Value-Added Wood Industry and Market Trends for Ontario Ian D. Manson, MNR Wood Centre Feb. 23,...
-
Upload
marco-gallegos -
Category
Documents
-
view
218 -
download
1
Transcript of Value-Added Wood Industry and Market Trends for Ontario Ian D. Manson, MNR Wood Centre Feb. 23,...
Value-Added Wood Industry and Market
Trends for Ontario
Ian D. Manson, MNR
Wood Centre Feb. 23, 2007
Industry Organization
PRIMARY
HarvestingForestryNurseriesServices
SECONDARY
Commodity Value-added
LumberResidualsPulp Newsprint
Wood Products
Papers
$2.8B
$4.3B
$7.1B
$4.0B
$5.5B
$9.5B
$16.6B
In 1998 C$
What are value-added wood products?
Traditional BioProductsNon-TimberProducts &Services
• furniture• cabinets• millwork• EWPs• boards • mfd housing• converted papers
• bio-fuels• bio-materials• bio-chemicals
• health care• personal care• foods• crafts• decorative• recreation• services
Timber BioMassPlants
What makes something ‘value-
added’?
Primary ForestIndustry
Value-AddedWood Industry
X6
the more capital (technology) and labour used to process a raw material the more value is created
2004 % Mix of Ontario VA Wood
EWP32%
Wood Household Furniture
10%
Cabinets13%
Millwork25%
Wood Office Furniture
10%
Mfd Housing5%
Crates/Pallets5%
Sub-sector Segmentation
Based on $ Revenue: Statistics Canada, ASM
Selected Ontario Industry Employment, 2002
42,430
49,288
81,671
9,445
47,958
59,020
71,200
0 20,000 40,000 60,000 80,000 100,000
Employment
Plastics Mfg
Food Mfg
Value-Added Wood Mfg
Chemical Mfg
Electronic Mfg
Motor Vehicle Mfg
Aerospace Mfg
Importance to Ontario
Source: Statistics Canada, 2002 ASM
Importance to Ontario
42%
28% 24% 24%22%
23%
12%
25%
0%5%
10%15%20%25%30%35%40%45%
% Export Value
Primary P&PValue-AddedP&P
PrimaryWood
Products
Value-AddedWP
Exports as % of Total Ontario Forest Sector
1995 2004
1995 Exports Value $2.8BN2004 Exports Value $5.2BN
Source: Minister’s Council of Forest Sector Competitiveness, Statistics Canada
Ontario is a Leader in Value-Added Wood
VA (SW) Employment in Great Lakes Area, 2002
37,489
38,067
32,253
32,695
35,242
16,714
19,877
23,202
19,419
- 10,000 20,000 30,000 40,000
Penn
Ont
Ohio
Wisconsin
Indiana
Illinois
NY
Minnesota
Mich
VA Employment in Canada, 2002
Quebec, 57,627
Ontario, 59,020
Alberta, 14,611
BC, 20,954
0 20,000 40,000 60,000 80,000
Quebec
Ontario
Alberta
BC Quebec has grown51% in VA woodjobs since 1997 vs.Ontario at 31%.
Ontario ranks #5in North Americafor Value-Addedwood jobs, but noindustry association
Source: Statistics Canada, Dept of Commerce
• British Columbia - BC WOOD
• ALBERTA - Dept. of Value-Added Wood
• QUEBEC - QWEB
• Great Lake States - Secondary Wood Mfg Association • ONTARIO - nothing representing value-added wood
… without leadership.
