Lumber Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 4,600 lumber distributors and wholesalers in the US act as middlemen between suppliers, retailers, and builders. Companies purchase stock and custom-ordered materials from sawmills, plywood and engineered wood product manufacturers, importers, and foreign suppliers and resell them to retailers, builders, lumber yards, and manufacturers. Firms may also provide engineering services or product modification such as cutting or planing wood to specified sizes or thicknesses.

Demand Tied to Residential Construction

Demand for lumber is largely tied to residential construction spending, which is cyclical and influenced by economic conditions.

Fluctuating Lumber Costs

The prices that manufacturers charge for wood products can fluctuate significantly and rapidly, driven by variability in underlying commodity costs.

Industry size & Structure

The average lumber distributor employs 24-25 workers and generates $21 million annually.

    • The lumber distribution industry consists of about 4,600 firms that employ 113,000 workers and generate about $98 billion annually.
    • Plywood, veneer, millwork, and wood panel wholesalers account for 60% of firms and 49% of revenue. Lumber distributors account for 40% of firms and 51% of sales.
    • The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 50% of industry revenue.
    • Only 1.5% of firms earn $100 million or more annually; those firms account for 29% of industry sales.
    • Large firms include BMC/Builders First Source, Forest City Trading Group, US LBM. Some of the largest firms, like Rex Lumber, still operate regionally.
                              Industry Forecast
                              Lumber Distributors Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              Jun 23, 2022 - BofA Securities Downgrades Housing Outlook
                              • Wood product firms Boise Cascade and Louisiana-Pacific were downgraded from buy to neutral in late June by BofA Securities amid a “more bearish” outlook for the US housing market, according to MarketWatch. BofA also recently downwardly revised its estimate for 2023 single-family housing starts from 1.1 million to between 800,000 to 900,000. BofA analysts suggested several drivers that have underpinned the housing market have “largely played out,” including above-average lumber pricing, and rising new home and remodeling expenditures.
                              • Homebuilder sentiment, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, decreased to 67 in June 2022 from 69 in May, marking the sixth consecutive monthly decline. Higher mortgage rates and inflation have unsettled the US housing market, especially for potential first-time homebuyers. Builders are taking a more cautious stance as demand weakens amid rising interest rates.
                              • Russia’s invasion of Ukraine is disrupting global wood product trade flows, especially in Europe. According to Wood Resources International, Russia, Belarus, and Ukraine exported 34 million tons of lumber in 2021, and 25% of that volume was exported to countries that have sanctioned Russia and Belarus. Europe’s timber imports from Russia and Belarus accounted for nearly 10% of the continent’s consumption in 2021. Wood certification organizations Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC) have designated all timber from Russia and Belarus “conflict timber,” which cannot be used to manufacture certified products, including lumber and plywood. Even after peace returns to Europe, timber trade flows have likely been permanently altered.
                              • Lumber markets have been volatile throughout the pandemic. Lumber traded at $610 per thousand board feet on June 21, 2022, down from the record high of $1,686 per thousand board feet on May 7, 2021, but remained well above pre-pandemic levels.
                              • Lumber distributors will likely be impacted by the pandemic-driven shift to a focus on resilient supply chains. Industry experts say that more emphasis is being placed on flexibility and less on cost reduction. Distributors’ customers may choose to hold higher inventory levels on-site rather than rely on just-in-time principles. They may also work with more wholesalers even though concentrating orders among a small number of suppliers typically lowers costs. Customers may also intensify supply chain reviews to avoid overreliance on a local wholesaler importing products from far abroad.
                              • Total construction spending increased 0.2% in value month over month on an adjusted basis and 12% in value year over year on an unadjusted basis in April 2022, according to the US Census Bureau. Residential construction spending increased 0.9% month over month and 18.8% year over year in April. Nonresidential construction spending declined 0.4% month over month and increased 5.8% year over year in April.
                              Get A Demo

                              Vertical IQ’s Industry Intelligence Platform

                              See for yourself why nearly 40,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                              Build valuable, lasting relationships by having smarter conversations -
                              check out Vertical IQ today.

                              Request A Demo