A bit of good news in the commercial sector

While the kitchen cabinet sector has struggled the past 12 months along with the housing market, the need for hardwood plywood in the institutional, educational and retail environment markets showed a promising level activity in the first quarter of 2009, according to Timber Products Company Vice President Roger Rutan.   Timber Products is a manufacturer of hardwood plywood used primarily for making cabinetry and case goods.

According to Rutan, the first quarter of 2009 was stable in the institutional market for new projects and those nearing completion. With federal stimulus funds expected to be geared toward these facilities this year, continued growth is anticipated.

 "Scientific laboratory fixtures, millwork and cabinets for educational and commercial institutions, hospitals and special manufacturing facilities are still having some activity," Rutan said. "We have a number of customers in Wisconsin and Illinois that say their business is good right now. We’re also seeing a growing number of orders coming in for materials that will be turned into case goods for libraries, museums and universities."

As an example of an institutional project that required a large number of case goods, Rutan cited the new west tower at the Children’s Hospital of Wisconsin in Milwaukee. The 12-story, 425,000-square foot expansion opened in March 2009 and contains cabinetry and fixtures built with Timber Products’ GreenT hardwood plywood. "Almost all of these projects are being constructed under strict environmental guidelines, so GreenT, with its low formaldehyde levels and certified wood, conforms nicely to these standards."

Like the housing market, which varies from city to city, the hardwood plywood market is experiencing pockets of healthy activity.  "Not all geographic regions of the United States are equal right now," said Rutan. "There are a number of markets that are still productive in terms of ordering raw materials. For example, New York, Oklahoma, Texas, Minnesota and Illinois are holding up better than other areas of the country. The intermountain states like Utah and Colorado are even up some in terms of activity. No place is really doing well, but there are places that haven’t been impacted as much."

Because Timber Products is a national company with mills in Oregon and Mississippi, it has been able to insulate itself from the overall lower demand for hardwood plywood. By having a strong presence across the country, the company has captured orders from regions that are showing consistent productivity.

To attract hesitant consumers, many of the nation’s retailers undertook renovation projects in the first quarter of 2009 to subtly change store appearances to appeal to nervous buyers. Ordering new store fixtures constructed of hardwood plywood is a major part of retail renovations, according to Rutan.  "The retail store fixture business is down compared to previous years, but it’s not out," said Rutan.

Another reason for an optimistic outlook on first quarter activity is that many cabinet companies that serve the residential market are now scaled to today’s current business level.  According to Rutan, the tough decisions on budgeting and staffing were made last year. Now correctly scaled to market conditions, manufacturers are focused on building cabinets and serving several of the high-end markets that are holding up well, such as Colorado , New York and Boston.

 "Our customers are out there looking for business and taking orders. That’s good for everyone," said Rutan. "It’s been a long road, but the first quarter results show some activity in the marketplace. Today, we see cautious optimism out there. Nobody’s jumping up and down, but our customers feel like this downturn won’t last forever." 

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