but you also are providing reports quarterly. 

Paul Trombitas: That's right. 

Heidi Ellsworth: Updates. Talk about how people can get their hands on those. 

Paul Trombitas: Absolutely. These are publicly available reports on our website. So we have annually, we release this report, which is the queue starting out every year in January, what is the outlook on the market and then updating that quarterly. So you can access these at fmicorp.com. And then we're also going to release our Building Products Outlook coming up here in the next month. And then we also have a number of other publicly available blogs and articles, everything from labor, talent, the impacts of tariffs, private equity investment. So there's a number of different reports that are available for all. 

Heidi Ellsworth: And you can find all of that on RoofersCoffeeShop too, because we are very proud to have FMI in our directory. Paul also has a directory out there, so if you're interested in having him speak at your association, I'm telling you, he's great. And also if you just want to get more information, you can find all of that on RoofersCoffeeShop. We are also sharing several articles that Paul sends to us and his team so that we can keep you at the forefront of everything that's happening. Paul, thank you so much. 

Paul Trombitas: Heidi, thank you. Always a pleasure. 

Outro: Ah, I love it. I love it. And thank you all for listening to this Contractor Outlook Newscast. This is what it's all about. We want to give you the information you need for your business in the upcoming year and long-term so that you can have great success. Building partnerships and having friends like Paul and FMI is what really brings it all together. So be sure to check out all of our Contractor Outlook Newscast under the RLW navigation under podcasts and you'll find us there or on your favorite podcast channel. Be sure to subscribe and set those notifications. And finally, of course, all of the Contractor Outlook Newscast are on YouTube, so please get on YouTube, subscribe and ring that bell so you don't miss a single episode. We'll be seeing you next time on Contractor Outlook Newscast. 

By Emma Peterson.

Examine market growth and industry shifts with Paul Trombitas and the FMI 2025 North American Construction Outlook report.

From new tariffs to changing immigration policies and more, 2025 has been an interesting year for the construction industry. To help you get a better understanding of what is going on in our market, FMI Research created a 2025 North American Construction Outlook report. To learn more about this, Heidi J. Ellsworth sat down with Paul Trombitas for an episode of Contractor Outlook. Paul is a partner at FMI with a focus on the building products sector team. This position means that he is incredibly knowledgeable of the dynamic challenges facing members of our industry, whether they are manufacturers, contractors, architects or another type of professional.

When looking at this year’s North American Construction Outlook report, Paul noted that there’s a variety of factors affecting the industry right now. He elaborated, “It's the political climate, affordability rates, technological trends and advancements. On top of it all, you also have generational transitions. The dynamic market we see today is from all of these converging together right now.”  

While a lot of these factors seem challenging and stressful, Paul noted that we are still seeing a very favorable growth market of the construction industry. He explained, “If we look at just 2025 data center spending, it’s anticipated to be $30 billion, which is substantially higher than it was in 2020.” Looking at that in terms of spending, there has been a slight drop in the last five years. Paul shared, “When we look from 2023 to 2024, we saw 6% growth. And then moving from 2024 to 2025, it's 2%. So a slowing of growth, but it is still growth.” And the outlook for the future remains strong. Paul explained, “Overall, we're seeing more stabilization and while we anticipate 2025 to 2026 to be lower growth years, it is then predicted for a return to higher annual growth rates from 2027 to 2028.”

Read the transcript, Listen to the episode or Watch the full conversation to learn more about FMI’s 2025 North American Construction Outlook report and the future of the construction industries. 

By Emma Peterson.

Learn about the challenges and opportunities tariffs present to the building and construction industries.

Speakers Bureau is one of RoofersCoffeeShops®'s newer initiatives. It aims to connect professional speakers and experts in the industry to events and opportunities. RoofersCoffeeShop President Heidi J. Ellsworth explained a bit about the inspiration for this Bureau, saying, “We are regularly asked if we know good speakers for association and company events, continuing education and trainings. The RCS Speakers Bureau highlights exceptional speakers in a directory format offering insights into their past experience and overall roofing industry knowledge."

One such member of the Speakers Bureau is Paul Tombitas. Paul is a partner in FMI Consulting’s strategy practice and leads their building products sector team. In his 10 plus years with FMI, he has worked with clients to develop everything from market strategy to customer-first company cultures. Recently, he published a timely article about tariffs and the implications they have on the building and construction industries.

If you haven’t heard yet, there are new enacted tariffs on Canada and China. Most pressing to our industry are the 25% tariffs on materials like steel and aluminum. These tariffs create both challenges and opportunities for companies. Paul’s fellow FMI Partner Jay Bowman explained, “Project pipelines may slow, and firms will need to adopt strategic countermeasures to navigate this volatile environment. However, these challenges also present opportunities for firms that can adapt their procurement strategies, hedge against risk and position themselves as trusted advisors to clients.”

