The timber industry in 2016: mid-year review

on 15 August, 2016

In January this year, Arbor Forest Products published a list of predictions for the timber industry in 2016. Here is a look back at the predictions that we made, and offer an update on how the industry – as we see it – is progressing.

Prediction 1: "MDF isn’t going away"

We predicted that the rise in popularity of MDF would continue to grow, but hoped that softwood merchants would act in order to protect its market share.

Both predictions have proven to be accurate; MDF is increasing in popularity, but softwood products have really upped their game.

Increased demand for MDF has led us to invest millions in a new production unit, and there is no question that more and more firms are embracing MDF.

But we have also pushed softwood products and, along with merchants, we have created strong, solid, personalised growth plans attached to softwood PAR and mouldings that include key elements such as range reviews and correct order quantities in branch.

Softwood product ranges are moving towards becoming truly fit for purpose, and there is branding and marketing support in place to support its growth.

Prediction 2: "Merchants will focus on customer needs"

We predicted a shift in the way merchants interact with customers, particularly around products like composite decking.

So far in 2016, the demand for composite decking products like Trex has been phenomenal, and the high sales figures can only be as a result of a strong response to this demand by merchants.

Composite decking was already a strong market in 2015, but since January we have been part of a $650,000 marketing push for Trex composite decking that has led to sales more than doubling.

This growth is not just a result of us selling composite decking: merchants are embracing it and working closely with customers to demonstrate the benefits of the product and increase sales.

Prediction 3: "Training is going to be key"

With the job market tightening, we predicted that companies would need to train existing staff rather than recruit in order to move forward in 2016.

The unemployment rate is falling and this has resulted in the recruitment of new, experienced staff growing more challenging. Staff retention has become an extremely high priority, and in our opinion the key to retaining motivated, knowledgeable staff is training.

We have had more than 65 people take our in-house training course – more than we have ever had in a six-month period – and this trend is one being seen at businesses like ours right across the UK.

Prediction 4: "The demand for flexible order quantities will continue"

We predicted that the demand for flexible and efficient deliveries would continue to increase because of the logistics benefits they offer.

The 'little and often' purchasing pattern has indeed grown to match new sales levels, but a bigger priority for merchants is getting product into and out of branches efficiently while maintaining a safe working environment.

Health and safety is a high priority for any business with a passion for its staff, and the flexible order quantities made possible by services like our 'Warehouse On Wheels' offering are having a big impact on the number of vehicles involved in the timber industry.

Fewer vehicles on-site means better health and safety for everyone, and this is something lots of merchants are buying into.

Prediction 5: "Timber prices will remain volatile"

Given the uncertainty over Britain’s place in the European Union in 2016, we predicted that currencies would continue to be volatile, and that imports would become more expensive.

Since then, timber prices have risen and are continuing to increase, while the exchange rate has been extremely volatile. That has forced exporting sawmills to take action and increase prices.

Increased prices led to widespread investment in more stock inventory, which created increased demand for the sawmills – but this hasn't necessarily led to the consumption of more products. With sawmills across Europe closing in July and August, some isolated shortages may occur in certain specifications.

One element we did not predict was the vote for 'Brexit', which has created a little more uncertainty, although we are sure this will settle over time, but for now the situation remains an unpredictable one.

Jason Ostler is managing director at Arbor Forest Products.

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