Summary
¦ Timber frame’s share of new housing construction fell 1.8% last year.
¦ Business has been improving through the year.
¦ The government’s commitment to the 2016 zero carbon target for new housing benefits timber frame.
¦ The UK Timber Frame Association has launched a website for its Fabric First marketing campaign and a timber frame NVQ.
The timber frame and timber panel construction sector has been through the mill over the last few years, just like the rest of the building industry. In fact, in some areas it may have fared worse than the masonry competition.
Today, however, the picture is looking brighter. Timber-based building companies aren’t convinced they’re on a smooth road to recovery yet. Competition is intense, costs are rising, margins are tight and there are fears that the market remains vulnerable to shocks that could yet cause it to stall. But business is stronger than a year ago. Order books are healthier and the industry believes increasingly demanding environmental standards imposed on construction by Building Regulations and legislation are set to push demand more strongly in its direction.
Geoff Arnold, UK Timber Frame Association chairman and managing director of timber frame supplier Pinewood Structures, said that the sector did see overall UK market share slip last year, from 25.6% to 23.8% of new housing starts.
“In England, Wales and Northern Ireland our share actually rose, but the figures were skewed by the 50% fall in total starts in Scotland,” he said. “Timber frame’s Scottish market share is over 70%, so that had a big impact on the UK-wide figure.”
Private housing
Times were especially tough in private housing.
“That’s partly because projects were cancelled or mothballed, but also, we believe, because developers didn’t necessarily need the quick-build benefits that timber frame brings,” said Mr Arnold. “In fact, as their sales were so poor, the longer site times of masonry construction may have been seen as a benefit, enabling them to keep their teams together rather than disband them between projects.”
Now, however, he said, “the whole of the timber frame industry is very busy”.
“The pick-up started to gain real momentum in May and order books are strong through to October – for some companies the next two months are as good as business was before the downturn,” he said.
Bow wave of demand
This actual pace of this recovery, he added, is probably not sustainable, with the sector experiencing a “a bow wave of demand” as mothballed sites restart and the industry catches up from the tough winter. It has also become busy quickly because it “downsized and lost production capacity over the last 18 months”.
“But, at the same time, within this improvement there are more private sector projects coming on stream that have been on hold and entirely new developments too, both housing and flatted projects,” he said.
“With more development finance becoming available, green shoots are also showing in other sectors,” said Gary Yeoman, sales and marketing director of Stewart Milne Timber Systems. “In particular, we are seeing growth in hotel and student accommodation projects coming on stream.”
In these latter sectors, he maintained, the speed of timber frame build is now an increasing positive, helping “ensure that a healthy cash flow is maintained”.
Timber frame companies shared the concerns of the wider building industry that embryonic market improvement might be hindered by an increase in ‘nimby’ objections to new developments following the devolution of greater planning powers to local authorities. But the feeling is that this has now been offset by the impending introduction of the New Homes Bonus. This, said housing minister Grant Shapps, will incentivise home building by giving councils the equivalent of six years’ council tax on each new property they allow.
“This looks like a good concept and the anticipation of it being introduced may already be having an impact, with anecdotal evidence of local authorities reconsidering earlier planning refusals,” said Tony Hutchison, commercial and sales director of timber frame and SIPs-build specialist Kingspan Potton. “It could have a very positive effect.”
Mr Yeoman agreed and said the bonus should benefit affordable as well as private developments. “And an increase in this sector can only be positive for timber frame and complement our ongoing registered social landlord (RSL) activity.”
Another encouraging wider construction market development, said Mr Arnold, could be more developers using their own cash reserves to complete projects to maintain their workflow.
“There is increasing talk of this happening, with developers retaining some form of ownership in a quasi-PFI approach,” he said.
Rising timber prices
A continuing concern for the timber construction industry against a generally improving market background is rising timber prices.
“The increases we’ve seen in the last 18 months are unprecedented in my experience,” said Mr Hutchison. “And whereas before we had peaks followed by troughs,
I don’t see the trough coming this time. There is so much new demand for timber worldwide, plus the growing biomass sector, to keep the pressure on.” The consequence, he said, is that timber frame companies are “having to take on a lot of work to make a margin”.
But helping offset some of the pain of raw material cost increases, the timber building sector generally concurs, is the UK’s increasing stress on sustainable construction.
“Last year social housing providers had to meet level 3 of the government’s Code for Sustainable Homes (CSH), this year it’s level 4, and they are increasingly viewing timber frame as the way forward for meeting these ever higher standards for insulation and energy performance,” said Mr Arnold. “This is something the UKTFA is very much focusing its marketing on.”
He added that timber frame’s environmental performance is making it the “building technology of choice” for care home providers too.
“Supermarkets are also increasingly opting for timber-based system build, such as glulam portal frame with timber frame panels,” he said.
Against this background, Mr Shapps’s latest announcement, that the government is sticking to its predecessor’s pledge for all new housing to be zero carbon from 2016, is clearly welcome news for the sector.
“The zero carbon goal is good for all system builders, but especially timber-based providers and Kingspan in particular, given that we’re an insulation-based company,” said Mr Hutchison. “We’re actively promoting zero carbon solutions to housing associations and other registered social landlords.”
Building envelope focus
Mr Shapps’s statement that he will also be expecting builders to meet a set standard in the quality of the building envelope in achieving carbon neutrality, rather than, as one company said, “getting a leaky lower quality shell up to zero carbon by loading it with renewable energy technology”, is also seen as playing into timber frame’s hands. And again it ties in with the UKTFA’s Fabric First marketing strategy, which focuses on the inherent superior energy performance of a timber frame ‘shell’.
“Fabric first solutions will be needed to ensure the best performing product at a reduced overall cost,” said Mr Yeoman. “At STMS [for instance] we’re investing in products, like our CSH level 4/5 Sigma II system, aimed at achieving low carbon at a price that is sustainable for mass market housing – and the next generation [of this] will be introduced in 12-18 months.”
Tough year ahead
The consensus in the timber building sector is that the business climate will remain demanding and, in fact, feel tougher for a period into 2011 as revived projects delayed or mothballed in the slump work their way out of the pipeline. But Mr Arnold said there was also confidence the government would steer its sharpest spending cuts away from social housing and the general view is that the underlying business trend will continue upwards – Kingspan Potton, for example, has budgeted next year for 15% growth overall and 20% in its self-build division.
A number of high profile new sustainable housing developments are also expected to give timber building overall a further boost. One is Kevin McCloud’s HAB Triangle project in Swindon, which is using Pinewood Structures’ timber frame panels with Hemcrete hemp and lime ‘concrete’ infill.
Among current STMS contracts, meanwhile, are a 1,000-bed student accommodation building in Bristol, a large affordable apartment project in Clapham, London and a number of RSL Sigma II developments across the UK.
Also under way is Barratt’s Hanham Hall eco-village near Bristol, comprising 200 houses using Kingspan’s TEK SIPs systems. “This will be the first mass CSH level 6, zero carbon development,” said Mr Hutchison. “It will be a flagship for several years to come.”
