This week BC Wood along with four member companies participated at the IBS 2010 trade event in Las Vegas Nevada. The show has an attendance of approximately 55,000 that at filled two of the three massive halls at the Las Vegas trade and convention centre. A number of themes were evidentat this years show including: the fragile and recovering US economy and its effect on residential housing starts, increased acceptance of factory direct imports from Asia, the demise of the mega house and move to smaller more affordable housing, and finally any and all things green.
This year’s event saw an increased number of Asian cabinet and mill-work manufacturers who exhibited their product to the US and International builder and architect community. Many of these exhibitors were offering “factory direct” shipping and delivery to home builders from across the Western United States, some were even willing to offer free shipping if the order placed reached a preset quantity. For example, a wood door and window manufacturer from Southern China was willing to provide free shipping for door orders totaling over $40,000 USD. In conversations with builders who target the $200+ square foot residential housing market this dollar figure could easily be reached if you include prefinished and pre hung entry doors, interior doors and closets. Of concern were issues regarding quality control and repair of potential damage that may occur during shipping. Many builders agreed that the price may be worth the risk when compared against purchasing from existing supply chains.
The question that needs to be addressed is if this direct to market strategy will ultimately succeed for lower cost Asian manufacturers, and what effect it will have on existing two step distribution and supply chains for manufacturers. I think the key finding is that BC manufacturers who continue to offer innovative product, followed with strong sales and customer support will find their customer base will avoid the high risk of dealing direct with Asian based manufacturers.
Is 2010 the year we see the demise of the mega house and a trend to the return to smaller more cost effective housing? In discussions with a number of residential home builders and developers who stopped by the BC Wood booth I would suggest the answer is yes but not necessarily in new home construction. Builders I spoke to suggested that they are looking at the rebuild and retrofit market as a growing opportunity in residential housing. Retrofit is essentially taking an existing home that has a smaller square footage footprint and renovating it to become more attractive and more importantly energy efficient. One builder group that targets the Las Vegas market was quoted as saying “the trend in his market is for more people to live in smaller houses, closer to the city and closer to transportation. With these trends, retrofits make sense”. They are aggressively perusing the retrofit market by purchasing houses in foreclosure at bargain basement prices, retrofitting the homes and selling them for a decent return. This group is sourcing building products that are of good quality, have an environmental benefit and are reasonably priced. They are trying to avoid low price Asian imports due to the environmental and social costs associated with the importation of these products. The retrofit market is a niche but potentially growing market opportunity for BC based manufacturers and it will need to be followed to see if it moves from a niche to common building practice in the US residential housing market.
The word “green” has been overused and is not commonly associated with residential construction, but green and sustainable building products were front and center at this year’s IBS trade event. Green building was evident throughout the show from the numerous seminars to the over 1,100 exhibitors of building products and construction materials – many had a common theme of sustainability. Green building is generally defined as construction practices that save energy and natural resources. It can be a simple as switching to LED lighting or as complex as geothermal wind and solar powered energy systems.
In regards to wood, numerous architectural mill-work, cabinet and door manufacturers showcased product that featured formaldehyde free adhesives and water-based finishes. The manufacturers claimed that the benefits of their products led to a healthier house and living environment for the end user. Of feature, was a new product introduction from Caoba doors that touted their FSC certified wood, new sustainable manufacturing process and high quality “green” finishes.
Wood Products that were shown to be energy efficient were also on display that this years event. For example in an interview with the Las Vegas Journal manufacturer Norbord Industries showcased their new solar board radiant barrier sheathing panel. According to their sales representative it reduces heat gain in the attic space by reflecting heat from the sun, which in turn reduces the load on light commercial and residential air conditioning systems. Norbord also introduced their Tall Wall OSB sip panel that they suggest reduces air leakage by up to 60% and does not contain any urea formaldehyde resins which again leads to better indoor air quality and healthy housing.
What does this all mean?. Not a great deal except that it is important to market the environmental or sustainable qualities of your products. Wood products alone already have a good story to tell and it is incumbent upon BC manufacturers to develop an green market strategy and to get the message out that their products are sustainable and add to the overall health of the environment. This green messaging will be needed to keep up with both domestic and international competition who all already spinning their own green story.