international*anddomestic* outlook*forthe*hardwood*industry - wood … · 2016. 1. 29. ·...
TRANSCRIPT
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International and Domestic Outlook for the Hardwood Industry
Lake States Lumber Association Winter Meeting Green Bay, WI
January 14, 2016
Urs Buehlmann Virginia Tech
Blacksburg, VA
Delton Alderman United States Forest Service
Princeton, WV
Matt Bumgardner United States Forest Service
Princeton, WV
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Urs Buehlmann Professor, Virginia Tech Former General Manager Enkeboll Designs
Delton Alderman
Research Forest Products Technologists, U.S. Forest Service Focuses on the U.S. housing market
Matt Bumgardner
Research Forest Products Technologists, U.S. Forest Service Focuses on hardwood supply and demand
The Speakers
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Acknowledgements
Al Schuler Research Economist, retired
Mark Barford
CEO NHLA
Mike Snow
CEO AHMI
WI DATCP
LSLA
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Announcements
NHLA/VT "state of the industry" survey electronic survey from NHLA/VT out soon (February '16)
Wood Industry Week @ WERC future of our industry conference in Princeton, WV;; November 2 3, 2016
Housing report
free monthly housing report to sign up email: [email protected]
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Innovation U.S. hardwood industry U.S. housing markets Opportunities Questions / Comments
Agenda
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Innovation I
Source: http://www.fortinconstruction.com/blog/2015/10/21/solid-vs-engineered-hardwood-flooring; http://www.winwood-products.com/eng/timber-products/edge_glued_panels/european_oak.htm
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Source: A. Finkral, The Forestland Group, LLC
Innovation II
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The Challenge
Source: Forest Products Journal; own pictures
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U .S. Hardwood Industry
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Aggregate price index for green No. 1 Common Appalachian hardwood lumber
(inflation-‐adjusted and indexed, 1970.1 = 100)
W. Luppold, U.S. Forest Service
(4th Qtr. 2015)
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U.S. hardwood lumber production
W. Luppold, U.S. Forest Service
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Pallets47%
Furniture5%
Exports15%
Millwork6%
Flooring9%
Cabinets6%
Railway ties/trans.
12%
Pallets35%
Furniture20%
Exports10%
Millwork10%
Cabinets10%
Flooring11%
Railway ties/trans.
4%
Where the hardwood lumber went,
2000
Industrial uses ~ 39% Appearance-‐based uses ~ 61%
Where the hardwood lumber went,
2010
Industrial uses ~ 59% Appearance-‐based uses ~ 41%
Data source: Hardwood Market Report
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Data sources: U.S. Census Bureau; International Trade Admin.
Market share estimates of imports in the U.S.
Consumption = value of shipments + imports exports Import share = imports/consumption
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Major U.S. Import Sources
Household & institutional furniture & cabinets (NAICS 3371)
Data source: International Trade Administration
31%
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Made in the U.S. Production Cost: US$ 42.25
Made in India Sales Price in U.S.: US$ 4.50
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Employment trends furniture vs. cabinets
Data source: Bureau of Labor Statistics
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U.S. hardwood lumber exports (Top 5 destinations)
~ 75% of total
99 other trading partners account for the remaining 25% Japan and the UK were slightly higher than Italy starting
in 2012, dropping Italy to 7th Data: USDA Foreign Agricultural Service
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U.S. hardwood lumber exports by species
Yellow-poplar increased by 535% from 1990 to 2013, rivaling the oaks
Walnut increased by 500%
Ash increased by 130% Data source: USDA Foreign Agricultural Service
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Source: M. Snow, AHEC; China National Furniture Association
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Production Value 54.8 $69.40 $87.10 $100 $117 $137 $162 $171.40 $177.40 $193.50Export Value 13.767 17.465 22.617 27.583 25.958 33.723 38.882 49.96 53.1 53.416
0
50
100
150
200
250 China Furniture Production and Export Value 2005-‐2014 (US$Billion)
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Source: M. Barford, NHLA
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$-‐
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Vietnam Japan Malaysia Thailand Indonesia South Korea
Millions (USD
)
US Hardwood Lumber Exports to Other Asian Markets
2008
2009
2010
2011
2012
2013
2014
Source: M. Snow, AHEC; USDA GATS
U.S. export of hardwood lumber to China 2014 $700 million+
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Source: M. Snow, AHEC; USDA GATS
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Sources of hardwood lumber (by volume) -‐ Large firms 45
39
16
01020304050
Direct fromsawmills
Distributors &concentration
yards
Brokers / Other
Percen
t
28
59
13
010203040506070
Direct fromsawmills
Distributors &concentration
yards
Brokers / Other
Percen
t
Sources of hardwood lumber (by volume) -‐ Small firms
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Services requested from hardwood lumber suppliers
0 20 40 60 80
S2S
Width sorting
Break bundles
S4S
Imported species
Special grading
Just-‐in-‐time orders
Color sorting
Certified products
Double-‐end trim
Percent
Large firmsSmall firms
S
S
S
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Proportion of production volume associated with the single family housing construction market
23 24
26 27
25 24
30
21
27 27
24 22
23
27 25
26
21 21
35
23
0
5
10
15
20
25
30
35
40
0% 1-‐20% 21-‐60% 61-‐100%
Percen
t
2009 2010 2011 2012 2013
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I I . U .S. Housing
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Housing Starts and Hardwood Prices
Source: M. Snow, AHEC; Census Bureau; Hardwood Weekly Review
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Source: AU.S. Department of Commerce-Construction ; B National Association of Realtors® (NAR®)
M/M = month-over-month;; Y/Y = year-over-year
June/July 2014 Housing Scorecard
M/M Y/Y
Housing Starts 10.5% 16.5%
Single-Family Starts 7.6% 14.6%
Housing Permits 11.o% 19.5%
Housing Completions 3.2% 9.2%
New Single-Family House Sales 4.3% 9.1%
Existing House Sales (NAR®) 10.5% 3.8%
Private Residential Construction Spending 0.3% 10.8%
Single-Family Construction Spending 0.6% 9.3%
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United States Housing
Source: https://www.census.gov/housing/hvs/files/currenthvspress.pdf
Home ownership rate: 63.7%
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United States Housing
Source: http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jchs-sonhr-2015-full.pdf; 6/29/15
for Most Age G roups A re Wel l Below That Point.
