Timber is an important product group for generalist builders merchants as well as dedicated timber merchants. It is stocked by over 250 of the Builders Merchants Federation’s (BMF) 340 merchant members and accounts for around 20% of their business, making it the second largest product category, in terms of turnover, behind heavy building materials.

Furthermore, timber and wood products are frequently the most profitable area for generalist merchants in terms of margin performance. As such, it is a sector that the BMF is keen to promote and support. The BMF is in a unique position to bring together merchants and suppliers to advance this technical product group.

For example, since 2014 we have run twice-yearly Timber Forums, open to any member with an interest in timber, to share best practice, disseminate information, hear from experts in the industry and gather views on legislation, product and building standards or other issues that may affect trading.

BMF Timber Forums, which are run in collaboration with the Timber Trade Federation (TTF), have proved extremely popular with BMF members.

Stemming out of our forums is another joint initiative with TTF: a biannual information digest, Timber Forum News, bringing up-to-date timber news and expert guidance to all BMF members selling timber and timber products. This initiative is particularly designed to help merchants to maximise their sales.

STRONG PERFORMER

Timber has been a strong performer in recent years. The BMF’s Builders Merchant Building Index (BMBI) report, which uses the research company GfK’s point of sale tracking data drawn from over 80% of builders merchant sales throughout the country, found that overall merchant sales in 2017 finished 4.8% ahead of 2016 by value, with timber and joinery outperforming the average, growing by 5.4%.

The positive story has continued in January 2018 with total merchant sales up by 8.4% on January 2017, and timber and joinery products showing a 9% increase. With the lion’s share of merchant sales driven by the housing market, the BMBI results can appear out of kilter with headline figures from the Office of National Statistics (ONS).

The reason for this can be seen in the government’s continued support for private housebuilding and the fact that private domestic RMI work has held up well to date, while the commercial and industrial sectors, also included in the ONS data, have both seen a sharp decline since the vote for Brexit. That said, while the strength of the sectors that builders merchants operate within has generated some growth, price inflation has also been a contributing factor to the rise in sales value, and it is one of the big issues for timber this year.

We are mindful that price rises, together with several other factors, could impact on trading throughout 2018. Initial reports have shown a weakening in new housebuilding and there are renewed concerns over skilled worker shortages which could affect output. Interest rates are also expected to rise sooner and faster than previously predicted, thereby increasing the cost of borrowing, potentially affecting consumer confidence and thus the RMI market.

Merchants who stock timber now face a challenging period, with price inflation at a pace rarely seen before compounded by reduced availability and extended lead times for both UK and imported timber affecting almost every product area.

The softwood market is ever-more affected by global trends. Price rises here are not solely down to the depreciation of sterling. They are being driven up by expanding markets in the US and China adding to the already firm consumption in traditional markets to create extremely high demand.

We are concerned by reports that shortages will begin to hit UK merchants in April, with further price rises predicted from this time. The story is the same in the panel sector, with price rises from UK, Irish and European MDF and OSB producers.

Global plywood markets are also under inflationary pressure. For example, US demand for South American softwood ply led to a 30% increase in a year. With other markets prepared to pay more than the UK, the situation shows no signs of stabilising any time soon.

In tough trading times, initiatives like the BMF Timber Forum are especially relevant. Agenda items for the next meeting, on June 27, include presentations on Merchant Timber Sales in a Challenging Market, and Plywood – How to Buy Better.

While it is likely that merchants will have to face challenges head on for some time to come, it is important that the industry presents a united front to campaign for supportive policy and market frameworks.

The BMF regularly arranges visits by MPs to merchants in their constituency to see how building materials in the supply chain deliver for local communities. In addition, along with the TTF, the British Woodworking Federation and the Structural Timber Association, the BMF is part of the renewed Confederation of Timber Industries, which acts as an umbrella organisation to grow the UK timber industry, as well as promoting ethical and sustainable sourcing.

Responsible purchasing has long been one of the BMF’s key goals for the industry and we have partnered with WWF’s Global Forest and Trade Network in the UK (GFTN-UK) to promote responsible forest trade throughout the merchant supply chain.

Many merchants already consider sustainability as a matter of course, but we have a responsibility to encourage every one of them to do so. GFTN-UK can help them ask the right questions to find out where their products are coming from, so they will know if they are sourcing from sustainable forests.

We also support the Grown in Britain campaign, to give merchants information and ideas for making the most of the British timber in their supply chains and grow their timber business, both pre- and post-Brexit.

DEVELOPING MARKETS

Despite the challenges in the current market, builders merchants are looking to expand the range of timber products they offer.

Along with the TTF we undertook a survey of BMF merchants in 2017 to find out which products they sold and which they believed had the greatest potential for growth. Engineered timber was seen as having the greatest potential, which came as a surprise as relatively few merchants were selling these products at the time.

Softwood was seen as another area for growth.

Within engineered timber products there is a huge opportunity for specialist providers to partner with merchants to meet the specification needs of their customers, for example with I-joists, trusses, glulam and timber frame. Even those who don’t hold stock want to be able to support customers with a specific request by working with supply partners to provide a quote and win the business with products that are fit for the purpose.

The survey also found that merchants wanted more education and training to help with sales of timber in key product areas. In response, the BMF and the TTF are running a series of free CPD-accredited skills development sessions for their members, covering topics from plywood and preservatives to responsible purchasing and regulation.

PEOPLE POWER

Merchant competitiveness relies on having the best people in addition to the best product selection and keen marketing acumen. Our aim is to secure high-quality skills for the future development of the merchant industry.

This year the BMF is introducing its new Trade Supplier Apprenticeship Standard. This is the first apprenticeship to be developed by people who actually work in our industry and is set to become the sector’s primary Level 2 qualification, ensuring new entrants have up-to-date workplace skills that are fully relevant to their merchant employer’s business.

Builders merchants will remain an important distribution channel in the overall construction market, with timber and wood products growing in importance, despite the challenging times facing us this year. The BMF will continue to work with our timber industry partners to support our members and promote timber solutions.