February, 2007

In Depth: Moulding, Trim, & Millwork

The slowdown in new-home construction may change the product mix in moulding, but marketers remain optimistic about 2007 sales.

By Craig A. Shutt

Most marketers are nervous about what the slowdown in the housing market will mean for their 2007 sales. Many moulding companies, however, anticipate changes in the types of products they will sell, but remain cautiously optimistic about sales in general.

"The weakening housing market is having a negative impact on the moulding market, although not to the same degree as other product categories that are more mature,” says Chris Fox, marketing manager for Universal Forest Products in Grand Rapids, Mich., which makes TechTrim polymer mouldings. "Overall, the demand for exterior trim and mouldings which are impervious to moisture and rot-free continues to grow every year.”

Greg Sitton, vice president of sales and marketing for wood trimboard and moulding manufacturer Windsor One in Windsor, Calif., agrees that the category will remain strong. "Differentiation is more and more important for builders [while there is] so much housing inventory on the market, so they need to stand out more. Trim details are one way to make a home stand out,” he says.

Customer Mix is Changing

Although production builders have driven sales in past years, they may not be as dominant a factor in the coming months. "There will be a little bit of a scare with housing due to fewer starts,” says Maureen Murray, marketing representative for Azek Trimboards in Scranton, Pa., which makes cellular PVC mouldings. "But renovators and remodelers will remain strong, as will custom builders.” She notes that remodeling often picks up when new-housing starts fall off, as potential customers stay put and add on or remodel their existing homes. "We don’t anticipate a hard time in 2007.”

Fypon will focus on those markets as well, says Tom Riscili, president of the Archbold, Ohio-based company, which makes urethane mouldings. "For our types of products, we believe it’s beneficial to put our attention on custom home builders who have a strong relationship with project architects and homeowners. We also believe that focusing on remodelers and the renovation market will give us added business.”

Historic renovation companies in particular will provide a strong customer segment, Murray adds. "We can easily replicate the original gingerbread on homes, and we expect that market will remain strong.”

Koma Trim Products in Huntsville, Ala., which makes PVC mouldings, also will concentrate on remodelers and renovators, according to Patrick Shabal, national marketing and sales manager. "We’ll be supporting the remodeler and architect with accurate installations that can be used in historic and traditional styles.”

Interior mouldings will withstand the housing drop-off, too, says Tom Talbot, founder and CEO of Glen Oak Lumber in Montello, Wis., which makes wood mouldings and trim. "We expect new-housing starts will be off significantly in some markets due to the hangover of inventory. But we expect the contract builder won’t notice the change in the market. And he is looking for bigger profiles in millwork and higher-end woods for interior trim. Price isn’t a restraint for the custom builders, many of whom are building homes for customers in their 50s and 60s. Those customers want an upscale look, something that’s bigger and bolder.”

It’s also important to keep the dip in starts in perspective, says Sitton. "We anticipate more of a flattening out than a big downturn,” he says. "And you have to keep in mind that housing starts are just low in comparison to the last couple of years. The growth we see will not be as explosive as what’s occurred in the last five to seven years, but [it will] still be very high.”

Demand Continues To Grow

Indeed, while moulding demand is expected to slow its growth through 2009, the category will continue to rise, according to a 2006 study by The Freedonia Group in Cleveland. The report says demand is expected to increase 1.7% annually "from a strong 2004 base,” to reach $9.8 billion in 2009. "This represents a significant slowdown from the advances recorded in the 1999 to 2004 period, reflecting a less robust building-construction environment,” the study states. As nonresidential construction continues to rebound and housing starts fall off, moulding sales in that segment will help offset the decline on the residential side.

Wood remains the premier material used to create mouldings, the Freedonia study says, accounting for two-thirds of total demand. But plastic (urethane and PVC) and composite mouldings are growing. Sales of those materials are expected to rise 6.2% annually through 2009, on a much smaller base than wood mouldings. "Plastics will continue to make inroads even in residential construction applications, where they are replacing wood products.”

"There is a growing awareness of the PVC market,” says Walt Valentine, president of Kleer Lumber in Westfield, Mass., which makes PVC mouldings. The company entered the market in 2003, he notes, and sales continue to grow, so the firm doesn’t anticipate a drop-off. "We’re seeing 15- to 20% annual growth: Customers switch to our products as they understand the capabilities of PVC,” he says. "But there still is a lot of the market that has not gained an awareness of PVC and the benefits [it] can offer.”

