A SNAPSHOT MARKET STUDY FROM PRINCIPIA
Basic study $5,000; Forecast Modeling Tool $2,500

Composite Decking & Railing 2009

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Study Background
The entire building products industry is undergoing a major transformation not only in the demand for products, but also in how products are manufactured and delivered to the market. The decking and railing industry is no different.

In North America, polymer membranes for reverse osmosis is the major pathway for de-salination. A substantial amount of our nearly 6 million cubic meter/day capacity at over 1000 desalination plants in North America is dedicated to desalination of brackish water.

Lumber and resin price volatility has affected the substitution dynamics between composites and wood decking and railing. For example, pressure-treated lumber prices dropped steeply as the residential housing market tanked, just when resin prices were skyrocketing.

This price gap contributed to the flattening of the composite decking adoption curve. Resin prices have since fallen, but the full impact of material substitution on the adoption curve will be challenging to distinguish from the decrease in overall demand due to the recession.

Demand Outlook
Reduced demand, combined with resin prices, severely stressed synthetic decking suppliers' margins and forced the closure of plants and overall reduction in capacity. Several large players, as well as small start-ups, have exited the business. Building products distribution has changed.

Early-buy programs and product inventory levels have been vastly reduced. Supplier-distributor relationships continue to change. Sole sourcing is a big change from the boom days, when distributors and dealers carried multiple product lines from multiple suppliers.

Decking and railing demand is also changing. The number of R&R projects financed via home equity will not soon reach the levels of the boom years. Discretionary remodeling projects take a back seat to more necessary projects that improve energy efficiency and the structural integrity of homes.

MARKET ANALYSIS
Product demand reported in unit shipments and wholesale dollar value.

• Most recent completed year (2008)
• Estimated current year (2009)
• Projected next year (2010)

For baseline year, product demand will be further segmented by:

• Materials
  • WPCs, PT wood, softwoods, hardwoods, cellular vinyl, other plastics
• End use (decking, railing)
• Construction type
  • New / R&R
  • Single / Multifamily
• Distribution channel
• Region (US Census Bureau and Canada)
• Producer share for composite and cellular vinyl decking /railing.

Estimated and projected demand, as well as shifts in end uses, construction categories, channels and regions will be qualitatively assessed to help guide sales and planning activities.

PRODUCT & PURCHASING TRENDS
We will be conducting 100 interviews to provide a fresh industry perspective. You will learn what key players are saying about the current and future direction of the market. Decking / Railing Manufacturers

• Compressed delivery
• Market reaction to new products
• Product warranty claims
• Others

Distributors / Dealers

• Product demand shifts
• Channel shakeups
• Dealer inventory levels
• Sole sourcing trends
• Others

Contractor / Installers

• Level of inquiries, RFQs
• Project sizes
• Consumer preferences
• Shifts in needs
• Others

MARKET & SUPPLIER DYNAMICS
The rapidly changing and evolving supply and demand for decking and railing in North America will challenge surviving manufacturers to adapt to the new environment. The report provides insights and answers to key issues and questions, including:

• How will the demand for cellular PVC affect the demand for WPCs?
• What does the demand curve look like for various grades of WPCs & cellular vinyl decking?
• Will synthetic decking prices come under more intense price competition?
• Is a structural shift in demand for decking on the horizon?
• Will the desire for quality outdoor living space continue to be the key demand driver?
• What is consumer reaction to and acceptance of the new coated synthetic decking?
• How will suppliers' financial health affect their ability to maneuver in the market?

INFORMATION SOURCES
Supplier and channel checks with key participants across the supply chain.
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