Volume 11, Issue 6 - July/August 2010

AAMA Analysis

Energy-Efficiency Retrofitting May Bring Back Jobs
by Ken Brenden

While new construction has been the high-profile focus of concern and continual monitoring for signs of life in a challenging market, retrofitting offers perhaps an even more fertile field for growth. Indeed, the renovation and retrofit segment has been comparatively resilient during the economic downturn. For example, the AAMA/WDMA U.S. Industry Regional Statistical Review and Forecast shows that, as window sales for new construction dropped a staggering 67 percent from 2005 through 2008, those for replacement projects dipped a relatively mild (albeit still significant) 24.4 percent.

Now, both segments are showing a stronger pulse.

At the end of May, the National Association of Home Builders reported April housing starts up 5.8 percent to the highest level since October 2008. Meanwhile, the National Association of the Remodeling Industry says its contractors report a general increase in remodeling activity. Analysts note that people who aren’t “underwater” with their mortgages, or who aren’t forced to sell due to job loss or other reasons, are more motivated to stay put. Instead of trading up, homeowners are fixing up and are starting to do so as consumer optimism increases. This is reinforced by information from the Joint Center for Housing Studies at Harvard University, which finds that Americans plan to increase their home improvement spending by nearly five percent this year.

"According to market research firm SBI Energy, the U.S. home energy retrofit market will grow about 15 percent per year to $35 billion by 2013, up from $20.7 billion in 2007. If true, this should lead to more jobs."

But now, the renovation and retrofit segment has even more reason for optimism, due at least in part to government stimulus and incentive programs (tax credits, grants and rebates) focusing on energy efficiency.

Programs likely to contribute to this result include the following.

Recovery Act Incentives
Under the American Recovery and Reinvestment Act of 2009, the individual tax credit for energy-efficient improvements–including window replacement–has been raised from 10 percent to 30 percent in 2009 and 2010, with an overall cap of $1,500.

The U.S. Green Building Council points to a “retrofitting revolution,” spurred by these tax credits and other Recovery Act “green retrofit” programs that the Council of Economic Advisors reports as responsible for creating 63,000 new jobs related to sustainability through 2009.

DOE Retrofit Ramp-Up
The Department of Energy’s Retrofit Ramp-Up Initiative, part of the overall $80 billion Recovery Act investment in energy efficiency, encourages partnerships of communities, governments and private sector interests to work together on innovative energy retrofitting projects. Twenty-five such projects recently were named as recipients of $452 million in stimulus funding.
The recipients estimate that about 30,000 jobs will be created during the next three years, and energy savings worth $100 million annually in utility bills will be realized.

Home Star
The pending Home Star program calls for rebates direct to homeowners who invest in qualifying home energy efficiency improvements. Sponsors estimate that the program would put approximately 168,000 Americans back to work over the next two years.

A Winner at Last?
While the relationship between government stimulus packages and actual number of jobs is debatable, it seems clear that more skilled workers will be needed to meet the demand for energy-based retrofits boosted by government programs.

The construction industry has significant capacity to create these jobs quickly by refocusing out-of-work personnel on the skills required by the new and growing home performance industry. And this comes with the added benefit of reducing heating and cooling demand and homeowners’ utility bills.

Though “win-win” situations have been in short supply during these tough economic times, retrofitting provides benefits for all involved.


Ken Brenden serves as technical standards manager for the American Architectural Manufacturers Association. His opinions are solely his own and do not necessarily reflect those of this magazine.

DWM

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