Businesses by Employee SizeSouth Ontario Wood Processing Industries
0500
1,0001,5002,000
1-4 5-910-1920-4950-99
100-199200-499500 +
Employee Size Range
# of Businesses
SecondaryPrimary
Large… and small
Source, by % utilization
Code Industry ONT PQ BC ALT U.S OTH D.K.321215 EWP 30.5 62.2 0.4 1.4 3.0 2.5 0321911 Windows/Doors 35.0 15.0 0 0 0 0 50.0
321919 Other Millwork 32.7 13.6 0 0 48.7 1.4 3.5
321920 Pallets/Crates 31.1 61.2 5.1 0.2 0.1 0.6 1.7
321999 Misc. Wood 92.0 5.5 0.1 0.1 0.3 0 2.0
337110 Cabinets 76.8 23.1 0 0 0 0 0.1
337123 Furniture 66.2 13.5 1.6 0 17.6 0 1.1
321992 Mfd Housing 31.6 37.2 22.8 8.4 0 0 0
TOTAL 38.1 41.5 1.7 0.6 15.1 1.4 1.6
Source: Linking the Forest to the Factory, MNR
Lack of Sector Integration
Species, by % utilization
Softwoods
Code Industry Pw Sp Pr Ce SPF OTH TTL321215 EWP 0.7 15.6 0.1 0 28.7 0 45.2321911 Windows/Doors 70.5 0.4 0.1 0.7 0.9 0 72.6
321919 Other Millwork 5.2 0.7 2.6 0.9 0.2 0.2 9.7
321920 Pallets/Crates 0.9 8.2 0.3 0.1 79.2 0 88.6
321999 Misc. Wood 2.8 9.1 0.4 0.8 44.7 2.0 59.7
337110 Cabinets 2.3 0 1.8 0.1 0 0 4.1
337123 Furniture 16.3 0 0.1 0.1 0 1.6 24.4
321992 Mfd Housing 6.3 60.3 0 6.2 32.6 0 99.4
TOTAL 3.6 9.1 0.9 0.7 27.6 0.2 42.0
Source: Linking the Forest to the Factory, MNR
Species, by % utilization
Hardwoods
Other - cherry, basswood, walnuts, exotics
Code Industry Mh Bw Po Or Aw OTH TTL321215 EWP 0.9 1.6 51.5 0.4 0.4 0 54.9
321911 Windows/Doors 2.6 0.5 3.60 5.9 0.5 14.3 27.4
321919 Other Millwork 23.7 0.4 15.5 26.6 4.8 19.3 90.3
321920 Pallets/Crates 3.4 2.1 2.5 2.0 1.2 0.2 11.4
321999 Misc. Wood 16.2 2.3 10.4 2.3 1.9 6.3 40.3
337110 Cabinets 34.3 15.0 3.3 25.0 0.4 17.7 95.9
337123 Furniture 23.5 2.1 3.9 20.5 0.8 24.8 75.7
321992 Mfd Housing 0 0 0 0.6 0 0 0.6
TOTAL 9.8 1.4 27.6 9.7 1.9 7.5 58.0
Source: Linking the Forest to the Factory, MNR
Materials, by % utilization
Solids
Code Industry RawLum Retail Spec Veneer MSR OTH TTL321215 EWP 4.9 2.6 18.8 2.4 2.7 46.8 78.2
321911 Windows/Doors 1.6 0.2 68.3 0.1 1.0 0.4 71.6
321919 Other Millwork 84.5 1.2 7.1 0.8 0.2 1.0 94.8
321920 Pallets/Crates 85.0 7.0 3.4 0.1 0.4 0.6 96.5
321999 Misc. Wood 28.1 54.9 12.8 0.2 0.2 0.4 96.6
337110 Cabinets 6.7 9.3 18.6 7.1 0 0.9 42.6
337123 Furniture 25.4 9.6 14.5 9.0 0 4.5 63.0
321992 Mfd Housing 0.6 2.8 17.4 0.1 4.4 6.3 31.6
AVERAGE 36.5 3.5 22.6 1.6 1.3 17.1 82.6
Source: Linking the Forest to the Factory, MNR
Materials, by % utilization
Composites
Code Industry Plywood Particle Chip Laminate OTH TTL321215 EWP 0.1 0 0 0 21.9 22.0
321911 Windows/Doors 9.8 0.1 18.5 0.1 0.1 28.6
321919 Other Millwork 3.5 1.6 0 0.1 0 5.2
321920 Pallets/Crates 3.1 1.2 0.2 0 0.1 4.6
321999 Misc. Wood 2.5 0.9 0 0 0 3.4
337110 Cabinets 13.4 22.3 1.3 16.5 3.8 57.3
337123 Furniture 13.3 14.1 0.2 8.4 1.0 37.0
321992 Mfd Housing 20.3 0 45.4 2.8 0 68.5
AVERAGE 4.1 1.3 3.8 0.6 7.8 17.6
Source: Linking the Forest to the Factory, MNR
5.0
1.0
2.0
3.0
4.0
ManagementCapability
WorkforceSkill Level Clustering Policy
Industry & Market
Structure TechnologyRaw
Material5.0
1.0
2.0
Denmark
Alberta
3.0
4.0 BC
NordicGermany
US Great Lakes
Quebec
Ontario
QuantitativeRanking
* based on labour, energy and productivity costs
Source: Jaakko Poyry: Assessment of the Status and Future Opportunities of Ontario’s Solid Wood Value Added Sector, June 2001
Benchmarking
Ontario’s Wood Manufacturing Sector
is….• Large• Diverse• Export focused• Technically sophisticated• Expensive• Rudderless
Trends
Industrial
Markets
Top Strategic Industry Issues
56%
46%
41%
41%
37%
30%
28%
27%
26%
26%
24%
23%
23%
20%
20%
0% 10% 20% 30% 40% 50% 60%
RISING BUSINESS COSTS
STRONGER CANADIAN DOLLAR
CHANGING PATTERNS OF CUSTOMER DEMAND
AVAILABILITY/COST OF ENERGY
AVAILABILITY OF SKILLED & EXPERIENCED PERSONNEL
TECHNOLOGICAL CHANGE
COMPETITION FROM CHINA
BRINGING NEW PRODUCTS/SERVICES ONTO THE MARKET
HIGHER TAX & REGULATORY COSTS
INCREASING COMPETITION FROM OTHER COUNTRIES
MANAGING BUSINESS GROWTH
INTRODUCING NEW/IMPROVED PROCESSES
