A R T I C L E S
Composite Profiles:
Trends in Composite and Plastic DeckingTHE recent, meteoric rise of composite and plastic decking can be traced to a convergence of factors—consumers’ preferences for higher quality and lower maintenance, product improvements, the hysteria over pressure treated wood, the growth of the overall deck market.
Now, with the phase-out of CCA treated decking, are plastics and composites braced for an even higher surge? Or, will the arrival of new manufacturers result in oversupply, depressed prices and eventual consolidation?
We asked some of the largest composite and plastic deck manufacturers where the industry is headed.1. How has recent demand and production of composite/plastic decking been? What do you anticipate, particularly in the short term?
Mark Shaner (Epoch/Evergrain composite)
“ Demand has been excellent. As composite decking has grown so has the consumers expectation for a better looking product and that’s where we come in. It’s been a lot of fun and hard work. Our business has been very strong and we expect it to get even better. We expect to be able to satisfy the rapidly growing demand.”
“ We expect demand for Evergrain decking to grow dramatically over the next five years, in part because of the success of the category but in a larger sense because of the product’s differentiation from other composites. Our compression molding technology allows us to achieve new levels of realism, detail and quality.”John Long (Kadant Composites/Geodeck composite)
“ Demand is growing dramatically. We began with two extrusion lines in year 2000 and are now installing lines eight and nine. Our lead time in the early spring was extended to 10 weeks. We expect 2003 to be a breakout year and anticipate doubling our 2002 revenues.”Rob Long (LP Corp./WeatherBest composite)
“ Demand has been very strong for composite wood decking over the last few years. Production has grown commensurately by both additional capacity and increased efficiencies at established manufacturers and the entrance by new manufacturers. We see it growing about 15% per year over the next few years.”Ludwig Furtner (Weyerhaeuser/ChoiceDek composite)
“ Market demand for Weyerhaeuser ChoiceDek products has grown significantly over the last couple of years. Consumers, d-i-y customers, professional deck builders, and repair and remodel contractors are embracing composite decking products based on increased advertising and on a track record of good performance for our products. We expect sales to continue to grow at the same rate as the last couple of years, if not stronger.”Kevin Brennan (TimberTech/composite)
“ You had the explosion in ‘98, ‘99, 2000, and then you had 4 zillion competitors get into it. We had a good year. The industry is growing at 15% to 25%, and we expect to exceed that rate.”Samantha B. Goes (Nexwood Industries Ltd./composite)
“ In the last year there has been a huge increase in the demand for composites. We attribute this partially to the increased exposure of composites in the marketplace, as well as the acceptance of the benefits of composites at all levels of distribution. With this increase in demand, however, has also come an increase in competition. Many new players have entered the market within the last two years.
“ In the short term, we expect that the increased demand is going to allow for many new players. States that have not been exposed to composites in great volumes are going to be introduced to many more manufacturers than were in the market even as few as two years ago, with a wide range of product offerings. The huge increase in demand has obvious implications for an increase in production, and many composite manufacturers are feeling the effects of this rapid growth.
“ In the longer term, we expect this already growing demand for alternative products to increase exponentially, triggered by CCA restrictions and the growing concern for the hazards posed by some chemically treated lumber.”Maureen Murray (Trex/composite)
“ Demand for Trex decking and railing has been very strong. (Third quarter 2002 revenue rose 66% to $49.5 million, with net income up 79% to $6.1 million.) You can extrapolate that the category has done well, largely based on Trex decking and railing having an estimated 55-60% market share. The alternative decking market (composites and plastic products) has an estimated 6-8% of the entire decking market. Although it is difficult to predict growth rates of alternative lumber sales, it appears the industry will at least continue its 25-30% historical growth.”Dick Gauthier (Universal Forest Products/EverX composite)
“ Demand for composite decking is estimated to be $480 million for 2002. The expected growth will be slightly less than 20% next year—about $570 million for 2003. An annual growth rate of about 18% is expected through 2006. We estimate demand to be $900 million by 2006.”Martin Grohman (Correct Building Products/Correct-Deck composite)
“ As a small manufacturer, we were warned that the big companies like CertainTeed and LP were going to come in a turn this into a commodity. We haven’t seen that at all. The products are getting better. People are looking for more bang for their buck.”John Pruett (CertainTeed/Boardwalk composite, EverNew and Bufftech vinyl)
“ The overall decking market has been growing slightly; the composite decking market is growing exponentially. Boardwalk’s sales doubled in the last year.”Lynn Goode (Mikron Industries/vinyl)
“ I see that the demand will just continue to skyrocket. From 1997 to 2001, the overall decking industry grew at about 8% per year. During the same period, alternative decking grew at 85% to 95% a year. There’s been a huge shift in marketshare—and that was prior to the CCA issue. Alternative decking now has its foothold. In 1997, it had less than 5% of the overall decking market. Within the next four to five years, I wouldn’t be surprised if it had 40-50%.
