Wall Coverings US Industry Study with Forecasts to 2007 & 2012 STUDY #1717 September 2003 $3800 The Freedonia Group www.freedoniagroup.com The First Choice In Industry Research 767 Beta Drive Cleveland, OH 44143-2326 USA Tel: 800.927.5900 (US) or 440.684.9600 Fax: 440.646.0484
Wall Coverings US Industry Study with Forecasts to 2007 & 2012 Study #1717 September 2003 $3800 249 Pages As the faux finishing trend is expected to subside through 2007, wallpaper demand will begin to recover, reaching $585 million on annual gains of 4.2 percent US wall coverings demand to advance 5.7% annually Demand for wall coverings used as alternatives to paint (i.e., ceramic tile, wood paneling, wallpaper and finished gypsum board) is forecast to expand 5.7 percent per annum through 2007 to $2.5 billion. Growth will accelerate significantly from the 1997-2002 period for virtually every product and end-use market. Advances in wall covering demand will be driven by both construction expenditures and fashion trends, although the effects of these two factors vary based on the specific product under consideration. Wall Coverings Demand by Product, 2007 ($2.5 billion) Ceramic Tole 35% Wood Paneling 23% Wallpaper 23% In terms of surface area, demand for wall coverings is forecast to increase 4.3 percent per year to 7.5 billion square feet in 2007. This forecast will slightly lag the growth expected for dollar value demand. However, the share of total interior space covered by wall coverings will increase through 2007 as wall coverings somewhat encroach on the dominant share held by paint. Wallpaper demand begins recovery The wallpaper market clearly illustrates the connection between home design trends and wall covering demand. Demand for wallpaper decreased significantly over the 1997-2002 period, almost entirely as a result of a shift in consumer preferences toward decorative painting techniques such as faux finishing. As the faux finishing trend is expected to subside through 2007, wallpaper demand will begin to recover, reaching $585 million on annual gains of 4.2 percent. Growth in wallpaper demand will also be stimulated, albeit to a lesser extent, by economic factors such as an upturn in the construction of key nonresidential structures (e.g., hospitality and assisted living facilities). Manufactured housing to boost finished gypsum board demand In the finished gypsum board product segment, demand is dependent almost Finished Gypsum Board 19% entirely on patterns in the construction of new manufactured housing, the dominant end use for these products. The correlation between finished gypsum board demand and manufactured housing shipments is further accentuated by the high proportion of gypsum board use in these homes relative to alternative wall surfacing methods. As a result of this close relationship, the expected recovery in manufactured housing shipments from lending and repossession problems of 2000-2002 will lead to double-digits gains in finished gypsum board demand through 2007. Visit www.freedoniagroup.com for complete text and table of contents
Table of Contents Letter From the CEO INTRODUCTION EXECUTIVE SUMMARY... 1 MARKET ENVIRONMENT General... 4 Macroeconomic Environment... 5 Consumer Income & Spending... 8 Personal Income & Expenditures.. 8 Consumer Financing... 10 Demographic Trends... 12 Population... 12 Households... 15 Building Construction Trends... 16 Residential Construction... 19 Housing Completions... 21 Housing Stock... 24 Single-Family Home Sales... 25 Repair & Improvement Activity.. 26 Nonresidential Construction... 27 New Construction... 28 Nonresidential Building Space... 29 Repair & Improvement Activity.. 31 Market Trends... 32 Pricing Patterns... 35 Environmental Issues... 38 Manufacturing Operations... 38 Indoor Air Quality... 41 World Wall Covering Overview... 42 US Foreign Trade... 44 Imports... 45 Exports... 49 Competitive Wall Covering Outlook... 51 PRODUCTS General... 54 Ceramic Tile... 57 Products... 59 Wall Tile... 60 Other Ceramic Tiles... 61 Supply & Producers... 62 Wood Paneling... 64 Products... 65 Sheet Paneling... 66 Solid Wood Paneling... 70 Supply & Producers... 73 Wallpaper... 75 Products... 78 Fabric-Backed Vinyl... 82 Paper-Backed Vinyl... 83 Vinyl-Coated Paper... 84 Other... 85 Supply & Producers... 87 Finished Gypsum Board... 89 Products... 91 Finished Mobile Home Gypsum Board... 92 Other Finished Gypsum Board.. 94 Supply & Producers... 95 Dear Colleague: As the world economy emerges from its recent period of doldrums, businesses are planning how to benefit from the new opportunities that an upswing will bring. In making those plans, strategic planners like you require credible industry information on which to base decisions. At Freedonia, it is our mission to provide you with an unbiased, reliable outlook for each industry that we study. We carefully examine available sources, separate the wheat from the chaff, and distill an ocean of data into a concise presentation of where an industry stands today... and where it is going. At Freedonia, it is our mission to provide you with an unbiased, reliable outlook for each industry... Each Freedonia industry study provides you with the information and analysis you need to make important decisions. How large is your target market? Which product segments are growing fastest? Which markets are growing fastest? Our analysts review the relevant secondary sources and talk directly to participants in the industry to find the answers. Our Wall Coverings study takes a good look at the alternative materials to decorative paints, namely wallpaper, ceramic tile, wood panels and finished gypsum board. Historical supply and demand data, as well as forecasts are provided for each major covering. Learn about the showings of these materials and see how they stack up against paint and against each other in the coming years. I invite you to add the Freedonia Group to your team by acquiring our Wall Coverings study today. Very truly yours, Jeffrey Weiss, CEO