GLOBAL SOURCING BY CUSTOMERS
BUSINESS OPPORTUNITIES IN OTHER COUNTRIES
AGEING WORKFORCE
PERCENTAGE OF COMPANIESSource: Canadian Manufacturers Export Association
Trends Effecting Value-added Wood Markets
1. developing populations2. disposable incomes3. housing starts4. renovation market5. ‘greening’ wave6. skilled labour shortages 7. Changing consumer tastes8. Glut of wood world wide9. U.S. protectionism – commodities
Trends in Value-Added Wood
Comparison of VA Wood Segment Growth in Ontario
0 5000 10000 15000
Millwork
Mfg Housing
Boards, EWP
Cabinets
Furniture
Employment
2002
1998
45.2%
19.6%
25.5%
37.4%
17.4%
Source: Statistics Canada, 2002 ASM
Opportunities
1. Manufactured Housing2. Building components - EWPs3. Doors, Windows, Moldings, other millwork 4. Furniture 5. Cabinets – Kitchen, bath & storage
1. Manufactured Housing
The evolution of residential construction
ExistingProducts
CommodityLumber
EmergingGrowth
EWPs andBldg components
New Technologies
IntegratedStructural Systems
$31
Manufactured Home
$95 Hand-CraftedTimber Frame
Log home
$55
$80
$72Site built Single Family
Std Precut, Panelized
Per sq ft
Con
stru
ctio
nT
ype
“ in 2006, one in seven American homeswere ‘manufactured’”
Population = 83 millionConstruction Sales = $239B
EWP/Components = $800mManufactured Housing = $300m
Millwork = $150m
Woodbridge Report
… Manufactured Housing
Manufactured Housing
• Increasing export focus– e.g. Confederation Log Homes
• But foreign markets don’t like dealing with Ontario companies, because they lack critical mass
• Strategy to go after traditional domestic stick built market first?
2. EWP’s Product Life Cycle
Introductory Growth Maturity Decline Stage Stage Stage Stage
2nd/3rd Generation EWP’s
2nd Generation Wall Panels
Species Segregated Softwood Lumber
Composites
Custom Orders
Installed Sales
New LaminateTechnologies(fibre polymers)
Eastern SPF MSR
I-Joists
PSL & LSL
Eastern SPF FJ
Commodity LVL
Commodity OSB
Glulam
Parallam
Commodity EasternSPF framing lumber
Variable qualityDimension lumber
-Building components account for 14% of total VA sales with 11% CAGR, but last two years growth at 28%, again driven by buoyant housing starts.
3. Millwork
- Windows and doors account for 13% of total VA sales, with compound annual growth rate of 7%, but 16% in last 2 years, driven by high Canadian housing starts
- However, window and door markets moving rapidly away from wood usage towards vinyl and steel respectively
- Other millwork (moldings, stairs, flooring, etc.) = 22% of total, with a CAGR of 15%, and stable at 13% recent growth
- Also, many of these products are moving away from solid wood towards FJ, MDF and composites
Millwork - Flooring
• the solid wood flooring market is rapidly giving way to engineered wood flooring
• one piece of solid wood can provide up to 6surfaces on an EWF• built on an composite substrate, EWF can gostraight onto concrete and doesn’t move like solid
Solid Engineered
4. Furniture
– Furniture = 36% of total VA sales with CAGRof 12%, falling to 1% in last two years
– Perfect storm for most of industry as retail marketsconvert to RTA and imports; quality and design still important but becoming more of a niche market
– Also large anticipated boom in office furniture
5. Cabinets
– Cabinets are a very regional market businessunless standardized sizes
– Cabinets = 15% of total VA with CAGR of 11% and reasonably strong recent growth = 9% – Cabinet demand will double in 10 years driven by
new home construction and home renovations
Cdn Housing Starts and US Reno $ Projections
0
50
100
150
200
250
90 92 94 96 982000 2002 2004 2006 2008 2010
Housing Starts and US$ BN
StartsRenos
Best Opportunities
Capital Investment
Mar
ket
Gro
wth
ManufacturedHousing
Bio-energy
Bio-Materials
Bio-chemicals
EWPs
Millwork –Doors/Windows
Millwork - Other
NutraceuticalsPharmaceuticals (collection)
Cabinets
Furniture
NTFPs
Bio’s
$Thousands $ millions
Questions?