New York, NY (PRWEB) February 17, 2014
The Millwork industry has experienced challenging conditions, primarily due to the downturn in residential construction during the recession. Demand for industry products, which include wooden window frames, doors, floors and dimension stock (lumber and worked wood products cut or shaped into specific sizes), is primarily linked to the level of activity in residential construction markets and, to a lesser extent, commercial and industrial construction. During the peak of the recession, housing starts plummeted, cutting into demand for the industry's wood products. Nonresidential construction also declined steadily through 2010, contributing to the industry's losses. However, with the recent turnaround in the construction market, demand for millwork products has begun to rebound. IBISWorld expects that revenue, buoyed by growth in housing starts, will rise in 2014. As a result, over the five years to 2014, revenue is estimated to increase at an annualized rate.
Since mid-2006, falling residential construction activity has led to large-scale capacity reductions in the US wood product sector. Meanwhile, growth in developing economies has put pricing pressure on many key inputs for US millworkers, such as preservation chemicals and oil. These factors have restricted profitability for millworkers, forcing many to close. From 2009 to 2014, the number of companies is estimated to decrease at an annualized rate. The Millwork industry has also been challenged by rising competition from wood substitute products. Windows and door frames made of fiberglass, aluminum, steel and vinyl have become increasingly popular due to their durability and lower price tags. Vinyl, a low-cost alternative to wood windows and door frames, is one of the fastest growing products in the window frame market according to the American Architectural Manufacturers Association.
The Millwork industry has a low level of market share concentration, with the top four companies accounting for a medium-sized proportion of the industry's revenue. Over the five years to 2019, according to IBISWorld Industry Analyst Vanessa Giraldo, “conditions are expected to improve for operators, with revenue forecast to increase at an annualized rate.” Recovery of the residential construction market is expected to accelerate, reviving demand for the industry. Also, “rising per capita disposable income following the recession will positively affect investment in remodeling activity,” says Giraldo. Nevertheless, the industry will continue to face competition from substitute products and low-cost imports.