Manufactured timber – new markets are maturing

From engineered wood products to wood-plastic composites, and even fully synthetic alternatives, there are powerful new product categories affecting the timber industry.
JOHN POWER examines the implications for hardware retailers.

Traditional timber departments, particularly those attached to suburban hardware outlets, have to choose their product ranges carefully – after all, space is always at a premium. However, the problem with highly selective, traditional stock selections is that retailers may be minimising their exposure to manufacturers of innovative, new-generation products, unwittingly setting the scene for the emergence of rival product lines or even entire categories.

In this article we’ll explore some of the ‘new-generation’ timber product categories (see Table) in the marketplace – categories that might have been considered too specialist or ‘niche’ to worry about – and see if they might be worth reappraisal in the hardware sector.

New-generation engineered timber products and timber composite (or fully synthetic) products have applications across the complete spectrum of buildings, from residential to the largest commercial high-rise. Let’s start with residential, the heartland of suburban hardware retail operations. The obvious growth category in this area, and the one most clearly relevant to small-to-medium timber departments, relates to ranges of wood-plastic composite (WPC) products, which are most commonly used in decking and screening applications.

Justin Newman, National Product Manager at ITI Australia, the nation’s largest distributor of WPC products, including ModWood, says the WPC category has been developing steadily in Australia over the past decade or so.

“Essentially, WPC refers to wood and plastic blended together to create durable outdoor products for decking and screening,” Justin says.

More recently, in the last two or three years, a separate category of ‘Alternate’ materials has emerged, made from PVC, i.e. polyvinyl chloride. These PVC products, which contain no wood at all, are technically separate from the WPC market, though they are frequently marketed as a subcategory.

WPC and PVC products are most prominent in the decking and screening sectors, and there are good reasons, Justin says, why timber stockists should accept they are here to stay.

“There is no doubt that in six, seven, eight years from now you will go to your local timber merchant and what is currently stocked there in timber decking, in either hardwood or softwood, will be equally shared with either WPC or alternate decking in store, potentially alongside other products,” Justin says.

His reasons for optimism are threefold:

1. “We don’t have an infinite amount of hardwood; and there is no doubt supplies are rising in price,” Justin explains. “And I believe WPC and Alternate prices will come down as volumes rise.” At the moment, a typical WPC deck might cost 30%–40% more than a hardwood deck in upfront costs. Payback periods for WPC or Alternate products, however, based on minimal or zero ongoing maintenance costs, are approximately
five years.

Prefab2. Justin says he believes that, as a society, we are searching for lower maintenance and better quality products, “and although there’s no doubt we are also looking for the lowest cost, I think we’re also assessing the lifecycle cost more than the one-off costs – that tends to lend itself to these kinds of [new] products.”

3. New generations of builders, he observes, are more likely to experiment with newer product categories. “Older generations of builders have used hardwoods for a long time. Composites are not part of their daily purchasing habit, but that doesn’t necessarily apply to the younger builders.”

An additional reason, Justin notes, is that more and more people are converting to WPC products, and they in turn convert exponential numbers.

In-store stocks tend to include samples, as brands like ModWood feature four colours in different textures and finishes, meaning orders generally tend to be processed to suit individual specifications.

Nevertheless, many specialists in the timber and hardware industry are including sample ranges of WPC products in-store – there are some 40-odd distributors in metropolitan Sydney alone. Larger hardware outlets like Bunnings also carry small ranges of WPC product.

The future for ancillary product categories is healthy, Justin says. For example, he anticipates that Alternate products, particularly pre-coloured white materials, have a positive outlook in rural fencing. Similarly, outdoor screening and landscaping applications have plenty of scope for market expansion.

He also sees growth based on consumers’ preference for environmentally sustainable local products. For example, Australian made ModWood is manufactured from recycled milk bottles (HDPE or high-density polyethylene) and
pine fibre.

mod
ModWood composite decking is gaining popularity as an alternative to solid timber, due to minimal ongoing maintenance and material consistency.

Engineered

The largest product category in this space is also the most distant from the minds of hardware retailers: engineered wood. This category includes high-quality manufactured timber products that have been mechanically processed in some way, typically involving either timber veneer or reconstituted fibre as the foundation material.

Only the biggest trade outlets in Australia’s retail hardware industry have opted to stock significant ranges of engineered wood products to date. However, the technology is gaining momentum in multi-residential and commercial building circles, and the market’s spread to domestic applications – though limited to detached housing at the moment – is widely tipped to expand in future years in line with European and
American models.

Kevin Ezard, from Frame Australia, the nation’s largest conference and exhibition dedicated to engineered timber products, says the category is vibrant in certain building sectors.

“The detached housing market is mature and there’s not a lot of change, so the biggest changes at the moment are in multi-residential, which has traditionally been much the same as the commercial building market,” Kevin says. “But all that is beginning to
change rapidly.”

The reason is simple: engineered timber offers an opportunity for greater levels of prefabrication.

“So things like upper-floor cassette systems, pre-assembled walls, modular bathroom units, are starting to move more rapidly into multi-residential construction,” Kevin explains.

Notwithstanding the influence of engineered product on the domestic market, Kevin notes that a desire to minimise on-site labour costs, combined with developers’ aims to save time, may ultimately drive greater adoption of engineered timber technologies at the domestic level, especially in large-volume developments. “If you look at the detached housing market, it’s a very efficient system at the moment, but labour on site will progressively become more of an issue and that will move the builder to start to bring in more prefabricated items, which means doing something in a manufacturing plant, which means more engineered-type structures will be built.”

Prefabrication of engineered timber products and systems necessarily entails more than a retail service; rather, the distributor is also responsible for processing the product to the customer’s specifications prior to delivery.

Kevin says suppliers of engineered timber products in Europe, in particular, are increasingly offering a full ‘supply and install’ service, not only delivering materials to site, but also carrying out construction using specialist crews. Such enterprises are already working in Australia.

While many hardware retailers will argue that they deal principally in renovations and extensions – a far cry from multi-residential and high-volume detached housing developments – it is worth remembering that building techniques and methodologies have a tendency to ‘migrate’ across sectors over time, particularly if efficiencies are clear-cut.

This is particularly feasible if we consider that companies like Lend Lease, according to Kevin, estimate that up to 40% of their apartment constructions could use engineered timber systems. “And Australand, which is building over 1,000-odd units at Parkville, Victoria, using engineered timber products, sees the advantages of having more engineered products put together and then brought on site,” he says. “Australand are talking about having full external panels go up with a crane so they can eliminate scaffolding, which ticks the box for safety, cost and time.”

It is hard to imagine that none of these efficiencies will ever find applications in smaller suburban building projects in years to come.

Implications for hardware

So, what are the implications for hardware timber departments?

In relation to WPC and Alternate products, it stands to reason that traditional hardwood supplies must eventually come under pressure from synthetic or composite substitute products. Plantation timbers are slow-growing and expensive resources, and scrutiny of imported timbers will surely only intensify.

In relation to engineered wood products, it stands to reason that even if hardware retailers are not equipped to play a direct role in engineered product distribution, then they should at least try to participate in the supply chain to capture some of the market for associated products.

Moreover, retailers should be extremely watchful for the emergence of any form of prefabrication in non-traditional home renovation and extension markets, as this could represent the subtle arrival of a competitor to solid timber markets. More information

Frame Australia www.frameaustralia.com

ITI Australiawww.itiaustralia.net