August, 2008

Engineered Wood Products

As suppliers fight price competition from dimensional lumber, they expand in new markets and look to greenbuilding programs to provide long-term prosperity.

By Craig A. Shutt

While the current housing market has marketers of engineeredwood products concerned about customers who may be tempted by low prices for dimensional lumber, most aren’t worried that such changes will occur long term. That’s because the proliferation of product options and interest from new markets continue. Marketers say growing awareness and expansion of green-building programs also bodes well when the market returns.

The product range for engineered wood includes I-joists, glued laminated (glulam) beams, structural composite lumber, rim boards, laminated veneer lumber (LVL), laminated strand lumber (LSL), and a variety of other items that use wood to create higher-performance products. These materials sell at a premium over traditional lumber, however, which is causing some builders to consider returning to traditional products.

“The industry has lost some market share back to dimensional lumber in the current market,” says Denny Huston, sales and marketing manager at Boise Engineered Wood Products in Boise, Idaho. “There’s a huge disparity with lumber prices now. If builders are looking to save money—and they all are—they may switch, even though it takes a little more time and labor to work with lumber. They forget all the savings.” Those considerations mostly tempt the small- and medium-sized builders, he notes. “The largest ones understand the benefits even with a higher initial price, and they won’t switch back.”

Value Engineering is Key

Paul Watterson, general manager for engineered lumber at BlueLinx Corp. in Atlanta, the exclusive distributor of Georgia-Pacific’s new XJ 85 wood Ibeam joists and some of the company’s other engineered-wood products, agrees that builders want to save costs where they can. “They’re definitely focused on value engineering,” he says. “That may take the form of moving down a series on I-joists. Builders have always been watching their dollars. This year, they’re watching their dimes and pennies.” But he hasn’t seen any shift to dimensional lumber, he adds. “That bodes very well for the future.”

Value engineering is a key concept for builders, agrees Brent Ellenberger, sales manager in the Parker, Pa., office of Universal Forest Products Inc. “Builders are looking for more value, as well as performance.

Engineered-wood products are more economical and add comparable if not greater performance than other products on the market.”

Part of that is derived from the products’ capabilities, he notes. “We can spec the proper size for columns based on known design values. That helps eliminate unnecessary costs from oversizing and minimizes the risk of undersizing the correct products.”

Others agree that most builders are not finding cheaper lumber to be an enticement. “We’ve been watching for shifts back to lumber, and there have been some small pockets in some regions,” says Cleon Pilon, strategic product manager for iLevel by Weyerhaeuser, based in Boise. “But it’s mostly been with multifamily builders, not with single-family builders, and not with custom builders. The high-end homes are less concerned about cost.”

Most marketers don’t expect a major shift, especially long term, adds Terry Stone, general manager for marketing at Ainsworth in Vancouver, B.C. “The larger builders, or at least the savvy builders of any size, have made the conversion to engineered-wood products, and they aren’t going to make another change. It’s attractive to get a cheaper price, but once you’ve used the products and see the savings are real, you don’t go back.”

“Some builders may shift back to plated trusses because they’re cheap, and they can find labor right now,” notes Bob Berch, national sales manager for the Engineered Wood Product Group at Roseburg in Roseburg, Ore. “But these are short-term issues due to the housing slowdown. Long term, engineered-wood products are the future. Builders recognize the quality, the availability, and the labor savings.”

In fact, adds iLevel’s Pilon, some Weyerhaeuser products have actually gained market share and sales because custom builders, who prefer those products, are holding their own in this market.

Packages, Systems Flourish

Another silver lining comes from builders who have time to step back, assess their processes, and determine where they can cut costs efficiently. One way they’re doing that is by systematizing their products and processes. “Homebuilders want to buy a package of materials, as well as preassembled products,” says Ainsworth’s Stone.

That bodes well for dealers’ own assembly processes and installed-services programs.

“Builders and remodelers both want packages delivered to the site, and not just one facet of the system but the entire
solution,” Stone says. That includes trusses, stair systems, and all types of complex components.

Anthony Forest Products Co. has focused on creating packages, says Kerlin Drake, vice president of marketing at the El Dorado, Ark.-based company. “We’re trying to attract new markets by putting products together as a ‘family’ to market them as a system. It helps to create brand identity.”

New Products Grow

The number of new products being introduced and lines that are expanding point to the potential of this market. “Tall engineered studs are definitely making inroads due to the tall walls being built,” notes iLevel’s Pilon. “Custom builders, especially, are using them, because they use open plans with high ceilings. But now they also want to ensure walls are straight, especially in kitchens and bathrooms.”

“Tall walls definitely are a new opportunity for engineered wood products,” agrees Jim Walsh, sales manager for Rosboro in Springfield, Ore. Window companies have been pushing builders to use the products because traditional framing isn’t “beefy” enough to handle the wind loads, he says. That results in window companies voiding warranties. “It’s still the early stages of builders recognizing these products.”

