. . .

Timber frame manufacturers hit by 35% price hike for timber in 2020

ITFMA

The Irish Timber Frame Manufacturers’ Association (ITFMA) says that there has been an unprecedented and record increase in the price of timber in 2020, with this trend set to continue into 2021, adding substantially to the cost of house building in the year ahead.

The construction industry has seen a substantial increase in the price of raw materials in 2020, and in particular in timber prices. While these costs are affecting all construction, they are impacting particularly hard on the timber frame industry due to the nature of the way contracts are awarded.

Fuelled mostly by an explosion in demand for timber in the US housing market, the Covid-19 crisis, and a subsequent massive upsurge in demand in the global DIY market, timber prices have risen steeply since the end of Q1 2020. Licencing issues related to the felling of Irish trees and Brexit stockpiling have added to the problems in the market, result in a perfect storm of supply pressures hitting the market.

Irish construction consumes an estimated 625,000 cubic metres of sawn timber per annum. This figure excludes panel products such as OSB and plywood, which are also increasing in price.

Most timber used in the timber frame industry is graded softwood imported from producers in Scandinavia and mainland Europe. These producers have started to export large quantities of timber to the US market.

Timber frame manufacturers, who generally provide fixed prices for a set period to contractors, can under normal circumstances usually absorb incremental price increases of about 5%. But a timber price increase of 35% to date this year has meant that its cost has now passed an unprecedented high price, with no sign of abatement in the coming months and into the first two quarters of 2021.

Peter McCaughey, Chairman, ITFMA,

Peter McCaughey, Chairman, ITFMA, says that the timber frame manufacturing industry has now passed the point where it can continue to carry these price increases.

“To remain viable, we need to pass on price increases incurred to clients, and have them make provision for further increases, should timber prices continue to rise.

“The building sector experienced substantial price increases for other timber products this year as suppliers, such as builders providers, have already passed on costs to them,” he continues. “As structural timber accounts for about 21% to 25% of the sale price of a timber frame house, the situation has now moved beyond a point where our members can bear the increased costs.”

Timber frame accounted for approximately 5,400, or 35% of new house units built in Ireland last year. This is about 24% of the overall 21,241 residential units built during the year.

While some supply issues will be addressed in the coming months, sustained US demand means that purchasers will continue to pay a premium for imported timber for the foreseeable future.

The ITFMA is the representative organisation for the timber frame industry on the island of Ireland. Established in 1998, the association has a membership of 16 manufacturers and several supply chain members, and comprises both publicly-listed and family-owned companies.