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Wood Products Council Targets Commercial Markets

By Jim Enright
Standard Structures

LIKE that little girl in Longfellow's famous poem, the housing market can be very good when it's good, but also at times rather horrid. Lately, it has been in a decidedly foul mood, with single and multifamily starts this year forecast to be off roughly 15% from 2006. That translates to a substantial decline in demand for and sales of wood products, from dimensional lumber and plywood to OSB, wood I-joists, and glulam timber. The U.S. nonresidential construction market, on the other hand, which last year posted an inflation-adjusted spending increase of 6%, is expected to do even better this year. Leading segments this year, according to an American Institute of Architects forecast, will be office buildings, up 9%; hotels, up 13%, and hospitals and health care facilities, up 7%. If that forecast proves accurate, 2006-07 will become the best two-year period for nonresidential construction since the late 1990s. In the longer term, commercial construction presents a significant opportunity not only to substantially increase wood product demand but also to lessen manufacturer, distributor and dealer reliance on new residential construction. Taking up that challenge is the Wood Products Council (WPC), an alliance of wood products industry associations whose charter members include the American Wood Council of the American Forest & Paper Association, APA-The Engineered Wood Association, Canadian Wood Council, Southern Forest Products Association, and Western Wood Products Association. After more than 20 years as an ad-hoc vehicle to develop and coordinate wood industry market education and promotion programs in North America, the council officially incorporated as a U.S. nonprofit organization late last year in order to more effectively facilitate industry-wide initiatives to increase wood product demand. The council is governed by a board of directors comprised of 15 senior executives from the organization's five charter associations and their members. (See sidebar at end of article.) Funding is being sought from U.S. and Canadian government agencies with matching support from the council's member associations. The rationale for commercial construction market promotion is compelling. First, there is substantial market share still to be gained. Commercial construction currently uses approximately 1.5 billion bd. ft. of lumber, including engineered wood. That's only about 20% of the code-defined market, leaving 5.9 billion bd. ft. of potential gain. On the panel side, the market consumes about 2.3 billion sq. ft. of plywood and OSB, or about 36% of the code-governed market opportunity. That leaves about 4.1 billion ft. of additional potential demand. Second, the wood products industry has a strong foothold in the market, particularly in the West, and experience supports the idea that where broad-based and long-term market development programs are pursued, the results can be very good. And third, the high and rising cost of steel and concrete supports both the timing of the initiative and the long-term prospects for success. A detailed strategic plan developed last year calls for a focused market-by-market approach, with high levels of promotion and support in markets calculated to represent the best prospects for meaningful results. Once momentum is built and success achieved in those markets, resources will be shifted to others. Based on various weighting schemes, the initial target markets have been identified as California, the three-state region of Georgia and the Carolinas, and the market encompassing Minnesota, Wisconsin and northern Illinois. The best estimates are that with a $6.5 million per year investment over 10 years there is reasonable expectation that annual demand for lumber and engineered wood can be increased by almost 3 billion bd. ft., and that annual demand for plywood and OSB can be increased by almost 2 billion sq. ft. That's significant. The benefits of the WPC plan, if successful, will extend far beyond the commercial construction market. It also promises to demonstrate the combined power of the wood products industry, both in the U.S. and Canada, to increase demand in a variety of markets when its talents and resources are pooled. Although the centerpiece of the council's efforts is the commercial construction market, Gulf Coast reconstruction and green building also are on the group's priority list. Like the commercial market initiative, Gulf Coast reconstruction is a long-term project. And assuring fair treatment of wood products by green building rating programs is an ongoing imperative. The housing market, of course, will continue to be the single most important customer for the wood products manufacturing industry and distribution chain. But with long-term vision and persistent effort, there is substantial opportunity to soften the impact of those times when housing, in a word, is horrid. - Jim Enright, president of Standard Structures, Windsor, Ca., is co-chairman of the board of directors of the Wood Products Council and a member of the board of trustees of APA-The Engineered Wood Association. ********************************************************* Wood Products Council Mandate To help protect and grow the market for wood products in North America by serving as a vehicle through which the wood industry associations can develop and coordinate programs in the areas of market access, research, education, promotion, and technical support. Officers Co-chairmen Jim Enright (Standard Structures) Rick Franko (West Fraser) President Dennis Hardman (APA) Vice President/Secretary Etienne Lalonde (Canadian Wood Council) Board of Directors APA - The Engineered Wood Association Jim Enright (Standard Structures) Mary Jo Nyblad (Boise) Dennis Hardman (staff) American Forest and Paper Association/ American Wood Council Rick Franko (West Fraser) Jeff Wagner (LP) Bob Glowinski (staff) Canadian Wood Council Bill Love (Tembec) Jean-Guy Gravelle (Bowater) Etienne Lalonde (staff) Southern Forest Products Association Ross Gardner (Weyerhaeuser) Fritz Mason (Georgia-Pacific) Steve Bean (staff) Western Wood Products Association Mike Phillips (Hampton Affiliates) Steve Schmitt (Stimson Lumber) Butch Bernhardt (staff)

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