INSULATION CATEGORY ROUND-UP: WINTER IS COMING!

By Terry Herbert April 11, 2016 Insulation

And the night is dark and full of terrors… Insulation has seen more shifts and alliances than Game of Thrones. One thing’s for sure, insulation ain’t dull! Terry Herbert reports.

There are bees under bonnets and under houses looking to ban foil insulation, especially in retrofit situations. Professional installers we spoke with, a polyester manufacturer and EECA are all reluctant to support reflective foil.

We turn to Hamish Aitken, Managing Director of installers Premiere Insulation, who tells us categorically: “No, we don’t put foil in. We are against it, especially underfloor. There’s plenty of evidence to show that, as soon as foil gets dirty and torn, it’s ineffectual.”

Aitken continues: “There have been electrocutions and fatalities in New Zealand [in 2007 three fatal accidents occurred when homeowners stapled under floor thermal aluminium foil insulation material into power cables] and more so in Australia. To counter this, the Government is introducing a warning to Worksafe NZ that there are inherent risks.”

Tony TeAu is CEO of InZone Industries, a polyester insulation manufacturer. We ask about foil and, because he supports the entire industry and is not seeking to rile anyone, an equanimous TeAu tells us: “The industry is very nervous and I say this cautiously, about letting reflective foil in as a product category.”

Weighing his words carefully, he says there are three perspectives on this:

“In New Zealand, three people have lost their lives through foil and there are more fatalities in Australia. I would never use the product and I would not promote it. I’m not anti-foil, just against it in a retrofit situation where there’s going to be an element of DIY. You just expose people to an unacceptable risk when there’s plenty of choice out there.

“There are also questions around durability. All the other products, Mammoth, Batts, Green, Bradfords, Knauf, you name it, all have a 50-year guarantee. I doubt foil will last 50 years in an underfloor situation. Foil still has an important part to play in a facings role, however, especially for commercial products.

“The Royal Commission of Australia. Their closing recommendation is they would ban a reflective foil product from any future residential retrofit of insulation.”

 

THAT’S THOSE AGAINST, NOW THOSE FOR

We give right of reply to David Osten, of Thermakraft: “WorkSafe have set up a review, a group to investigate safe practices around foils. The group has only recently come together. I am on that committee. It’s a review process. We hope the outcome is as simple as use your common sense and don’t put a staple through a cable. Like anything, you can’t mitigate against idiots and you have to make it as safe as you can.”

I ask when WorkSafe is due to release its recommendations: “It’s going to public comment soon. You could say long weeks into short months. It’s soon but it’s not confirmed.”

Is the end nigh for foil? The answer is far from it, as David Osten matter-of-factly explains: “Sales are steady. It’s a product that has been through a decrease in sales, but we still sell a lot of those products. It’s still viable and it’s certainly far from a sunset product. We don’t have any plans not to supply it.”

Osten firmly believes there remains a place for foil: “In residential building you can’t use foil as an underlay in the floors or roof, it has to be a breathable film. But under the floor, absolutely! It can be either as a new build or retrofit. We sell a lot into commercial buildings as vapour barriers. Look in any of the big box stores and look at that white product, that’s actually a foil product.

“There a lot of applications where it’s perfect: transportables, where site access is difficult; construction on the Gulf islands, where they don’t want to be carrying big, bulky bales; also retrofits after fires where the insurance claim is like-for-like replacement. We still sell mountains of it.”

 

Update (6 May 2016): MBIE has just announced a proposal to prevent the retrofitting of residential buildings with foil insulation. The proposed ban doesn't preclude new home builds but may be in place by 1 July 2016, when the changes to the Residential Tenancies Act (which include minimum insulation requirements) come into force.

 

GOING FOR GOLD

Whether molehills are being turned into mountains it can’t be argued that Tasman’s Pink Batts (by volume and sales) is king of the hill and overall insulation market leader.