C hange in Homeownership Rate (percentage points
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Multifamily
Source: http://eyeonhousing.org/wp-content/uploads/2015/10/MF-unit-distributions.jpg; 10/5/15
increasing number of newly-built multifamily units are found in larger buildings, as measured by the number of apartments per building. According to Census Bureau data of multifamily completions, the share of new multifamily units in buildings with 50 or more units reached a data series high of 48% during 2014 .
The share of new units in large buildings (50+ units or more) has been rising steadily since 1996, after reaching a data series low of 8% during 1994 and 1995, albeit with one exception. The share declined to 28% in 2011 after recording a 43% mark for 2010 -- Robert Dietz, Ph.D., Vice-President, Tax and Market Analysis, NAHB
Rising Share of New Multifamily Units in Large Buildings
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Demographics & Economics
Source: https://www.jpmorganfunds.com/blobcontentheader/202/900/1158474868049_jp-littlebook.pdf; 9/30/15 Return to T O C
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Source: http://research.stlouisfed.org/fred2/series/MEHOINUSA672N
United States Housing
$66,632 1/1/2014
$65,570 1/1/1997
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U.S. Housing: Income and Sales
Note: 2000 2014 Federal Reserve Bank of St. Louis (not adjusted for inflation); Jan 2015 to Sep 2015 Sentier Research LLC ©
50
51
52
53
54
55
56
57
58
59
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan2015
Feb2015
Mar2015
Apr2015
May2015
Jun2015
Jul2015
Aug2015
Sep2015
Real Median Income New SF Sales
LHS: New SF RHS: Real Median Income in thousand $/year
Sources: http://research.stlouisfed.org; http://www.sentierresearch.com/
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United States Housing
Source: https://www.kansascityfed.org/publicat/econrev/pdf/13q4Rappaport.pdf
-family starts peak at 1.35 million in 2021, nearly identical to their level at the start of the housing boom in 2002. Thereafter, starts contract. Their projected annual level in 2030, at 950,000, would be the lowest since 1991, a year in which starts reached a trough following a steep downturn. From 2031 onward, starts follow the downward contours of the trend change in occupied single-family units (blue line Joel Rappaport, Economist, The Federal Reserve Bank of Kansas City
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United States Housing Starts
Source: US DOC
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan2015
Feb2015
Mar2015
Apr2015
May2015
Jun2015
Jul2015
Aug2015
Sep2015
Oct2015
Nov2015
Total Starts SF Starts 2-4 MF Starts
SAAR = Seasonally adjusted annual rate; in thousands SF & MF Starts: LHS Total Starts: RHS
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Source: US DOC
United States New SF House Sales
0
200
400
600
800
1,000
1,200
1,400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan2015
Feb2015
Mar2015
Apr2015
May2015
Jun2015
Jul2015
Aug2015
Sep2015
Oct2015
Nov2015
Total SF Sales
in thousands; SAAR
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United States Existing House Sales
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
-
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
US NE MW S W
in thousands; SAAR Total Sales: RHS Region sales: LHS
Source: NAR® www.realtor.org/topics/existing-home-sales; 12/22/15
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United States Construction Spending
Source: US DOC
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Residential SF MF RR
in thousands of dollars; SAAR Total $: RHS SF, MF, RR $: LHS
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Opportunities
Bigger homes for those who can afford them
We may see smaller homes why?
Affordability for the average American Stock houses with limited amenities?
If this occurs how will producers position their products?
What products will be offered? Manufactured housing could possibly make a comeback
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The U.S. Economy
Strong employment numbers, but lack of high paying jobs with benefits. Mostly positive housing numbers, however, at levels far below "normal." Not so favorable household income numbers (non-existent wage growth). Challenges with our debt (national, student). Political gridlock, no common sense present anymore. What will the rising Dollar exchange rate do to our exports?
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The World Economy
China's potential fiber supply gap (difference between demand and domestic supply) is estimated to be 150*106 m3., yet China is slowing and demand is cooling. Japan's 2011 triple disaster created replacement demand, but Japan is still stuck in its "lost decade." Europe is a "mixed" bag:
The Euro and the migrant crises Scandinavia, Germany, Benelux and France are doing OK Spain, Portugal, Greece, and some Easter European countries are facing challenges
South America is struggling, Brazil is in a deep recession Australia is, due to lackluster commodity markets, facing challenges
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Thank you
Urs Buehlmann Virginia Tech
Blacksburg, VA
Delton Alderman United States Forest Service
Princeton, WV
Matt Bumgardner United States Forest Service
Princeton, WV