Molding & Trim. US Industry Study with Forecasts to 2009 & The Freedonia Group. Study #2023 January 2006 $ pages. Table of Contents 2

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1 INDUSTRY MARKET RESEARCH FOR BUSINESS LEADERS, STRATEGISTS, DECISION-MAKERS CLICK TO VIEW Table of Contents 2 List of Tables & Charts 3 Study Overview 4 Sample Pages, Tables & Charts 5 More Samples from this Study 6 Order Form 7 About Freedonia, Custom Research, Related Studies, Corporate Use License 8 Study # pages The Freedonia Group 767 Beta Drive Cleveland, OH USA Toll Free US Tel: or Fax: info@freedoniagroup.com

2 Table of Contents Executive Summary Market EnvironmenT General... 4 Macroeconomic Environment... 5 Demographic Trends... 8 Population... 9 Households Consumer Spending Trends Building Construction Trends Residential Construction Housing Completions Housing Stock Repairs & Improvements Nonresidential Construction New Nonresident Construction Repair & Improvements Market Trends Pricing Patterns Regulatory & Environmental Issues Building Codes Environmental Considerations World Overview Foreign Trade MATERIALS General Wood Demand by Wood Type Demand by Product Demand by Market Metal Demand by Product Demand by Market Plastic Demand by Resin Type Polyvinyl Chloride Polyurethane Other Resins Demand by Product Demand by Market Engineered Wood Demand by Product Demand by Market Other Materials Demand by Product Demand by Market PRODUCTS General Moldings Demand by Material Demand by Market Stairwork Demand by Material Demand by Market Other Products Demand by Material Demand by Market MARKETS General Residential Markets New Residential Repair & Improvement Demand by Home Type Single-Family Homes Multifamily Homes Manufactured Housing Nonresidential Markets New Nonresidential Repair & Improvement Demand by Building Type Office & Commercial Institutional Industrial Other Nonresidential INDUSTRY STRUCTURE General Industry Composition Market Share Wood Plastic Other Materials Vertical & Horizontal Integration Product Development Manufacturing Materials Manufacturing Processes Marketing Distribution Mergers & Acquisitions Cooperative Agreements Company Profiles Advanced Environmental Recycling Technologies Alcoa Incorporated Associated Materials BPB plc Bright Wood Corporation Builders FirstSource Canamould Extrusions Cascade Wood Products Collins Companies Compression Polymers Group CRH plc Edge Building Products Flex Trim Industries Georgia-Pacific Gossen Corporation Headwaters Incorporated Hunter Douglas NV Louisiana-Pacific Melton Classics Noel Group Quanex Corporation Royal Group Technologies SBR Incorporated Sierra Pacific SierraPine Limited Stairways Incorporated Temple-Inland Incorporated Ultra-Flex Moulding Universal Forest Products Weyerhaeuser Company WindsorONE Company Wolseley plc Woodgrain Millwork Page 2

3 List of Tables & Charts Executive Summary 1 Summary Table...3 Market EnvironmenT 1 Macroeconomic Indicators Demographic Indicators Consumer Spending Trends Building Construction Expenditures Residential Construction Expenditures Housing Indicators...21 Cht Year of Construction of Housing Stock, Residential Repair & Improvement Expenditures Nonresidential Construction Expenditures Nonresidential Repair & Improvement Expenditures Market, Cht Market, Pricing...33 Cht Molding/Trim Pricing Patterns by Material, US Foreign Trade...42 MATERIALS 1 Demand by Material...45 Cht Demand by Material, Wood Demand by Wood Type Wood Demand by Product Wood Demand by Market Metal Demand by Product Metal Demand by Market Plastic Demand by Resin Plastic Demand by Product Plastic Demand by Market Engineered Wood Molding & Trim Demand by Product Engineered Wood Molding & Trim Demand by Market Other Demand by Product Other Demand by Market...78 PRODUCTS 1 Demand by Product...81 Cht Demand by Product, Types of Molding Products Molding Demand by Material Molding Demand by Market Types of Stairwork Products Stairwork Demand by Material Stairwork Demand by Market Types of Other Products Other Molding/Trim Products Demand by Material Other Molding/Trim Products Demand by Market MARKETS 1 Demand by Market Cht Demand by Market, Residential Markets for New Residential Market for Residential Repair & Improvement Market for Residential Demand by Housing Type Single Family Market for Multifamily Housing Markets for Manufactured Housing Markets for Nonresidential Markets for New Nonresidential Market for Nonresidential Repair & Improvement Market for Demand Nonresidential Demand by Building Type INDUSTRY STRUCTURE 1 US Sales by Company, Cht Wood Market Share, Cht Plastic Market Share, Selected Acquisitions & Divestitures Selected Cooperative Agreements Page 3

