Vinyl Slows Wood Millwork Sales.

The millwork industry is projected to grow 3.6% annually through 2008 but faces increasing competition from vinyl and other materials, according to excerpts from The U.S. Millwork Industry report.

THE U.S. MILLWQRK INDUSTRY has grown in the past few years, due in part to a strong construction market combined with increases in the number of home improvement and repair projects that have been undertaken, according to a report from the Commack, NY-based Business Trends Analysts.

In 1998, the market for millwork grew by 3.8% to $11.8 billion. In 1999, the market is expected to increase by a modest 3.2%, as construction activity is expected to slow somewhat. Sales of millwork might be higher, but the industry is facing a serious threat from vinyl which is cutting into its sales, especially in the window segment, the study says. As a result, sales of millwork are expected to grow at an average annual rate of 3.6% per year from 1998 to 2008.

Vinyl Impacts Wood Window Sales

While wood windows had a 24.2% market share in 1998, its share of the millwork market is expected to drop to 21.2% by 2008, as this segment faces competition from vinyl windows. In 1992, wood windows were 47.3% of the market while vinyl windows represented 26.3%. In 1998, vinyl window sales equaled sales of wood prime windows with each capturing 42.7%. Currently, vinyl is more popular in the replacement segment, while wood still holds an advantage in the new construction market. This is projected to change.

Due to vinyl's impact, sales of wood windows are expected to grow at an average rate of 2.2% per year to 2008.

Consumers who are concerned about appearance prefer wood windows, while vinyl has become the preferred material for consumers who are primarily concerned with energy conservation. To meet market demand, some traditional millwork producers, such as Kolbe & Kolbe, Hurd and Weather Shield Manufacturing, have begun to produce vinyl windows.

Sashes, Frames and Mouldings Also Feel Vinyl's Impact

The wood window sash market has been a rocky one in the 1990s, and it, like wood windows, is being affected by vinyl. From 1991 to 1998, the wood window sash market fell at an average annual rate of 1.7%. It rebounded in 1998 as sales grew 1.8% to $133.9 million and it is expected to rise at an average compound rate of 1.7% through 2008.

Despite the fact that door frame sales continue to perform solidly overall, sales of door frames, as well as wood window frames, have also slowed as a result of vinyl's growth. In 1998, the market for wood window and door frames expanded by 4.2%, due in large part to the expansion of the door frame market, which grew by 4.5% in 1998. From 1992 to 1998, the market for door and window frames grew at an average annual growth rate of 2.6% a year, while door frames climbed an an average annual rate of 3.1%. Sales of wood window and door frames are expected to advance at a 3.5% compound growth rate between 1998 and 2008.

To compete with vinyl frames, window frame manufacturers are introducing frame designs that reduce solar gain, improve noise reduction and insulation and reduce or eliminate ultraviolet penetration.

Wood molding sales increased by 4.4% to $1.8 billion in 1998, but in the coming years sales of wood moldings are not expected to be as high as sales of vinyl and plastic moldings. From 1998 to 2008, sales of wood moldings are expected to grow at an average annual rate of 3.4% annually. In the wood moldings market, sales of non-prefinished moldings surpassed sales of refinished moldings, capturing a 92.3% market share in 1998. By 2008, the share captured by non-prefinished moldings expected to grow to 92.7%. Nonprefinished moldings are dominated by pine, which accounts for 55.1% of non-prefinished moldings. Prefinished moldings are dominated by softwoods, which have a 68.8% share of the prefinished moldings market.

Sales of other millwork products increased by 3.9% to $2.7 billion in 1998. This segment includes stairwork, exterior wood blinds and shutters, risers, brackets, porch columns, trellises, wood carvings and ornaments. Increases in sales of wood blinds and shutters corresponded to increases in the remodeling/replacement market, as more consumers are adding blinds and shutters to their homes. In addition, increases in the new construction market have led to an increase in stairwork, as more multistory houses are being built.

Industry Must Fight Back with Aesthetics, Improved Products

As long as the construction and remodeling/replacement markets remain strong, the millwork industry should continue to exhibit healthy growth. Growth within this industry would be much stronger, however, if it did not face increasing competition from vinyl products. These products seem to be drawing millwork customers away by offering better durability and energy-saving qualities. As vinyl grows, millwork manufacturers must either emphasize the aesthetic quality of their wood products or improve their products' durability and energy-saving characteristics. This is already being done with innovations such as low-E glass and water-resistant finishes. A sudden downturn in the construction market, or in the economy as a whole, could be very harmful to the millwork industry, which is already battling competition from lower-cost vinyl products.

                  U.S. Market for Millwork by Select Type
                               ($ Millions)
                  1990     1995     1999
TOTAL DOORS [*] $2,571.6 $3,142.7 $3,818.5
MOULDINGS       $1,067.2 $1,621.0 $1,833.0
WINDOW UNITS    $2,163.1 $2,611.6 $2,961.4
(*.)Includes interior, exterior, and specialty doors
Source: U.S. Department of Commerce; Business
Trend Analysts
                       Growth of the Millwork Market
                               ($ Billions)
1991     $8.5
1999    $12.1
(est.)
2008    $16.7
(proj.)
Source: U.S. Department of Commerce;
Business Trend Analysts