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Report from
Europe
EU wood manufacturing struggles with slow
growth
and substitutes
The EU wood joinery sector continued to grow only very
slowly in 2018, well below the pace of increase in the
wider construction sector. While joinery production and
consumption gained momentum in Germany, Austria,
Spain, the Netherlands and Belgium last year, it remained
subdued in Italy, the UK, France and Scandinavia.
Growth in the EU wood door sector slowed in 2018, while
the wood window sector was close to a new record low.
There was some evidence of wood making up some lost
ground against plastics in these sectors, but wood
continues to face stiff opposition from other materials.
Where wood is being used, it is increasingly combined
with metals, or used in engineered form, to ensure greater
strength and durability.
These are the main conclusions to be drawn from analysis
of newly released Eurostat PRODCOM data which
provides a snapshot of the production and consumption
value of wood joinery products in the EU in 2018.
EU joinery production not keeping pace with
construction sector growth
The independent research agency Euroconstruct estimates
that the value of construction activity in the EU increased
3.1% in 2018, building on 3.1% growth the previous year.
However, analysis of newly released Eurostat data
indicates that activity in the European wood joinery sector
has been relatively unresponsive to this wider expansion in
the building sector.
Eurostat PRODCOM data shows that the production value
of wood joinery and related products in the EU increased
only 0.3% to 35.1 billion in 2018 following growth of
2.4% in 2017. Although 2018 marked a high point for EU
joinery sector activity in the last 10 years, activity was still
down more than 20% compared to the period before the
global financial crises (Chart 1 left).
The trend in wood joinery activity has varied widely
between EU countries in recent years (Chart 2). After
levelling off in 2017, growth in joinery activity in
Germany resumed last year, rising at 3.3% to 8.70. After
a brief bounce in 2017, joinery production in Italy fell
back 6% to 5.52 billion in 2018, only just above the
historically very low levels recorded in 2015 and 2016.
In the UK, joinery production increased 2.6% to 4.71
million after slowing over 5% the previous year. Joinery
production declined in Scandinavia, by 5.6% to 3.57
billion in 2018. Joinery production in France increased
only 0.3% in 2018, to 3.25 billion, after rising 3.7% the
previous year.
However, there has been more consistent growth in joinery
production in several other EU markets including Austria
rising 3.3% to 2.03 billion in 2018 (+2.2% in 2017),
Spain rising 3.6% in 2018 to 1.75 billion (+4.6% in
2017), the Netherlands rising 8.5% in 2018 to 1.17
billion (+11.7% in 2017), and Belgium rising 1.5% in
2018 to 0.95 billion (+8.8% in 2017).
Part of the explanation for the slow increase in wood
joinery activity in the EU compared to growth in the wider
construction sector and economy is increased substitution
by alternative materials. However, there is some evidence
to suggest that the pace of substitution slowed in 2017 and
2018. This is revealed by comparing the total EU apparent
consumption value of doors and windows in various
materials (Chart 3).
Between 2014 and 2017 total EU consumption value for
doors and windows increased 26% in aluminium and 28%
in steel. The consumption value for wood increased only
4% during this period, while consumption of plastic
stagnated.
Overall the share of wood in the total value of EU door
and window consumption fell from 30% to 28% between
2014 and 2017, while the share of aluminium increased
from 25% to 28%, steel increased from 14% to 16%, and
plastic decreased from 31% to 27%.
During this period, the growth in aluminium consumption
in the EU windows and doors sector was particularly
dramatic. Aluminium has always remained the default
windows product in the commercial market but has
enjoyed considerable resurgence within the residential
window and door market.
An important driver behind this has been aluminium bifold
and sliding doors as consumers demand greater space
and light within living areas. Another factor is the demand
for lower maintenance and greater strength in light weight
frames for high energy efficiency double and triple glazed
units.
However, in 2018, the growth in consumption of steel and
aluminium appears to have stalled. Wood even regained a
little share, rising from 28% to 29%, at the expense of
plastic for which share fell from 28% to 27%.
The Eurostat data has limitations and the suggestion that
wood may be regaining some market share is contradicted,
at least in the window sector, by other more detailed
studies (see report below on the Interconnection study).
A specific constraint of the PRODCOM data is that it does
not distinguish products made wholly in wood or metals
from those that are composites of both materials. The
development of wood-aluminium composite window
frames has been a key growth area in the EU in recent
years. These products combine the strength and efficiency
of aluminium with the thermal insulation and aesthetic
properties of wood.
Stasis in EU market for wooden doors
Eurostat PRODCOM data shows that the total value of
wood doors supplied to the EU increased just 0.1% to
7.36 billion in 2018. Most new wood door installations in
the EU comprise domestically manufactured products. The
EU‘―s domestic production was static at 7.0 billion in
2018 (Chart 4).