4 Plastic molding and trim will offer the best opportunities for growth based on gains in the nonresidential market and on the replacement of wood products in residential applications. Nonresidential construction to drive US demand Demand for molding and trim products in the US is forecast to increase 1.7 percent annually from a strong 2004 base to $9.8 billion in Demand growth will be stronger in nonresidential construction, which is expected to post a strong recovery following a period of extreme weakness. Conversely, gains in the residential market will be flat as housing completions are expected to fall from their high 2004 levels, primarily due to slowing in the single family home segment. Exterior trim, stairwork to grow the fastest Demand for molding products is projected to increase 1.3 percent annually to $4.6 billion in Moldings, primarily made from wood, are principally utilized in residential building, with the greatest concentration in single family housing. Declining single family home building will negatively impact molding demand, although opportunities will exist in residential repair and improvement applications, and in both new and aftermarket nonresidential markets. Demand for stairwork is forecast to advance 1.9 percent per annum to $2.6 billion in Growth opportunities will be heavily concentrated in the nonresidential market, particularly for metal stairwork products. Demand for other products, which mainly include exterior Molding 47% Stairwork 26% Other Molding & Trim Products 27% molding and trim products, is forecast to expand 2.1 percent annually to $2.6 billion in Growth opportunities will emerge primarily in plastic exterior trim products, particularly for use in nonresidential construction applications. Residential repair and improvement uses will also offer growth potential. Plastic molding & trim to offer best opportunities US Demand, 2009 ($9.8 billion) Wood is the primary material used to manufacture molding and trim products, accounting for two-thirds of total demand in Overall, demand for wood molding and trim is projected to remain around $6.0 billion in Gains will be primarily concentrated in the nonresidential market, offset by declining use of both molding and stairwork in the new residential market. Plastic molding and trim products offer the best opportunities for growth, and are forecast to advance 6.2 percent annually to $1.3 billion in While the greatest gains will occur in the nonresidential market, plastics will continue to make inroads even in residential construction applications, where they are replacing wood products. Metal products will also show strong growth, advancing 5.3 percent per year to $1.3 billion in Demand will benefit from increasing new nonresidential building activity, and both residential and nonresidential repair and improvement activity. Page 4

