Volume 13, Issue 5 - June 2012

Moulding & Millwork

Report Expects U.S. Moulding Consumption Will Rebound in 2012
International Wood Markets Group released the seventh edition of its U.S Moulding Market Outlook: 2012- 2016, noting that “after enduring four years of declining demand of epic proportions, the resultant consolidation among North American and offshore moulding producers has left the industry with fewer but, on average, much larger producers.”

Though having access to the customers was the key for success in moulding distribution in the past, the report suggests success for distributors will be more closely related to having access to reliable supply of mouldings, as they are expected to be more constrained. Producer success will be more closely related to having access to a steady and longer term supply of raw material inputs.

Some of the other implications related to a rebound in moulding demand that is forecasted in the report include:

• Moulding demand in 2011 was split between new construction and repair and remodeling at around 40/60. However, as the housing recovery gains momentum, Wood Markets is forecasting the split to move to 50/50 by 2014 and then new residential construction will overtake repair and remodeling in 2015;

• The North American supply of appearance pine material (shop and better lumber, blocks and blanks) is forecast to rise by 9.0 percent in 2012 and, by 2016, supply is forecast to increase by more than three times this to keep up with demand from North American moulding and millwork producers;

• To keep pace with forecasted accelerating moulding demand, finished moulding imports (solid lineal, finger-joint and MDF) are poised to play a larger role, increasing their dominant market share by another 5 percent of U.S. supply over the next five years; and

• Paint grade mouldings, namely MDF and finger-joint, remain the preferred choice of consumers consistently accounting for more than 80 percent of U.S. moulding consumption. MDF mouldings are forecast to make further gains at the expense of finger-joint, which the report says will benefit North American producers that already have a cost advantage over imported MDF mouldings.

Chain of Custody: Arauco Facility Issued FSC Certificates
Arauco Panels USA LLC’s Moncure, N.C., facility has been issued an FSC chain of custody certificate by the Rainforest Alliance, which the company says provides independent, third-party verification that its facility is able to track FSC-certified material through its production process. In addition, the facility has been issued an FSC controlled wood certificate providing independent, third-party verification that it is in compliance with the FSC controlled wood standard, and is eligible to sell its non-FSC-certified wood products to other FSC CoC-certified manufacturers as “controlled wood.”

“FSC chain of custody certification sends a strong message about [the company’s] commitment to environmental, social and economic initiatives, and to help support our customers in this as well,” says Tom Ruedy, business development manager for
Arauco Panels USA.

Arauco Wood Products Inc., the parent company of Arauco Panels USA LLC, also received its FSC chain of custody and controlled wood certification from Bureau Veratis.

China Reported as the World’s Largest Importer of Softwood Lumber and Logs
Importation of softwood logs and lumber to China has increased continuously during the past 15 years, and in 2011 the country was the largest importer of softwood lumber and logs in the world, according to the Wood Resource Quarterly. Total import value equaled almost $8 billion last year, which was an increase of 57 percent from 2010, and up from only $70 million 15 years ago. Annual growth over the past five years has been almost 30 percent, and over the past 15 years, the compound annual growth rate (CAGR) has been as high as 36 percent, says the report.

According to Wood Resource Quarterly, imports of softwood lumber have increased faster than imports of softwood logs over the past few years, but log imports still constitute a higher share of the total import value of softwood products. The reports says that after having increased for seven consecutive quarters, the importation of softwood logs and lumber fell for the first time in the fourth quarter of 2011 because of reduced domestic demand and high inventories at many of the country’s ports. It adds that the decline was 14 percent from the third quarter of 2011, but the total import value was still higher than the fourth quarter in 2010.

By volume, importation of softwood log and softwood lumber to China fell 10 percent in the fourth quarter as compared to the previous quarter, says the report, adding that importation of logs and lumber from Russia decreased the most, while lumber from New Zealand and logs from Canada actually increased slightly during the fourth quarter.

