With an uncertain economic future ahead, we asked timber industry suppliers how they were preparing for the challenges of 2023. Here’s what they said.
Paul Pennick, MKM Building Supplies
Encourage more engagement with timber
Paul Pennick, Timber Product Manager, MKM Building Supplies, says: “Our focus as we move into 2023 is, first and foremost, to encourage our Branch Directors to engage with timber – the higher the engagement, the higher the reward. That means upskilling the knowledge base of our teams and giving them hints and tips on how to best look after and store timber, and general day-to-day husbandry to reduce wastage.
“I think there is quite a subdued atmosphere around the actual market outlook itself, but at MKM Building Supplies we believe timber gives us a large opportunity to take market share, so even though we might be faced with adversity for the year ahead, there is a large market there to target. That could be around new products, new customers, or even new markets for us, but we’re an agile business so even though our scale is so large, we can make decisions very quickly.
“Longer term, the outlook for timber is absolutely fantastic. The Government is continuing to say that we need to build 300,000 houses per year, but the industry simply doesn’t have the capacity to do that in terms of the manufacture of bricks and blocks, so we see possibilities for increasing the use of quicker-construction timber frame and possibly modular buildings as well.
“Also, the more timber we use in building, the more carbon we store, and by the end of the life of those buildings, we would hope the infrastructure will be in place to be able to keep that carbon stored and not release it into the atmosphere.
“Whatever the future holds, I think the most important thing is investing in people, finding those people who want to engage more with timber products, and either upskilling or giving them new skills to do the job.”
Phil McCormick of Nicks Timber
An unpredictable future
Phil McCormick, Managing Director of Nicks Timber, says: “An exceptional trading period during the Covid years resulted in 70% inflation in timber products, finally bringing selling prices to a level that represented the true value of timber. But few could have predicted such a striking readjustment in 2022, when the price of timber plummeted almost as quickly as it rose.
“It is now generally believed that we have reached the bottom of the slide. With production costs increasing, I believe material costs can only go up in 2023. The question is, when will they start to move? With merchant yard stocks at such a low level, when the price does start to move there will be a buying spree to restock, which will give the importers a shot in the arm, I believe, towards the end of the first quarter.
“There’s no doubt it’s going to be a difficult year ahead. The war in Ukraine has created issues sourcing Birch Plywood and Siberian Larch, but its main effect has been on energy costs, fueling the cost of living crisis.
“Add to that reducing sales and the current seasonal reduction in demand, as well as reduced consumer spending as money becomes tighter, and I believe sales will greatly depend on which market sectors you operate in and how diverse your company is.
“The sheds, garden landscaping and fencing sectors are now feeling the full force of the downturn and will remain flat through 2023, since the majority of garden projects were completed in 2020/21.
“The furniture and bespoke joinery sectors remain strong, mainly due to the small number of companies remaining in business after Covid, so we feel sales into this market will remain constant as supply is outstripped by demand.”
Future-proof for success
“Nicks is a multi-market supply organisation that is better placed to weather the storm than most. We believe the timber and builders’ merchant supply chain will be affected by a general downturn in activity in 2023. The only way to combat this is to be talking to more branches in a wider geographical area, but that comes with the issue of higher distribution costs.
“We invested heavily in plant and equipment in 2020/21, which has future-proofed the company for the coming decade, with very little further investment required. This should also reduce our repair and maintenance costs going forward.
“We believe the focus needs to be about getting through 2023. Most companies will be happy to have a breakeven year, and I think merchants will probably be able to achieve this. Importers will be playing catch up on their losses, though, and may find a positive result difficult.”
* This article will appear in the next issue of Supplying Timber magazine.
Have your say
What do you think lies ahead for the timber sector? What are the key challenges that we need to come together to address? If you’d like to have your say in an upcoming issue of Supplying Timber magazine, we want to hear from you. Send your comments by email to jennie@timberdevelopment.uk to find out how you can get involved.