5 Samples Pages, Tables & Charts TABLE VI-5 NEW RESIDENTIAL MARKET FOR MOLDING & TRIM (million dollars) Item markets New Residential By Product: New Residential Molding 1134 MARKETS Demand for molding and trim products in the new residential mar-stairworket is projected to decrease 1.5 percent annually to $3.8 billion in Other Products The 813 Market 1166 Section Growth prospects will be APPLICATIONS presents historical 945 data 1070 limited to the smaller manufactured housing By Material: and multifamily housing Text segments sections of the explain market, and while demand in the through 2004 plus Wood larger single family home support segment each will post table s declines through Metal 113 forecasts to and 325 Also, plastic molding and numbers trim products and projections will continue to make inroads in Plastic for residential and 550 the new residential construction market, to the detriment of traditional Engineered Wood 97 nonresidential markets 270 wood products. Other Materials 100 demand 109 by 115 product 120 and 140 Although the sluggish market for new single family housing will % new 55.6 material act to restrain overall prospects for molding and trim in new residential Residential Demand markets, the negative impact of this weakening will be offset in part by increases in the average size of homes, which will lead to an increase in the average use of molding and trim products per unit. Further, an aging population with an increasing concentration of individuals aged 45 years and older will support molding and trim demand. Although these consumers tend to move less frequently than other age cohorts, if they choose new homes, their higher income levels allow them to purchase or build homes with more square footage. In addition, the age group tends to show a preference for more traditional home interiors commonly characterized by higher levels of decorative moldings such as chair rail, crown moldings and so forth. Dollar value gains in new residential molding and trim demand will also benefit from the growing popularity of higher-priced products such as plastic moldings and interior woodwork products made from more costly hardwood species. As is the case with molding and trim markets in the aggregate, demand in the new residential market is dominated by interior molding products, which accounted for nearly half of total consumption in The majority of demand for molding and trim used in the new residential 106 Copyright by The Freedonia Group, Inc. Res Bldg Construction Expend (bil $) $ molding/000$ construction CHART VI-1 WOOD MOLDING & TRIM MARKET SHARE, 2004 ($6.1 billion) INDUSTRY STRUCTURE Section gives insight on restructuring activities, competitive strategies and market share Page 5

6 Samples Pages, Tables & Charts TABLE IV-6 STAIRWORK DEMAND BY MATERIAL (million dollars) Item COMPANY PROFILES PRODUCTS Bldg Construction Expend (bil $) $ stairwork/000$ construction The Product Section Stairwork Demand 1328 provides demand 2590 for 3280 Wood 710 historical years 1110 (1994, 1295 Metal , ) as well 1570 Plastic as forecasts growth to Engineered Wood Other Materials and ; 220 data 330 is illustrated with the % stairwork 23.6 aid 26.1 of nearly tables 27.8 Demand 5627 and 7138 charts Advanced Environmental Recycling Technologies Incorporated 914 North Jefferson Street Springdale, AR Sales: $64 million (2004) Employment: 585 (2004) COMPANY PROFILES The Profiles Section analyzes 33 firms active in the US molding Key Products: wood-plastic composite trim Advanced Environmental Recycling Technologies (AERT) manufactures composite and trim building market. materials The from profiles reclaimed are plastic and wood fiber waste for use specialized exterior construction applications. a sampling or cross-section of the The Company groups its products into three main lines: commercial and residential types decking of surface companies components; participating exterior door, window and housing trim components; and industrial flooring. in the industry. The Company is active in the US molding and trim industry through the exterior door, window and housing trim components line, which represented sales of $12 million in AERT s trim components are marketed under the MOISTURESHIELD CORNERLOC brand name, and are produced using the Company s proprietary wood fiber and polyethylene (PE) composite material. The wood fiber is waste byproduct sourced from furniture, cabinet and flooring manufacturers, while the PE is sourced from industrial and consumer waste, including grocery bags, containers and other packaging materials. AERT s recycling process produces a material that is engineered with enhanced dimensional stability and resistance to moisture, contraction and expansion, rotting, cracking, warping, splintering and insect infestation. The Company s composite products can be designed and extruded to customer specifications, embossed with woodgrain texture and incorporate coloring agents for aesthetics. Total demand for molding and trim materials is projected to increase 1.7 percent per annum through 2009 to $9.8 billion. Although wood materials will continue to dominate consumption at over three-fifths of demand in 2009, plastic and other materials will offer significantly more favorable growth prospects. Demand for molding and trim made from plastic materials will show the strongest gains, rising... --Section III, pg Copyright by The Freedonia Group, Inc. Page 6

