Decking & Railing Demand Expected to Increase to $3.1 Billion in 2010 Despite 40% Decline since 2006 According to New Principia Study

EXTON, Pa.--(Business Wire)--
The North American residential decking and railing market dropped from $4.6
billion in 2006 to $2.8 billion in 2009 reflecting a 40% decrease over this time
period. These changes have been caused largely by the deep economic recession
which has dramatically reduced the homeowner`s ability to finance a new deck or
replace an existing deck.

About 2.5 million decks are expected to be built on residential structures in
2009, and over 90% are on existing homes as part of a remodeling project or
replacement (R&R) of an existing deck. Job losses, tight credit, devalued homes,
the inability to tap into home equity to finance home improvement projects, and
record lows in consumer confidence have combined to push decking and railing
demand back to levels that have not been seen since the early 2000s.

Further, an important shift has occurred over the past two to three years. Wood
is regaining share from synthetics, which include wood-plastic composites,
primarily driven by demand elasticity due to lumber deflation while
petroleum-based synthetics have experienced significant raw material price
escalation. Wood decking and railing had steadily lost market share to
synthetics since the introduction of composite products in the mid to late 1990s
based on performance and maintenance benefits. Wood market share, on a volume
basis, hit a low in 2007, maintained its position in 2008, and reversed in 2009.

Steve Van Kouteren, a Principal at Principia Partners, says "Although the entire
synthetic category has lost share to wood, demand for cellular vinyl decking has
been growing at a double digit rate while the demand for polyolefin-based WPCs
has decreased. This disparity is due to the growing popularity of ultra-low
maintenance decks among homeowners.

"The market has two primary forces at work. On one end of the decking market,
consumers are fighting money and budget issues and are scaling back deck
projects, as well as using less expensive materials. Conversely, there is a high
end of the market that is less price-sensitive. This segment is using new
synthetic materials, and is driving the increase in demand for cellular vinyl."

Mr. Van Kouteren continues "Cellular vinyl demand growth is at the expense of
polyolefin-based WPC decking. As a consequence, composite decking is losing
market share to wood on the low end and losing market share to cellular PVC on
the high end. Total value for WPCs and cellular vinyl is estimated at about $725
million or 26% of the decking and railing market in 2009. Total North American
demand for cellular vinyl in residential decking has grown from about $5 million
in 2004 to over $95 million in 2009."

The future is brighter for decking and railing as homeowner desire for quality
leisure time and outdoor living in the backyard or front porch of the home is
part of the fabric of American living. Residential decking and railing demand is
expected to improve in 2010 compared to 2009, as home construction and R&R
recovery begins.

An increase in housing starts and modest growth in R&R activity will increase
the demand for decking and railing, on a value basis, about 10% in 2010 from its
bottom in 2009. About 6% of the growth will result from volume growth and
another 4% from product mix and a slight recovery in wood prices. Pent-up demand
from consumers will help support decking and railing growth in 2010. Total
decking and railing demand is expected to increase from $2.8 billion in 2009 to
$3.1 billion in 2010.

Principia's latest study COMPOSITE DECKING & RAILING 2009 serves as an important
baseline analysis for year-over-year forecasting and business planning purposes
by existing and new industry participants. Headquartered in suburban
Philadelphia, Principia Partners is a leading boutique strategy consulting firm
that serves the broad building products and construction materials industry as
well as other materials-related industries. For more information, visit the
company's website at www.PrincipiaConsulting.com.

Principia Partners
Steve Van Kouteren
US Only: 1-800-378-8330 ext. 242
Direct: US +1-505-466-3749
SteveVK@PrincipiaConsulting.com

Copyright Business Wire 2009