Los Angeles, CA (PRWEB) November 25, 2013 -- The buyer power score for engineered wood products is 3.4 out of 5. According to IBISWorld analyst Andrew Rogers, this score represents the volatility of external drivers and engineered wood prices, as well as low average profit margins across the market. The recent global economic recession sent the value of residential construction and investment in home improvement on a precipitous decline. With the housing and home improvement construction markets being major users of lumber and engineered wood, demand for wood products fell in conjunction. Weak demand for sawmilled lumber, the primary input for engineered wood products, applied downward pressure to lumber prices, thus sending engineered wood prices lower in the process.
However, the ongoing economic recovery is fueling demand for lumber and engineered wood products from major downstream industries, including housing and commercial construction, continues Rogers. As a result, lumber prices grew in the three years to 2013. Rising lumber prices caused engineered wood products prices to grow in the three years to 2013, eroding buyer power.
Furthermore, inconsistency in the engineered wood products market has helped to weaken buyer power. The volatility of demand drivers and lumber prices creates an unpredictable purchasing environment for buyers. Major players in this market include Weyerhaeuser Company, Georgia-Pacific Corporation, Louisiana-Pacific Corporation and Boise Cascade Company. Engineered wood products suppliers have low average profitability, and the volatility of primary inputs, such as lumber, makes protecting margins difficult. As a result, prices for engineered wood are often in flux as suppliers try to maintain profitability. Suppliers' constant fight to protect profit severely limits price flexibility, thereby hurting buyers' negotiating power. Nevertheless, volume purchases and supply agreements provide buyers with potential cost savings, as volume discounts can reduce list prices, and supply agreements can shield buyers from future price spikes.
For more information, visit IBISWorld’s Engineered Wood Products procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of engineered wood products. Engineered wood, also referred to as composite wood, man-made wood or manufactured board, includes a range of derivative wood products made by binding strands, particles, fibers or veneers of wood together with adhesives. Engineered wood products are used for structural applications, including home construction, commercial building construction and industrial products. Products include plywood, oriented strand board, particleboard and laminated veneer lumber. The primary suppliers of engineered wood products are integrated wood product manufacturers, wholesalers and home improvement retailers.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Danielle Goodman, IBISWorld, +1 3108762175, [email protected]