Table of Contents (cont.) MARKETS General... 97 Residential... 100 New... 103 Repair & Improvement... 106 Residence Type... 110 Single-Family... 111 Multifamily... 113 Manufactured Housing... 115 Nonresidential... 118 New... 120 Repair & Improvement... 123 Building Type... 126 Office & Commercial... 127 Institutional... 130 Industrial... 132 Other Nonresidential... 135 DEMAND BY REGION General... 137 Regional Demographic & Economic Trends... 139 Population Patterns... 140 Economic Outlook... 142 Construction Activity... 143 Housing Trends... 145 Regional Demand for Wall Coverings... 148 Northeast... 151 New England... 153 Middle Atlantic... 154 Midwest... 155 East North Central... 158 West North Central... 159 South... 160 South Atlantic... 163 East South Central... 164 West South Central... 165 West... 166 Mountain... 169 Pacific... 170 INDUSTRY STRUCTURE General... 172 Industry Composition & Market Share... 173 Ceramic Tile... 174 Wood Paneling... 175 Wallpaper... 176 Finished Gypsum Board... 177 Competitive Strategies... 177 Product Development... 179 Ceramic Tile... 180 Wallpaper... 180 Other Wall Coverings... 182 Manufacturing... 184 Marketing... 186 Distribution & Installation... 189 Distribution... 189 Installation... 192 Cooperative Agreements... 193 Company Profiles... 197-249 Wall Covering Demand by Market, 1997-2007 (million dollars) 2000 1500 1000 500 0 Residential Georgia-Pacific Corporation 133 Peachtree Street Northeast Atlanta, GA 30303 404-652-4000 http://www.gp.com Sales: $23.3 billion (2002) US Sales: $20 billion (2002) Employment: 61,000 (2002) Nonresidential 1997 2002 2007 COMPANY PROFILES Key Products: decorative wall panels and gypsum wallboard Georgia-Pacific Corporation (G-P) operates through four segments: Consumer Products, Packaging, Bleached Pulp and Paper, and Building Products. In May 2002, G-P announced plans to split its consumer products and packaging, and building products and distribution operations into two separate, publicly traded companies; however, in March 2003, G-P withdrew its plans to hold a public offering for these businesses due to changed market conditions. The Company participates in the US wall covering industry through the Building Products segment, which had 2002 sales of $7.1 billion. The segment manufactures and distributes wood panels, lumber, gypsum products, chemicals and other products. These products are made at facilities in the US (127), Canada (7) and South
Freedonia Study #1717 - WALL COVERINGS New Nonresidential Wall Covering Demand by Product Type (million dollars) Item 1992 1997 2002 2007 2012 Nonres Bldg Constr Expend 151.5 238.4 268.8 391.0 504.0 $ wall covering/000$ expend 1.3 1.2 0.9 0.9 0.8 West - Pacific MARKETS The Markets Section analyzes trends and considers the threats and opportunities in each major market New Nonres Wall Covering De194275 249 335 385 Ceramic Tile 55 86 90 114 133 Wood Paneling 81 110 101 136 148 Wallpaper 45 59 48 71 91 Finished Gypsum Board 13 20 10 14 13 DEMAND BY REGION % new 40.5 46.0 42.0 45.6 44.3 Nonresidential Wall Covering Dd 479 598 593 735 70 Demand for wall coverings in the Pacific subregion is projected to increase 4.4 percent per annum through 2007 to $400 million. Advances in Pacific wall covering demand will be checked by moderating economic growth and weakness in new housing SAMPLE construction. PAGE However, although the new housing market is projected to decelerate over the forecast period, Text the sections effects of support this softness each will be moderated by above-average table s numbers economic & projections and population growth, which will bolster demand in residential repair and improvement markets. The outlook for overall construction spending in the Pacific subregion will also be strong through 2007, driven by healthy expenditures in the nonresidential sector. For example, school construction is expected to increase as communities contend with the effects of recent population increases and laws mandating smaller class sizes. The Pacific subregion consists of Alaska, California, Hawaii, Oregon and Washington. This area saw even Wallpaper faster population Demand by Product growth than the Mountain states over the (million past several dollars) decades, and from a much larger base. This was not the case in the 1990s, however, as population gains Itemdeceler- 1992 1997 2002 2007 2012 ated in response to an economic restructuring. Until the early 1990s, economic growth in the Pacific subregion Wall Covering had Demand 1849 2417 1904 2515 2940 kept pace with population growth, fostering a relatively % wallpaper 40.1 30.0 25.0 23.3 23.8 prosperous environment. However, decreased federal Wallpaper Demand 741 725 PRODUCTS 476 585 700 Fabric-Backed Vinyl 165 The 183Products 174 Section 210 270 Paper-Backed Vinyl 305 provides 283 153 demand 185 for 210 Vinyl-Coated Paper 209 historical 189 102 years 125 and 135 Other 62 forecasts 70 growth 47 to 65 2007 85 and 2012 $/sq ft 0.13 0.14 0.15 0.16 0.17 Wallpaper Demand (mil sq ft) 5844 5354 3173 3655 4120
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