In the domestic market, manufacturers should look into leveraging domestic supply chains. Because tariffs make imported materials and products more expensive, those that capitalize on domestic options can capitalize on pricing gains and reduced international competition. Those with international facilities should also consider reshoring their operations and/or strategically adjusting pricing to offset increased costs.  

For foreign manufacturers, tariffs provide far more threats than opportunities. Paul writes, “Higher costs make their products less competitive against domestic alternatives, forcing companies to absorb price increases, pass costs to customers or explore alternative operations.” Overall, we can expect to see a rise in cost for foreign materials. Using the example of steel and aluminum, there are prediction of U.S. prices increasing by 8.2% and 5.7% respectively. Ultimately, there are two main paths that foreign manufacturers will take, invest in establishing production facilities in the U.S. (Recticel Group is an example of this) or shift their interests away from the U.S. market to other nations.

To learn more about pricing volatility, market shifts, growth opportunities and more, read Paul’s full article!

By Heidi J. Ellsworth.

DeepSeek announcements drive speculation.

The demand for data centers continues to grow and with the emergence and recent announcements concerning DeepSeek, a Chinese AI company claiming to offer substantial efficiency gains at a lower cost, changes in how data centers are being constructed are very much in the forefront. In a recent article from FMI, they raise concerns about potential shifts in data center construction and capital expenditures (CapEx). In visiting with Paul Trombitas, a partner with FMI Consulting, this is an area that is gaining intense interest including research by the experts at FMI. 

According to FMI, while some anticipated a reduction in spending, interviews with 26 industry experts revealed that most expect the demand for data centers to remain robust. The consensus is that AI innovations, including DeepSeek’s, will not reduce the need for infrastructure but could lead to greater efficiency, potentially increasing AI workloads and, in turn, driving further data center investment. 

Despite skepticism about DeepSeek's efficiency claims, experts agree that AI's rising demand will likely push CapEx growth. Investors are scrutinizing spending, particularly for large-scale projects, but data center projects are expected to move forward, with a focus on infrastructure optimization rather than unchecked expansion. This means growth for metal in the building envelope, roofing and overall long-term maintenance. As AI models become more complex, the emphasis will shift towards improving energy efficiency, particularly in cooling and power distribution. All of this could also affect the structural and accessibility needs of the roof. 

In the long term, infrastructure improvements such as liquid cooling systems and localized solutions are expected to play a critical role in meeting the rising energy demands of data centers. Even though AI efficiencies may help reduce some costs, power and cooling challenges are seen as the primary bottleneck to growth according to FMI’s reporting. 

For the full story visit FMI — https://fmicorp.com/insights/quick-reads/will-deepseek-change-data-center-construction-plans 

By Dani Sheehan. 

Numbers project a slowdown in growth over the next few years, but how will this affect each sector? Listen to this Contractor Outlook newscast to find out and focus your business approach. 

“The quote, ‘the only thing constant is change’ really resonates,” Paul starts. “When we look at the construction space over the next several years, it continues to evolve.” 

You won’t want to miss the twists and turns of a recent Contractor Outlook newscast to better understand factors influencing the construction industry today. Heidi J. Ellsworth sits down with Paul Trombitas of FMI, a leading research company, to breakdown the numbers in the 2024 FMI Building Products Market Overview. They look at current trends and forecast a view of the next five years. 

The construction industry has seen significant growth over the past several years, but the landscape is starting to change. Paul reveals that while the industry experienced substantial growth from 2021 to 2023, the following years will slow down. “What we anticipate moving forward is really a slowdown in growth – not necessarily a decline – but a change in growth from six percent down to three percent,” Paul explains. 

Not all sectors will be affected equally, however. Paul points out that in the residential market, single-family construction is expected to fare well, with a projected seven percent annual growth rate. He’s seeing declines in the multifamily market through 2026. Residential construction accounts for 45% of overall spending, so these trends will have a significant impact on the market. He shares, “It’s a great way to gauge the health and wellness of the overall market in your portfolio of segments. And projects and products are going to be different than the overall market. And it's a way to gauge how you're performing against the marketplace.” 

The forecast provides a tool for evaluating your market position and adjusting your business approach. Whether the market slows down or picks up, understanding the changing dynamics can help you decide whether to be more competitive in filling your backlog or more selective in choosing your projects. 

Read the transcript, Listen to the newscast or Watch the webinar to help you prepare for the future in today’s evolving construction landscape.