Misaligned Interests

This week we’d like to give our perspective on the insulation installation industry. After six years of working closely with these companies, we’ve learned a ton, met some great people and yes, had some frustrations. We continue to see an industry ripe for disruption, or perhaps more delicately put improvement.

myths_factsLet’s be very clear about one thing. There are plenty of conscientious insulation installers out there. They take pride in their work and understand the importance of quality materials. Typically, they are smaller, owner-operated firms who place huge importance on positive customer relationships. They do not live by the mainstream industry jargon: blow and go.

How We’ve Come to Understand The Insulation Installation Industry

Historically most homeowners don’t care to learn about insulation or how it’s installed. Why would you? It’s not a visible part of your home, it’s hard to know if it’s actually working, and the materials used are mysterious, if not dangerous. No one wants to touch fiberglass much less consider where it came from. Cellulose is recycled newspaper, on a good day….BORING. Cotton is a nice idea but it is not an insulator and won’t manage moisture. Rockwool is not wool and most Rockwool products contain formaldehyde. Spray foam is the next big industry problem waiting to happen, but before that why would you let someone donning a moon suit enter your house to ‘seal it’ with chemicals?

Follow the Money

Now let’s hone in on the economics of insulation installation. Following the money is always a revealing experience.

Installers have a price for installation based on square footage and localized labor rates. Generally, they don’t make money on labor, it’s a cost passed onto the customer – with little/no margin. Their returns are made on the insulation material with a standard markup of ~1.4x. If the material costs more, the installer makes more. Great, wool insulation costs more so installers make more. Welcome to the market Havelock! Not so much.

The industry has evolved differently. The purchasing power of large national firms enables them to buy out smaller, regional ones. Once on a large platform, an installer’s material costs less which means they are more competitive and can earn more jobs. Or at least that is the sales pitch. In reality, they join a large, dysfunctional organization that just struck the same deal with their two closest competitors so now they buy material for less but they also have to sell it for less to stay in business. Herein lies the manufacturer-led race to the bottom. They sell more material into a highly competitive environment with no regard for where or how it ends up in a home.

The result? Consumers get what they pay for. “Blow and go” installation of low-quality insulation.

So, how does Havelock Wool fit in the equation?

We cater to those who are interested in quality, long-lasting, high-performance materials that create a healthy home. We ask homeowners to slow down, learn and make informed decisions about their insulation materials. With a bit more thought and yes, upfront cost, you will get the long term benefits of better materials. Be vigilant because the mainstream insulation industry, in its current form, won’t get you there. You must self-advocate…but don’t worry, Havelock is here to help too.

Two recent jobs of ours exemplified this difference in mentality between an informed homeowner and the volume-driven installation industry. In fact, it was these experiences that inspired this blog. We can summarize like this:

The Homeowner: The house is comfortable, quiet, warm, protected and cozy. We feel great about using quality, sustainable materials. The installer grumbled a lot about how long the installation took but regardless, we look forward to using wool on our next project.

The Installer: Wool is a pain to work with. It is slower to install and it didn’t work all that well with our loose-fill machines. We don’t have any other wool installation projects coming up so the learning process was for naught. We’ve got a ton of jobs to do and this really slowed us down.

You can clearly see the misalignment of interests here. A happy homeowner should be a good thing for everybody but the volume-driven installation industry does not currently allow for that.

The Good News

Now back to the installers mentioned at the start of the post that we work with successfully time and again. How do they do it? They take a long term view, knowing a properly built home is good business. They enjoy offering a product that the market increasingly wants and their competition doesn’t. They understand that what they may lose in volume of jobs, they make up with a higher margin product. And finally, their goal, a healthy and efficient home, is completely aligned with that of the homeowner. Again, this is good business.

We are very grateful to the growing number of installers out there that share this philosophy. They are dedicated to seeing structures become more healthy and are engaged in the effort to improve the built environment. We are here to support their efforts and hope you will too.

Keep well,
Andrew

 

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One comment on “Misaligned Interests : Today’s Insulation Installation Industry

  • Phenomenal summary of the disconnect between: those who perform work to shape buildings – and those who will own, occupy & operate these buildings. Thank you for inspiring these conversations and industry transparencies!

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