Pink Batts is the number one fibreglass insulation brand and Greenstuf is the number one polyester insulation brand and both parties acknowledge an “alliance” with the latter being distributed by the former.

CSR Bradford and InZone have also formed an alliance and claim they were the first to become BFFs.

“Even though we manufacture the Mammoth polyester brand, we also recognise that some will prefer a glass option. We do work closely with Bradford’s and it all gets down to customer choice and requirements. Both have advantages and disadvantages”

Amanda Rackham, General Manager at CSR Bradford Insulation explains: “We’re their Bradford Gold [fibre] glass wool supplier and Mammoth is our polyester supplier. Not everybody wants glass. If people want polyester underfloor but glass in the ceiling we’ll supply that.

“We manufacture our own product in Australia and it’s all containerised into Auckland, Wellington and Christchurch. I believe we have the best glass wool product in the market. There’s a good reason why Tony TeAu chose to align their business with Bradford!”

InZone’s experienced CEO, Tony TeAu, adds: “Even though we manufacture the Mammoth polyester brand, we also recognise that some will prefer a glass option. We do work closely with Bradford’s and it all gets down to customer choice and requirements. Both have advantages and disadvantages.”

Tony TeAu confirms that InZone has a supplier arrangement with Bradford’s which has been in place 18 months. “It’s working really, really well,” he says, adding the clarification that: “Strictly speaking alliance is not the right term.

“First of all, InZone Industries and Bradford’s supply Smart Energy Solutions which is an energy efficiency business. We are product-agnostic to telling the customer what they want,” he adds.

Smart Energy Solutions was founded by Tony Snushall and Paul Thomson, also directors of InZone Industries. To quote Smart Energy: “The business has grown to be the largest EECA provider, with an excellent quality audit score.”

 

TASMAN ALLIES WITH AUTEX

So does the combination of pink & green have the advantage? If New Zealand was Westeros to use a Game of Thrones analogy, House Lannister would definitely be Fletcher’s Tasman Insulation.

Alison Roberts, Marketing Manager at Tasman Insulation, is quick to confirm Pink Batts’ market leader status but slightly less enthusiastic to comment, in detail, on the alliance with Autex: “Tasman are distributors for some Autex products under their brand name. The arrangement is working very well but for more comment you’d need to speak with Rob Croot at Autex.”

Rob Croot at Autex responded briefly and deftly passed the ball to Dan Szczepanski, Autex’s National Sales Manager, who confirms: “Yes, there is an agreement between Autex and Tasman. We only supply the merchant channel. Basically we supply all the major merchants except Bunnings.

“There’s a synergy there. We don’t want to compete against each other the whole time, so we’re sharing resources really. That’s being smart. We supply the merchants and Pinkfit [Preferred Pink Batts Installers].”

 

HE SAID THAT SHE SAID

So how is Autex faring? Dan Szczepanski: “Things are going pretty well. If you look at Auckland and Christchurch, the sky crane count in Auckland is 33 and 31 in Christchurch. That’s a good indicator to me of how much construction work there is and we certainly plan to get our share.”

In terms of supported retro fitment of insulation, Szczepanski, like others, is anticipating growth as a result of the Residential Tenancies Amendment Bill which is calling for a minimum standard of insulation in rental accommodation. “We’re anticipating plenty of action because of the RTA Bill,” he says.

What other shifts in the market is Autex seeing? “As far as new innovation, we’re seeing from builders and specifiers, a real move away from commodity-type insulation to more fit-for-purpose that will do the job you’re looking for. We’re planning on releasing new products to satisfy that demand from the more astute owner or specifier.”

Asked about current industry concerns or gripes, Autex’s Dan Szczepanski is quick to shoot from the hip, saying: “No-one likes eroded margins.” No name, no pack drill, as they say.

Returning to Bradford’s Amanda Rackham, I ask if 2015 was a good year? “No!” she tells us laughing, “We had price pressures with X dropping their prices even more. It hasn’t been a nice market to be in.