Universal Forest Products has introduced Universal Glulam Plus Columns to provide structural integrity for tall pole buildings.

The product, now available in the Midwest, uses three- or four-ply sections in 2-ft. increments up to 32 ft. The columns, dubbed “the next generation of laminated columns,” are treated on the bottom for ground-contact applications. Structural panels, especially insulated ones, also are growing in demand, says Robert Fouquet, vice president of marketing and sales at Ainsworth. “Many builders are interested, and manufacturers we have talked with say that while residential construction is down, their sales are up. People want energy efficiency in their homes.”

Complete stair systems also are growing in demand, says Ainsworth’s Stone. The company’s SteadiTred engineered stair tread, introduced in 2006, is replacing lower-priced products due to its faster installation and better performance, he says. “It offers longer spans, no waste or damage, and no need for temporary stairs,” he notes. “Builders recognize that, at the end of the day, those benefits create savings.”

This year the company introduced an OSB concrete-forming panel that is FSCcertified, to serve as an alternative to B-B plywood. It allows forms to be stripped quicker and to be reused, reducing costs Treated beams also are growing in popularity, with a number of companies promoting their availability. Anthony Forest Products introduced treated glulam beams in November, “and they’re competing very well,” says Drake. Rosboro likewise has seen interest gaining as awareness of the product’s stock availability grows. “Beams were being treated, but now the logistics and time have been cut by having the treating done in advance,” he explains. “Now that builders are learning they are ready to go, they’re looking at them more.”

iLevel by Weyerhaeuser has introduced Wolmanized beams and columns, combining the benefits of its Parallam beams with wood treatments. The products are especially popular in coastal areas subjected to saltwater splash, notes Pilon. After making them available on the East Coast for several years, the company expanded into Utah and northern California last year. This year, Texas has been added to distribution.

Services Aid Dealers, Builders

Even as product options expand, attention turns more to services, says Boise’s Huston. “The product line is pretty efficient and well designed, so we’re spending most of our time providing innovations on the service side.” That includes the company’s new BC Estimator digitizing/estimating software, which integrates with its other programs. “BC Estimator, together with our other tools, including the SawTek automated cutting systems, lets builders accommodate last-minute plan changes profitably— something that’s been sorely missing in our industry,” he says.

New programs also have been introduced by iLevel by Weyerhaeuser, including the Performance Connection Tool that uses a web-based interface. The user enters the local zip code and receives a listing of products based on the appropriate seismic-design category, maximum wind speed, snow loads, and average annual precipitation for that area. The listing includes products for floors, walls, and roofs, including joists, studs, sheathing, panels, and wall braces.

The program adds to the company’s variety of services, including the NextPhase Site Solutions, which consists of products, proprietary software, and services that allow builders to walk into dealers’ locations with architectural plans and walk out with an integrated framing solution. “Dealers will drive a lot of innovation as we move out of this down cycle,” says Pilon. “We want to help them provide the services that builders want.”

New Markets Added

New markets also are gaining interest from engineered-wood marketers, especially multifamily housing, where project managers are looking to cut costs. “The slowdown in residential business has caused us to look for new market segments to go after,” says BlueLinx’s Watterson. That led Georgia Pacific to introduce the XJ 85 joist earlier this year, which BlueLinx distributes. It’s a deeper, trimmable joist that provides standard precut holes of all sizes and shapes for mechanical needs. “As multifamily housing comes back, we’ll benefit from having products targeted to that market and from focusing attention on their needs.”

“There are a ton of builders who are really building their business today on the multifamily side,” agrees Boise’s Huston. “That sector always has been price sensitive and slower to adopt new products. We expect to gain market share there, especially among property-management people who understand the long-term benefits of engineered wood.”

Changes and restrictions being added to building codes also are gaining attention for engineered-wood products, says Rosboro’s Walsh. “We definitely see more codes picking up on the value of engineered wood,” he says. “And code officials are great sales people for us. They require it and ask the right questions of the builder about how he’s building, and the builder has to have the answers or get them.” That, in turn, leads them to discover that engineered-wood products have the answers waiting.

Huber Engineered Woods promotes recognition by codes of its ZIP System structural roof and wall panels, which combine structural and underlayment benefits in one unit. Huber says the combination saves time, eliminates rework, and ensures code requirements are met.

Code officials along the Gulf Coast are particularly interested in these products’ benefits. “Codes are looking at the malleability of wood versus steel, and they’re seeing that wood makes a better shear brace,” says iLevel’s Pilon. That’s especially critical in the West due to high-seismic areas, although seismic needs across the country have been tightened. “Smaller pockets were not taken into account, but now code officials are very aware of the differences that can occur and they know what’s needed.”