Gary Difazio, director of sales for Palram Industries in Kutztown, Pa., agrees. The company introduced its cellular-PVC trim early in 2006 in response to market demand. "We’re seeing a lot of interest from those [builders] looking to replace their wood mouldings,” he says. "Cellular PVC has gained a reputation for offering a high-end alternative, which is used more often by custom builders due to its ease and maintenance. So a drop-off in sales of production homes won’t affect us so much.”

Low Maintenance, Appearance Are Key

The key benefit that alternative materials offer is low maintenance. Resistant to moisture, they won’t rot and also can resist insects. "The trend is definitely toward plastics due to the changing demographics of the market,” says Peggie Bolan, director of marketing for CMI Inc. in Chicago, which makes composite-wood mouldings. "Everyone wants low- or no-maintenance products, especially older homeowners who are aware that it is an option today.”

That durability encourages more usage, as builders and remodelers can be assured that they won’t receive callbacks or run into problems due to moisture conditions, she points out. "Designers can be more creative and produce more detail, and their customers encourage that because they won’t have maintenance concerns.”

That doesn’t mean wood has lost its appeal, marketers note. As Freedonia’s study indicates, wood remains the dominant choice primarily because of the textural beauty it provides. "Composites are out there, but there is still a strong market for wood mouldings throughout the home,” says Windsor One’s Sitton. His largest competition, he notes, comes from local and regional mills. "They’re our biggest challenge, because there are many out there producing their own styles and types of products. The quality from offshore markets is substandard and lower than accepted, so it’s not as big of a concern.”

Textural beauty and low maintenance are the keys to homeowners’ hearts and pocketbooks, agrees Azek’s Murray. "Offering both low maintenance and the beauty of wood are very important,” she says. In addition, Azek has introduced a program with Sherwin-Williams to provide a wider range of paint colors than were previously available. "Now you can go darker and create custom colors like Chocolate Brown or Hunter Green,” she says. Palram too has introduced colors that haven’t been available on the market, says Difazio.

Environmentally friendly products also are high on homeowners’ wish lists, but all types of mouldings offer some benefits in that regard, marketers say. While wood is a renewable resource, plastic mouldings provide a long service life that reduces material usage over time. The plastics also can be recycled if they ever are removed. Kleer, in fact, touts itself as a green company because it recycles and reclaims plastic material in the production of its mouldings. Still, "product performance seems to outweigh environmental issues in terms of selection,” says Universal’s Fox.

Premium grades of wood mouldings are in higher demand, says Windsor One’s Sitton. "We’re seeing more and more paint-grade mouldings being used rather than stain-grade styles.” Koma added a millwork-grade product in October because of that increased demand, Shabal says. "We wanted to offer a premium product that can be machined to a greater degree,” he says. "We’ll continue to add extensions that will help support the range of exterior options and provide a higher level of finish that the market wants.”

New Styles Enter Market

As mouldings take on a more prominent role in helping homes stand out, contractors and homeowners are looking for new styles. "As remodeling grows, we’re seeing more crown mouldings and other decorative touches becoming important,” says Sitton. Adds Kleer’s Valentine, "We can cut mouldings to any size, and we’re getting more requests for larger sizes. We’re seeing 1 in. and even 1 7/16-in. thicknesses with widths of 8 in.”

Regional preferences for mouldings vary greatly and are a key driving force in selection, marketers agree. To some extent, that demand results from homes which were built at different times in different parts of the country. "We see more Colonial styles preferred on the East Coast, for instance,” says Sitton. "As a result, we try to keep our collections historically accurate because history is important to many homeowners.” Even the names of the collections can be regionally specific to tie into styles popular in that area, he adds. For that reason, in January the company introduced new products only on the East Coast.

CMI is testing prefinished products in the Northeast and mid-Atlantic states, says Bolan. "We’re seeing more styles of homes adding trim, with the average square footage of trim increasing. There are more widths available as mouldings get wider and wider because customers are realizing that moulding adds detail and stands out.” CMI is adding new products, she notes. "The trim category has just exploded with new competitors so there are a lot of product options available.”

Azek also targets regional differences. "In the Northeast, designers want cornerboards already joined to save time,” says Murray. "They also want wider corners and shadowlines, so they’re using 6-in. styles, where other regions want 4-in. options. Meanwhile, we’re seeing a lot more style elements being added in California. The climate is better so there are fewer maintenance issues. They’re using a lot of creativity.”

