TTJ (Timber Trades Journal) canvassed industry organisations and companies about their plans and predictions for the sector for the year ahead. Respondents identified challenges due to the wider economic situation and geopolitical tensions, but they also see market opportunities and continuing strong prospects for timber generally given its capacity for reinvention and its increasingly relevant environmental credentials.

Alastair Kerr
Wood Panel Industries Federation director-general

The script for the current economic outlook was written over the past three or four years and is shaped by the cumulative impact of both global and regional geopolitical events and some national self-inflicted impacts which still weigh on the country post Brexit.

Whatever your political leanings, you would normally expect a boost to the economy when a party wins a significant majority, but unfortunately that doesn’t seem to have materialised this time round and some of the autumn Budget announcements only add to industries’ costs and don’t seem to have improved consumer confidence. The latter is particularly important because 80% of UK consumption is domestic.

Looking to 2025 there is some optimism, but this really needs to be seen against the backdrop of gloomy 2024 numbers where UK GDP and inflation bounced around. Energy costs remain challenging and private and public house building slowed (down 9-10% on 2023).

For the panel sector, housebuilding, refurbishment, repair and maintenance are key market segments where growth will drive demand for panels either within the building structure or in subsequent furniture. Whilst the government seems committed to it, no one on the Construction Leadership Council believes that the government target of 1.5 million new homes by 2030 will be met because there isn’t a quick fix to some of the key structural inhibitors such as planning and skills shortages. Targets aside, there is an expectation of modest growth in these sectors in 2025 and the key for business will be to see (however modest) steady but sustained growth, as it is this which helps with investor confidence.

The feedback from the Construction Products Association is that there is improvement in housebuilding under way, albeit from a very low base, with new
sites opening and brick deliveries and forward orders improving. New homes are having to meet tighter energy efficiency standards, which should help play to timber frame’s strengths. Nearly every major housebuilder has a timber frame facility within their portfolio, so we can hope that the percentage of timber frame homes in Englandwillprogressivelyincreasefromthe 16% estimated by NHBC (2023).

The export market is being hampered by equally subdued demand in Europe particularly in Germany. The European Commission’s economic sentiment indicator in October was 3% below the long-term average and looks set to continue flat lining into 2025.

Certainly, the first half of 2025 looks to continue with the challenging market conditions, but progressive companies often invest when market conditions are difficult, either to enhance their offering or to prepare for growth in better times. I see signs of this within the panel sector.

--- > More details of the report can be found here

Source: ttjonline.com