Outlook depends on downstream demand

The Plywood, Veneer and Fabricated Wood Manufacturing industry in Australia is influenced by demand for plywood, veneer and fabricated wood from downstream industries, particularly within the housing and commercial construction sector. According to IBISWorld industry analyst Alen Allday, “with weaker residential and non-residential building construction activity in 2011- 12, industry revenue is estimated to decrease 2.6% for the year to $1.67 billion”. Source: Timberbiz
Over the five years through 2011-12, industry revenue is estimated to have declined by an annualised 1.8%, with moderate fluctuations from year to year. Residential construction activity increased steadily in 2006-07 and 2007-08, largely due to high demand and the First Home Owner Grant, while commercial and industrial construction activity increased rapidly. As residential and non-residential building construction activity declined significantly in 2008-09, industry output fell. Despite increased construction activity in 2009-10, industry revenue declined due to lower output and prices. Industry output increased strongly in 2010-11 as the construction sector increased inventory levels. This is expected to be followed by a relatively large decline in 2011-12 as construction levels remain weak. Lower furniture manufacturing activity in recent years also contributed to industry declines.
In the five years through 2016-17, industry output volumes are expected to increase despite lower output forecast in 2012-13.
Although industry revenue is also forecast to decline in 2012-13, industry revenue is forecast to increase as growth returns from 2013-14. “The outlook for the industry depends on downstream demand from the construction sector in Australia and other wood product manufacturing industries”, Allday adds. Future demand for the industry’s products is expected to be low due to major housing price increases in recent years and uncertainty surrounding future interest rate rises and economic conditions.
Over the past five years, the level of market share concentration in the Plywood, Veneer and Fabricated Wood Manufacturing industry increased, with several major players expanding their operations and increasing market share. Dozens of other small and medium-size producers operate within the industry. Market share concentration is expected to increase slightly over the next five years due to further merger activity by the largest companies in this industry, and with other firms expected to exit the industry, particularly exporting companies. The largest firms in this industry are also expected to continue to expand operations into new geographic regions, and with new wood products. The four largest companies in the industry are Fletcher Building Limited, Building Supplies Group Holdings Pty Limited, Boral Limited and Gunns Limited.