The U.S. Market for Fence, Deck & Rail Products

SUMMARY

These are uncertain times in the housing and home improvement industry, especially for arenas that may be considered non-essential to consumers, such as fence, deck & rail (FDR) products. This all-new SBI report covers the market for residential FDR products made from wood, metal, vinyl, plastic and concrete. While many market studies strive to analyze market sizes and dynamics from the "sell side" perspective by attempting to measure the revenues earned by product and service vendors of materials, this study also focuses strongly on the "buy side" of the market by looking at indicators of demand among builders and consumers. This is key, as the FDR market is so closely tied to residential housing and economic issues affecting buyers.

SBI estimates that the residential FDR market reached a record $11.9 billion in 2006; however, 2007 proved to be a tough year for the industry as homeowners reigned in spending and homebuilders pared back on construction. While there are some factors that may help lessen the blow felt by the housing and economic slump, such as lower interest rates and an unending consumer desire to spend on home improvements and outdoor living, they are not strong enough drivers to cause a turnaround in the near term. The market is likely to continue to correct downward into 2008, but should begin to pick back up thereafter.

The report further explores economic, housing, consumer and product trends, as well as consumer home improvement activity, distribution channels and the competitive environment affecting domestic, residential FDR product demands. The report also profiles major marketers, along with manufacturer strategies to maximize growth and profitability.

Data were obtained from government sources, trade associations and publications, business journals, company literature, investment reports and interviews with industry stakeholders. In most cases, historical data are provided for 1998 through 2007, with forecast data from 2008 to 2012. Market size statistics are derived from U.S. Department of Commerce and other data sources, and are augmented by SBI estimates. Simmons Market Research Bureau's spring 2007 survey, based on a sample of 24,136 respondents, provides the primary research data on consumer remodeling habits and home improvement expenditures.

TABLE OF CONTENTS

Chapter 1 Executive Summary

• Scope of the Report
• Methodology
• Residential Fence, Deck & Rail Market
  • Fence, Deck & Rail Suffers Drop to $10 Billion in 2007
  • Figure 1-1 U.S. Residential Fence, Deck & Rail Market: Total and Fence vs. Deck & Rail, 1998-2007 (in billion $)
  • U.S. Fence, Deck & Rail Market to Reach $11.8 Billion by 2012
  • Figure 1-1 Forecasted U.S. Residential Fence, Deck & Rail Market: Total and Fence vs. Deck & Rail, 2007-2012 (in billion $)
• Economic Growth Factors
  • 2008 Real GDP Growth Forecasted at a Meager 0.9%
  • Figure 1-3 Percentage Changes in U.S. Current-Dollar GDP, Real GDP and the GDP Price Index, 2002-2008 (%)
  • Commodities
• Housing Market Trends
  • Residential Markets Head South
  • Home Maintenance and Improvements Lose Some Steam
  • Figure 1-4 U.S. Quarterly Expenditures for Home Maintenance/Repairs and Improvements, 2004-2007 (in billion $)
  • Outdoor Living Projects May Propel Remodeling Growth
  • Outside Residential Additions and Alterations
  • Figure 1-4 Deck or Porch Additions to Occupied Residential Structures, 1997-2005 (in thousands of projects)
  • Deck, Porch DIYers Declining Faster Than Outside Contractors
  • Unattached Additions, Alterations on the Rise
  • Fencing, Wall Projects Show Slower Growth
• Product and Consumer Trends
  • Can Green Boost Fence, Deck & Rail?
  • Composite Sources Go Beyond Plastics
  • Composite Benefits and Obstacles
  • Nanotechnology: The Next Wave
  • Cellular PVC Alternative
  • Design Me!
  • The Outdoor Lifestyle
  • Outdoor Living Affects Fencing
  • DIY Home Improvement
  • Women Doing It for Themselves
  • Baby Boomers
  • American Mobility Shifts to Warmer West and South
  • Weather Anomalies Pose Threats and Opportunities
  • Remodeling Hangs Tough
• Distribution Trends
  • Overview: Highly Diverse and Fragmented Marketplace
  • Competitive Distribution Landscape
  • Manufacturer Distribution Points Mostly Intermediary
  • Dealer and Builder Programs
  • Retailing
  • Direct Sales
• Promotion Trends
  • Magazines and Websites
  • Event and Contest Sponsorships
  • Trade Shows
  • Word of Mouth
  • Product Placement Works in Reality
  • The Internet Shifts Outreach
  • Core Company Values Important
  • Direct Mail Lists Still an Opportunity
• Consumer Home Improvement
  • Demographic Characteristics of Recent Remodelers
  • Demographic Characteristics of Future Remodelers
  • Home Improvement Expenditures
  • Decking Accounts for 3% of Improvement Activity
  • Demographic Characteristics of Outdoor Deck Buyers
  • DIY vs. Service-Supplied Decks and Porches/Patios

