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

                                    Mar 23, 2023 - Home Builder Sentiment Improves
                                    • Tight existing home inventories are pushing buyers into the new home market, which helped move home builder confidence higher in March, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose two points to 44 in March 2022 2022, although the HMI remained in bearish territory. Any HMI reading over 50 indicates that more builders see conditions as good than poor. While stress in the US financial system pushed mortgage interest rates down, affordability is still a significant roadblock to homeownership for many. The NAHB said a side effect of the increased pressure on regional banks would be a further tightening of acquisition, development, and construction (AD&C) loans for home builders.
                                    • The number of building permits issued for single-family, privately-owned housing units increased 7.6% month over month but was down 35.5% year over year in February 2023. Single-family housing starts rose 1.1% month over month but decreased 31.6% year over year in February. Housing completions increased 1.0% month over month but fell 3.6% year over year in February. Some industry insiders suggest the monthly improvement in housing permits and starts in February could be a signal that the housing market is building steam after higher interest rates hobbled housing demand, according to Reuters.
                                    • North American lumber consumption is expected to decline by about 7% in 2023, but that may not have much of an effect on pricing, according to a lumber analyst with Forest Economic Advisors. Lumber demand is softening as high interest rates and elevated home prices slow the housing market. Remodeling boomed during the pandemic, but home improvement spending is projected to fall as much as 8% from its peak during the health crisis. While lumber demand is forecast to drop, supplies in key producing regions, including British Columbia and the US West Coast, are tight. Meanwhile, sawmills are curtailing production, or even closing mills, while new planned mills are slow to come online. Lumber prices may be held in check by softening demand, tight supplies, and high inventories on the retail level.
                                    • The Dodge Momentum Index (DMI) increased 1.9% in February 2023 to 203.0 (2000=100), up from the revised January reading of 199.3. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component rose by 1.4%, and institutional increased by 2.9%. Commercial planning got a boost from an almost 20% rise in office planning and stronger data center project planning. In the institutional sector, education and healthcare planning saw gains, with research laboratories being a noted bright spot. Dodge’s associate director of forecasting said, “The continued elevation in the DMI should provide hope that construction activity will grow in 2024. Owners and developers tend to put projects into planning until well after economic conditions weaken. During the Great Recession, for example, the DMI did not substantially decline until 2009. Therefore, the anticipated mild economic growth in 2023 could cause the DMI to moderate over the year, but it is unlikely to fall below historical norms.”
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