There was significant variation in the performance of the
wood door sector in EU countries in 2018. Production in
Germany, the largest wood door manufacturing country,
increased 1.9% to 1.35 billion during the year.
Production in the UK fell back a further 4.5% to 810
million in 2018 after declining 2% the previous year, the
volatility being partly due to Brexit and partly to changes
in the EUR-GBP exchange rate.
Door production in Italy has also been volatile, declining
7.5% to 940 million in 2018 after a 22% increase the
previous year. Production in France fell 2.5% to 640
million after a 5% rise in 2017. Production in Sweden fell
nearly 8% to 240 million.
Elsewhere there were solid gains during 2018, with door
production rising 6% to 580 million in Spain, 7.4% to
560 million in Poland, 5% to 290 million in Austria and
9% to 280 million in the Netherlands (Chart 5 above).
Wood door imports into the EU increased by 1.5% to 352
million in 2018 (Chart 6). Imports accounted for 4.8% of
the total euro value of wood door supply to the EU in
2018, the same proportion as the previous year.
Tropical countries took a larger share of the EU market for
wooden doors in 2018, largely at the expense of China.
Total EU imports from the tropics were 175 million in
2018, 8.6% up on the previous year and enough to offset a
6% decline in 2017.
In 2018, wooden door imports from Indonesia increased
7.8% to 112 million, while imports from Malaysia were
up 7.1% to 41 million. Imports from Brazil increased
1.7% to 13 million. EU imports of wooden doors from
China, still the largest single external supplier, fell 2% to
111 million in 2017.
The European wood door industry is now dominated by
products manufactured using engineered timber driven by
requirements to comply with higher energy efficiency
standards and efforts to provide customers with more
stable products and long-life time guarantees.
Another key trend is towards composite doors with a steelreinforced
uPVC outer frame with an inner frame
combining hardwood and other insulation material. These
new products are designed to combine strength, security,
durability, high energy efficiency, with a strong aesthetic.
There may be a place for tropical hardwoods in the design
of these products with manufacturers looking to combine
high quality, consistent performance, regular availability,
and good environmental credentials with a competitive
price.
EU market for wood windows fell 1.6% in 2018
The total value of wood windows supplied to the EU fell
1.6% to 6.18 billion in 2018 following a 2.8% increase
the previous year (Chart 6). EU consumption of wood
windows in 2018 was 6.14 billion, the second lowest
level recorded in the last twenty years (when adjusted for
inflation), only just exceeding the record low of 6.07 in
2016.
Supply of wood windows to the EU is overwhelmingly
dominated by domestic production which fell 1.7% to
6.14 billion in 2018. Imports from outside the EU
accounted for only 0.6% of total EU wood window supply
in 2018, a slight gain compared to 0.6% in 2017.
Italy has maintained its position as the largest wood
window manufacturer in the EU, although production fell
2.7% to 1.46 billion in 2018. Production in Germany
increased 4% in 2018, to 850 billion, rebounding after a
0.9% decline the previous year. Production in Sweden also
rebounded in 2018, up 5.4% to 440 million, after
declining 2.4% the previous year. Production in Poland
continued to rise in 2018, by 2.9% to 740 billion.
However, wood window production declined in most other
leading EU producer countries in 2018 including France (-
7.2% to 500 million), Denmark (-9.2% to 440 million),
Austria (-2.2% to 420 million), UK (-10.8% to 270
million), and the Netherlands (-5.9% to 240 million)
(Chart 7).
EU imports of wood windows from outside the EU
increased by 13.1% in 2018 to 36 million, recovering
ground lost in the previous two years (Chart 9). Imports
increased 19% to 14 million from Norway, 8% to 4
million from Bosnia Herzegovina, and 154% from
Belarus, to 4 million.
Only a very limited, and currently declining, quantity of
wood windows is imported into the EU from tropical
countries. After a spike in imports of 7 million in 2015,
mainly from the Philippines, imports from tropical
countries fell continuously to only at 1.8 million in 2018
(Chart 10). Most EU wood window imports from tropical
countries are destined for France and Belgium.
Tropical wood in the European wood window market
While tropical countries are not significantly engaged in
the EU market for finished windows, this sector is of
interest as a source of demand for tropical wood material.
From this perspective, a notable trend in the EU window
sector ¨C as in the door sector - is towards use of
engineered wood in place of solid timber.
This is particularly true of larger manufacturers producing
fully-factory finished units that buy engineered timber by
the container load.
Increased use of engineered wood is closely associated
with efforts by window manufacturers to meet rising
technical and environmental standards, provide customers
with long lifetime performance guarantees and recover
market share from other materials.
