Woodworking industry forecast for 2015

Dec 25, 2014

 

Key industry officials are mostly bullish about prospects for woodworking businesses in the coming year.

TC Millwork in Bensalem, Pennsylvania, makes millwork for health care and retail store fixtures.

Interviews with key woodworking industry officials reveal a largely sunny forecast for business in 2015, with one even going so far to declare he was "giddy" about the prospects. Still, there are warnings about lumber prices and possible shifts in the economy later in the year.

CabinetMakerFDM talked to experienced and influential leaders representing several segments of the industry, asking them to peer into their crystal balls and make predictions about the coming business climate and any particularly significant trends. The viewpoints represent cabinet shops, industry trade shows, lumber supplies, machinery and finishing. Most of those contacted have a perspective of many years in the industry often including additional experience outside their primary area of expertise.

View from the shop

Matt Krig is the newly elected president of the Cabinet Makers Association. He also operates Northland Woodworks in Blaine, Minnesota. Consequently, his observations and predictions for the future are based both on his own shop's experience and also on what he hears from other shops around the country.

"Most CMA members are optimistic," he says. "A lot of guys bought a lot of things at the show (IWF) and are at the point of making significant investments (in new technology)." He thinks many shops that invested in new technology early, are now seeing it's time to upgrade. He described a 10-year-old nesting CNC router in his own shop as a "time bomb" that needs to be upgraded or replaced before it becomes a problem.

He sees both challenges and opportunities in growing consumer trends. "People are being bombarded with Houzz and HGTV," Krig says. "Homeowners have some unreal expectations. We don't have a way of taking six weeks of work that was edited down to a 20 minute show." He sees increasing requests for different kinds of hardware, wood species, and colors, all in the same house. Krig also sees a "huge swing toward Euro cabinets" in his area.

To meet increasing demands for fast turnaround, Krig sees shops like his having to work hard on procedures and checklists. He also sees renewed emphasis on hiring the right employees even to the point of actually marketing the shop to potential workers to attract the best prospects from other firms.

Show time

This year's big woodworking trade show is the AWFS Fair set for Las Vegas in July. That might seem a long way off, but Angelo Gangone, AWFS executive director, is already very busy planning for the event. He suggests that the health of the show is a good indicator of the health of the industry in general. If that is indeed the case, he is very optimistic about 2015.

"We feel pretty strongly," he says. "It could be our best show year since the recession. Everybody's pretty fired up." He said the rate of exhibiters signing up for the show is "much farther ahead" of where it typically is this far in advance. He pointed to growing housing numbers matched to lower unemployment rates and other positive economic indicators. "What I believe is a lot is dictate by how confident people feel," he says. "I think people in general, consumers, feel more confident."

As for trends to watch out for, Gangone sees a growing interest from woodworking manufacturers in the area of plastics fabrication and other non-wood materials. "We feel some of the machinery companies will put a bigger emphasis on that area," he says.

Of course, he also sees an across-the-board continuation in the advancing emphasis on technology and computer software. To match that demand, he says, AWFS will add a special stage to focus on new technologies in 2015.

Giddy about 2015

Steve Waltman, vice president of sales and marketing at Stiles Machinery, has long been an enthusiastic booster of the industry, and that enthusiasm is running at full power for the coming year. He describes himself as "giddy" about the prospects for industry growth in 2015.

"Stiles Machinery has the highest expectations for the rest of 2014 and 2015," he says. "I can't allow myself to be conservative."

He says the positive forecast extends to all segments of the woodworking industry, but he predicts particular growth in the office furniture segment. "There are some real shifts in fashion," he explains. "They are doing away with cubical farms. Things are a little brighter, more flexible. There are more work stations and more multi-use tables." He says existing office environments are "not tasked to meet today's needs and don't have the clean look people are looking for." Design trends for brighter colors and new materials will also drive change, he says.

At the machinery level, Waltman sees two major areas growth. The first is in automated storage and retrieval systems for panel saws and routers. "Two years ago we would not have this conversation," he says. "The industry is doing a better job of making it affordable." He notes the concept of automated storage and retrieval today goes way beyond material handling and encompasses inventory control and production efficiency and flexibility. "It's the hottest thing we have now," he says.

The second trending area in machinery from his perspective is flat-line finishing. "It's found its way now into small and medium size shops," he says. Advantages include safety, fume control, and perfect application. He says advances in the technology have put it reach of smaller operations, who are finding the savings "just as profound" as larger plants that previously adopted the technology.

Waltman also sees no abatement in the continuing trend for more technology in general. "Clearly, the demand for labor-saving technology is coming more and more to the forefront," he says, attributing that trend to changing demographics and the "neglect in our technical education over the last couple of decades. "The demand is for a well trained technician rather than half-a-dozen laborers," he says.

Economist Alan Beaulieu of ITR Economics is a longtime watcher of trends in the woodworking industry. At the 2014 Executive Briefing Conference sponsored by Stiles Machinery, he said that industrial growth will slow in late 2014 and early 2015, but will remain positive. Then the economy will stay strong for several years, with the next recession coming in 2018. Unemployment will remain high, but good people will be hard to find. He also said that companies will have to pay their employees more. He also warned of an inflationary trend later in 2015.

Lumber prices

Gene Wengert has decades of experience as a wood technologist and a consultant to the industry, as well as writing the Wood Doctor's Rx column for CabinetMakerFDM. He sees an interesting convergence of trends that will likely lead to higher lumber prices in the coming year.

The lumber industry faces a shortage of sawmills and logging crews because many went out of business during the recession. "A third of them are gone," says Wengert. But then there is another factor that most in the woodworking industry might not think about. "The big one is the tremendous need for railroad ties," says Wengert.

He explained that the increase in domestic oil production fueled by shale oil development and fracking has increased the need for fuel transport by rail since there are not enough pipelines. That will increase the financial incentive for existing sawmills to saw more lower grades of lumber for railroad ties, which will create a shortage of those grades in the general lumber stream.

"The price will go up in all grades," says Wengert. "We may have a 50 percent increase. We have to learn to be more efficient then we are now so we create less waste." Companies will need to put more emphasis on how lumber is cut and graded, as well as confirming they are being supplied with the right grades and footages. "When you check grades and board footage, it's amazing how often it is off," he says.

Trends he sees include increased use of thin-kerf blades to reduce waste, more interest in character woods such as hickory, pecan, and blue pine. He also sees increasing competition for the American wood market by offshore species and products, including bamboo.

Finish line

Laura Kelleher, vice president of marketing for Sherwin-Williams, looks at the woodworking industry from the finishing perspective. "We feel really good about these markets," she says. She points to good news about housing starts, pent-up demand, and increased traffic at industry shows. "We're seeing growth in the market, and we're feeling very good about where the market is going."

She says the trend in the market is to more sustainable products such as LED cured UV coatings. As for color trends, she says the big emphasis is gray. "Gray is really big in kitchen cabinets," she says. More storage options in homes leads to more wood to coat, she says. And changing cooking trends for more elaborate cooking facilities also is a factor that affects finishing.

New products that Sherwin-Williams sees trending include Powdura Sprint, a low-cure polyester resin-based powder coating system for use on MDF, which cures at temperatures as low as 250 degrees F. Another product Kelleher sees trending because of a need for reduced production time as well as environmental concerns is the Ultra-Cure waterborne pigmented UV finishes.

Source: WOOD TAIWAN 2015