What a difference a year makes in the construction industry. Turn the clock back 12 months and most I-joist producers/suppliers were fighting to hold on to market share in a stagnant construction market. Now almost every I-joist company is looking upwards as their customers ramp up housebuilding.
Last summer’s spike, aided by the government’s Help to Buy programme, initially caught many unawares, briefly pushing out lead times by, in some cases, over four weeks.
"It focused the attention of key builders as to how robust the supply chain was," said one I-joist producer.
Despite some impact on south of England construction during the recent severe wet weather, I-joist volumes are cracking on apace.
A TTJ survey of the five I-joist producers active in the UK reveals that the market’s current annual volume is likely to be in the 11-13 million linear metres range – a long way off the 20 million linear metres in 2007 before the economic crash.
That’s still a lot of volume to make up. UK government statistics show new house completions reached 109,000 in 2013, way below the 200,000+ generally accepted as needed.
But signs point to a sharp upwards curve – NHBC recorded 133,670 new home registrations in 2013, 28% up on 2012. And January’s registrations figure is up 14%.
Four I-joist suppliers are focusing on the housebuilder, distributor and timber frame manufacturer markets – of these Scotlandbased James Jones & Sons and Metsä Wood are currently the biggest suppliers in the UK, with similar volumes. Both also manufacture the product here.
Steico’s I-joists are produced in Poland and Boise’s product is made in the US and shipped to UK distributor Crown Timber.
US-based Louisiana-Pacific is focusing on supplying off-the-shelf standard I-joist products to merchants servicing the small builder market – something Steico is also now active in.
One distributor/fabricator TTJ spoke to was very bullish about demand, reporting "very high" volumes from large housebuilders. "We are cutting up to 130 floors a day on two sites, which is 50% up on two years ago," he said.
His metal-web production has quadrupled in the same time period.
He expects a 4-5% increase in net return on sales across his whole business in 2014. "But there’s no room for complacency and still a lot of change in the market," he said, adding that he has plans to add an additional site this year.
An I-joist producer told TTJ he was maintaining current shift levels and building stock "because everyone we are talking to is going to be very busy this year".
He noticed some impact on activity from the recent wet weather, but the advent of spring was bringing increased demand.
The contact said I-joist prices had risen 5-10% since last summer, but against a backdrop of building material shortages, many builders were valuing continuity of supply.
Several I-joist suppliers implemented price rises earlier this year, with another set to follow in April.
"But there is so much pressure within the market to have the cheapest price and this will continue more and more," the producer said.
He said distributor customers had seen a 15-20% increase in volumes going to larger housebuilders.
Increasing volumes
Another I-joist producer said he was looking forward to an increase in housing starts over the next few years, saying "prices are still very sensitive but volumes are increasing".
He hinted at small margins but thought most operators were comfortable with the market.
"There are going to be some shortages and price increases in timber generally in Q2 and Q3. I wouldn’t be surprised to see further price increases to come this year with I-joists.
"The name of the game is continuity of supply and there’s a bit of nervousness from builders about switching suppliers."
He thinks builders are wise to the tight timber supplies and that overseas sawmillers could redirect volumes if it made commercial sense.
The contact also predicted that the engineered timber floor market split between I-joists and metal-webs would widen in favour of I-joists as house construction gets busier and volume builders specify the more costeffective I-joist offering.
Another producer cited cost increases for OSB, TR26, energy and logistics, and predicted prices would continue to come under pressure. But he believed much of the supply chain recognised and understood this inflationary pressure.
"What will give first [because of increasing volumes] is distribution. As the market grows we will need more distribution."
This is both in terms of cutting and design capacity at distributors. During the downturn many floor designers left the industry.
At I-joist production level, the big four producers supplying the housebuilder/ distributor sector have capacity to spare. Steico and Boise’s overseas factories are vast, the latter investing in veneer production and drying technology during the downturn and currently running at only 60% capacity.
So even with some housebuilders talking double-digit growth this year, I-joist capacity does not appear to be an issue for the foreseeable future.
One factor that could influence the I-joist supply chain is consolidation among housebuilders. Last week’s acquisition of Banner Homes by Cala to create a £500m turnover company in the luxury homes market raised some eyebrows.
If the housing market continues on its current path, deals like this may become more common as profit-rich housebuilders seek to increase their market share. This inevitably brings the potential of I-joist supplier switches, either at end of contracts, on a site-by-site basis or possibly more immediately.
Mixing system components
There’s also been a shift in recent years from the original I-joist system model, where distributors were closely tied in to the supplier. These days there is more mixing and matching of system components, with one I-joist brand being paired with someone else’s LVL or glulam rim board product.
"Everyone owes it to the end user to get them to the best most competitive blend of products," added another I-joist producer. "This will become more and more commonplace over the coming years."
The importance of the service offering, build package, Building Information Modelling (BIM) and design/technical innovations was also highlighted by contacts.
Another market dynamic to watch will be the off-the-shelf I-joist business, a model pioneered by LP in the UK, which sees merchants selling standard size I-joists to small builders.
The I-joist is more unfamiliar territory for smaller housebuilders, but the thinking is they will like its lightness, ease of installation, straightness and dimensional stability.
The proponents of this model told TTJ that sales are growing year-on-year, with merchants doing repeat I-joist business.
"A lot of small builders are getting comfortable about using I-joists with no design," said one contact.
The I-joists are being sold as alternatives to 8×2 and 9×2 solid joists, with a typical 225x63mm I-joist having a 15-20% price premium.
I-joist producers not in this market are watching developments with interest, but some voice concerns that the off-the-shelf approach could lead to wrong product use on site with the potential for I-joist failure and bad publicity.
They also question whether the model is as robust as in the US, where floor designers are often in merchant and DIY stores and a larger range of products are stocked.
