Wooden decking still has a 46 percent market share in the region, but a majority of outdoor living spaces are now constructed with composite and cellular PVC boards that stand up to weather and require little maintenance.
Alternative decking products, which include capped and uncapped composites, are doing best in this U.S. region, according to an industry analyst at Principia Consulting LLC, a Malvern, Pa.-based research and consulting firm.
The West is next. However, in this region, alternative decking accounts for 40 percent of demand, compared with 56 percent for wood — particularly cedar — although some pockets of California prefer redwood.
The market share gap widens in the Midwest, Southeast and Southwest, where wood, which also includes pressure-treated lumber and hardwoods, satisfies 59-73 percent of demand, while alternatives top out at 25-36 percent.
Composite decking manufacturers are out to change that. They have been chipping away at wood sales for years with improved performance and better warranties. Now they're trying to compete on price, too, in a market where 1 percentage point represents about $50 million in sales.
The U.S. residential decking market, which was valued at $3.1 billion in 2018, will grow 6.5 percent annually in value by 2021, according to Principia.
Overall, the firm says wood decking in 2018 had a 79 percent share of the market by lineal-foot volume; alternative-wood decking had a 19 percent share; and other decking, such as hollow vinyl, plastic lumber and metal, had a 2 percent share.
In 2015, wood decking's market share was roughly 80 percent. Wood price increases and manufacturing advances to meet consumer demands for decking that stays cool under the hot sun and better replicates wood helped bolster capped composite sales.
To keep the momentum going, Trex Co. Inc. and Azek Building Products have joined the former Fiberon LLC, which was acquired last year for $470 million by Fortune Brands Home & Security Inc., in reducing the inputs for capped composite decking by going with a scalloped underside. The redesign requires less material, and that savings can be passed on to consumers.
With sales of $613.2 million, Winchester, Va.-based Trex is the No. 6 manufacturer of pipe, profile and tubing in North America, according to Plastics News' latest rankings.
Fiberon designed its decking with grooves about five years ago, and this year Trex's brand of Enhance Basics and Azek's brand of TimberTech Edge Prime are bringing more attention to the option.
"It's possible wood alternatives will approach 20 percent of the market if lower-priced decking products released by Trex and TimberTech cause wood conversion to accelerate faster than we've anticipated," Nancy Musselwhite, an industry analyst at Principia, said in a phone interview. "At this point, it's too early to tell."
The changing market also could mean that instead of taking sales from wood decking, capped composite products, which usually have a protective PVC shell, may take share from uncapped composite products.
"So rather than grow wood alternatives, lower-price capped could cannibalize uncapped and cause share shift within wood alternatives," Musselwhite said.
Regardless, capped composite decking will continue to be the fastest-growing product with a projected growth rate of 8 percent by value, while uncapped composite is the only kind of decking with a negative growth rate — it is showing a -1 percent projection — between 2018 and 2021, Musselwhite said.
To meet demand, Trex is expanding capacity for Enhance Basics and the higher-priced Enhance Naturals capped composite decking, which are made of recycled polyethylene and reclaimed wood, a year ahead of schedule.
The company is investing $200 million to increase production at its Fernely, Nev., plant, starting this quarter and will open another manufacturing facility by its headquarters in 2021.
Trex encountered startup problems in Virginia and equipment failures in Fernley that have product shipments behind schedule, but it is working through them.
"Stronger-than-expected demand across all decking lines and challenges faced in the production ramp-up earlier this year for Enhance combined to create longer lead times for Trex," Leslie Adkins, vice president of marketing for Trex Company, told Plastics News.
The company moved to an allocation program in Nevada to ensure a more balanced distribution of its products to customers in the Western U.S. The program was set to run through July but has been extended.
"For markets served by our Fernley production facility, the allocation program details were shared with our distributors, with whom we are in constant communication. The allocation remains in place through the remainder of this deck building season," Adkins said.
Enhance Basics costs $1.75 per lineal foot, Enhance Naturals and Trex Select decking cost $2.50 per lineal foot, and Trex Transcend costs $4.25 per lineal foot.
