Better times ahead....

22 May 2012


North American engineered wood producers seek global markets and growth in the coming year as they predict that 2012 will show an upturn compared to previous years, according to the APA-The Engineered Wood Association. Steve Ehle spoke to the APA’s marketing director, who kindly shared some of the association’s data

As is the case with other wood based manufacturing market sectors in North America, the trend for engineered wood is still flat, but the future is not dim, if not bright, according to the APA-The Engineered Wood Association, which represents manufacturers of engineered wood products in North America.

A spokesperson for the APA says cautious optimism is the call for the day as 2012 moves into the second quarter in North America.

"Once again, the 2011 recovery of the economy and wood product demand was less than predicted," says Marilyn Thompson, marketing director for APA.

"For many products, North American demand was about the same in 2011 as in 2010; however consumers are beginning to spend again and US GDP has grown for nine quarters in a row.

"The outlook is for a better economy in 2012, with improved demand for wood products, particularly for those companies who are seeking overseas market opportunities."

She says consumption will grow in 2012 for the North American market.

"APA's base assumption for 2012 is that the US and Canada will grow and not be pulled down by the European debt crisis. The US is expected to grow 2.2% in 2012 and Canada is expected to grow 2.3%."

Steady job growth of between 125,000 and 150,000/month is expected to keep the US recovery "plugging along" and job growth could improve in the latter half of 2012, she says.

According to the APA, residential construction ended 2011 with 607,000 housing starts - an increase of only 20,000 from 2010. For 2012, the forecast is for 680,000 starts, an increase of 12%.

However, Ms Thompson adds, "There should be enough pent-up demand in a few markets where house prices are stabilising to bring about an increase in single-family starts. Single-family units are predicted to increase from 429,000 in 2011 to 470,000 in 2012.

"Multi-family starts are forecast to increase from 178,000 to 210,000 in 2012. This will be a big improvement from a low point of just 109,000 multi-family starts in 2009."

The APA says repair and remodelling activity in 2011 was "about the same" as in 2010. Also, exports of structural panels to offshore locations grew 63% in 2010 and were about the same in 2011.

With the slowing world economy, the forecast is for exports to grow by about 7% in 2012.

"For 2012, the outlook is for increased demand as consumer spending picks up," Thompson says. "According to a recent survey, many builders and remodellers are working on home modifications related to an ageing population. Room additions and modifications will allow some of the population to live with their children.

"Other modifications will allow home owners to remain in their homes for longer."

Buffering that trend, she says, is the move to a stronger industrial market.

"Industrial market demand has been a bright spot for wood product manufacturers in 2010 and 2011, coming out of the US recession," she says. "Demand is increasing for truck trailers, boats, furniture, pallets, containers, trailers, campers and motor homes. The outlook is for the industrial market to grow 4% in 2012, after growing 3% in 2011."

Non-residential construction declined in 2010 and 2011, the APA determined through surveys. Still, there is optimism.

"The outlook is for a bottoming out in late 2011 (when statistics are available) and early 2012 before another growth cycle begins," Ms Thompson says. "Wood product demand in this market declined about 3% in 2011 and is expected grow only about 2% in 2012.

"Government infrastructure projects may help some, but roads and bridges use more concrete and steel than wood products."

The APA is a non-profit trade association that has grown and evolved with the engineered wood industry. The association was founded in 1933 as the Douglas Fir Plywood Association, and was later recognised as the American Plywood Association.

Membership of the APA - which incorporates 148 mills in total, including plywood, OSB, glulam, I-joist, structural composite lumber and speciality products - provides a wide mix of products, serving many industry sectors.

Ms Thompson was asked about the APA's position regarding the energy code battle.

She says: "The Coalition for Fair Energy Codes (CFEC) was established under the leadership of APA to assist in maintaining wood structural panel sheathing and lumber framing access to the residential wall market by influencing energy conservation policy debates at both the federal and state levels and the energy code provisions that are developed nationally and adopted by state and local jurisdictions.

"Coalition for Fair Energy Codes supports technically credible and cost-effective energy conservation; the use of the best available building science and technical data in support of the code development process; and construction industry options, alternatives and trade-offs for meeting conservation targets."

The CFEC was established under the leadership of the APA to assist in maintaining wood structural panel sheathing and lumber framing access to the residential wall market by influencing energy conservation policy debates at both the federal and state levels and the energy code provisions which are developed nationally and adopted by state and local jurisdictions.

"The Code supports technically credible and cost-effective energy conservation; it uses the best available building science and technical data in support of the Code development process; and construction industry options, alternatives and trade-offs for meeting conservation targets".

As far as other relevant focuses, formaldehyde in engineered wood "is still impactive" on its particular industry sector, according to the APA, as is the topic of the "wood flooring initiative," which is also a major influence on the APA markets in North America, where there is an abundance of soft and hardwood.

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