“ The motivator of the growth has been the consumer, who is concerned about maintenance issues. About 63% of decks are made from pressure treated southern pine; it’s cheap and it’s abundant, but it warps and checks.”John Robinson (The Plastic Lumber Co./plastic)
“ Despite a softening economy in the third and fourth quarters, demand was off projections but still strong. Plastic lumber decking boards posted a 15% gain over the past year, as consumers and contractors became more comfortable with the product. We anticipate a surge in demand, barring a war with Iraq. We feel many consumers have been cautious about making significant expenditures for the past two seasons, and there is pent-up demand.”Mike Moseby (RPM/DuraBord plastic)
“ Demand and production have been increasing at a rate of approximately 50% per year. Our growth in DuraBord plastic lumber is expected to expand by approximately 15/20 times for 2003 and double that in 2004. We are just getting ready to bring on a second line in 2003. Our emphasis in the past was to sell to local retail lumber yards, deck builders and the general public via the Internet. Our current plan is to sell our plastic lumber products via wholesale distribution in the Western states.”Rick Wier (Kroy Building Products/vinyl)
“ Decking in general is expanding about 7% annually; however, alternative products to wood are growing over 25%. About 900,000-plus new decks were constructed this year, and almost 3.5 million replacement projects were undertaken in 2002. Replacement decks are 20% larger than the original deck. Composite or alternative deck material is expected to grow well into the double digits as far out as the research projects project. Through 2006, the growth is expected to continue in the 25% range.”Dave Stammen (Dayton Technologies/vinyl)
“ Demand for plastic/composite decking has been steadily growing, with the marketplace becoming more aware of, and more comfortable with, these materials. Production definitely appears to be increasing, from what our competitors have advertised. We anticipate the same growth through 2003 as was in 2002. Market share will continue to be taken by plastics and composites, but the overall decking market will remain steady.”Derek Morin (CPI/Eon plastic)
“ Our 2001 sales were $14 million, 2002 sales were $20 million, and in 2003 we budgeted for $30 million.”
2. How much of an effect has the phase-out of CCA treated products had on plastic/composite decking demand and production, and what do you see happening when the CCA ban hits in 2004?Goes (Nexwood)
“ With the phasing out of CCA, we expect to see a variety of alternative treating methods that may or may not perform as well as CCA. As a result, homeowners are going to be looking for decking alternatives that outlast traditional lumber, and new treating methods. By 2004 we think that dealers and deckbuilders who haven’t been exposed to composite decking products are going to find themselves scrambling for an alternative to treated lumber.”Brennan (TimberTech)
“ The effect it’s had is making people investigate other options. A lot of yards are still selling CCA, and it sounds like many will until the last minute. We didn’t see much effect in 2002, but expect to in ’03 and especially in ’04.”Gauthier (UFPI)
“ The robust sales growth in composites began long before any perceived safety concerns occured regarding CCA, so we don’t see the CCA ban as a significant driver of composite sales. Demand for CCA is still high, and we predict will remain strong for its successor preservatives in 2004. Since the new chemicals will drive up treated lumber costs by anywhere from 15-25%, however, that may help steer some consumers—for whom price is the primary decision driver—toward composites.”Furtner (Weyerhaeuser)
“ It is very difficult to quantify the impact of the treated lumber situation on composite decking, especially when ChoiceDek sales growth is as strong as we have seen recently. I feel that the confusion that generally accompanies the phase out of CCA combined with the uncertainty about the cost and reliability of alternative treated products will very likely result in additional growth in the sales of composites. The new treated products are more expensive than those being replaced. The cost differential between treated and composites is lessening.”Long (Kadant)
“ Certainly the phase-out from a public awareness point of view will give us some additional opportunity, but, keep in mind that all of the treaters are converting to other chemicals, so they will still be around and will continue to hold market share in the decking arena.”Shaner (Epoch)
“ In part, it depends on who you listen to. There is general agreement that, as the price gap closes, more people will switch to composites. Price is important, but it is too simple an excuse for not converting sales from wood to composites. There is another dynamic involved and it’s fundamental. Face it, Americans have never been afraid of paying more for quality. But how America defines quality is a question we, as an industry, need to ask. The stakes are higher than a few years ago. Today, low maintenance and high performance is what gets you into the game not price.”Fred Costello (Fiber Composites/Fiberon composite)
“ Difficult to measure. It can only strengthen the trend toward wood substitutes over time.”Long (LP)
“ It will have a significant effect. Consumers and municipalities are already concerned about the potential environmental and health effects of CCA treated lumber and are seeking alternatives. And while there are alternative treated wood products they are more expensive than CCA treated wood. This drives the price of the wood products higher and closer to composite wood.”Grohman (CorrectDeck)
“ Pressure treated wood is the 800-pound gorilla. Yet, CCA treatment is rot preventive. It doesn’t do anything to warping, cupping or checking. In 10 years—or less—it’s time for a CorrectDeck.”Murray (Trex)
“ Many lumber distributors and dealers have already begun to offer alternatives to CCA-treated lumber, in anticipation of the ban. We think that the phase-out of CCA has caused many contractors and homeowners to consider alternatives. Anecdotally, we’ve seen more of our TrexPro contractors doing remediation, also known as ‘tear-offs.’”Pruett (CertainTeed)
