We all know how important housing starts are to the health of the wood products industry.
When home construction was hovering at 2 million starts back in 2007, cabinet manufacturers were pumping out product at a record pace. Manufacturers of furniture, flooring, millwork, doors, windows and other residential wood products, likewise benefited from the ripeness of the market.
As housing starts contracted to a fraction of 2007’s total, the market’s plunge has severely disrupted sales for most woodworking companies dependent on residential consumers. Cabinet sales are running about half of what they were in 2007. What’s more, the sagging fortunes of the wood products industry have been acutely felt upstream by suppliers of panel products, lumber, hardware, etc.
But probably no sector of the industry has been hurt more by the housing recession than manufacturers of industrial woodworking equipment. This is made clear by the jaw-dropping 2009 sales figures reported by the respective associations representing Italian and German woodworking machinery.
ACIMALL's preliminary figures for 2009 indicate that Italian woodworking machinery and tool sales decreased 48.3% compared to 2008. Calling 2009 the worst year for the German machinery industry since post-WWII, the VDMA said sales of German equipment declined by more than 40% last year, including a 43% decrease in exports.
I don’t have comparable numbers for U.S. woodworking machinery to share, but I suspect they wouldn’t be much better than those reported by the world’s two largest sources of woodworking equipment.
Obstacles to Growth
Both ACIMALL and VDMA believe that the worst is over and that the global economy is improving.
However, Dr. Ralph Wiechers, chief economist of the VDMA, cautions that woodworking machinery will be among the last players in the market to reap the benefit of expected improvements in the demand for wood products.
He offers several reasons for why woodworking machinery manufacturers will lag in the recovery, including:
• too much unused production capacities and a comparatively young machinery stock;
• the difficulty of wood products companies to secure financing to make capital equipment investments; and
• continued glut of “comparatively young” used equipment “flooding onto the
Wiechers predicts that German sales of woodworking machinery will remain soft for the first few months of 2010, then begin a “slight uptrend over the course of the year.”
ACIMALL predicts that while it is very difficult to make a forecast for 2010 for a variety of reasons, it expects to see growth of between 5% and 10% compared to the final 2009 figures. This is based on an expected recovery in the United States, Spain and Russia.
We know there must be a number of readers who have put off major equipment purchases during the downturn. We would be interested in hearing about your capital equipment investment plans for this year. Drop me a line at [email protected].
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