Gomposite Profiles Trends in composite and plastic decking

FlaHE recent. meteoric rise of composite and plastic deckI ing can be traeed to a convergence of fhctors-consumers' pref'erences for higher quality and lower maintenance, product improvements. the hysteria over pressure treated wood, the growth of the overall deck market.

Now, with the phase-out of CCA treated decking, are plastics and composites braced for an even higher surge? Or, will the arrival of new manufacturers result in oversupply, depressed prices and eventual consolidation'?

We asked some of the largest composite and plastic deck manufacturers where the industry is headed.

Rob Long (LP Corp.lWcutherBest composite)

"Demand has been very strong for composite wclod decking over the last few years. Production has grown commensurately by both additional capacity and increased etficiencies at established manutacturers and the entrance by new manuf-acturers. We see it growing about l5qo per year over the next few years."

Ludwig Furtner (WeyerhaeuserlChoiceDek composite)

"Market demand for Weyerhaeuser ChoiceDek products has grown significantly over the last couple of years. Consumers, d-i-y customers, professional deck builders, and repair and remodel contractors are embracing composite decking products based on increased advertising and on a track record of good performance tbr our products. We expect sales to continue to grow at the same rate as the last couple of years, if not stronger."

Kevin Brennan (T i nbcrTechl contposite )

"You had the explosion in '98, '99, 2000, and then you had 4 zillion competitors get into it. We had a good year. The industry is growing aI l5c/o to 25a/o, and we expect to exceed that rate."

Samantha B. Goes ( Nc.tv'rxttl I ntlu.stries Ltd.l compttsite ) r How has recent demand and production of composite/plastic decking been? What do you anticipate. particularly in the short term?

"ln the last year there has been a huge increase in the demand fbr composites. We attribute this partially to the increased exposure of composites in the marketplace, as well as the acceptance of the benefits of composites at all levels of distribution. With this increase in demand, however, has also come an increase in competition. Many new players have entered the market within the last two years.

"Demand has been excellent. As composite decking has grown so has the consumers expectation for a better looking product and that's where we come in. It's been a lot of fun and hard work. Our business has been very strong and we expect it to get even better. We expect to be able to satisfy the rapidly growing demand."

"We expect demand fbr Evergrain decking to grow dramatically over the next five years, in part because of the success of the category but in a larger sense because of the product's diffbrentiation from other composites. Our compression molding technology allows us to achieve new levels of realism, detail and quality."

John

"Demand is growing dramatically. We began with two extrusion lines in year 2000 and are now installing lines eight and nine. Our lead time in the early spring was extended to l0 weeks. We expect 2003 to be a breakout year and anticipate doubling ow 200.2 revenues."

"In the short term, we expect that the increased demand is going to allow for many new players. States that have not been exposed to composites in great volumes are going to be introduced to many more manufacturers than were in the market even as few as two years ago, with a wide range of product otferings. The huge increase in demand has obvious implications for an increase in production, and many composite manufacturers are feeling the effects of this rapid growth.

"ln the longer term, we expect this already growing demand for alternative products to increase exponentially, triggered by CCA restrictions and the growing concern for the hazards posed by some chemically treated lumber."

Maureen Murray (Trexl composite)

"Demand for Trex decking and railing has been very strong. (Third quarter 2002 revenue rose 66Va to $49.5 million, with net income tp 197o to $6.1 million.) You can extrapolate that the category has done well, largely based on Trex decking and railing having an estimated 55-6OVo market share. The alternative decking market (composites and plastic products) has an estimated 6-8Vo of the entire decking market. Although it is difficult to predict growth rates of alternative lumber sale s. it appears the industry will at least continue its 25-30% histurical growth."

Dick Gauthier ( Ll ttit'ersuI F orast ProtluttsI EvcrX contposite )

"Demand for composite decking is estilnated to be $,180 million fbr 2002. The expected growth will bc slightly less than 20% next year about $570 million for 2003. An annual growth rate of about lSolc is expected through 2006. We estimate demand to be $900 million by 2006."

Martin Grohman (Correct Buitdin,q ProtluctslCorret tDeck ctmposite)

"As a small manufacturer, we were warned that the big companies like CertainTeed and LP were goin-e to come in a turn this into a commodity. We haven't seen that at all. The products are getting better. People are looking fbr more bang firr their buck."

John Pruett ( C c r ta i n'I' c e tl I B rn r clv' a I k c o ntp o s i te. Et e rN ev' and Bufttcch vittt'l)

"The overall decking nrarket has been growing slightly; the composite decking market is growing exponentially. Boardwalk's sales doubled in the last year."

Lynn Goode ( M i k t' r t tr I t ul u.s t t' c s I v i n -,I )

"l see that the demand will just continue to skyrocket. From 1997 to 2001. the overall decking industry grew at about 8% per year. During tht: same period, alternative decking grew at 857c to 95c/c a year. There's been a huge shift in marketshare-and that was prior to the CCA issue. Alternative decking now has its foothold. ln 1997, it had Iess than 57c of the overall decking market. Within the next firur to five years, I wouldn't be surprised if it had 4O-50Vo.

"The rnotivator of the growth has been the consumer, who is concerned about maintenance issues. About 637o of decks are rnade from pressure treated southern pine; it's cheap and it's abundant, but it warps and checks."

John Robinson (The Plastic Lumber Co.lptastic')

"Despite a softening economy in the third and fourth quarters, demand was off projections but still strong. Plastic lumber decking boards posted a 157o gain over the past year, as consumers and contractors became more comfortable with the product. We anticipate a surge in demand, barring a war with Iraq. We feel many consumers have been cautious about making significant expenditures for the past two seasons, and there is pent-up demand."

Mike Moseby (RP M ID uraB ord plastic )

"Demand and production have been increasing at a rate of approximately 5OVo per year. Our growth in DuraBord plastic lumber is expected to expand by approximately 15/20 times for 2003 and double that in 2004. We are just getting ready to bring on a second line in 2003. Our emphasis in the past was to sell to local retail lumber yards, deck builders and the general public via the Internet. Our current plan is to sell our plastic lumber products via wholesale distribution in the Western states."

Rick Wier (Kroy Building Productslvinyl)

"Decking in general is expanding about 77o annually; however, alternative products to wood are growing over 25Vo. About 900,000-plus new decks were constructed this year, and almost 3.5 million replacement projects were undertaken in 2002. Replacement decks are 207o larger than the original deck. Composite or alternative deck material is expected to grow well into the double digits as far out as the research projects project. Through 2006, the growth is expected to continue in the 257o range."

"Demand fbr plastic/cornposite decking has been steadily growing. with the marketplace becoming more aware of, and more comfortable with. these materials. Production definitely appears to be increasing, tiom what our competitors have advertised. We anticipate the same growth through 2003 as was in 2002. Market share will continue to be taken by plastics and composites, but the overall decking market will remain steady."

Derek Morin (CPIlEon plastic)

"Our 2001 sales were $14 million, 2002 sales were $20 rnillion, and in 2003 we budseted for $30 million."