Deck makers balance capacity limits, strong sales

New London, N.C.-based Fiberon LLC was among the decking manufacturers that had cut production costs and retail prices to compete better against the wood products that dominate the market.

Then, in March 2020, the COVID-19 pandemic put new dynamics in their favor. Homeowners went on shopping sprees for decking and a lumber shortage led to higher prices for wood materials.

The fast-spreading respiratory illness that brought social distancing rules, indoor capacity restrictions, quarantines and lockdowns elevated the desire for backyard entertaining, working and learning.

At the same time, rising prices for wood closed the price gap between composite and cellular PVC decking and its competition.

Fiberon is poised to deliver, according to Jim Stange Sr., product manager for the company that offers polyethylene composite boards (Concordia Horizon, Concordia Symmetry, Sanctuary, Good Life, ArmorGuard) and PVC boards (Promenade and Paramount).

"At Fiberon, we are experiencing a banner year for decking and outdoor living products," Stange said in an email, pointing to new decking colors and improved fastening systems. "We're making it even easier for customers to create and install beautiful outdoor living spaces."

With estimated annual extrusion sales of $235 million, Fiberon ranks 21st among North American pipe, profile and tubing extruders, according to Plastics News' latest ranking.

One of the new Fiberon colors, Cabana, was added to the Good Life Escapes product line, which features a three-sided cap to protect against moisture, staining and fading and has a scalloped bottom for a lighter deck board with a quicker install time.

The Good Life Weekender line also has the scalloped underside, which lowers raw material costs in addition to lightweighting. Fiberon prices it to tempt wood decking shoppers to pay a little more for a product that won't splinter, warp or fade and only needs a soap-and-water cleaning to look like new.

"Homeowners are replacing their weather-beaten wood decking with high-performance, low-maintenance Fiberon composite decking and railing," Strange said. "We are seeing strong demand from both trade professionals and DIYers."

To keep up, Fiberon is increasing capacity ahead of schedule and investing to get more efficiency out of the assets it has, company officials have said in quarterly conference calls.

Trex also recently completed an expansion to increase capacity by 70 percent compared with 2019 volume levels.

With $880 million in sales, Trex ranks sixth among North American pipe, profile and tubing extruders, according to Plastics News data.

In addition, Azek has undertaken a three-phase plan to increase capacity by 70 percent. The final phase is scheduled to ramp up in the first two fiscal quarters of 2022.

Azek is the eighth-largest North American extruder with estimated sales of $580 million.

Manufacturers of most decking products have initiated or scheduled capacity increases, according to Nancy Musselwhite, an industry analyst at the Malvern, Pa.-based Principia Consulting LLC.

"There's a lot of confidence in the strength and health of the decking industry," Musselwhite said in a phone interview.

Principia Consulting estimated the value of the U.S. decking market in 2020 at $4.1 billion.

"While we saw early evidence of surging demand for both wood and wood alternatives, we couldn't forecast that strong demand would continue through the end of the year or the impact of wood inflation, which was impressive," Musselwhite said. "Wood jumped dramatically in terms of price per lineal foot and stayed at very high prices for a long period."

The decking market grew 9 percent by volume and almost 22 percent by value compared to 2019.

Demand surged in 2020 for both wood and wood alternative decking products. The wood alternative category includes capped composite, cellular PVC and uncapped composite decking, while wood decking is made up of pressure-treated lumber, cedar and redwood, hardwoods and thermally or chemically modified wood.

"There was incredible demand for decking products," Musselwhite said. "People invested in the backyard and when stay-at-home orders came off, they didn't stop. Outdoor living space has become a valuable centerpiece of the home in peoples' minds. It wasn't a passing phase. Sales continue to be very strong in 2021."

At one point this spring, lumber prices increased 300 percent following a historic shortage set in motion when the COVID-19 pandemic was declared in March 2020. Sawmills cut production and unloaded inventory in case of a housing crash that never happened.

Instead, Americans bought building materials for do-it-yourself projects. At the same time, low interest rates brought out homebuyers, including more millennials. The housing inventory dried up and buyers turned to new construction.

