Residential construction is big business-with nationwide home builders, professional builder suppliers and big-box retailers-that leaves little room for error by suppliers, said a Louisiana-Pacific Corp. official.
Those customers, and the home buyers they serve, demand innovation and a competitive price, said John Sooker, general manager for LP's outdoor living group.
``You want to win a national contract? You want to be a key supplier? You've got to be in all these different channels,'' he said March 2 during Plastics News' Executive Forum in Litchfield Park.
Fewer customers handling bigger volumes means more pressures, said Sooker, who compared the big builders with the Big Three automakers. ``To be successful, you really need to have a leadership position with your product - with very good geographic distribution. That's very, very important,'' he said.
Sooker joined Nashville, Tenn.-based Louisiana-Pacific in 1995 as product manager of its exterior sidings division. LP, known as the world's largest producer of oriented strand board, has moved aggressively to expand into plastics.
LP now is a major player in wood-plastic composite decking, with its WeatherBest product. LP has invested more than $80 million in the composite decking segment. Sooker said the total market was $600 million in 2002, and it should triple by 2010 to $1.8 billion.
``We see this as being the single biggest opportunity for our company,'' Sooker said.
Sooker outlined short- and long-term economic drivers for construction products. LP is predicting a 2005 decrease in housing starts and remodeling spending, although both are at a high level.
Mortgage rates are going up. ``This will take big chunks out of the population of people who can buy homes,'' he said. Unemployment is down.
Longer term, Sooker cited positive factors such as an increasing number of new households. Immigration should hold up as well. ``Who are these people? They're workers, they're consumers and they're homeowners,'' he said.
Sooker said high resin prices are a question mark. Vinyl siding now competes with a fairly new player, fiber cement.
Vinyl siding has grown because it is inexpensive, durable and low-maintenance. But if vinyl keeps going up in price, ``you're going to stall that growth,'' he said. ``And the guy who is waiting for you is fiber cement.''