MARKET POINTS OF BUSINESS WITH THERMO-TREATED WOOD. How to Sell Thermo-Treated Wood.
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1 MARKET POINTS OF BUSINESS WITH THERMO-TREATED WOOD How to Sell Thermo-Treated Wood
2 About thermo- treated wood Thermo-treatment of wood is a high temperature wood treatment process with no usage of any chemicals. We use just heat (up to 400 F) and water vapor to create oxygen-free environment and change a molecular structure of wood cells. The process takes just several hours. Below, is a microscopic view of cell structure for non-treated, thermo-treated and 350-years old wood. Thermo-treated wood is a human and pet friendly, green alternative to chemically treated (pressure treated) wood, and it is superior to non-treated wood and other building materials. Thermo-treatment of wood: Increases durability of wood on molecular level 25 times Increases dimensional stability 5-15 times Adds no chemicals ( Green product) It is a real wood Lighter in weight Lower maintenance Lover cost of ownership Better grain structure Is the only option to protect hardwoods for outdoor wood applications
3 Markets for Outdoor Applica8ons of Thermo- Treated Wood
4 Who is on the US market of thermo- treatment of wood Going back to 2004, when Westwood was the first company in the U.S. exhibiting thermo-treated wood at the International Woodworking Fair, it was difficult to explain to everybody: What is thermo-treated wood? In 2006 at the same International Woodworking Fair in Atlanta we found two our indirect competitors Stellac and Jartek Companies from Finland. By our joined efforts, about 30% of the professionals were educated about thermo-treatment at that time. In 2008 almost 100% of lumber professionals were already familiar with the thermo-treatment idea and Westwood was already known as the first USA manufacturer. In 2008 Stellac, started their plant in Indiana for manufacturing thermo-treated decks made of softwood, under the brand name PureWood. However, the market for thermo-treatment softwood does not seem promising in the U.S. Softwoods in the U.S. are typically used for construction purposes, which demand completely different moisture standards than that of Europe. In the U.S., the moisture content for building materials is 20-25%, compared to the European standards of 8%. This is a significant factor for thermo-treatment processes. Jartek, another Finland based company, installed their equipment in a plant located in Minnesota. Jartek, like Stellac, has similar technology that is only capable of treating softwoods, limiting them because of the difference between the U.S. and European softwood markets. The thermo-treatment process used by these companies was developed by Finland VTT Institution ( Thermowood ) and used under a VTT license. Perdure, a company using the first French technology (the next one was the French ratification technology NOW see below), also predominately softwood manufacturing, launched their plant first in Quebec, Canada. In 2008, Perdure installed their equipment in a U.S. plant located in New Hampshire. Their products (mostly softwood) can be found in the US under the brand-name Cambia. 4
5 Westwood technology is the most advanced, developed the new 3-D heat wave control to treat hardwoods. It is a third generation of technology, which improved the existing European thermo-treatment processes in Igor Danchenko, Westwood owner, holds three patents for thermo-treatment technology. There were nine Westwood thermo-treatment kilns been manufactured and installed in Russia, Canada and the US since Compare Westwood with the other world technologies: Technology Hardwood treatment Yearly capacity Treatment cost Equipment cost / Capacity Time of installation Total Plato (The Netherlands) Retification (France) ThermoWood (Finland) Bois Perdure (France) OHT (Germany) Westwood (USA) Bad, 2 - Poor, 3 - Neutral, 4 - Good, 5 - Excellent
6 Westwood for Product Manufacturers 6 WESTWOOD Thermo-treated Lumber B2B Product trainings, technical support PRODUCT MANUFACTURERS B2C B2B INSTALLERS ARCHITECTURES BUILDERS Decks, Siding, Stairs, Building Materials, Moldings, Parquet, Cabinets, Furniture, Wall panels, Windows, Doors B2C CONSUMERS Our goal is: to transfer the advantages of thermo-treated wood into additional profit and sales for manufactures and distributors. There are several ways to increase business using thermo-treated wood: 1. Improve your existing products with new material 2. Expand your product line and go to new markets 3. Get one up on competitors with your unique product
7 Three main sources of addi8onal profit for Product Manufacturers Improve exis,ng products with new material New value to bring and get money selling be:er product and win compe,,on Stable Kitchen cabinets. Decks look like exo8c wood. Colored floors. More op8ons for design. Expand the product line and go to new markets New applica,ons for products and more sales to the same customer Wooden floors, furniture and wall panels for bathrooms, kitchens, basements and saunas. Wooden pool areas. Hardwood furniture for outdoor applica8ons. Furniture for hotels or other high- traffic areas, or for children because the surface scratches are invisible. Design op8ons (wide parquet planks because the material is stable, colored parquet, as the examples). Push indirect compe,tors from the market subs,tu,ng their products Green subs8tu8on to chemically protected wood (GO GREEN!). Durable and Stable subs8tu8on of plas8c by the real wood (HARDWOOD IS GOING OUTDOOR!). A subs8tu8on to exo8c wood with cheaper, more stable and rich in grain structure product (SAVE RAINFOOREST!). 7
8 Westwood for Distributors, Installers, Contractors 8 WESTWOOD B2B Products and inventory support Decks, Siding, Moldings, Parquet, Wall panels DISTRIBUTORS INSTALLERS ARCHITECTURES BUILDERS CONTRACTORS B2C CONSUMERS Distributors, Installers, and other front line businesses are always in a hard competition against each others for the retail customers. There are several ways to beat competitors and turn customers to buying decision: 1. Introduce product which is new in the market 2. Turn thermo-treated products in front of the customer with the side they want: Green, Exotic Look, Durable, Stable, Sounding Grain Structure, Real Wood, Color In All Depth, etc. 3. Affordable price level.