“ The ban of CCA has only accelerated the acceptance and growth of wood plastic composite decking. And, it’s helped support our price point because ACQ and other alternatives are 10% to 20% more expensive.”Morin (CPI)
“ Some of the players are making a big deal out of it, but ours is a premium product that’s less likely to compete with pressure treated wood. We’re another upsell on composite decking. Certainly, the change will positively affect (plastic decking) demand, but treated wood still has to be used for the understructure.”Stammen (Dayton)
“ Up to this point, we have not seen a dramatic upswing due to the CCA ban. It allows for big points in literature, but wood is still being used more than we anticipated.”Wier (Kroy)
“ There are a couple of things going on here. CCA has been very good for composites, particularly in marine applications. Surface deck board is on the rise because of this. Everyone is scrambling right now to come up with a load bearing composite piling and substructure for the remainder of the deck system. Most thought the answer was ACQ, however, ACQ may attack galvanized hangers on docks, requiring the use of expensive stainless steel hangers. Nobody has the perfect answer…yet! Kroy is actively on the hunt for the right combination of products. So are others. When the products are identified the market for marine and other EPA effected areas is so big, I’m not sure we can measure the size of the market.”Goode (Mikron)
“ Absolutely it has had an effect, but not a striking effect. It’s the perception; building material companies are staking their claim to fame by advertising their eco-friendliness. Dunn Lumber in the Seattle area has done a great job spreading the word and creating a captive market. The CCA ban will add to the momentum.”Robinson (Plastic Lumber Co.)
“ We expected the CCA backlash to hit last season, but it had little effect. We expect to feel it strongly this season, as the media begin to track the story more and awareness grows.”Moseby (DuraBord)
“ We feel that this will help the sales of plastic lumber and composite lumber. Treated lumber accounts for 85% of the decking market, with cedar/redwood 10% and plastic/ composite 5%. We expect plastic/composite products will grow 50% per year. We also feel that plastic products will grow at a faster growth rate than composites as the end-users becomes more educated to the advantages of plastic.”
3. Over the last year or so, many large pressure treaters have begun evolving into more generic wholesalers by beginning to stock alternative products. What are your thoughts on this phenomenon? Has your company worked with pressure treaters?Long (Kadant)
“ We currently distribute Geodeck through four different treating companies in nine different locations, throughout the U.S. Their sales are growing at the same pace as our forest product and building material wholesalers.”Gauthier (UFPI)
“ Many pressure treaters see market share slipping away and have chosen to embrace, rather than fight, the evolution in both alternatives technology and consumer tastes. UFPI treats lumber, distributes several brands of composite decking and manufactures its own brand.”Moseby (DuraBord)
“ I have had numerous talks with treaters, and they have shown interest in our products. There is a lot of confusion as more composite manufacturers come on line so it will be a learning process for some of them to understand the differences between the various composite lumber products and plastic lumber products.”Brennan (TimberTech)
“ Yes, we have been working with treaters for several years. I think they saw composites eroding into their business and also a way to make more margin than with wood.”Furtner (Weyerhaeuser)
“ We supply a lot of lumber products to treaters. It makes complete sense that treaters may want to supply composite decking with their treated lumber products. Remember, composite decking products still use treated or other decay resistant framing for joists, girders, and posts.”Goes (Nexwood)
“ Nexwood has not worked with pressure treating companies. We try to focus on a clean distribution channel to dealers/lumberyards through wholesalers/distributors.”Shaner (Epoch)
“ No we haven’t, though we have had conversations with several over the past few months.”Murray (Trex)
“ As more and more consumers recognize the benefits of alternatives to wood for their decking needs, it is natural that more businesses will take notice and try to supply that need. Since the combination of a pressure treated framing system and alternative decking surface and railing makes an ideal deck, it is not surprising that wood treaters are distributing the complete package. Trex is not currently distributed through any treaters.Wier (Kroy)
“ Yes, many wood treaters are beginning to stock alternative products to wood. More for their own long-term preservation as wood becomes less desirable over the next 10 years. It will be a huge conversion. Kroy has not worked with pressure treaters, however we have been approached by very large deck and dock builders who are the treaters’ direct customers.”Long (LP)
“ We have not.”Costello (Fiber Composites)
“ New, late entry manufacturers find that traditional lumber and building materials distributors are already carrying at least one composite and are not available to them. Treaters, who are losing market share to composites, are the only viable distribution channel remaining to these smaller manufacturers because of their ability to top-load regular deliveries to the retail yards.”Morin (CPI)
“ Because we do so much business with Home Depot, they like that we are distributed through some of the largest pressure treaters—Great Southern, Rocky Top, MacFarland Cascade—because they’re at the stores all the time.”Stammen (Dayton)
“ We have not worked with pressure treaters; however, we have seen the same with the larger lumber distributors opening their doors to plastic/composites.”Robinson (Plastic Lumber Co.)
