The current market for wood coatings and preservatives is being impacted by a variety of factors including a cautious economic outlook, rising interest rates, and subsequenly a slow down in new housing starts, new home sales and remodeling projects versus where the market was three to five years ago, explained Jacquelyn Ferrara, director of marketing-Minwax and Formby's, Sherwin-Williams Wood Care Products.
Despite a challenging market environment, demand for wood protective coatings and preservatives is forecast to increase a slow but steady 2.7% per year to $3.0 billion in 2009, according to a new report from The Freedonia Group titled, "Wood Protection Coatings & Preservatives." By application, 33% of this $3.0 billion market is represented by siding, 19% decking, 11% furniture, 7% cabinet applications and 25% other various applications (see charts below).
EPA regulations tightening VOC emission standards for the surface coating of wood building products, such as flooring, millwork, siding, and windows and doors will be one of the biggest factors affecting the 2006 wood coatings market, according to Pamela Prokop, industry analyst, Freedonia Group. "While many facilities have already made adjustments, the industry officially has until mid-2006 to comply with these regulations," she said. "These regulations will promote the use of lower VOC emitting coatings, such as water-based, powder, UV-cured and high solids solvent-based."
Pending VOC regulation changes in southern California is a major factor that will impact how coatings manufacturers go to market in the next one to two years, commented Leslie Juhn, category manager, Wolman Wood Care Products.† "Many companies have a stable of oil base products whose formulas will have to be adjusted to meet VOC levels as low as 100 g/1 for shipment into southern California and other northeastern/mid-Atlantic states."
Growth has remained strong in the exterior decking market in spite of various market challenges.
The move toward waterborne and low-VOC coatings to meet environmental regulations is affecting both the interior and exterior wood coatings and preservatives markets. "In many cases the waterborne products are more durable than solventborne formulations but they may also apply differently and look differently during application than the familiar oil-based products."
Exterior applications, as a group, will lag aggregate gains for wood coatings, commented Prokop. "In exterior applications, wood is faced with a declining market base as alternative substrates, such as vinyl, continue to gain in popularity among contractors and consumers," she said. "Among exterior applications, wood siding will continue to suffer the most market share losses, particularly at the hands of vinyl and fiber cement. However, the relatively frequent maintenance requirements of all exterior wood products will provide opportunities for coatings. For example, individuals concerned over the potential leaching of CCA into soil will promote the regular re-application of coatings on wood decking, children's playsets and various landscaping items."
CCA, or chromated copper arsenate, is a preservative that was voluntarily removed from use in the production of pressure treated wood for residential applications at the end of 2003.
Discussing alternative materials, Mike Kozlowski, director of marketing, Thompson's Water Seal Brand, said composites are becoming an impressive segment of the market. "Consumers are choosing these products because they are marketed as requiring lower maintenance than wood," he said. "However, their original position has changed over time from 'no maintenance' to some maintenance needed to remove dirt and mildew."
During the past few years consumer focus has shifted to outdoor living and outdoor decorating, bringing a fresh energy and excitement to the deck market in particular, according to Kozlowski. "More than ever, consumers are inspired to try new designs, products and materials for decks. With the deck as the centerpiece, homeowners are adding other features like outdoor kitchens, arbors and pergolas,"† he said. "As the exterior decking market continues to grow, and so does the opportunity for deck cleaners, waterproofers and stains" †
Overall, in spite of several market challenges in other segments, the exterior decking market remains strong with continued growth††† forecast at least through 2009. "Although composite decking continues to grow, wood remains dominant," said Joan Griswold, executive vice president, sales and marketing, Penofin Performance Coatings. "And since 85% of all decking demand comes from remodel and repair work, continued growth looks very promising for the future."
Exotic woods are also capturing a great deal of attention, but remain a tiny fraction of the total decking market and people are also increasingly interested in using color on these outdoor structures and in decorative treatments using waterproofers and stains.† "This can be as simple as using one color on the deck, and a complementary color on railings and steps," said Kozlowski. "It's even possible to create patterns on the deck using multiple shades of product."
Decorating outdoor wood with two tone color is a trend that is emerging and the growing use of plastic/wood composites, and to a lesser extent, exotic hardwoods, in place of traditional domestic wood species for deck building is another trend that has been improving for the last five years, according to Juhn of Wolman Wood Care Products. "Also, homeowners and the contractors they hire are adding decks to new home construction more often, are building larger decks than in the past, and are using stains more often than clear sealers to obtain a greater variety of color choice and longer-lasting color, which equates to less frequent maintenance."
As more decks are built each year, there will be greater demand for exterior wood coatings. "Consumer interest in outdoor living continues to increase, and is likely spurred on by the sheer number of outdoor living products introduced each year, said Juhn. "Home improvement and monetary investment in one's house or condominuium is still touted as a good way to increase resale value and buyer appeal when or if the dwelling should be offered for sale. Building or adding a large deck for entertaining guests as well as for personal enjoyment coincides with homeowners' desires for spending free time at home."
"Interior applications will provide more favorable opportunities for wood coatings, where wood is highly valued for its aesthetics and durability," said Prokop. "Despite gains for wood coatings in interior applications, obstacles will arise, including a shift in wood products manufacturing capacity, particularly wood furniture, to offshore locations. In addition, the longevity of interior wood limits gains in coatings demand, as maintenance requirements are infrequent."
According to Griswold, in general there is a move back to natural wood finishes in all areas of interior applications including doors, moldings, chair rails, and windowsills. "However, at the same time this rebirth in natural wood finishes is occurring, there has been an amazing growth of exotic hardwoods in cabinetry and flooring as a continued trend in interior applications."
There also continues to be a trend of adding custom color stains on wood as part of an overall design/decorative scheme. "This is evident on architectural elements in the home including kitchen cabinets and bath vanities, for example, as well as on furniture, molding and trim," said Ferrara. "These water-based stains in greens, blues, reds, yellows and pinks, among others, add decorative color without obscuring the beauty of the wood's grain."