Wind forces also have gained attention nationwide, he adds. “Shear bracing used to be a concern only on the West Coast, but now it’s anywhere that 90-mph winds can be generated.” That especially is affecting tall-wall applications. “Previously, tall walls were built without a second thought. Now, code officials want to see the design, so we have created design tools for helping to design to the code.”

The company has introduced the Shear Brace, a pre-built, engineered panel to improve the performance of shear walls.

Hurricane Katrina also has brought requirements for raised-floor applications along the Gulf Coast, which has opened a considerable new market. The requirements mandate homes be constructed 1 ft. above the flood line, eliminating concrete slab-on-grade designs. “This effort is helping builders switch to a new strategy of building in these areas,” says Ainsworth’s Fouquet. “They aren’t used to building wood floors, but they’re coming around.”

A number of organizations, including Southern Forest Products Association, APA—The Engineered Wood Association, and the Southern Pine Council are promoting the benefits of raised-floor building. APA and SPC recently joined to contribute to Habitat for Humanity programs along the Mississippi state coast.

“There’s a lot of opportunity for using treated beams in these applications,” says Anthony Forest Product’s Drake. “These uses will take share from concrete rather than from other kinds of wood. They also are using more panel products and wood joists. It’s a definite change, and it represents a great opportunity for growth.”

Green Interest Explodes

In addition to this attention, consumers and builders alike are looking closer at engineered-wood products as the benefits of green building gain awareness. “Green interest right now is pretty high,” says Jeff Key, marketing communications manager for Georgia-Pacific.

“We get a lot of questions about green building and sustainability. But it’s more talk than action. It’s a growing trend, but they’re not putting their money where their mouth is yet.”

Even so, he notes, “There are some pretty progressive builders out there looking to differentiate their homes and their subdivisions, and some are marketing their green building as a benefit.”

Roseburg’s Berch agrees with that assessment. “Most people want to know about green products, but they don’t want to pay for it. But as it goes forward, they’re finding that the greenest product you can have is wood.” All of Roseburg’s products are FSC-certified, and the company is taking that certification down to the wood chips they create, he notes.

Adds Ainsworth’s Fouquet, “In this period of downturn, builders are interested in anything that will give them differentiation and allow them to stand out. Green building is one of those things, and engineered wood is part of green building.” Some builders are expanding on that concept to create entire green developments rather than one home, he adds. “They want to attract that audience that is not as price conscious and will pay for less environmental impact and reducing their carbon footprint.”

Anthony Forest Products has picked up some customers due to its SFI certification, says Drake. “The green message is a big deal, no matter where you are. But when it gets to the individual rating systems and what they mean, it gets confusing.”

Indeed, although the Leadership in Energy & Environmental Design (LEED) program from the U.S. Green Building Council has gained the most attention, its greatest impact comes on the commercial side. It has introduced a residential program, but their approach does not impress wood marketers, who see a bias toward commercial-grade products, such as steel and concrete, which can be manufactured close to the site. Marketers have high hopes for the National Green Building Program introduced by the National Association of Home Builders, which anticipates framing a home with wood.

“I hope the NAHB program takes a leadership position because it presents the most responsible approach for housing,” says Boise’s Huston. “We expect it will become the only program followed for residential housing.”

Roseburg’s Berch agrees. “LEED in particular has been promoted by architects and commercial-building owners,” he says. Many public buildings, including government centers, schools and hospitals, follow LEED guidelines, which has boosted its public awareness. But the NAHB program helps people understand the value of building with wood. “Wood rates very well in the NAHB program, and if people understand that, the engineered-wood products will grow and have a strong impact on the industry.”

Defining what “green” means can be difficult, points out Georgia Pacific’s Key.

“There was a belief that cutting down trees was bad, but the energy to produce the trees used for engineered-wood products is far less than for concrete and steel,” he says, noting that OSB technology allows smaller and faster-growing trees to be used. Processes also reduce the amount of wood fiber required in each product, with virtually all of the tree’s wood being used.

The interest in green building is not just a fad that will fade, stresses Roseburg’s Berch. “There’s going to be fundamental changes in the market as homebuilding begins to return and home buyers gain a new awareness,” he says. That will dovetail with the aging population, which will demand smaller, more state-of-the art homes that require less maintenance and provide higher energy efficiency.

Those approaches to efficiency will spread throughout the buying public, he predicts. “Everyone is going to be smarter about affordability, which will be a big issue, along with heating, cooling, and water use,” he says. “I expect there will be a new mentality about building that will catch on in the next few years. When we’re back to 1.8 million housing starts in a few years, we’ll be building a different kind of house, in a different shape and size, with more townhomes and condominiums.”

The demand for a smaller carbon footprint and more awareness of green building— along with continually rising energy costs—will drive innovation. “Ten years from now, we’ll look back to today and be surprised at how far we’ve come in this regard,” he says. “But more than likely, the approaches and products being used won’t be what we expect them to be today.”

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