“Has it been profitable and successful? No. Has it been a race to the bottom? Correct. We stayed out of it as much as we could.”

“I’m hopeful that the next 6-12 months will be better. Things are starting to happen now. We are doing quite well in the retro scheme through Mammoth. EECA are not a help to us. Bradfords has never had an allocation.”

 

WALKING AROUND WELLINGTON

Looking for more around the Residential Tenancies Act Amendment Bill, which looks like being a key driver for insulation in the coming years, I’ve discovered that politicians, lobbyists, bureaucrats and consultants walk a lot in Wellington. It’s such a compact city that walking is by far the most efficient way of getting from place to place.

“Damp housing is a widespread threat to children’s health. 50,000 children are admitted to hospital each year for diseases attributable to cold and damp housing"

For example when I track down Philippa Howden-Chapman Otago University Professor and Director of the Wellington-based Housing & Health Research Programme, she’s walking and tells me in staccato bursts: “Insulation is one of the things that EECA has done well over successive Governments.”

However she adds: “The fact remains that there are still two thirds of existing homes that need to be insulated. We’re only a third of the way through! It’s a cumulative disadvantage.

“It’s important that all homes have at least basic insulation. Damp housing is a widespread threat to children’s health. 50,000 children are admitted to hospital each year for diseases attributable to cold and damp housing.

“I’ve been very busy putting a submission to the Tenancies Act,” she says, adding “We’re in Budget phase right now so I’m not sure what I can tell you.”

 

THEN, NOW AND WHAT NEXT?

Speaking of skilled lobbyists, a man who wears two hats, Premiere Insulation’s Hamish Aitken, is also President of the Insulation Association of New Zealand (IAONZ).

Aitken has a slightly different perspective on Government-backed programmes: “Under the old scheme [Warm Up New Zealand Heat Smart] it seemed anyone could get an allocation from EECA. There was a proliferation of companies claiming that they could install insulation. Everyone did their own self-audits! It was called a PIA (Post Insulation Audit). An independent company, Opus Consultants, would randomly select about 5% of all jobs and audit them.

“Today there is a much smaller scheme [Warm Up New Zealand Healthy Homes]. Where there is a Community Services Card and there is a health risk, aged person or very young people, there is potential to get up to 100% subsidy to insulate that property.

“Funding is in two parts: through EECA and the Government scheme and part funding through third party charitable organisations like the ASB Trusts or Counties Manukau Health. There were a lot of politics, but actually it has been reasonably successful.”

Hamish Aitken highlights other potential agents of change in the form of the new Health & Safety Act which is coming into effect on 3 April: “That’s going to change everything in the building industry. If there is a complaint, is it up to us to investigate and potentially take disciplinary action? Right now we’re in transition, strategic flux if you will. It could all change significantly.”

And then there’s the changes to the Residential Tenancies Act. Can the industry supply the demand? “The answer is yes we can,” says Aitken.

 

WINTER IS COMING

Someone else who was kind enough to speak to us mid-dash (a recurring theme) between Wellington meetings was Penny St John, Senior Communication Adviser for the Energy Efficiency & Conservation Authority (EECA).

When asked about the future of the Warm Up New Zealand Healthy Homes (WUNZ) programme she was candid enough to says: “As of right now the Government has yet to make a decision about the future of the WUNZ three-year programme,” adding: “There are still MOU’s (Memorandums of Understanding) between EECA and councils whereby ratepayers can have their homes (retrofit) insulated and pay the loan back over nine years as a cost to their rates. I wish I could tell you more.”

As of right now, a large question mark hangs over subsidised programmes that affect insulation. Although no-one is prepared to commit definitively at this point about the future of WUNZ type programmes, or the final details around the RTA, there is some confidence around the insulation industry for the future.

There are simply too many Ministers desperate to push this through and frankly too much evidence to deny that our youngest and neediest must have speedy access to good insulation. Many also expect Bill English to sugar-coat his Budget with positive news around EECA and the disadvantaged, or risk the wrath of righteous indignation.

