The chancellor’s emergency budget back in June has paved the way for what looks to be a cautious 2011. While timber trading during Q3 and Q4 of this year has been supported, to a degree, by a growth in housing start, it looks likely that the first half of 2011 still remains difficult to forecast accurately.
2010 proved to be a difficult trading time; with availability tight the cost of timber rose rapidly. Further fuelled by a number of global factors (poor performance of sterling overseas; increasing oil prices), general pricing increases are something the entire sector is familiar with. There was also the well-documented growth in demand for softwood from developing economies.
2011, with the increase of VAT to 20% influencing economic activity on the national stage, coupled with the uncertainty around government expenditure, the housing market and consumer confidence will continue to present challenging times. In addition, many European sawmills shut down through the recession and supply will continue to be tight.
All this means that for timber merchants and distributors there is added pressure, in sustaining a reliable supply and in identifying viable market streams where there is the opportunity to maximise margins and grow sales.
A strategic approach to sales is vital and suppliers should expect a true partnership attitude from forward-thinking merchants and distributors who are trying to second-guess where the market will turn. Strong relationships and, in fact, partnership approaches are what is required to ride out the challenges 2011 has in store. By nurturing trusting relationships, suppliers and their merchant or distributor customers can ensure the right timber products are in the right place at the right time, reducing the uncertainty around availability.
By approaching the market with a sector-by-sector strategy, different timber products and systems can be segmented to meet needs on a more regionalised basis. Demand in this way is driven by a number of factors: changing regulations from the latter part of this year with the emphasis on Part L and increased airtightness of buildings is seeing an increase in the specification of engineered systems that can achieve higher levels of thermal performance.
Likewise, the implementation of Eurocode 5 will force timber engineers and those involved in the design of timber structures to keep their software up to date in order to comply with the harmonised European standards. Durability, low maintenance and health and safety will always play their part in the decision-making process, particularly for developers on a regional and national level in the housing, retail, leisure, hospitality or commercial sectors.
The current short-term local and global economic pressures will continue to present challenging times through 2011. However, a partnership approach and a market strategy where the requirements of the sector are clearly identified will ensure timber products continue to reach the customer and a return to more buoyant trading for the supplier, manufacturer and merchant channels.
