Picking timber for distribution at SCA's Stoke warehouse.

Buy-sell-hold 3/5

Published:  03 June, 2011

“The increase in prices is due to sustained competition from the biomass industry, which is expanding and encroaching on our fibre supplies. This is not affecting our ability to obtain fibre, but is certainly affecting what we have to pay to get it.

“In terms of panel products, the two basic types that are most seriously affected are particleboard in all its forms – including flooring and MDF. We fully expect that downstream products such as MDF mouldings will also be affected as the year progresses,” he comments.

Merchants, says Mr McElroy, should be looking to hold stocks of all timber-related items that are relevant to the DIY market.

“The shortfall in newbuild housing is expected to create more DIY activity. The merchants who have the right items in stock for their builders will be in the best position to get the business.”

The merchant, he adds, needs to be aware of this to make sure their supply lines are tied up and that they don’t get caught short.

“In 2011, we expect our particleboard and MDF products to be affected more by cost, and consequent price escalation, than OSB,” he says.

“Last year, OSB prices moved up by an average of 28%, while particleboard and MDF price increases were in the single digits. We have already been hit by double-digit input cost escalations related to particleboard and MDF. In order to continue providing these products to the market, we need to recover these costs from our customers. The principle cost inputs to our products are wood, resin and energy. All are under pressure.”

Darren Pack, head of merchant sales for Finnforest, is convinced that this summer homeowners will con-tinue to be inspired by the ‘improve not move’ philosophy, and will be investing in their properties for a future upturn.”

“It will be key for merchants to look to core product ranges that reflect the landscaping season, so as to avoid disappointed customers and ensure merchants themselves do not miss out on valuable sales.”

Decking, Mr Pack says, should form a key part of this offer as a staple product that is kept in stock. Alongside the popular core softwood decking, merchants with an eye to diversification and perhaps those positioned to deal with the commercial contractor could consider holding a wider range, providing the trade professional and the commercial trade customer with an extra choice.

“Taking a view on the popular products for this coming season will help to determine which to buy now and which to consider purchasing in order to increase range and availability of choice for customers.

“Having a comprehensive range on offer will maximise the chances of securing a sale, because the customer will have plenty of choice and the merchant stands a greater chance of being able to fulfil their needs.

“The link-selling opportunities that timber products held in stock present will also enable the merchant to maximise sales potential.

“For example, log cabins require foundations, so associated materials such as cement and slabs, can be sold accordingly,” he explains. Meanwhile, there are further options to upsell on further items, such as guttering for the roof, flooring even underfloor heating and additional insulation for a new log cabin.

“Keeping a good range of softwood PSE, claddings and mouldings is important. Products that are easy to store present suitable stock items. This is where packaged goods, such as balustrade kits offer the merchant a solution, helping to make life easier for their customer’s end-users, too.”

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