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News Release
Substitute Products to Lumber Growing Rapidly
Commodity Lumber is Slowly Being Displaced by Some Technology-Based Products
For Immediate Release October 17, 2000
Vancouver, B.C. — A report on the North American outlook for engineered wood
and non-wood products that are used as direct substitutes for lumber was released today by
WOOD Markets newsletter, Vancouver, B.C.
The increasing success and volumes of wood and non-wood substitutes are displacing
conventional, sawn structural and appearance grade lumber products at a slow but very
steady rate. "These substitutes," explained Russell Taylor, Publisher of WOOD
Markets and author of the report, "include a variety of engineered wood
products but also includes an assortment of non-wood items (e.g., vinyl sidings, mouldings
and windows; plastic lumber and decking; and steel)." Collectively, these substitutes
represent a volume equivalent to over 10% of all wood products consumption in North
America, or more than 7 billion bf in 1999 (figure 1). "More convincing," said
Taylor, "is that these substitutes have collectively been growing at the astounding
rate of almost 20% per year since 1992 – a rate that pales to anything in the solid
wood business."
What is almost unbelievable to the lumber trade is that an increasing number of
end-users and consumers are willing to pay substantially more for engineered or specialty
non-wood products over lumber. "For example," said Taylor, "a spectrum of
end-users will pay a 50% premium for plastic decking lumber over the price for some of the
highest quality knotty cedar or twice the price for treated pine decking." Why? One
simple premise is the reason: these substitute products can deliver the quality, value,
performance and reliability that the end-user wants – and paying a higher price than
wood is becoming a trend in some product lines!
These same end-users are choosing substitutes over lumber partly as a lack of
confidence with wood or in response to the strong promotion that substitutes are able to
generate. As well, problems with variable lumber quality and volatile prices have caused
builders to switch to the largest group of lumber substitutes, engineered wood products
(mainly I-joists, laminated veneer lumber, glue-laminated beams and finger-jointed studs).
About 70% of lumber substitutes are actually wood-based or engineered products while the
balance are an assortment of non-wood products.
"This variety of lumber substitutes is growing at the pace of over 500 million bf
per year – about the equivalent production of three large sawmills," said
Taylor. However, this incremental volume will likely give lumber producers some additional
trouble since an oversupply of lumber is expected to lower sawmill output throughout North
America over the next few years.
"Steel studs used in residential house construction still remain the largest
threat to solid sawn and engineered lumber," said Taylor, "even though the
actual use of steel to-date is still very small." "This is contrast to vinyl
siding," commented Taylor, "which over the last 20 years has achieved a 50%
share of the siding market with a product that is now the lowest priced product on the
market. Two other substitutes, fibre-cement siding and OSB, have another 10% each, while
wood siding has sunk to about 8% from close to a 50% share in the late 1970s."
Substitute products are forecast to increase in quantity while a variety of new
composite products designed "with the consumer in mind" are expected to enter
the market on a steady basis. The onslaught of substitute products will continue to be
driven by an older and wealthier consumer that wants products that offers consistent
performance, little to no maintenance, and are backed up by warranties ranging from ten to
50 years. Conventional lumber’s fit into a more discerning market environment will
mean that some commodity products will need to be improved, re-positioned, or be priced
even lower to remain good value over a variety of specialty products or substitutes.
This is where a new wood marketing initiative comes in. The Wood Promotion Network,
is a timely and very focused attempt by the North American wood industry to improve market
awareness and better positioning of all wood products through a media campaign due to
start in late 2000. However, at the current rate of growth, substitutes will continue to
put extra pressure on lumber’s dominant (but fragile) market position and its current
over-capacity, making price advances even more difficult for lumber.
Figure 1
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For more information, please contact:
Russell Taylor, Publisher and President
International Wood Markets Research Inc. / R.E. Taylor & Associates Ltd.
Vancouver, B.C. Ph: (604) 801-5996 E-mail: retaylor@woodmrkts.com
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