“ We are a regional decking manufacturer and focus on small distributors that can sell the added value of plastic as well as educate homeowners and contractors on proper installation. We have not developed a relationship with any pressure treaters.”
4. Anything new in regards to plastic/composite products at your company?Murray (Trex)
“ Last year, Trex changed its product name to Trex Decking and Railing, to emphasize its full line of railing components. This railing component line continues to expand in 2003, with several new railing products debuting at the International Builders Show. A thinner baluster profile will be introduced in all five Trex colors. And, a beautifully crafted, new style of chamfered handrail, along with a pyramid-style post cap and a post skirt to finish off the base of the railpost will be offered in 2003. In 2002, saddle, a deep tan color that lightens only slightly, was added.”Long (Kadant)
“ We are adding several new trim pieces to the Geodeck line, including a decorative post cap and base, as well as a fascia board and starter trim piece for our T&G decking.”Grohman (CorrectDeck)
“ We have introduced the Correct-Deck Signature Series, a ‘groove-and-groove’ deck board that features a hidden fastener system and a quick, easy installation method.”Brennan (TimberTech)
“ We just introduced a decorative rail system, the Ornamental Railing System, in 6-ft. and 8-ft. kits, in four colors—cedar, gray, redwood and natural.”Furtner (Weyerhaeuser)
“ We just introduced the new ChoiceDek Decorative Handrail line of products. Our handrail has been fully tested and will be included in the next release of our National Evaluation Report. The system includes all of the components necessary to build multiple styles of handrails as well as the framing connections to ensure that it is built to meet requirements.
“ We will introduce some very exciting additions to the ChoiceDek line later this year. Colored decking products are in the early stages of field testing. A new line of decking called ChoiceDek Performance Plus is now available in eastern Canada.”Shaner (Epoch)
“ We’ve expanded the sales force to service our growing business. We’re adding new sleek railing designs.”Goes (Nexwood)
“ Nexwood started to manufacture all our products in three new colors in 2001. These colors (sequoia red, sierra brown and driftwood gray) are being introduced slowly throughout the U.S. and by the end of next year, will be able to be ordered in most of the territories in which Nexwood is sold. In the same manner, Nexwood manufactures a tongue-and-groove profile that is very popular in the Eastern states and is slowly being introduced to other parts of the U.S.”Long (LP)
“ In 2002 we introduced decking and railing in three colors: Pacific cedar, western redwood and driftwood grey. They provide a true wood like appearance and hold their color well. Coloring the wood composite adds cost to the product, but consumers have shown that the premium appearance is well worth the price.
“ We have also introduced WeatherBest Crystal White Railing, a premium wood composite railing system with an integral co-extruded white PVC capstock. The system includes top and bottom rails, stair handrail, balusters and a 4x4 post sleeve.”Pruett (CertainTeed)
New in 2003 are a new post cap and a post base ring. We’ll introduce decorative accessories in March. The post cap will be moulded not milled to bring the cost down and provide consistent aesthetics. We added a new tan color to our decking January 1.”Stammen (Dayton)
“ Dayton Technologies has developed a new vinyl deck and rail program targeted to the two-step and one-step distributors. This vinyl plank will have two different colors on the same plank, allowing for reduced inventory at the distributor’s site, and installation similar to that of wood products. It will be marketed under the name Dual-Deck. At the same time, we are near completion of releasing a composite profile, which will complement our vinyl program.”Morin (CPI)
“ We are test-marketing a new fencing product. The main advantage is its light weight.”Wier (Kroy)
“ We just completed spending $4 million on a composite line in our Fair Bluff facility to produce composite deck, rail and other materials. We will have some major product announcements in this arena, the first quarter of 2003.”Moseby (DuraBord)
“ We are working on expanding our sales to wholesale distribution and manufacturers in the future. Plastic lumber has a lot of advantages over composite lumber products and will demand more marketing and advertising exposure.”Robinson (Plastic Lumber Co.)
“ This coming season we will market two styles of railing. We are also branding our product ‘Leisure Deck’ and putting on a bigger marketing push.”