Chapter 2 Market Size and Growth

• Scope of the Report
• Methodology
• Differences Between Chapter 2 and Chapter 3
• Residential Improvement Market
  • Over $200 Billion in Residential Improvement Expenditures
  • Figure 2-1 U.S. Residential Improvement Expenditures: Total and Owner-Occupied vs. Rental Properties, 1998-2007 (in billion $)
  • Table 2-1 Total U.S. Residential Improvement Expenditures and Year-over-Year Gain, 1998-2007 (in billion $)
  • Figure 2-2 Estimated Share of U.S. Residential Improvement Market by Property Type, 2007 (%)
  • Owner-Occupied Expenditures Drop 9%
  • Rental Expenditures Yo-Yo
  • Table 2-2 U.S. Residential Improvement Expenditures: Owner-Occupied vs. Rental Properties, 1998-2007 (in billion $)
  • Figure 2-3 Share of U.S. Residential Improvement Market by Property Type, 1998-2007 (%)
• Residential Fence, Deck & Rail Market
  • Housing Bubble Put Fence, Deck & Rail into Overdrive
  • Fence, Deck & Rail Suffers Drop to $10 Billion in 2007
  • Figure 2-4 U.S. Residential Fence, Deck & Rail Market: Total and Fence vs. Deck & Rail, 1998-2007 (in billion $)
  • Table 2-3 U.S. Residential Fence, Deck & Rail Market and Year-over-Year Gain, 1998-2007 (in million $)
  • Figure 2-5 Estimated Fence vs. Deck & Rail Share of U.S. Residential FDR Market, 2007 (%)
  • Deck & Rail Market Declines 15% in 2007
  • Fence Market Declines 17% in 2007
  • Table 2-4 U.S. Residential Fence, Deck & Rail Market 1998-2007 (in billion $)
  • Figure 2-6 Fence vs. Deck & Rail Share of U.S. Residential FDR Market, 1998-2007 (%)
• Market Forecast
  • U.S. Fence, Deck & Rail Market to Reach $11.8 Billion by 2012
  • Consumer Driven Trends Not Much Help
  • WPC Potential Thwarted Somewhat
  • Figure 2-7 Forecasted U.S. Residential Fence, Deck & Rail Market: Total and Fence vs. Deck & Rail, 2007-2012 (in billion $)