Builders were caught in the middle.

"Sawmills shut down and then had to ramp up again," Musselwhite said. "That left treaters short of wood to treat at the same time homebuilders looked for framing packages. There was a lot of demand on the lumber supply chain when it wasn't prepared."

U.S. Census reported 1.47 million permits in 2020, making it a huge year for new home construction. However, new construction still only accounted for 5 percent of decking demand.

"Homebuilders won't build a deck unless they have to because of topography or architecture," Musselwhite said. "Think of hilly locations, like much of the Northeast. It's much more likely a deck will come off the second story of a house."

Ninety-five percent of decking is sold for remodeling, be it to repair or replace existing products or add a new feature onto an existing house.

"In our research, we saw a large percentage of homeowners in 2020 indicate they built a new deck on an existing home where no deck previously existed," Musselwhite said. "That speaks to the drive to create outdoor living space regardless of what your backyard looked like before."

Wood decking had a 78 percent share of the market by volume in 2019, followed by wood alternatives at 20 percent and other decking at 2 percent. The share shifted slightly in 2020, Musselwhite said. Wood gained share by value primarily due to price inflation, and wood alternatives gained by volume against wood. Capped composites accounted for about a third of the residential decking market by value.

In addition to Fiberon's Good Life product lines, Azek released a new TimberTech Azek-brand capped PVC decking line in 2021 called the Landmark Collection. The company says it applies a proprietary color-cascading technology to the boards to blend several colors and produce highlights and lowlights similar to variations found in nature.

For the past year, Fiberon has worked with Emeryville, Calif.-based SCS Global Services to certify the recycled content of its products, according to Jacob Szypka, Fiberon marketing specialist.

"We're achieving a minimum of 94 percent recycled material in the PE deck boards," Szypka said in an email, adding the company continues to explore ways to increase the amount of recycled material used in its PE and PVC boards.

Fiberon currently uses an average of 100 million pounds of recycled PE annually, according to Mike Huskey, vice president of operations and supply chain for Fiberon.

"Most all of this comes from post-industrial waste providing many manufacturers an outlet for their PE waste streams," Huskey said in an email. "We are always looking for new streams of PE waste, including creative ways to incorporate more post-consumer waste into our integrated recycling process."

Research shows that consumers, especially the younger generations, are becoming more environmentally conscious when making purchases, Szypka said.

"More importantly, we value the importance that using recycled materials has for our environment, and Fiberon will continue to innovate eco-friendly products and processes," he added.

With potential new machinery investments, Fiberon will be exploring the use of additional alternative streams of recycled material in 2022 and beyond, Huskey said.

The company also launched Fiberon Balance, its sustainability initiative, in January 2020.

"We have since partnered with the National Forest Foundation and have started work on an environmental product declaration and life cycle assessment to help customers meet requirements for LEED points," Szypka said, referring to the Leadership in Energy and Environmental Design rating system developed by the U.S. Green Building Council.

Many manufacturers also are finding new uses for extruded profiles as cladding products.

"Their focus is more to the commercial accent market than the residential market," according to Casey Olson, another analyst at Principia.

Commercial cladding products are usually installed in a rainscreen application, Olson said, while residential siding products are adhered directly to the building envelope.

Fiberon introduced Wildwood cladding this year and is receiving a lot of inquiries, according to David Graham Sr., Fiberon's national cladding manager.

Wildwood, which also is made of 94 percent recycled content, cuts and installs like real wood without the same staining and painting requirements. The cladding features an open-joint profile and comes in different lengths and widths for design flexibility.

"Initial customer engagement shows us that the product is inspiring designers, and we've received feedback from some well-established firms that the authentic wood aesthetic of Wildwood opens up countless project possibilities," Graham said in an email. "Architects are particularly excited about our true 6-inch profile because it creates enhanced visual appeal and allows for improved yield."

Wildwood is resonating with homeowners, too, Graham said, citing the high-performance, low-maintenance value proposition and a 50-year warranty.