The wood-plastic composites industry has gotten an adrenaline shot from the growing acceptance of alternative deck and railing systems - products expected to gain rapid market share during the next five years.
In fact, by 2010, composite decks are expected to grow to about 35 percent market penetration - up from 10 percent in 2004.
"As we move into 2006, this has become a very different business," said Harold Stanton, executive vice president of specialty products and sales for Louisiana-Pacific Corp., a building products conglomerate based in Nashville, Tenn.
Stanton was the keynote speaker to kick off the 2005 Wood-Plastic and Natural Fiber Composites conference Oct. 24 in Baltimore.
Consumer awareness and acceptance is keeping pace with some of the latest technological advancements in any industry - including the changeover from compact discs to digital music files, Stanton said.
"That's a fast market-adoption rate," he said. "It's faster than MP3s."
There ultimately will be a number of factors that help composite decking continue its breakneck growth rate, said Dick Gauthier, vice president
of marketing for Grand Rapids, Mich.-based Universal Forest Products Inc. The company's annual sales in composite decking materials are
about $35 million.
Both Gauthier and Stanton preached brand development and praised companies like Winchester, Va.-based Trex Co. Inc. for its work in making composite decking a known commodity in home construction and improvement.
"Brands make the whole category accessible, and that helps everybody," Gauthier said.
Gauthier did caution against making environmental claims about various decking products and urged the audience not to throw their competitors under the bus as they pitch their products to potential customers.
Phil Pifer, Trex's vice president of sales and marketing, called for cooperation - not just competition.
He said it is more profitable for composite decking manufacturers across the board to "grow the entire market" than to fight among themselves.
Like Gauthier, Pifer said negative marketing can "cast a pall over the entire industry," ultimately slowing down composite decking's market gains over treated lumber and cement.
Pifer pointed to the airline industry as an example of competitors working together for the common good of the entire category. For example, airlines don't advertise their safety records.
The reason they don't, Pifer said, is because they don't want to raise questions among the traveling public as to whether there might be safety issues with commercial aircraft.
Similarly, he said, composite deck makers may be casting negativity on the entire industry by promoting performance in regards to mold and mildew or fire resistance.
"Competition is important. It's our lifeblood," he said. "But maybe we're missing an opportunity to cooperate."
Trex, the industry leader in composite decking and railing, on Oct. 26 reported year-to-date sales of $250 million, up from $224 million through the first nine months of 2004.
Earnings, however, took a hit, which the company blamed on inflated raw material prices: Trex reported profit of $12.6 million through the first nine months of 2005, compared with $27.5 million through the same period a year ago.
It's a booming industry, but not one without challenges, said Keith Hughes, director of equity research for building products and consumer durables for SunTrust Banks Inc. of Atlanta.
"Can this industry make money with high prices?" Hughes asked the audience. "We're coming to the danger point on elasticity of demand. Consumers could balk at paying significantly more for this product."
Hughes said Wall Street generally views the profitability of composites makers as low and inconsistent - something that could hold back the industry through a lack of private financial investment.
Ultimately, he said, the industry can't rely on deck and railing systems alone.
"We need more diverse applications," he said.
More decorative, indoor products, as well as development of products for structural uses could be a boon - particularly for North American
composites manufacturers, which generally lag behind European composite makers, which have tapped into indoor features like trim and window profiles.
Aesthetics, performance and utility will be the driving forces behind wood-plastic composites' emergence in the marketplace, said David Beck, director of development and manufacturing support for Valley Forge, Pa.-based CertainTeed Corp.
One thing is certain, Hughes said: The rapid growth of decking products will continue.
"In terms of composite decking, I'm confident you'll continue to see double-digit growth," he said.