Chapter 3 Category Focus

• Overview
• Metal & Wood Fence
• Wood & Wood-Plastic Composite Deck & Rail
• Vinyl Building Products
• Table 3-1 U.S. Shipments of Building & Construction Fabricated Plastics and Other Building & Construction Plastics, 1997-2007 (in million $)
• Metal & Wood Fence Products
  • Banner Years Over as Metal & Wood Fence Market Stalls
  • Figure 3-1 U.S. Metal & Wood Fence Products Market: Total and Metal vs. Wood, 1998-2007 (in billion $)
  • Table 3-2 Total U.S. Metal & Wood Fence Products Market and Year-over-Year Gain, 1998-2007 (in million $)
  • Metal's Larger Share Staved Off Further Losses in 2007
  • Figure 3-2 Estimated Share of U.S. Metal & Wood Fence Products Market by Material, 2007 (%)
  • Figure 3-3 Share of U.S. Metal & Wood Fence Products Market by Material, 1998-2007 (%)
  • Aluminum Fence Shines, Wood Disintegrates
  • Table 3-3 U.S. Metal & Wood Fence Products Market by Material, 1998-2007 (in million $)
  • Metal & Wood Fence Shipments, Imports and Exports
  • Table 3-4 U.S. Shipments, Imports and Exports of Metal & Wood Fence Products, 1998-2007 (in million $)
  • Domestic vs. Foreign Production as a Share of U.S. Market
  • Figure 3-4 U.S. Net Shipments of Metal & Wood Fence Products and Share of Market, 1998-2007 (in billion $)
  • Table 3-5 U.S. Net Shipments of Metal & Wood Fence Products and Year-over-Year Gain, 1998-2007 (in million $)
  • Figure 3-5 U.S. Imports of Metal & Wood Fence Products and Share of Market, 1998-2007 (in million $)
  • Table 3-6 U.S. Imports of Metal & Wood Fence Products and Year-over-Year Gain, 1998-2007 (in million $)
  • U.S. Manufacturers Exporting a Greater Share of Shipments
  • Figure 3-6 U.S. Exports of Metal & Wood Fence Products and Share of U.S. Shipments, 1998-2007 (in million $)
  • Table 3-7 U.S. Exports of Metal & Wood Fence Products and Year-over-Year Gain, 1998-2007 (in million $)
  • Metal & Wood Fence Product Imports by Country
  • Table 3-8 U.S. Imports of Metal & Wood Fence Products by Country of Origin, 1998 and 2003-2007 (in million $)
  • Figure 3-7 Share of U.S. Metal & Wood Fence Product Imports by Country of Origin, 2007 (%)
  • Metal & Wood Fence Product Exports by Country
  • Table 3-9 U.S. Exports of Metal & Wood Fence Products by Country of Destination, 1998-2007 (in million $)
  • Figure 3-8 Share of U.S. Metal & Wood Fence Product Exports by Country of Destination, 2007 (%)
• Wood & Wood-Plastic Composite Deck & Rail Products
  • WPC Outlasts Wood
  • Figure 3-9 Estimated U.S. Wood & WPC Deck & Rail Products Market: Total and Wood vs. WPC, 1998-2007 (in million $)
  • Table 3-10 Estimated Total U.S. Wood & WPC Deck & Rail Products Market and Year-over-Year Gain, 1998-2007 (in million $)
  • Table 3-11 Estimated U.S. Wood & WPC Products Manufacturing Market by Material, 1998-2007 (in million $)
  • WPC Grabs Market Share
  • Figure 3-10 Estimated Share of Wood & WPC Deck & Rail Products Market by Material, 2007 (%)
  • Figure 3-11 Estimated Share of Wood and & WPC Deck & Rail Products Market by Material, 1998-2007 (%)

Chapter 4 Competitor Profiles

• Overview
• About Selected Profiles
• Shuffling of the Boards, Consolidation Strong
• M&A to Continue in Softer Market
• Changing Market Shuts Down Facilities
• Advanced Environmental Recycling Technologies, Inc. (AERT)
  • Overview
  • Performance
  • Figure 4-1 Total Net Sales of AERT Fence, Deck & Rail Products, 2003-2007 (in million $)
  • Figure 4-2 Estimated Brand Share of Net Sales for AERT Fence, Deck & Rail Products, 2007 (%)
  • Product Portfolio
  • Table 4-1 Selected AERT Product Lines
  • Significant Events
• CertainTeed
  • Overview
  • Performance
  • Figure 4-3 Total Net Sales of CertainTeed, 2003-2007 (in billion $)
  • Product Portfolio
  • Table 4-2 Selected CertainTeed Product Lines
  • Significant Events
• Fiber Composites, LLC
  • Overview
  • Performance
  • Figure 4-4 Estimated Total Net Sales of Louisiana Pacific Composite Deck & Rail Products, 2003-2007 (in million $)
  • Product Portfolio
  • Table 4-3 Selected Fiber Composite Product Lines
  • Significant Events
• MMI Products, Inc. (CRH Plc)
  • Overview
  • Performance
  • Figure 4-5 Total Net Sales of MMI Fence, Deck & Rail Products, 2003-2007 (in million $)
  • Product Portfolio
• Ply Gem Industries, Inc.
  • Overview
  • Performance
  • Figure 4-6 Total Net Sales of Ply Gem Siding, Fence, Deck & Rail Products, 2003-2007 (in million $)
  • Product Portfolio
  • Table 4-7 Ply Gem Fencing & Decking Product Portfolio
  • Significant Events
• Trex Company, Inc.
  • Overview
  • Performance
  • Figure 4-7 Total Net Sales of Trex Fence, Deck & Rail Products, 2003-2007 (in million $)
  • Product Portfolio
  • Table 4-5 Trex Fence, Deck & Rail Product Portfolio
  • Significant Events
• Universal Forest Products, Inc.
  • Overview
  • Performance
  • Figure 4-8 Total Net Sales of Universal Forest Products, 2003-2007 (in billion $)
  • Figure 4-9 Share of UFPI Net Sales by Customer Type, 2007 (%)
  • Figure 4-10 Total Net Sales of UFPI Fence, Deck & Rail Products, 2003-2007 (in million $)
  • Figure 4-11 Total Net Sales of UFPI Preservative-Treated Lumber, 2003-2007 (in million $)
  • Product Portfolio
  • Table 4-6 UFPI Fencing & Decking Product Portfolio
  • Significant Events

