Composite decking and railing market continues to grow

The total demand for decking and railing in the North American residential market was up slightly in 2010 compared to 2009, and it is expected to show a modest increase in 2011 to $3.4 billion.

The total demand for decking and railing in the North American residential market was up slightly in 2010 compared to 2009, and it is expected to show a modest increase in 2011 to $3.4 billion, according to a new report titled Residential Decking and Railing, 2011 from market research firm Principia Partners (Exton, Pa.). The total decking and railing industry value, based on manufacturers’ pricing, will increase by more than 5 percent this year. Driven largely by price increases for most plastic-based decking and railing, the growth also benefited from a continuing shift in the available product mix from lower-priced, uncapped wood-plastic composites (WPCs) to premium, capped WPCs (with a coextruded polymer cap or coating layer) and cellular vinyl decking.

Steve Van Kouteren, a principal at Principia Partners, says, “The market has enthusiastically embraced the new ultralow-maintenance (ULM) decking products, including the new capped WPC decking. Ultralow maintenance properties and the new improved aesthetics drove a nearly sixfold increase in demand for capped WPC decking in 2010 vs. 2009. In addition, the darker cellular PVC decking with variegated colors, led by brands AZEK (Moosic, Pa.), Fiberon LLC (New London, N.C.), TimberTech Ltd. (Wilmington, Ohio) and Trex (Winchester, Va.), increased cellular PVC growth by nearly 40 percent in 2010. We expect these trends to continue through 2011.”

Altogether, the ULM decking category, which includes capped WPCs and cellular vinyl, now accounts for nearly 45 percent of the total synthetic decking demand, up from 15 percent in 2008. Growth in ULM demand, the expansion of channel partnerships and a customer base that favors the larger, established players, have combined to increase industry concentration. For example, the top four players increased their market shares and now account for more than 75 percent of the market, compared to 65 percent in 2008. The top 10 suppliers now account for more than 95 percent of the market, compared to 90 percent in 2008.

The general decking and railing demand is forecast to grow by about 8 percent per year, on a value basis, through 2013. The high growth rate is partly due to price increases for plastic-based products, continued product mix shifts and the assumption that there will be solid growth in new home construction and remodeling in 2012 and 2013. However, there is considerable downside risk in the forecast as housing prices and the inventory of foreclosed homes continue to dampen the demand for new homes, as well as the possibility that the economic recovery will stall.
According to Principia, this yearly study is intended to provide existing and new industry participants a baseline analysis for year-over-year forecasting and business-planning purposes. For more information, visit the company’s Web site at www.principiaconsulting.com.