So – picking up that Game of Thrones analogy again – the battle lines have been drawn and alliances have been made.

Many expect ongoing price erosion, especially when you look at the big merchants and what they’re prepared to do to gain share over margin. Many accept however that this is just a fact of life.

Bottom line? The good insulation suppliers and installers will do well, and besides, winter is coming…

 


 

What might the RTA do for the insulation industry?

The Residential Tenancies Act 1986 (RTA) is the existing law governing residential tenancies.

The proposed Residential Tenancies Act Amendment Bill is currently before a Select Committee with consultative third parties including Government and Professor Philippa Howden-Chapman (Department of Public Health). The Bill is in front of Parliament at the moment.

Driven by Nick Smith (Ministry of Business Innovation & Employment) the RTA will have new powers to investigate and prosecute landlords for breaking tenancy laws as part of these reforms.

The new law will require retrofitting of ceiling and underfloor insulation in rental homes over the next four years. The requirement applies from 1 July 2016 for social housing that is heavily subsidised by Government, and from 1 July 2019 for other rental housing, including boarding houses. 

There will also be a new requirement from 1 July 2016 for all landlords to state in tenancy agreements the level of ceiling, underfloor and wall insulation to help better inform tenants.

To quote Minister Smith: “These new insulation requirements in our tenancy laws are the logical next step following our programme to retrofit insulation in 53,000 state houses and the 280,000 grants from the Warm Up New Zealand scheme.”

It would be an understatement to reiterate that insulation manufacturers, importers, distributors and installers are pinning their hopes on the RTA.

 


 

Warm Up programmes, then & now

Then: EECA Warm Up New Zealand (WUNZ) Heat Smart launched in 2009, gave an insulation grant of up to $1300 to all homes BUILT pre-2000.

Heat Smart was not means tested or restricted by low incomes or the elderly. By most accounts, this initiative was incredibly successful. Over its 4-year duration over 241,000 homes benefited. Heat Smart ended in June 2013.

Now: WUNZ Healthy Homes was launched on 1 July 2013 only for low income homes, to provide free retrofit floor and ceiling insulation for those with a Community Services Card over 65 or with children under 17. The three-year Healthy Homes programme is scheduled to finish at the end of June 2016.

What’s been achieved to date through these two programmes? The following shows us how much and where:

 


Back to basics – insulation types

In a category where there are several ways of achieving the same outcome, it’s always useful to get back to basics. So here is a series of thumbnail descriptions of the main insulation types:

  • Fibreglass & other mineral wool types – Made from materials (eg rock slag, recycled glass, quartz sand, soda ash, limestone and boron) which are melted and spun into fibres. Fibreglass insulation comes in blankets, segments (“batts” or biscuits) and as loose fill. Fibreglass and mineral wool melts, rather than burns, in a hot fire.
  • Wool – Made from new or recycled sheep wool, possibly with added preservatives and/or blended with polyester or resin for extra rigidity to counter slumping. Can only be labelled as “wool” if it contains more than 95% natural wool. Comes in blankets, loose fill, and segments.
  • Polyester – A synthetic material based on petrochemicals. May contain recycled polyester fibre, from plastic bottles (etc). Polyester/wool blends are also available. Comes in blankets, segments and loose fill. Compresses if stored inappropriately before installation.
  • Polystyrene – Synthetic material based on petro-chemicals with additional fire retarding agents. Form is a stable, rigid foam that can be extruded, formed or cut. Comes in rigid sheets and planks which can be used in under-floor slabs, in exterior walls as cladding and insulation, and in ceilings. Current products will be CFC free, some with high recycled content.
  • R-Values – An R-value is a rating which measures how well insulation can resist heat flow. A product’s R-value depends on the type of material, its density and thickness. For details visit http://alf.branz.co.nz/tools/insulation-r-values

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