Chapter 5 Economic and Housing Market Trends

• Overview
• Economic Factors
  • 2008 Real GDP Growth Forecasted at a Meager 0.9%
  • Figure 5-1 U.S. Current-Dollar GDP vs. Real GDP, 2002-2008 (in trillion $)
  • Figure 5-2 Percentage Changes in U.S. Current-Dollar GDP, Real GDP and the GDP Price Index, 2002-2008 (%)
  • Commodities
  • Fence Stock Prices
  • Figure 5-3 Fence Stock Monthly Price Index, 2007
  • Steel Wire Prices
  • Figure 5-4 Steel Wire Average Price Index, 1998-2007
  • Other Plastic Construction Product Prices
  • Figure 5-5 Other Plastic Construction Products Average Price Index, 1998-2007
  • Soft Lumber, Cut Stock Prices
  • Figure 5-6 Soft Lumber, Cut Stock Average Price Index, 1998-2007
  • Composite Framing Lumber Prices
  • Figure 5-7 Composite Framing Lumber Average Prices per 1,000 Boardfeet, 1998-2007
• Housing Market Trends
  • Residential Markets Head South
  • New Home Sales
  • Figure 5-8 Annualized U.S. New Single-Family Home Sales by Region, January 1997-July 2007 (in thousands of units)
  • Figure 5-9 Annual U.S. Existing Home Sales by Region, 1963-2007 (in thousands of units)
  • Existing Home Sales
  • Pending Home Sales
  • Figure 5-10 Annual U.S. Existing Home Sales by Region, 1997-2007 (in thousands of units)
  • Figure 5-11 U.S. Pending Home Sales Index by Region, 2004-2006, January-December 2007
  • Building Permits
  • Figure 5-12 U.S. New Housing Units Authorized by Building Permits, January 1997-December 2007 (in thousands of units)
  • Outdoor Features in New One-Family Houses
  • Decks
  • Porches
  • Patios
  • Figure 5-14 Presence of a Patio, Porch or Deck in New One-Family Houses Completed, 1997-2007 (in thousands of units)
  • Home Maintenance and Improvements Lose Some Steam
  • Figure 5-13 U.S. Quarterly Expenditures for Home Maintenance/Repairs and Improvements, 2004-2007 (in billion $)
  • Outdoor Living Projects May Propel Remodeling Growth
  • Outside Residential Additions and Alterations
  • Figure 5-15 Deck or Porch Additions to Occupied Residential Structures, 1997-2005 (in thousands of projects)
  • Deck, Porch DIYers Declining Faster Than Outside Contractors
  • Figure 5-16 Additions to Occupied Residential Structures, Work Done by Household, 1997-2005 (in thousands of projects)
  • Figure 5-17 Additions to Occupied Residential Structures, Work Not Done by Household, 1997-2005 (in thousands of projects)
  • Unattached Additions, Alterations on the Rise
  • Figure 5-18 Patio, Terrace and Detached Deck Additions and Alterations: Work Done by Household vs. Not Done by Household, 1997-2005 (in thousands of projects)
  • Fencing, Wall Projects Show Slower Growth
  • Figure 5-19 Fencing and Wall Additions and Alterations: Work Done by Household vs. Not Done by Household, 1997-2005 (in thousands of projects)

