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Big Time "Frame-Up": U.S. Wood Exports to Japan
By Craig Jenkins
Through its promotional
efforts and production of high-quality goods, the U.S. wood
industry has earned bragging rights for a five-year annual
average of $3.1 billion in sales to Japan, with value-added
products such as glue-laminated lumber, doors and window frames
making big gains. But it couldn't have happened without a healthy
hand-up from the huge new-home market in Japan.
The Japanese population is less than half that of the United States at 125 million, but housing starts in this country, short on land but long on urbanized landscape, often exceed those in the United States. In its best-ever year, 1996, the Japanese housing industry built a record-breaking 1.63 million new houses.
Though starts were down 15 percent at 1.39 million units in 1997, due to an increase in the consumption tax and sluggish economic conditions, the magnitude of the Japanese market remains impressive.
The savvy Japanese consumer is very receptive to U.S. housing products for their good value: high quality at affordable prices.
With Japanese housing construction costs about 2.5 times the cost of U.S. housing, quality with an affordable price tag becomes a major consideration for new homeowners.
Housing Due for Replacement
Much of Japan's existing housing was built hastily to meet the emergency housing needs following World War II and lacks the functionality demanded by modern-day home buyers.
But the Japanese consumer has a raised set of expectations for replacement homes that are replete with modern Western building techniques: thermal efficiency, central heating/cooling and the strength inherent in newer framing methods.
These new homes are designed to last much longer and offer more floor space. Much of this emphasis on greater functionality is due to the influence of 2x4-framed-style housing and imported wood products.
The re-sale home market in Japan is almost negligible, making up only 10 percent of home purchases. Compare that to the U.S. market for previously owned homes, which is about double the size of new housing starts! Since re-sale structures are not highly valued, it is the land underneath that largely determines the selling price of the house.
Though not widely practiced in the past, renovation is becoming an option for handy homeowners. This development is contributing to a growth in retail home building supplies.
Post-and-Beam, Traditional But Costly
Post-and-beam has been the
time-honored construction technique for Japanese home builders.
But new materials and skyrocketing construction costs, brought
about by growing shortages of skilled labor and craftsmen, have
led consumers to search for less expensive, though durable,
techniques.
Concrete and steel building materials entered the market in the 1970s. More recently, prefabricated (prefab) and 2x4 construction techniques captured market share.
Wood housing has suffered a significant loss of market share to concrete and steel construction although in recent years the growth in 2x4 framed construction has helped stabilize the decline. Despite this trend, wood housing starts, at 611,000 units in 1997, still make up 44 percent of all new starts in Japan.
U.S. exporters have already gained significant market shares in the 2x4 framed construction market. However, post-and-beam housing may offer the U.S. wood products industry the best avenue to increase export volumes and market share. With almost half a million housing starts using this technique in 1997 (a down year), the sheer volume can't be overlooked.
Many entrepreneurs in the post-and- beam segment are working hard to revitalize this industry. To cut costs, builders are forming cooperatives that provide members with joint materials purchasing. They are also turning to glue-laminated timber, an alternative to expensive solid-sawn timber, and one which U.S. exporters are in a strong position to provide.
Besides these cost-cutting measures, many builders are also incorporating structural panels and metal connectors into their designs to minimize risk during earthquakes. Builders' renewed efforts to spark the post-and-beam market have opened opportunities for U.S. wood products such as Douglas Fir beams, Hem-Fir baby squares for posts and ground sills, glue-laminated posts and beams, structural plywood, oriented stand board (OSB) and interior finishings.
Prefab Growing Fast
Prefab starts totaled 207,000 in 1997. Of this amount, 34,000 were wood-framed. In 1994, the Japanese government began promoting the import of foreign-made housing, including prefab and 2x4 frmed housing packages, to help lower consumers' housing costs, expand housing options and help reduce Japan's trade surplus with the U.S.
While the vast majority of
structural framing components of the larger prefab housing
companies consist of lightweight steel products, there are
significant opportunities for wood-framing stock in wall, floor
and ceiling panels.
Marketing to this sector is extremely demanding; the industry is hard-nosed about assuring stability in supply, price and quality. Still, plenty of opportunities exist for a range of solid wood and engineered products such as glue-laminated beams and laminated veneer lumber (LVL). Additionally, wood products are used for interior finishings such as flooring, joinery, doors and windows.
To adapt their products to the needs of Japanese homebuilders, the U.S. wood industry is investing resources to produce dimensions preferred by the Japanese.
Japan's Imported Housing Boom
Before 1993, imported houses were limited to the luxury end of the market and had a very small market share. However, imported houses are now becoming attractive to a wider range of customers thanks to their low price and high quality. In 1997, the Japanese spent $288 million on imported prefab buildings, including $73 million from the United States.
Housing components are also coming on strong. Japanese imports of U.S. wood doors rang up $52 million in sales in 1997, with wood windows reaching $39 million. Wood flooring, molding and kitchen cabinets also have excellent market prospects.
2x4 Framed Houses Resist Earthquakes
First introduced 20 years ago, 2x4 construction occupies a fast-growing niche of the Japanese home market. Almost 80,000 units were built in 1997 using a mixture of North American and adapted Japanese construction techniques. Platform frame (2x4) housing now accounts for 13 percent of total wood-frame construction, up from just 9 percent in 1994.
The popularity of this framing method got a boost because of its excellent performance during the 1995 Kobe earthquake. Another plus for U.S. exporters was Japanese acceptance of U.S. softwood lumber grade marks of over 1,000 U.S. mills in early 1997, reducing costly and time-consuming grading to Japanese standards.
However, U.S. mills face formidable competition from Canadian mills that in 1996 supplied 87 percent of the 3.4 million cubic meters of framing lumber used in Japan. U.S. mills supplied almost all the remaining imports.
Multi-Story Housing Allowed?
In the past, Japanese building codes have severely restricted the building of multi-story, wood-frame housing. But permits for this type of construction have been rising; 40,000 units--a 27-percent increase over 1995--went up in 1996. Almost all of these starts are single-family homes.
Outdated biases against wood construction in Japan's building code have been a central point of discussion for many years in bilateral wood trade talks. Adding to the pressure on the government to allow this type of housing is the scarcity of land and the dilapidation of old mid-rise apartment buildings.
In 1996, the Japanese government committed itself to the development of new performance-based standards to allow the construction of three-story, multi-family, wood-frame construction in urban areas.
Government-sponsored promotions for imports have included the opening of imported housing parks and imported housing materials centers, organizing seminars and training for architects and builders and conducting market research.
As the largest and one of the
fastest growing import markets for value-added wood products,
Japan's future housing demands and easing of import entry provide
ample opportunity for U.S. exporters to increase their market
share.
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The author is an agricultural economist with the Fisheries and
Forest Products Division of the Foreign Agricultural Service.
Tel.: (202) 720-0770; Fax: (202) 720-8461; E-mail: jenkins@fas.usda.gov
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