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 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 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

                                    Coronavirus Update

                                    Apr 21, 2022 - Ukraine War Further Disrupts Global Wood Product Markets
                                    • 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.
                                    • On April 8, 2022, President Biden signed the Suspending Normal Trade Relations with Russia and Belarus Act which stripped the two countries of their “most favored nation” trade status. The move opens the path for significantly increased tariffs on imports of wood products from Russia, including plywood. In 2021, US imports of Russian veneer, plywood, and engineered wood products totaled $396 million, or a little over 3% of total imports. However, Russia directly accounts for about 10% of all US hardwood plywood imports, according to Forest Economic Advisors. By selling timber to major hardwood plywood producers such as Indonesia and Vietnam, Russia may indirectly supply another 10%. According to the Decorative Hardwoods Association, higher tariffs on Russian plywood imports are likely to benefit domestic producers.
                                    • The short-term outlook for construction starts remains cloudy due to continued increases in material prices and labor shortages, said Richard Branch, chief economist for Dodge Construction Network. He added that while construction should see some reprieve from pandemic-related challenges in 2022, they will restrain the industry’s ability to fully capitalize on both the large number of projects in planning and funding resulting from the federal infrastructure package. The result will be moderate growth in construction starts over the near term.
                                    • Even as pandemic conditions wane, homeowners are expected to continue to invest in home improvements. Home remodeling spending is expected to remain strong for most of 2022 before tapering off in the fourth quarter, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 11.3% to $390 billion in the first quarter of 2022 compared to Q2 2021. On a year-over-year basis, quarterly remodeling spending levels are forecast to rise 15% in Q2, 19.7% in Q3, then moderate slightly to 17.3% in Q4 when spending will reach $430 billion.
                                    • Total construction spending increased 0.5% in value month over month on an adjusted basis in February 2022, according to the US Census Bureau. Total unadjusted construction spending rose 10.4% in the first two months of 2022 compared to the same period in 2021. Residential construction spending increased 1.1% month over month in February and was up 15.5% for the first two months of 2022. Nonresidential construction spending decreased 0.1% month over month but increased 5.8% in the first two months of the year compared to the same period a year earlier.
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