Chapter 6 Product and Consumer Trends

• Can Green Boost Fence, Deck & Rail?
• Composite Sources Go Beyond Plastics
• Plastics to Composites and Back Again
• Non-Wood Composites
• Science and the Art of Recycling
• Composite Benefits and Obstacles
• Nanotechnology: The Next Wave
• Ban on CCA Treated Wood
• Cellular PVC Alternative
• Design Me!
• The Outdoor Lifestyle
• Cocooning Outdoors: "Outdoor Rooms" on the Rise
• FDR Central to the Outdoor Room
• The Deck Is Only One Component
• Outdoor Living Affects Fencing
• Enabling Design Technology
• Exurbia Needs to Relax Too
• Aesthetic Focus on Natural, Reusable and Sustainable
• DIY Home Improvement
• Women Doing It for Themselves
• Baby Boomers
• Boomers Prefer Staying Put, Investing in Home
• Privacy and Style More Meaningful Than Safety?
• American Mobility Shifts to Warmer West and South
• Weather Anomalies Pose Threats and Opportunities
• Remodeling Hangs Tough
• A Tick Down Market?

Chapter 7 Distribution and Promotion Trends

• Overview: Highly Diverse and Fragmented Marketplace
• Distribution
  • Competitive Distribution Landscape
  • Manufacturer Distribution Points Mostly Intermediary
  • Dealer and Builder Programs
  • Retailing
  • Direct Sales
• Marketing and Promotion
  • Magazines and Websites
  • Event and Contest Sponsorships
  • Trade Shows
  • Word of Mouth
  • Product Placement Works in Reality
  • The Internet Shifts Outreach
  • Warranties
  • Do the Green Thing
  • Core Company Values Important
  • Direct Mail Lists Still an Opportunity

Chapter 8 Home Improvement Activity

• Note on Simmons Market Research Bureau Consumer Data
• Homeowner Remodeling Activity and Intent
• Table 8-1 Percentage of Homeowners Who Did or Plan to Do Remodeling, 2007 vs. 2004
• Demographic Characteristics of Recent Remodelers
• Table 8-2 Demographic Indicators for Homeowners Who Have Remodeled in the Last 12 Months, 2007
• Demographic Characteristics of Future Remodelers
• Table 8-3 Demographic Indicators for Homeowners Who Plan to Remodel in the Next 12 Months, 2007
• Table 8-3 [Cont.] Demographic Indicators for Homeowners Who Plan to Remodel in the Next 12 Months, 2007
• Home Improvement Expenditures
• Table 8-4 Percentage of Homeowners Spending on Home Improvements in Last 12 Months, by Spending Range, 2007 vs. 2004
• Demographic Characteristics of Those Who Spent $251-$999
• Table 8-5 Demographic Indicators for Homeowners Spending $251-$999 on Home Improvements, 2007
• Demographic Characteristics of Those Who Spent $1,000-$1,999
• Table 8-6 Demographic Indicators for Homeowners Spending $1,000-$1,999 on Home Improvements, 2007
• Selected Home Improvement Characteristics
• Table 8-8 Percentage of Homeowners Who Bought Selected Outdoor Home Improvements in Last 12 Months, 2007 vs. 2004
• Demographic Characteristics of Outdoor Deck Buyers
• Table 8-9 Demographic Indicators for Homeowners Who Bought an Outdoor Deck in the Last 12 Months, 2007
• Demographic Characteristics of Outdoor Porch/Patio Buyers
• Table 8-10 Demographic Indicators for Homeowners Who Bought an Outdoor Porch/Patio in the Last 12 Months, 2007
• Homeowner Expenditures on Outdoor Decks and Porches/Patios
• Table 8-11 Percentage of Homeowners Spending on Outdoor Decks and Porches/Patios in Last 12 Months, by Spending Range, 2007
• DIY vs. Service-Supplied Decks and Porches/Patios
• Table 8-12 Percentage of DIY vs. Service-Supplied Outdoor Deck and Porch/Patio Home Improvements in Last 12 Months, 2007

Appendix: Selected Addresses