Royal Building Products Partners with Habitat for Humanity on 55 Homes
Royal Building Products is partnering with Habitat for Humanity and professional homebuilders across the United States during Home Builders Blitz 2012. Habitat for Humanity will build, rehabilitate or repair more than 200 homes in partnership with low-income families across the country as part of its Home Builders Blitz program. Royal Building Products will contribute vinyl siding, trim and accessories for 55 projects in Tennessee, Ohio and Indiana.

“Royal Building Products has a long history of supporting the communities where we operate,” says Mark Orcutt, executive vice president-Building Products at Royal’s parent company, Georgia Gulf Corporation. “Our partnership with Habitat for Humanity during the 2012 Home Builders Blitz is an opportunity for Royal Building Products to contribute high-quality, durable and sustainable vinyl building materials that will minimize the time and expense these families will need to spend maintaining the exterior of their homes,” Orcutt said.

“I want to thank Royal Building Products for stepping up to the plate during this challenging economic environment to work with Habitat to help improve the lives of more than 50 families in Tennessee, Indiana and Ohio,” says Steve Thomas, who is working with Habitat for Humanity International to raise awareness about Home Builders Blitz. Thomas is former host of the PBS television program “This Old House” and “Renovation Nation” on Discovery channel’s Green Planet.

Royal Building Products will be working with ABC Supply Co. Inc. and Modern Builders Supply to contribute three of its brands of siding for the homes it is supporting during Home Builders Blitz 2012.

Alexandria Moulding Acquires Royal Woodworking Co. Ltd.
Alexandria Moulding, based in Alexandria, Ontario, acquired Royal Woodworking Co. Ltd. (RWC) of Bradford Ontario. RWC was founded by the Rowe and Gerrits families and specializing in the manufacturing of hardwood solid and custom mouldings, boards and stair components.

“This partnership solidifies our hardwood supply and product offering,” says Andre Cholette, president of Alexandria Moulding. “Royal has a strong, specialized team and is a cultural fit. We will leverage each other’s strengths to further enhance the value we bring to our customers”.

According to the announcement, Royal Woodworking will operate as a standalone business unit. Donna Gerrits, Rick Gerrits and Tom Hayes will join the Alexandria management team and support the integration and combined businesses over the long term.

Co-founding owner Frank Gerrits announced his intention to retire as planned.

“We have been business partners with Alexandria Moulding for over a decade. Through our discussions … we believe [its] values and approach to business match ours,” says Donna Gerrits, general manager of Royal Woodworking. “Our hardwood and custom moulding capabilities are a natural extension of Alexandria’s existing business. We see significant growth potential and opportunities for our combined business and people.”

The announcement notes that current supplier relationships will not be affected by this transaction.

In addition, Aurora Timberland, an Ontario-based wholesale lumber distributer, is also part of the acquisition. Timberland will continue to operate as a standalone business with the founder Ted Rowe staying on board. Likewise, the Royal Wood Shop, a retail outlet owned by Frank Gerrits, is not a party to this transaction. Royal Woodshop will continue to operate independently out of Aurora, Ontario.

Moulding and Millwork Producers Association Installs New Leadership
The Moulding & Millwork Producers Association (MMPA) announced new volunteer leadership, which will guide the organization through April 1, 2013.

The executive officers are: president Les Baker, Best Moulding Corp.; vice president Al Delbridge, East Coast Moulding Co.; second vice president Pete Delaney, Port-O-Lite Corp.; treasurer Craig Young, TLC Mouldings; CEO and executive vice president Kellie Schroeder; and past president Ted Smith, Smith Millwork.

The directors are: Tina Mealer, Fypon/Therma-Tru; Claus Staalner, C.S. Industries; Tom Williams, Yuba River Moulding & Millwork; Jim Cadwell, Regal Custom Mouldings/Reel Lumber; John Morrison, Sunset Moulding Company; Bob Simon, Gossen Corp.; Alexis Boulanger, Roland Boulanger & Co. Ltd.; Tim Dykstra, Royal Building Products; and Gian Carlo Marodin, Araupel S.A.


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