Increased focus on energy efficiency means that tripleglazed
insulating window units with very low U-factors
are now more common than double-glazed units in
Europe. These units demand thicker, more stable and
durable profiles that in practice can only be delivered at
scale using engineered wood products or by combining
wood with aluminium and steel in composite products.
The quality and engineering of wood windows has
undergone a revolution in the EU in recent years so that
manufacturers are now able to deliver products with many
of the benefits previously reserved only for the best quality
tropical hardwood frames using softwoods and temperate
hardwoods.
Factory-finished timber windows are given a specialist
spray-coated paint finish for even and durable coverage
which might only need redoing once a decade. The
lifespan of factory-finished engineered softwood frames is
now claimed to be about 60 years, while thermally or
chemically modified temperate woods can achieve around
80 years.
Nevertheless, smaller independent joiners producing
bespoke products in low volumes still tend to rely on solid
timber purchased from importers and merchants to
manufacture window frames. Tropical woods such as
meranti, sapele and iroko continue to supply a high-end
niche in this market sector, competing directly and often
successfully with oak, Siberian larch, and western red
cedar.
Total window sales increase 2% in Western Europe
2018
Sales in the window market in Western Europe increased
by 2.0% in terms of value last year. Sales in the industry
increased by 1.5% in terms of quantity. A similar
development is expected for 2019, as shown by
Interconnection Consulting in a study presented at the
First Vienna Window Congress in June 2019.
The great uncertainty surrounding Brexit caused a 2.1%
sales decrease in the window industry in the UK and
Ireland area. By contrast, the window market in southern
Europe (Italy, Spain, Portugal) will continue to recover
and will be Europe‘―s main growth area with sales expected
to increase 6.8% in 2019.
The largest markets, France and Benelux and the Germanspeaking
DACH region, however, will continue to achieve
moderate growth rates of 1.6% and 1.9% in 2019,
respectively. In these countries, the main factor curbing
growth is restrained housing construction.
The Scandinavian countries are also suffering from the
poor development of residential construction and the
window market is this region is expected to decline 1.5%
in 2019 with a particularly large slowdown in Sweden.
Overall, Interconnection estimate that sales of windows in
western Europe will increase from 18.4 billion in 2018 to
19.9 billion by 2022, with Italy, Spain and Portugal
making a major contribution to growth both in the new
construction sector and in the renovation segment.
Wood-metal composite windows gain ground in
western Europe
According to Interconnection, western European sales of
windows with wood content should hit 5.38 billion in
2019, including 2.62 billion of wood-only products and
2.86 billion of wood-metal composite products. Window
market share of wood-only products currently stands at
14.0% while the share of wood-metal composites stands at
15.3%.
Sales of wood-only windows in western Europe are
forecast to decline 1.2% per year between 2018 and 2022.
However, this decline is expected to be offset by 2.6%
annual growth in sales of wood-metal composite windows.
In 2019, metal windows have the largest share of the
western European window market, with 36.8%. Sales of
metal windows in this market are forecast to reach 6.8
billion this year and annual growth of 3.2% is expected
until 2022.
Consistently high growth rates for this material are
expected due to relatively low costs of maintenance and
the optical appeal of aluminium.
PVC currently accounts for 5.40 billion (29.4%) of
window sales in the western European market. PVC
window sales are expected to grow by 1.7% per annum
until 2022, mainly driven by rising demand in southern
Europe.
An additional 680 million (3.7%) of window sales
comprise PVC-aluminium composite product. Sales of this
product are expected to increase 3.7% annually until 2022.
Environmental requirements drive window demand for
renovation
Interconnection report that the residential construction
sector is the most important market for windows in
western Europe, accounting for 66.3% of sales. Total sales
in this sector are expected to grow 1.4% per year until
2022 with most of the increase driven by renovation which
continues to perform well due to increased environmental
requirements.
The European window industry is undergoing a major
structural change due to increased internationalization.
Companies from Eastern Europe, particularly in Poland,
Slovakia and Romania, are gradually increasing share of
western European markets. Nearly 30% of windows
installed in Germany each year are manufactured outside
the country. Exports account for 56% of sales by Polish
windows manufacturers.
PVC dominant window type in Eastern Europe
According to Interconnection Consulting, PVC is the
leading material used for window frames in Eastern
Europe, with annual sales of 2.48 billion expected to
grow at 3% per year until 2022. Metal windows are the
second most popular window type with annual sales of
1.03 billion euros growing annually at a rate of 5.2%.
Metals are particularly dominant in the non-residential
construction sector. There is also expected to be rapid
growth in sales of wood-aluminium windows in Eastern
Europe, at an annual rate of 7.6% until 2022.
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