Plum Creek Timber Competition
Now Viewing Plum Creek Timber's competition in: Sawmills and Plywood Mills
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How large a geographical area does the company sell to? - Transportation costs limit the market area for most sawmills.
How many competitors serve the same market? -
What types of customers does the company sell to? - Wholesalers, lumber yards, construction companies, furniture makers, and lumber retailers are major customers.
Does the company sell a large percentage of production to any single customer? - Smaller sawmills often have customer concentrations.
How does the company find customers? - Phone calls are the main sales tool. With a limited number of possible customers, most sales are to repeat customers.
How does the company determine prices? - Prices may be negotiated for every order.
Does the company ship product by rail or truck? -
Does the company operate its own delivery trucks? -
Competitive Landscape
Demand is closely tied to the level of home construction. The profitability of individual mills depends on efficient operations, because the products are commodities sold based on price. Large companies have big economies of scale in sawmill operations. Large mills can have annual revenue per employee of close to $300,000, while small mills may achieve only half as much. Local mills can often compete successfully with those of large companies because they can efficiently serve a local market. Sawmills can operate with only a modest investment of capital, but plywood mills require expensive equipment and therefore are usually plants with high annual volume.
Business Challenges
CRITICAL ISSUES
Volatile Timber Costs, Lumber Prices - Lumber supply and prices can be volatile, affected by demand, domestic supply, Canadian imports, weather, and environmental regulations. The fragmented nature of the industry makes predicting supply, which fluctuates monthly, difficult. Lumber prices can change 40 or 50 percent in a matter of months. The costs of timber and the prices received for lumber and other wood products can be volatile but don't necessarily change in tandem. Lumber prices generally swing more widely than do timber costs, squeezing sawmill operators when demand falls.
High Dependence on Home Construction - Demand is closely tied to the level of home construction. About 75 percent of lumber and wood panel is used in residential construction, either in homebuilding or indirectly as wood furniture and cabinets. The level of home construction typically varies in multi-year cycles, and can fall 20 percent per year. Home repair and remodeling form a smaller but less cyclical market.
Industries Where Plum Creek Timber Competes
- Real Estate
- Real Estate Investment Trusts (REITs)
- Land REITs(primary)
- Residential Real Estate Development
- Real Estate Investment Trusts (REITs)
- Construction
- Construction Materials
