Crosscurrents in the engineeredlumber matkets

By Lloyd C. Irland The Irland Group Winthrop, Me.

EINGINEERED products have llrbeen slowly changing the economic landscape of the North American wood products sector, as new plants are built offering new families of products to builders and specifiers. The effects on traditional solid wood manufacturing are already being felt.

(For this article, engineered lumber will include products used for structural purposes, and not appearance items or engineered panels.)

Homebuilding has long been an industry slow to change, but the pace of change is accelerating. New materials, new needs by homebuyers, competitive pressures, and the tightening supply of construction labor are all involved.

A few familiar specifics: o homes are getting larger, involving large open spans for major structural members: r ceiling heights are increasing; o large garages are becoming more popular, and tolerance of sagging in headers is decreasing; o builders are seeking standardization, low on-site waste, and everfaster cycle times on the jobsite, and r builders are growing less and less tolerant of the variability in solid sawn lumber that is allowed under traditional grading rules.

Wood producers are responding. They are offering longer studs, dimensionally stable Timberstrand studs, and providing their products in complete framing systems. These systems incorporate I-joists for floor joists, engineered Rimboards, glulam

Wood-against-wood

competition (is) sapping energy that ought to be going into taking -or retakinymarkets from steel, plastics and other competing products.

has ever been. For a garage door header, for example, they can choose glulam, doubled LVL (1-3/4"), a single 3-ll2" LVL, Parallam, or doubled 2xl2s.

Occasionally, products are introduced that are largely technology-driven instead of being market driven. These products usually displace existing products. However that may be, at present there is a good deal of wood-against-wood competition sapping energy that ought to be going into taking-or retaking-markets from steel, plastics and other competing products.

or other materials for headers, all in packages designed for compatibility with one another. By making specification easy for builders, they are trying to capture a larger portion of the lumber package at once.

It is a disease of the wood products business that every major innovation takes markets from an established wood product and not from its nonwood competitors. Today, the range of choices for builders is larser than it

Every building product faces a cycle of market maturation. The housing market has seen a major boom during the 1990s, but it is not likely to grow nationally in terms of units built per year. Materials requirements will shift with increasing floor area and ceiling height, however. But the building materials industries basically are facing mature markets that will grow only slowly. So, competition between materials is a zero-sum game.

For the engineered lumber products, the glulam market appears to be mature now. The growth in LVL production is largely being driven by its usage in I-joists. It is not clear whether free-standing LVL usage is maturing or not. The I-joist market is still in its growth stage. As that market matures, there will be continued pressures for standardization as a way to gain market advantages against competitors. At the same time, producers treating I-joists as a proprietary specialty will have to intensify their development of specialty and niche markets and cede high volume, low margin markets to new entrants.

Portions of the engineered lumber markets will feel inexorable pressures to "commodity" through standardization-this is what the builders say they want. To some, the term commodity is a dirty word, carrying connotations of intense price competition and low-end quality. But commodity does not really mean those things at all. What it does mean is ready interchangeability between sources for end users. Interestingly, it is in the standardization problem that the steel industry is facing its most significant obstacles to mass penetration into the housing market. They are working on it-hard.

There is no "glulam market" or "LVL market," or "I-joist market." In fact, there are myriad submarkets or segments. There are also regional differences. The Northeast, for example, is recognized as a weaker glulam market for a variety of historical reasons, including the historic prominence of the steel industry there. Still, even in that region, glulam-framed school gyms and swimming pools are commonly seen. The competition between solid sawn, engineered and steel works itself out in each segment based on costs, product traits, builder preferences and at times, the degree of success of producer promotions with specifiers and builders.

How often have you been asked, "Which is cheaper, glulam or LVL?" It turns out that this question is not easy to answer. Once we developed a cost comparison for a 40-ft. carrying beam, comparing steel, LVL, dimension lumber, glulam and Parallam. The variations in local pricing, local construction practices, and the range of latitude permitted by handbook specs for spans and depths almost drove us crazy. And we were only trying to compare material cost, not total installed costs.

Technically strong distributors have structural engineers on staff who know the design practices and have comparative costing information at their fingertips. Specifiers and builders not working with a strong organization like this will encounter many headaches in making sound decisions, both on engineering and costs. I suspect that many designers throw up their hands in the face of these complexities and settle for what is familiar. All too often, uninformed retailers simply supply what is spec'ed, and don't make suggestions for improvements that could improve functionality and lower costs.

Despite the energetic efforts of major producers and trade groups, much remains to be done. In our market research, we find that many people in the retail sector have little or no awareness of the details of engineered wood products. They are unaware of the differences between LVL, glulam and proprietary composite beam products such as Parallam. They treat engineered items like they do their lumber-I have seen bundles of I- joists and composite beams lying in the mud over a rainy weekend after delivery to a local building project. How can we expect people to respect our products if we treat them like that?

As a new century rushes toward us, our industry faces ever more serious challenges and brighter opportunities. Competition among producers and between different classes of wood products has benefited builders and consumers by maximizing their choices at ever-improving real costs. The industry's weakest points so far have been the difficulty in developing nationwide expertise at specifier and retail levels, and the heavy costs of engaging in wood-against-wood competition, as opposed to spending effort to grab share from non-wood products.

Lloyd C. Irland is a forestry/wood products consultant and publisher of "Engineered Lumber Trends," a monthly newsletter offering pricing, market comment, and technical information. For a free sample, call (207) 395-2185, e-mail irland@aol.com, or see a sample at www.rctc.com/irland.