Mark Young, Arauco USA, presented a market overview of supply and finished products for the moulding industry in 2011 and beyond at the recent meeting of the Moulding and Millwork Producers Association. The group met last week at the Isle of Palms, S.C. Before delving into a variety of charts detailing distribution channel shifts and global consumption, Young presented some forecasts from a variety of industry sources.

Numbers shown are for 2010.

Architectural Woodwork Institute: Although many architectural woodworkers recorded down sales for 2010, the group predicts that 2011 will remain at status quo or even show slight improvement.

Wood Component Manufacturers Association: Members saw 5-7 percent growth in 2010 and the outlook for 2011 looks to be even better, with projections of up to 10 percent growth.

Wood Products Manufacturers Association: Though sales were static for 2010, there is optimism for slow but gradual improvement in 2011, particularly in the second half of the year.

Composite Panel Association: Overall panel shipments were up slightly for the year with projections for 2011 also showing nominal growth.

Hardwood Plywood and Veneer Association: Despite slight growth in first half of 2010, sales retreated to 2009 levels by year’s end. For 2011, look for the same or a slight increase.

Wood Machinery Manufacturers of America: Inquiries and sales have been on the rise, and although there is optimism for 2011, it is tempered by an uncertain housing market.

Wood Machinery Industry Association: Despite flat sales in 2010, there is optimism for 2011. An 8-10 percent increase in equipment sales in the woodworking industry is projected.

Market Highlights

When Young delved into more specific projections he summed up that “2010 was a lost year.”

“Demand was about half of what it was at its peak,” he said. “Retail remains the market leader with more than 60 percent share. Five years ago it was the opposite. Today retail is a huge part of the market. The big box stores are dictating and influencing what is going on in the market.”

Regarding moulding pricing, Young said the following materials’ prices bottomed out in 2009; he also offered forecasts for these for the years ahead:

Solid Pine: Expected to increase through 2013.

Fingerjoint: Expected to settle back in before increasing through 2012.

MDF: Expected to increase through 2012.

Young added that there will be a shortage of pine fiber in 2010 and beyond. “MDF will gain consumption market share due to pine shortages,” he said.

Consolidation continues with companies including 84 Lumber, ProBuild and Stock Building Supplyclosing more than 1,200 locations from 2008-2010.

While Young said he believes the crisis is over for the market, he pointed out that the financial markets are still fragile and the banks have stringent lending and covenant requirements. He added that renovation and remodeling looks to be the main driver for 2011.

“Two thirds of the housing stock is 25 years old, which bodes well for remodeling,” said Young.

Future challenges include low housing start numbers, lack of cash flow in the millwork industry, purchasing behavior of dealer and retailer channels, decisions to add capacity with increasing demand, and the shortage of pine fiber as global consumption improves.

Young pointed out that capacity utilization in U.S. wood products manufacturing was 62.3 percent in January, compared with a 7-year historical average of about 72 percent.

“Most everyone is underutilized,” said Young.

For more detailed information from Young’s presentation look to the May issue of DWM/Shelter magazine.

Mark, Young, Arauco USA, offered his moulding forecast for MMPA attendees.