Even though Enhance Basics costs twice as much as pressure treated lumber, which is about 85 cents per lineal foot, it will be within reach of more buyers and has a good value proposition, Adkins said.
"Wood may be cheaper, but it comes at a price when you factor in the maintenance required," she said. "Enhance Basics solves for that with a low-maintenance, eco-friendly wood alternative that is priced to put the pressure on treated lumber."
The response to the launch of Enhance Basics and Naturals products was positive from the start at both professional and retail channels, and consumer feedback has been encouraging, Trex Ceo Jim Cline said during the last quarterly call with investment bankers.
"This supports our conviction that the new Enhance products will significantly increase our addressable market and accelerate conversion from the dominant wood market," Cline added.
Trex officials also say the company's decking has a smaller carbon footprint than wood. Composite decking lasts longer, and it doesn't need any fossil fuel-based chemical stains and sealants.
In addition, Trex decking is manufactured from recycled plastic PE film and wood diverted from landfills, which also appeals to some consumers.
Azek Building Products' TimberTech brand says the benefits of the scalloped profile reduce the weight of Edge Prime decking without sacrificing durability and strength.
The company opened a $25 million recycling facility in Wilmington, Ohio, to turn polyethylene into shredded flakes that can be formulated with wood fiber and then extruded into decking boards sold as both Edge and Pro decking.
The company's goal is to recycle 100 million pounds a year of used plastic wrap, shampoo bottles, milk jugs and detergent bottles to save landfill space while insulating the company from market fluctuations for virgin resins. The first recycling line is operating 24/7 with a second one scheduled to go on line this month and the third in early 2020.
The company also added multi-width planks to its cellular PVC line of Vintage decking to replicate the indoor-to-outdoor look and offer more design options. Boards in widths of 3 ½ inches and 7 ¼ inches were added to the standard 5 ½-inch-wide boards.
The new owners of Fiberon, acquired for $470 million in August 2018, said in April they will accelerate capacity investment ahead of growth initiatives. They plan to offer specifics later this year.
The goal is to sustain above-market growth rates and realize new opportunities that Fortune Brands expect to come about in the second half of 2019, according to CFO Pat Hallinan.
The company put Fiberon in its newly formed Doors & Security unit, where it contributed $37 million in the seasonally low first quarter. Overall, unit sales were up $49 million to $296 million.
"Our integration effort with Fiberon is progressing well and we're investing in product line expansion and capacity ahead of a range of new opportunities that will begin to be realized later this year and into the following years," Hallinan said in a conference call about first-quarter results.
MoistureShield decking, a brand of Atlanta-based Oldcastle APG, a U.S. subsidiary of CRH plc, of Dublin, introduced an enhanced all-polymer cap this year to the Vision line called DiamondDefense. The company says the coating is durable enough to withstand high-heel shoes, furniture legs and golf cleats without scratching.
"DiamondDefense represents an evolution in MoistureShield cap technology. This exclusive technology provides the strongest composite cap in the industry to resist damage from scratches, stains and fading," Joey Peters, a senior brand manager, said in a press release.
The innovation follows another Vision line improvement called CoolDeck technology, which the company says reduces heat absorption by up to 35 percent compared to conventional capped composites.
Oldcastle entered the composite decking market in 2017 when it acquired the business in a $117 million cash deal from Advanced Environmental Recycling Technologies Inc.
For 2018, CRH reported sales of $30.1 billion, which it says was 6 percent ahead of 2017, but the company doesn't break out decking results.
Zuri-brand decking manufactured by Royal Building Products is doing well in the niche it carved itself in the composite segment, Scott Szwejbka, vice president of the exteriors business, said in a phone interview. Made from cellular PVC, the boards are designed to compete against high-end, exotic-looking woods.
The PVC substrate is capped with a photo-realistic wood-grain print and then a protective clear acrylic.
"This is not a deck you choose instead of treated pine," Szwejbka said. "It's an expensive deck designed to be an alternative to teak. It's a premium look. Trex and Fiberon are trying to get to that level."
"Zuri is doing well in its segment and I do see more and more movement away from wood," Szwejbka said.
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