9 Why Consumers are buying the thermo- treated products? Free of any chemicals Safe for interior and exterior use Decks and siding friendly to the touch. Great for hot tub and pool areas. Great for children playgrounds. Bathroom floors! En8re sinks, counters and shower stalls craaed in wood! Enhanced Durability and Stability 25+ years for exterior applica8ons (even hardwoods). The durability is on the molecular level (not depends on the other treatments). Even in a high moisture environment, thermo- treated wood does not shrink, swell, or twist (good to make wide floor planks or apply in bathrooms, kitchens, basements). Beau,ful natural wood color The color is consistent throughout. Naturally accents the grain of the wood. Easily restore scratches and fading by sanding. Lighter and darker shades available Low cost of ownership Other materials just don t compare. Longer 8me between maintenance works. The applied finish will not crack due to the greater stability of thermo- treated wood. Thermo- treated wood requires fewer layers of 9 finishing coat to receive the same results
10 Compare Thermo- treated wood with the other outdoor products Product Durability Stability Green Appearance Price Total Pressure-treated softwood -4 Cedar 0 Tropical wood +4 Composite wood +7 Thermo-treated wood +14 V.S. 10
11 Mo8va8ons for buying decision Ban Zone Doubt Zone Cedar expensive Tropical wood Composite wood bad good Thermo-treated wood Pressure-treated wood Doubt Zone inexpensive Shopping Zone 11
12 Thermo- treated wood V.S. other outdoor products Compared with non-treated wood: o Weather Durability o Increased Stability o Exotic appearance (color & grain structure) o 2 to 4 times less expensive than exotic species Compared with chemically-treated wood (softwood): o NO CHEMICALS!!! o Greater Stability o Easier and less expensive to maintain o Hardwood is a better finishing material than softwood o Exotic appearance o Safe for the environment, friendly to people Compared with composite materials: o 100% Natural Wood Material o Safer for the environment o Natural brown color with detailed grain structure o Competitively priced Compared with exotic woods: o 2 to 4 times cheaper than most exotic species o Equal and sometimes greater stability o Supports local and domestic economy o SAVE THE RAINFOREST!!! Compared with cedar: o Cedar is softwood o Hardwoods shows better grain structure o Greater Stability o Competitively priced 12
13 Re: Finland ThermoWood Association
14 US Decking Market in Billions of Linear Foots (3.5 B total) Others Exo8c Wood Pressure- treated Pine Composite Material Plas8c US Market Size for thermo-treated Decking Bln BF Bln $ Premium Line Regular Line US Decking Market in Billions of Dollars ($6.2 B total) Others Exo8c Wood Pressure- treated Pine Composite Material Plas8c To fulfill the US market of decks, we need to install at least 3,000 our thermo-treatment kilns.
15 Freedonia Group Decking Market Research. Demand across America for decking will revive from the 0.6% annual drop in 2004 to 2009 to increase 2.7% per year and reach 3.5 billion lineal feet--worth $6.2 billion-- in 2014, the Freedonia Group forecast today. Wood products will continue to dominate the market, demand will to 2.67 billion linear feet in Wood-plastic composite decking, which saw demand shrink 1.4% per year between 2004 and 2009 to reach 349 million lineal feet, will see 12.9% annual growth through 2014 to hit 640 million lineal feet. Meanwhile, plastic (PVC, mainly), which had seen demand fall 2.1% per year to total 73 million lineal feet in 2009, is forecast by Freedonia to grow 13.9% per year over the next five years, hitting 140 million lineal feet in The residential market accounted for 59% of all decking demand in 2009, noting that the percentage normally would be much higher had it not been for the recession in home building. Nonresidential market demand will rise 2.4% annually through 2014, it said. "Through 2014, decking demand gains will be driven by an expected advance in housing completions from their low 2009 base," Freedonia predicted. "Rebounding housing completions and improvement and repair expenditures will spur gains. Growth also will be supported by homeowner desire for larger decks. "It said demand for wood decking "will be restrained by competition from composite and plastic decking materials. Interest in tropical hardwoods, such as ipe, will provide growth opportunities in the residential building and non-building construction markets.