In some markets, larger jobs or commercial projects are using heat-formers to speed installation, she notes. Builders use heat blankets at the job site or create a heat-duct tunnel with propane heaters to form the plastic mouldings into the needed shape. "We’re seeing a large amount of customization on the job site and an unbelievable amount of detail in routing and heat-forming,” says Murray.

Fypon’s Riscili agrees that regional differences are strong, with some markets accepting newer materials faster. "Geographically, sales of our products are strong in the Northeast and Southeast due to home designs and the acceptability of both urethane and PVC products. We’ll focus on growing business on the West Coast in 2007.” Color options also vary across regions, adds Universal’s Fox. "Darker colors are becoming more prevalent in some regions of the country, which lends itself to the use of polystyrene moulding.”

Interior mouldings also are seeing expansions, based on species and design styles, says Glen Oak’s Talbot. "Oak mouldings have been strong in the upper Midwest, but oak is waning compared to poplar and red-leaf maple,” he says. The kitchen’s design holds the key to interior-moulding selections, he notes. "It sets the tone, and oak isn’t in the top five options for kitchens today.” Instead, he sees more cherry and maple being used.

Lengths also are growing, he says, driven by homes with higher ceilings. A 1x12 from oak or maple would be specified at 16 ft. in the past for stair risers, but now designers want 18- or even 20-ft. "Higher ceilings require longer stairs, and they don’t want to splice,” he explains. Glen Oak revamped its manufacturing processes to create pieces as long as 21 ft. because of this trend, he notes. The company also is looking to expand into the Southwest with a new distribution center this year to serve customers in a new region.

Moulding Uses Expand

Moulding also is expanding to new locations, adds Kleer’s Valentine. "We’re seeing it used around decks, as deck railings, and as soffits, with more uses for beadboard, too,” he says. "The applications continue to grow, especially for plastic products, which have great opportunities anywhere the material can come into contact with moisture. We don’t know all the possible uses yet.”

Indeed, some designers are using plastic mouldings on interiors, notes Azek’s Murray. "We’re seeing our mouldings used in bathrooms or on kitchen backsplashes, anywhere there can be moisture.”

Combinations also are becoming more evident, says CMI’s Bolan. "We see more houses blending materials based on location and the texture desired. They’ll use plastic mouldings where moisture will be an issue and go with cheaper alternatives in other locations. People are more willing to experiment as they see more options are available.”

For that reason, Fypon’s Riscili intends to promote the value of dealers selling mouldings based on the entire project. "The ‘whole house’ sales concept is possible with synthetic millwork products because there are so many vast uses for urethane and PVC products on both the interior and exterior of the home,” he says. "Inside, you’re looking at moulding, millwork, and faux beams for ceilings. On the exterior, there are balustrade systems, fabricated PVC trim pieces, window and door trim, columns and column wraps, louvers, and E-vent systems.”

The key to improving sales is educating dealers, builders, remodelers, and homeowners about the value of each type of moulding product and the long-term value the mouldings represent, as well as impressing upon the group the variety of ways mouldings can be used. "People are looking for value in every product so you have to show them that the higher cost for plastic mouldings will pay off with long-term durability,” says Kleer’s Valentine. "There are profit opportunities in showing customers more uses for mouldings and the different products that are available.”

To aid that higher profile, Koma has launched a program promoting the range of capabilities for mouldings, using concepts from the Luciani Building Group in North Hampton, N.H. "It’s a cross-promotional strategy to reach everyone in the channel to raise awareness of the value of adding details to homes and encourage more trim to be used,” says Shabal. "Our intent is to help grow the category and raise the tide for everyone.”

That tide seems to be rising anyway, albeit slower than hoped, and marketers are encouraged by the opportunities, despite a relative housing downturn. "Builders are realizing it’s more important than ever to stand out, and that those houses will sell quicker,” says Windsor One’s Sitton. "We’re certainly looking at new species and profiles all the time.” Adds CMI’s Bolan, "There aren’t a lot of new products coming out or a lot of news per se, but there’s a lot more interest in mouldings than there has been.”

Internet Information

To learn more about these companies’ products, visit these websites

Azek: www.azek.com

CMI: www.craftmasterdoordesigns.com Fypon: www.fypon.com Glen Oak Lumber & Milling: www.glenoaklumber.com Kleer Lumber: www.kleerlumber.com Koma Trim: www.komatrimboards.com Palram Industries: www.palram.com Universal Forest Products: www.universalforestproducts.com Windsor One: www.windsorone.com

CRAIG A. SHUTT, senior contributing editor of the magazine, has nearly 30 years experience covering the LBM industry.

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