Lumber, Plywood, Millwork, and Wood Panels

Industry Snapshot

The lumber, plywood, and millwork industry was worth $45.6 billion in 2009, according to Dun & Bradstreet's Industry Reports. The industry employed 205,671 workers at 20,198 establishments. About 62 percent of establishments employed only one to four people. These small firms, however, accounted for only about 11 percent of industry sales, whereas medium (10 to 100 employees) and large (more than 100 employees) companies accounted for 45 percent and 36 percent of all sales, respectively.

Background and Development

During the early 1990s, establishments involved in the wholesale distribution of lumber and other wood products faced a number of challenges stemming from depressed economic conditions and an uncertain political climate. As the nation's economy stagnated, many large retail outlets began bypassing wholesalers in favor of direct purchasing channels. Some smaller retail outlets were forced to close, leaving a diminished number of traditional customers for wholesalers. In addition, uncertainty about the nation's timber policy led to fluctuating prices and concerns about product availability. In the late 1990s, however, the booming U.S. housing market led to an increase in new construction, reducing inventories and increasing the price of lumber.

According to the U.S. Department of Commerce, the industry generated $56 billion in sales in 1992. Plywood, millwork, and wood panels accounted for about 51 percent of all revenues, and lumber accounted for about 49 percent. Sales of lumber were almost evenly divided between establishments with yards ($14.6 billion) and those without yards ($12.4 billion). By 1995, revenues had risen to almost $70 billion.

In the early 1990s, the do-it-yourself (DIY) market represented approximately $117 million in annual retail sales. Sales made by DIY retailers rose 12 percent between 1988 and 1993, and new warehouse-style stores began to spring up around the country. By 1995, however, the DIY market had flattened considerably and by later in the decade started to decline. In contrast, the professional builders' market continued to increase, beefing up sales for building supply giants such as Home Depot--which controlled 42.8 percent of retail building supply sales in 1996--and the North Carolina-based Lowe's Companies. In 2001, home improvement generated about $190 billion. Together, Home Depot and Lowe's continued to dominate some 30 percent of the DIY market in 2001.

A standard wood-framed home demanded about 15,000 board feet of lumber and continued to be a major market for lumber in the early 2000s. The residential housing market fueled the market throughout the first half of the decade. According to the National Association of Home Builders (NAHB), single-family housing starts increased every year from 2000 to 2005, when there were 1.72 million new single-family housing starts. The subprime mortgage crises in 2007 and U.S. economic slowdown, however, ended the housing boom, and single-family housing starts dropped to 1.05 million in 2007. The decline continued in 2008 and 2009, when the U.S. Census Bureau reported 622,000 and 445,000 single-family housing starts, respectively.

Current Conditions

In the early 2010s the industry was still struggling to recover from the drastic decline in housing starts and economic recession of the late 2000s. According to a report by IBISWorld, the industry was also becoming even more fragmented. The report stated, "The market penetration of big box retailers threatens to erode the distribution chain at the wholesale level. Traditional lumberyards have lost most of the home improvement market to these large retailer chains and now focus upon providing quality service to professional contractors."

Some saw millwork in a better position in the market. Tina Mealer of Fypon told Qualified Remodeler in August 2010, "I think the future is going to hold a solid standing for millwork. We're seeing as people pull back into their homes, they're working on updating them, plus builders and remodelers are using millwork to add more value to the homes that they're working on." The same article cited the trim market as worth about $1.4 million and predicted more growth in the future.

Industry Leaders

Industry leaders in the early 2010s included Weyerhaeuser Co. of Federal Way, Washington. With 2009 sales of $5.5 billion, Weyerhaeuser's 14,900 employees manufactured lumber, plywood, and other wood products. Louisiana-Pacific Corp. of Nashville, Tennessee, which specialized in engineered and composite wood products, had sales of $1.0 billion in 2009 and 4,000 employees. Boise, Idaho-based Boise Cascade LLC was also an important player, with 4,600 employees and annual revenues of $2.9 billion in 2009. Boise Cascade operated about 30 wholesale building material distribution centers throughout the United States, selling lumber, plywood, particle board, and engineered woods products. The large and diversified Georgia-Pacific LLC, a subsidiary of Koch Industries, was also heavily involved in the industry.

Other industry leaders included American Builders & Contractors Supply Co. (ABC Supply) of Beloit, Wisconsin, which supplied siding, windows, doors, and other exterior building products, and Guardian Building Products Distribution Inc., of Greer, South Carolina, which wholesaled millwork, among other building materials.

Workforce

Ten percent of the 205,671 workers employed in the industry in 2010 worked in the state of California. Other top employing states were Florida and Texas (6 percent each) and Pennsylvania (5 percent). The remainder of employees were distributed across the United States. More than 50 percent of workers in the industry were employed by establishments that included only two to four employees, according to Dun & Bradstreet.

Employment in the industry was expected to continue to decline as restraints were placed on lumber harvests.