The Marketplace
The millwork market includes seven segments: window units, window sash, window and door frames, interior and exterior doors, specialty doors, moldings, and other millwork products. The construction market is among the leading factors affecting demand for millwork products. In addition, the millwork industry can depend on the remodeling/replacement market to boost demand during periods of low construction activity. In 2003, U.S. manufacturers sales of millwork products increased by 1.2% to reach $13.9 billion. Stronger competition from vinyl products and other materials, coupled with a weakened economy, has resulted in a slowdown of growth in the millwork market since 2000. Business Trend Analysts expects this slow growth to continue through 2006, when the market will total an estimated $14.5 billion. Millwork sales are projected to grow at an average annual rate of 1.2% from 2004 to 2014 to reach $15.9 billion in the latter year.
New Construction Market
Trends in new construction activity are among the key ingredients underlying demand patterns in the millwork market. Despite steady gains in the value of public construction, the value of private construction dropped each year from 2001 to 2003. In 2003, the total value of new construction in the U.S. declined by 0.8% to $686.9 billion measured in constant 1996 dollars). Construction activity is expected to stabilize in the coming years as the economy continues to recover.
Remodeling/Replacement Market
The remodeling/replacement market is less volatile than the construction market because these projects generally require smaller amounts of funding. Maintenance and repair work has blossomed in recent years, thanks to the historically low interest rates instituted by the Federal Reserve Board. Housing affordability has surged, which in turn expanded the potential customer base for the millwork industry.
Competition from Vinyl
Demand for vinyl windows has been rising for more than a decade, particularly in the remodeling/replacement market. The material s low maintenance requirements and traditionally lower cost compared to wood are the main contributors to its growing popularity. Although wood continues to hold a slight lead in the market for prime windows used in the new construction industry, vinyl s market share for prime windows used in the remodeling/replacement market has been over 50% since the late 1990s. Vinyl is also leading in the remodeling/replacement market for patio doors.
Foreign Markets
Foreign trade does not play a significant role in the overall market for millwork, although the industry is still affected by global affairs. The U.S. trade deficit for millwork has been rising for well over a decade, as the growth in imports has outpaced the growth in exports since 1990. In 2003, U.S. millwork imports were valued at $1.4 billion, which translated into 9.2% of U.S. apparent consumption. Exports totaled only $267.4 million, representing a mere 1.9% of U.S. manufacturers sales. For the future, Business Trend Analysts expects that China s growing economy will offer opportunities for domestic millwork suppliers seeking to expand their markets on a global scale.
Industry Consolidation
Consolidation has been an ongoing trend in the millwork industry since the late 1990s. Many of the dominant players have acquired the businesses and other assets of their competitors. Two recent examples of consolidation activity include the 2003 acquisition of American Millwork Corporation by RAF Industries, Inc., and Masonite International s purchase of a 75% interest in Kronodoor, a major Eastern European door manufacturer, in July 2004. | 
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