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8 INDUSTRY MARKET RESEARCH FOR BUSINESS LEADERS, STRATEGISTS, DECISION-MAKERS Other Studies World Drywall & Building Plasters Global drywall demand will grow 4.4% annually through North America will remain dominant while growth in the Asia/Pacific region will be particularly strong. Drywall based on synthetic gypsum will continue to gain market share, allowing producers to locate closer to cities and lower transportation costs. This study analyzes the 6.6 billion square meter world drywall industry to 2009 and 2014 by product, market, world region and for 13 countries. It also details market share and profiles major players. # / $5300 Insulation US insulation demand will grow 4.9% yearly through 2010, driven by nonresidential building, appliance and transportation markets. Replacement uses will outpace new home insulation in the residential segment. Fiberglass and foamed plastic insulation will remain dominant while reflective insulation and radiant barriers will grow the fastest from a small base. This study analyzes the $7.7 billion US insulation industry to 2010 and 2015 by product, market and region. It also evaluates market share and profiles # / $4300 Prefabricated Housing US prefabricated housing demand through 2009 will decline at a much slower pace than that of the period. Positive factors include the cost advantages of factory production and designs that better resemble site-built homes. Within the dominant manufactured housing segment, multisection units will outpace single-section types. This study analyzes the $8.8 billion US prefabricated housing industry to 2009 and 2014 by product and region. It also profiles leading producers and evaluates their market share. # / $4100 Composite & Plastic Lumber Demand for wood-plastic composite and plastic lumber in the US will grow 11% annually through 2009 based on growing use in decking, fencing, windows and doors, and railroad ties. Molding and trim will remain the largest end use but will lose share to other applications. Residential building will remain the top market. This study analyzes the US composite and plastic lumber industry to 2009 and 2014 by material, application and market. It also profiles leading industry competitors and evaluates market share. # / About The Freedonia Group The Freedonia Group, Inc., is a leading international industry market research company that provides its clients with information and analysis needed to make informed strategic decisions for their businesses. Studies help clients identify business opportunities, develop strategies, make investment decisions and evaluate opportunities and threats. Freedonia research is designed to deliver unibiased views and reliable outlooks to assist clients in making the right decisions. Freedonia capitalizes on the resources of its proprietary in-house research team of experienced economists, professional analysts, industry researchers and editorial groups. Freedonia covers a diverse group of industries throughout the United States, the emerging China market, and other world markets. Industries analyzed by Freedonia include: Chemicals Plastics Life Sciences Packaging Building Materials Security & Electronics Industrial Components & Equipment Automotive & Transportation Equipment Household Goods Energy/Power Equipment Freedonia Custom Research Click here to learn more about Freedonia Freedonia Custom Research delivers the same high quality, thorough and unbiased assessment of an industry or market as an industry study. Since the research initiative is based upon a company s specific needs, companies harness Freedonia s research capabilities and resources to answer unique questions. When you leverage the results of a Freedonia Custom Research engagement, you are able to obtain important answers to specific questions and issues associated with: mergers and acquisitions, new product launches/development, geographic expansion, entry into new markets, strategic business planning, and investment and funding decisions. Freedonia Custom Research is ideal for companies seeking to make a strategic difference in the status quo and focus on future business growth. Working side by side with clients, Freedonia s team is able to define a research project that is custom-tailored to answer specific questions and provide the basis from which a company can make informed business decisions. Click here to learn more about Custom Research Residential Kitchen & Bath Countertops US demand for kitchen and bath countertops will reach 509 million square feet in Gains will be driven by modest growth in remodeling expenditures and by an ongoing trend toward larger kitchens and more bathrooms per home. Value gains will be promoted by a shift toward high value materials. This study analyzes the $1.2 billion US residential kitchen and bath countertop industry to 2009 and 2014 by material, product, market and region. The study also includes company profiles and market share data. # / Click here for complete title list Click here to visit freedoniagroup.com Page 8 The Freedonia Group, Inc. 767 Beta Drive Cleveland, OH USA Web site: Tel US: or Fax: info@freedoniagroup.com