Ed Elias, president of the APA-The Engineered Wood Association, discusses how APA and the engineered wood industry viewed 2013 and what to expect in 2014.
What expectations does APA have for the housing market in 2014?
Along with the rest of the world, we’re forecasting housing demand in 2014 and global economic growth in general with cautious optimism. The economy is slowly improving, and the housing market is recovering in many areas. APA is forecasting 1.1 million housing starts in the U.S. in 2014, up 16 percent from an expected 945,000 starts in 2013. In Canada, we are expecting overall housing starts to remain similar to 2013 at 187,000.
That being said, confidence among consumers and builders is still fragile, and challenges, from a tight lending market to labor issues, remain. Of particular note is the fact that multi-family construction is up 32 percent relative to single-family starts at 16 percent for 2013. This trend is expected to continue yet for several years. The driving force for this expectation is the assumption that as household growth among young people picks up, their first move is going to be into a rental apartment and not toward the purchase of a single-family house.
On the positive side, home prices are generally higher by 12 percent relative to a year ago. Real gross domestic product is expected to average 2.8 percent through 2018, which is potentially high enough to improve the employment rate to levels where housing starts by 2015 could be as high as 1.0-1.2 million units per year. By 2018, APA forecasters are projecting that single family housing starts could reach 1.05 million per year and multi-family starts at 0.5 million starts per year.
Demand growth in other end-use sectors, such as repair and remodeling, nonresidential construction and industrial markets, is expected to average 3 percent in 2014.
How will APA approach these changing market scenarios?
As an Association, that means keeping a focus on our core goals and services while remaining open to opportunities to expand our programs to new and developing engineered wood products and systems.
Specifically, related to housing the Association is pursuing the maintenance and expansion of structural wood-based panel wall sheathing. But, we have also continued to support the growth of engineered wood floor systems, reduced callbacks through installation education and the proper specification of standard compliant products by engineers, architects and builders. By way of an example, through our APA Simplified Wall Bracing program we are promoting the value proposition for the use of fully sheathed walls in low to moderate wind zones (up to 100 mph wind speeds). Four states incorporated these provisions into their building codes this past year: North Carolina, Georgia, Idaho and Montana.
The Association has also promoted the expanded application of wood structural panel sheathing used in combination with systems other than foam sheathing to meet energy code and structural building requirements through our Advanced Framing construction program.
More at the trade level, we have also focused on expanding the technical information available on mobile platforms such as iPhones, iPads and Android devices. Basic mobile Builder Tips related to the prevention of panel buckling, proper panel and nail spacing, squeaky floors and care and handling of stock on the building site were successfully introduced in 2013.
What are the biggest challenges for engineered wood manufacturers in the present economy and marketplace? How will those challenges affect building products dealers and their customers, if at all?
Recovering from our recent recession, there are no shortages of challenges. Overall market demand remains the primary challenge faced by the North American engineered wood products industry. North American structural wood panel production in 2013 is forecast to reach 21.3 billion square feet on a 3/8 inch thickness basis. We remain well below the 43 billion square feet of production during 2005 and the peak of our housing market that totaled 2.3 million housing starts that year.
Government fiscal policy is a challenge that we cannot directly address but clearly impacts labor markets, interest rates and consumer confidence. We believe that the trend of depressed employment rates across all age classes, most notably those in the under-35 age group, continues to adversely impact household growth and homeownership.
Global supply and demand of wood products may also impact future consumption patterns of North American construction materials. The cost of raw materials and labor, and the availability of transport for product distribution will need to be balanced against trade policies between developing and developed nations. Competitive use of wood fiber for nonstructural applications such as wood pellets to meet clean energy targets could also impact the future availability. Other potential constraints deal with expanding regulatory concerns on formaldehyde emissions and those of methanol, as well as green building legislation.
There are no shortages of challenges, prioritizing them will be a key role of the Association, its Board of Trustees and membership.
What’s the industry production forecast for 2014 and beyond? Which categories are expected to be the strongest performers?
For 2014, we are forecasting U.S. and Canadian plywood and OSB production to rise by 1.9 billion square feet reaching 25.7 billion square feet, an increase of 9 percent from 2013. By 2018, U.S. and Canadian structural wood panel production is expected to reach 27.4 billion square feet.
For 2014, North American production of engineered wood products of glued laminated timber, structural composite lumber and wood I-Joists are also forecast to improve by 5 percent, 12 percent and 7 percent, respectively as the North American economy improves. Overall glulam demand in North America is expected to grow from 251 million board feet in 2013 to 328 million board feet in 2018. Structural wood I-Joist production is expected to grow from 625 linear feet in 2013 to 887 million linear feet in 2018. Laminated veneer lumber volumes will increase from 61.5 million cubic feet in 2013 to 79.8 million cubic feet in 2018.
The forecasted increase in housing starts is expected to be the main driver for this increasing demand for engineered wood in North America. We also believe that recovery in the non-residential construction market will lag behind but follow home building. In this latter sector, we expect to see a 31 percent growth by 2018 in comparison with 2013.
What are some of APA’s chief highlights from 2013?
Through our internal staff and our partnerships with members and other organizations, APA continued to produce a wide breadth of resources, helping to ensure wood-framed structures that are strong, efficient, affordable, and long-lasting. Among our many accomplishments in 2013:
• Expected 1.5 million unique visits this year to APA’s website, www.apawood.org, almost 5,000 visits per day, every day of the year.
• Nearly 6,000 end users have had technical issues addressed by the APA Product Support Help Desk
• Numerous new and updated technical publications, adding to our library of more than 500, including the distribution of close to 150,000 publications through direct downloads from our website.
• Mobile Builder Tips: Easily accessible, back-to-basics installation tips for installing dealers and contractors facing a tight labor market and inexperienced crews.
• Developed a bi-national ANSI standard for cross laminated timber and published a performance rated structural insulated panel ANSI standard for use in wall applications.
• Promotion and education supporting several APA wall sheathing systems to expand the specification and application of structural wood panels: Simplified Wall Bracing System, Force Transfer Around Opening shear wall design procedures, and advanced framing techniques to meet the more stringent energy codes.
• Establishment of a strategic partnership with Wood Works, a coalition that is promoting wood frame solutions to the nonresidential market.
• In-person events: APA’s field services staff hosted six dealer training events in the past year and presented a variety of educational sessions around the U.S., including “Top 10 Framing Mistakes” at the International Builders’ Show, “Wood Framing for More Efficient Homes” in New England, “Wood Podiums for Mid-Rise Construction” at Woodworks Wood Solutions Fairs, and “2012 IRC Wall Bracing” at the Building Officials Association of Texas.
• Carbon Challenge competition: In partnership with the U.S. Forest Service Forest Products Lab, APA hosted competitions in Baltimore and Providence, R.I., that challenged architects to consider the carbon footprint of materials in addition to affordability, livability, and longevity. See the winners at www.apawood.org/carbonchallenge.
What specific programs and resources can engineered wood retailers and end users expect from APA in 2014?
• Continued emphasis supporting the cost effective use of structural wood wall sheathing to meet state energy and building codes.
• Promote the preference of continuously sheathed wood structural panel walls to builders and code officials through field calls, publicity, seminars and publications.
• Promotion of the specification and proper application of engineered wood products in APA wall, roof and floor systems both in residential as well as commercial construction applications. The latter will be in conjunction with the industry-wide Woodworks campaign.
• Increased incorporation of web-based programs, mobile applications and social media (e.g. YouTube videos) to influence target audiences.