Plywood and Engineered Wood Manufacturers

Industry Profile Report

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

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 1,100 companies in the US produce a variety of wood-based and wood-like products, including plywood, veneer, and reconstituted wood products. Major revenue categories include plywood and veneer (hard or soft wood); reconstituted wood sheets and boards (particle board); roof and floor trusses; and engineered wood products. Firms may also manufacture related products or kits, such as outdoor furniture, pergolas, or specialized saws. Engineered wood is a term that may apply to the entire industry (veneer, plywood, reconstituted wood, trusses, and composite products) or just composite products.

Sensitivity to Economic Conditions and the Construction Sector

Demand for plywood and engineered wood products is highly dependent on the health of the construction industry, which is sensitive to economic conditions.

High Capital Requirements

Production of plywood and engineered wood products requires an investment in specialized equipment and machinery.

Industry size & Structure

The average wood product manufacturer operates out of single location, employs about 72-73 workers, and generates $21-22 million annually.

    • The plywood and engineered wood product manufacturing industry consists of about 1,100 firms that employ about 78,700 workers and generate $23 billion annually.
    • Most sub-industry categories are concentrated; the top 50 companies account for 89% or more of industry revenue for manufacturers of plywood and veneer, engineered wood, and reconstituted wood products. The top 50 companies account for 66% of industry revenue for truss manufacturers.
    • Plywood and veneer manufacturers account for about 27% of industry revenue and 23% of firms. Reconstituted wood manufacturers account for 29% of revenue and 13% of firms. Truss manufacturers account for 33% of revenue and 55% of firms.
    • Large companies include Louisiana-Pacific Corporation, Trex Company, and Roseburg Forest Products. Weyerhauser Company, Georgia-Pacific, and Boise Cascade have wood product manufacturing operations.
                                    Industry Forecast
                                    Plywood and Engineered Wood Manufacturers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Oct 28, 2022 - Uptick in Remodeling Forecast for 2023
                                    • The outlook for remodeling activity dimmed in September but remained positive, according to the National Association of Home Builders (NAHB) /Westlake Royal Remodeling Market Index (RMI). Based on a survey that asks remodelers to rate various aspects of the residential remodeling market as “good,” “fair” or “poor,’ the RMI for Q3 2022 posted a reading of 77, declining 10 points from Q3 2021. (Index numbers above 50 indicate that a higher share of those surveyed view conditions as good than poor.) The overall RMI of 77 points to positive remodeler sentiment due to increases in home equity in recent years, ongoing demand for work at home, and an aging housing stock. The NAHB forecast a small increase for remodeling activity in 2023, while the rate of new construction is expected to continue to decline.
                                    • The construction market – a driver of demand for plywood, veneer, and engineered wood – saw builder confidence slip in September 2022 for the ninth consecutive month as the US housing slowdown continued, the National Association of Home Builders (NAHB) reports. Rising interest rates, persistent building material supply chain disruptions, and high home prices all took a toll on affordability. Builder confidence in the market for new single-family homes fell three points in September to 46, the lowest level since May 2014 with the exception of the spring of 2020, according to the NAHB/Wells Fargo Housing Market Index (HMI). All three HMI components declined in September, with current sales conditions down three points to 54, sales expectations in the next six months falling one point to 46, and traffic of prospective buyers down one point to 31. (Any number below 50 indicates that more builders view conditions as poor than good.)
                                    • High interest rates, continued supply chain constraints, and elevated housing prices pushed home builder sentiment lower in September 2022, according to the National Association of Home Builders (NAHB). Homebuilder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell three points to 46 in September 2022 from 49 in August, marking the ninth consecutive monthly decline. Any HMI reading over 50 indicates more builders see conditions as good than poor. Demand for new homes has fallen as higher interest rates have made housing less affordable.
                                    • On September 27, 2022, lumber futures traded at about $429 per thousand board feet, about a third of where they were a year earlier and 70% below the level seen in March, according to The Wall Street Journal. Lumber prices have generally trended downward since the spring of 2022, when the Federal Reserve began raising interest rates to tame inflation. The resulting rise in mortgage rates has significantly cooled the once red-hot housing market, and lumber prices have moderated as housing demand has fallen.
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