16 It is estimated that 20 million decks in the U.S. are currently in need of replacement *. Thermo-treatment of wood is a great and Green option for decking market. Westwood and B&D are launching a decking program under a brand-name Well Done for our two thermo-treated decking products, which are covering two main decking price niches: o o Well Done Pacific Line Decks are made from thermo-treated Poplar or Gum and having an affordable price level which might compete with thermo-treated pine or composite materials. It is a real hardwood product, incomparably much better looking than softwoods, Green, stable and requires a lower maintenance. Well Done Atlantic Line Decks are made from thermo-treated Ash or Cypress, which fall within the Composite and Exotic Decks price category, being a real wood product, Green, and having a much better look. Well Done brand-name is appealing to the idea of thermo-treatment. We re doing a cooking process with wood; the deep brown color is really going throughout the depth of the wood (like well-done steak), a product is really looking nice, so we can really say: Well done V.S. WellDone Pacific Decking Line Pressure-treated Pine V.S. * The Bureau of Economic Analysis, 2009 WellDone Atlantic Decking Line Composi te Material Exotic Wood
17 WellDone Atlantic Line $3,0/LF $2,5/LF WellDone Pacific Line *Independent survey performed by Babcock Lumber in frames of decking certification
18 Factors Durability Dimension Stability Weight Heating on Sunlight "Green" Appearance Maintenance Dulling of tools Price Factors, Total Cost to manufacture 1x6", per LF Annual Sales in the US WellDone Atlantic Line $3.0 - WellDone Pacific Line $2.5 - Thermo-treated Pine ThemoWood $1.7 - Exotic Wood $3-4 $1,500 Mln Composite Material $2-3 $1,600 Mln Pressure-treated Pine $0.7 $2,200 Mln 1 - Bad, 2 - Poor, 3 - Neutral, 4 - Good, 5 - Excellent
19 R /16 (21 mm) Bo#om side is rough planed Hardness Rate 1320 Hardness Rate 1350 Thermo-treated Ash Atlantic Line Thermo-treated Gum Pacific Line
20 As Survey* shows, Contractors and Architects are having the most problems with Pressuretreated Pine Decks and Stained Wood. Homeowners with Solid Wood, applied for decks. Thermo-treatment technology is resolving all these issues, providing protection, stability and durability of decking product. Homeowners are more sensitive to better performance and better appearance of decks, than to its price. It means that our hardwood substitution of pressure-treated pine with our thermotreated Ash and Gum will be extremely successful for Homeowners, who are accenting more in appearance; and for Architects and Contractors, who are accenting more to better exposure properties, even this product will be having a little higher price. Homeowners and Contractors might be reached better by providing them with an information about properties of thermo-treated wood, than with direct advertising. Architects might be reached better with articles in special magazines, as shown in results of Survey *) on the next page. Architects are less sensitive to the price point and mostly driven by better performance, as shown in Survey. It means, that we can promote them our Well Done Premium Line of decking made with thermo-treated Ash, which will be a substitution for Composite and Exotic Decks at the market. * The Market for Decking in the U.S. Northeast: A survey of architects, contractors and homeowners. Wood Technology Portland, Oregon, University of Massachusetts, Amherst see the next page.
21 * The Market for Decking in the U.S. Northeast: A survey of architects, contractors and homeowners. Wood Technology Portland, Oregon, University of Massachusetts, Amherst
22 22 Thermo-Treated Wood Decks Price V.S. other decks in the market Cost to purchase decks Cost of ownership of pressure-treated deck V.S. thermo-treated deck After the first maintenance of pressure-treated deck (the second year of ownership), the cost of ownership will be THE SAME as for thermo-treated deck. After ten years of ownership the cost of replaced pressure-treated deck will be in 4 (four) times more!
23 Thermo- treated Hardwood V.S. Thermo- treated Soawood Product Durability Stability Green Appearance Price Total Thermo-treated softwood +10 Thermo-treated hardwood +14 Poplar Pine Ash Maple 23
24 Pressure- treated wood market in the US and some limita8ons The US restrictions for pressure-treated wood. In 2005 the United States and Canada enforced a series of limits on the application of chemically treated wood for: o Children's playgrounds, o Pallets used for food transportation, o Building and finishing houses that are situated on the edge of water reservoirs. In Europe pressure-treated products have been prohibited and replaced by thermotreated wood since The thermo-treated wood is the only ecological pure alternative to pressure-treated wood. The pressure-treatment market in the US is $4 B per year. Total revenue from chemically treated wood sales in Canada is $1.4 Billion per year. The significant part of landscape design market is also pressure-treated wood. The US market of landscape design is $140 B per year. 24
25 Created by Nature Improved by Westwood 25
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