Low Downstream Demand for Industry Products during the Recession Hurt Revenue
Los Angeles, CA (PRWEB) October 23, 2013
Over the five years to 2013, the Reconstituted Wood Product Manufacturing industry endured steep revenue declines. Industry operators manufacture hardboard, particleboard, insulation board, medium-density fiberboard, waferboard and oriented strand board, all of which are primarily used in residential construction and furniture manufacturing. As such, both segments suffered during the economic downturn as rising unemployment and falling consumer disposable income hampered demand for both housing starts and big-ticket items, such as new furniture. According to IBISWorld Industry Analyst Brandon Ruiz, “Downstream demand from home builders and furniture manufacturers halted reconstituted wood product purchases, hurting industry revenue in the process.” As a result, IBISWorld expects industry revenue to fall at an annualized rate of 4.3% to $5.4 billion over the five years to 2013. Although industry revenue is expected to decline during the five-year period, it has slowly trended upward since the worst of the recession, backed by improving economic conditions. IBISWorld expects industry revenue to increase 1.5% in 2013.
Reconstituted Wood Product Manufacturing was born from advancements in both chemical and wood engineering. Industry products are used for a number of construction functions including subflooring, sheathing and roof decking. Moreover, industry products typically provide a cheaper alternative to more expensive products, such as plywood, which is not included in this industry. Oriented strand board, for example, is becoming increasingly popular among home builders and furniture manufacturers due to its durability and structural uniformity.
Recovery in the construction market is expected to propel industry growth. Increased housing starts, for example, are expected to boost both the volume and prices of reconstituted wood product sales as demand increases. “Pent-up demand for new furniture will also lift industry revenue higher as furniture manufacturers increase reconstituted wood product purchases in the wake of renewed demand,” says Ruiz. Moreover, profit margins are expected to be relatively high compared with prerecessionary levels due to slimmer operations from the large capacity and labor cuts enacted during the downturn. IBISWorld therefore expects industry revenue to grow during the five years to 2018.
For more information, visit IBISWorld’s Reconstituted Wood Product Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Reconstituted Wood Product Manufacturing industry includes establishments primarily engaged in manufacturing reconstituted wood products. Products can include hardboard, particle board, insulation board, medium-density fiberboard, waferboard and oriented strand board.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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