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Trends in Marketing Wood Products - Illinois Urban Wood · Trends in Marketing Wood Products...
Transcript of Trends in Marketing Wood Products - Illinois Urban Wood · Trends in Marketing Wood Products...
by Daniel Cassens
Professor of Wood Products Purdue University
Trends in Marketing Wood Products
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Bringing the Urban Forest Full Circle March 18, 2016
• Price is Critical
• Large Producers (semi loads)
– Low Labor Costs
– High Capital Investment
– Efficient
– Not Adaptable
• Certified Lumber FSC, SFI
Lumber is a Commodity Lumber is a Commodity
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Truck Load Quantities
Lumber is Not a Commodity
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
• No Grades
• Mixed Species – Lumber vs. Pieces
• Slab Cuts
• Mantels
• Timbers (custom)
• Urban Wood
Trunk Load Quantities
Large End User
Small End User
Concentration Yard
Distribution Yard
Wholesaler
Large Sawmill
Small Sawmill
Hardwood Lumber Distribution
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Hardwood Lumber Distribution
Hardwood Lumber Distribution
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Traditional Industry Trends
1. Export Markets (China) under pressure
2. U.S. Housing Market 2016 won’t match up to 2015
3. Job Markets less robust
4. Rising Imports Flooring imports up (now 55% of domestic market) Large Chinese presence at Jan. Kitchen and Bath Show
5. Low-Grade Markets Soft markets for flooring grade lumber, frame stock, pallet cants, board road, crane mats; tie inventories high
Other: Hardwood Checkoff Program DOA
5 Market Drivers to Watch in 2016 (Hardwood Review Weekly)
Hardwood Lumber Distribution
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Traditional Industry Trends
Technology Developments • Log Scanning • Lumber Grading
Wood Energy • Wood Pellet Export • Power and Steam Generation • BioFuels KIOR ZeaChem
• Fuel Wood
Substitute Materials • Panel Products • Laminates • Wood Substitute (Saves Trees?)
Environmental Issues • Life Cycle Assessment (AHEC) • Bats and Tree Huggers • Certification no longer buzzing
Hardwood Lumber Distribution
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Trends for Small Mills
• Have wood worker/buyer recognition
• More small kilns
• Numbers have created competition
• Can fill niche for being local
• Can fill niche for processing urban timber
• Can fill niche for processing small lots
• Can fill niche for custom products
• Needs recognition as a separate industry segment
Hardwood Lumber Distribution
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Electronic Media Trends (Forbes)
• Video Ads (YouTube)
• Apps – Mobile Optimized
• Mobile to Dominate Desktop
• Digital Assistance
• Virtual Reality
• Wearable Technology Watch
• Advertising More Expensive
Hardwood Lumber Distribution
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Electronic Media Trends
Social Media (Woodshop News, Oct. 2015)
• Google Plus
• Tumbler
• Flicker
• Vine
• Green Lumber
• Air-Dried Lumber
• Kiln-Dried Lumber
Seasoning Levels Seasoning Market Categories
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Seasonal Levels
1 Northern (North Central) stock FAS/F1F truckload quantities 2 Appalachian 3 Large Flitches $25 to $30/BF 4 Hearne Hardwoods, Inc.
Table 4-2. Wholesale green and kiln-dried lumber prices (not surfaced) as reported by the
Hardwood Review Weekly (Hardwood Publishing, Inc. 2011) and kiln-dried surfaced on two sides
retail prices as reported by the Woodshop News (Dominion Enterprises 2010, 2011)
Kiln-Dried Lumber Uses Wholesale Green and
Kiln-dried Lumber Prices Wholesale green and kiln-dried lumber prices (not surfaced) as reported by the Hardwood Review Weekly (Hardwood Publishing, Inc. 2016) and kiln-dried surfaced on two sides retail prices as reported by the Woodshop News (Dominion Enterprises 2015)
Species Green
How drying affects lumber value
Wholesale1 Retail Kiln-dried
Dollars per MBF Green
Dollars per MBF Kiln-dried (KD) Net
Tally Dollars per BF
Ash 1110 1525 4.004
Cherry 1160 1730 5.40
Hard Maple #1@2 White 1825 2230 5.25
Hickory2 825 1590 4.504
Oak, Red 1150 1615 4.004
Oak, White 1510 2030 5.00
Walnut 22752 40952 6.50 – 8.503
Yellow Poplar 8302 11952 2.754
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
• Hardwood Grade Lumber – Wholesale quantities – Retail
• Industrial – Pallets and crates – Blocking – Timbers – Railroad ties – Truck and trailer flooring
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Market Categories Market Categories
1 of 2
• General Construction – Framing lumber – Post and beam – Farm lumber
• Miscellaneous – Bending stock – Sofa frames – Boat builders – Signs – Urban Wood
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Market Categories Market Categories
2 of 2
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Hardwood Grade Lumber Wholesale Quantities
Hardwood Grade Lumber Retail
• Small custom manufacturers
• Institutions
• Contractors
• Weekend woodworkers
• Hobbyists
Types of Buyers
• Seasoning – Kiln dried
• Quality – Mostly 1C and better – Or character wood slabs
• Pricing – Between market reports and Woodshop News
• Delivery – Seller must be available to buyer
Hardwood Grade Lumber Retail Hardwood Grade Lumber Retail
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Generating Interest Activities
• How many customers do you need?
• How many new customers do you need to replace due to attrition?
• How many new customers do you need to expand your business?
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Customer Base
Generating Interest Activities
US. Small Business Administration recommends 7-8% of gross revenue if less than $5 million sales/yr.
Chief Marketing Officers (CMO)
58% < 4% of gross
16% 5-6% of gross
23% > 6% of gross
2% > 20% of gross
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Marketing and Advertising Budget
Generating Interest Activities
• Trade Shows
• Forestry Field Days
• Your Own Demonstration
• Flea Markets
• County Fairs
• Auctions
• Farm Markets
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Generating Interest (Traditional) Activities
Who can help you sell lumber?
– Farm Stores
– Farm Elevators
– Craft Shops
– Lumber Yards
– Large Sawmill
– Your Customers
Generating Interest (Traditional) Partnering
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
• Signs
• Newspapers
• Phonebooks
• Word-of-Mouth
• Give Aways
Generating Interest (Traditional) Partnering
Generating Interest (Traditional) Advertising
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
http://cassenslumber.com
Generating Interest (Traditional) Partnering
Generating Interest Electronic
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
• Considerations – Development Costs
– Maintenance
Generating Interest (Traditional) Partnering
Generating Interest Electronic
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
• Ebay Store
• Craigslist
• WoodPlanet.com
• Etsy.com
• WoodWeb.com
• YouTube
• Forestry Forum
• Google Adwords
• Indiana Woodworkers
• I-Phone
• Printed Receipt with Disclaimer
• Credit Cards
Business Necessities
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
www.freedigitalphotos.net
• Greeting
• Probing
• Presentation
• Agreements
• Objections
• Negotiations
• Close
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Seven Steps to a Sale
www.freedigitalphotos.net
• Traditional Producers will continue to Produce Commodity Lumber.
• Substitution for Solid Wood will continue. (No Check Off)
• Small Producers will gain local market share rather Urban wood or timber trees.
• Getting recognized will require work.
©2016, Daniel L. Cassens, 5038 Morehouse Rd., West Lafayette, IN 47906
Summary