What's the Demand for Components Equipment?

Posted by: Craig Webb on Monday, July 1, 2019

This story was originally written by Craig Webb and published on his blog at: www.webb-analytics.com.

 

Jay and Joe Halteman have rarely been so popular. Their company, Wood Truss Systems, helps companies buy and sell much of the equipment used to create trusses and panels. That puts this manufacturer’s rep at the center of construction’s mass movement toward component manufacturing. And from that spot, they see both boom times and challenges ahead.

 

“Floor decks and pre-assembled roof truss sections, doing things from a modular approach, that’s where it’s on fire,” Jay, the president, told Webb Analytics in an interview. Dealers certainly are contributing: BMC opened its second automated truss plant recently, expects a third to start up this summer, and is working on a fourth plant that will be ready by next spring. Meanwhile, Builders First Source says some of the company’s 58 manufacturing facilities will get roughly a quarter of this year’s capital expenditures (expected to total $77 million to $115 million) in order to expand those plants’ production capacity and capabilities. And smaller dealers, such as Wilson Lumber, are in the game as well; Alabama-based Wilson is building a truss plant near Nashville, Tenn.

 

But you can’t do this work efficiently without modern equipment, and that’s where Wood Truss Systems comes in. Its website shows nearly 120 new and used pieces of equipment for sale today, but Jay says those numbers exclude gear that’s so popular its sale notice never reaches the site.

 

“When we learn about [available machinery], we make two, three calls and it’s sold,” he says. “It’s like throwing meat to the lions. Floor truss equipment is almost impossible to find.”

 

Such frenzy stems in part from builders’ ever-tightening embrace of components. Roof trusses already are the norm in most parts of the country; according to a survey late last year by the Home Innovation Research Labs, 76.7% of builders said they planned to use roof trusses in the next year, and 78.9% will do so within five years. Other components are seeing even bigger growth spurts: 22.9% of builders said in the same survey that they’ll use open wall panels this year and 28.1% will within five years. For wall panels, the numbers are 19.2% in one year and 25.1% in five.

 

But there’s another reason why demand is so high today. Between 2009 and 2014, Wood Truss Systems exported more than 70 ocean containers’ worth of equipment to countries that had begun ramping up their use of automation. “A lot went to Australia, New Zealand, Chile, Russia,” Joe says. “Anybody who could get their hands on it would buy it, partly because it was good quality used equipment and was dirt cheap.”

 

“We sent over 200 truckloads into Canada,” Jay added. Today, labor and equipment shortages combined with increased demand have made six-month lead times for truss deliveries common, the Haltemans say.

 

While business is white-hot, Jay says, he and his son note that a lot of the demand is coming from big companies (including BMC and BFS) as well as new players like Katerra, Inphastos, and Entekra. “The rest of the industry is watching and everybody is really anxious to see how it’s going to shake out,” says Joe, Wood Truss Systems’ sales specialist. “But there’s some reluctance to invest. Mostly it’s just the unknown.”

 

For their part, the Haltemans think this trend has legs. Indeed, they predict some used equipment will appreciate in value over the coming years rather than decline.

 

At the same time, however, the Haltemans say we can expect some headwinds. For instance, consider wall panels. While seemingly simpler than roof trusses, they can require more parts and can be more complicated, Joe says. (See Part 1 and Part 2 of his primer on getting into wall panels.) And Jay points out that the design software used to create trusses is provided for and paid by the money people spend on the connectors. Since wall panels typically are nailed, there’s no inducement to offer free software for designing wall panels. Some companies that make connectors might offer their wall-panel software to existing truss customers, but that same motivation doesn’t exist to help a customer making wall panels alone.

 

Machines like the Terminailer can reduce this problem a bit, the Haltemans say. But often, companies that do just wall panels find after about a year that they need to get into trusses as well.

 

Whichever route a dealer takes, both Jay and Joe say the key is to treat the components as an assembly plant, not a place for old framers who want to get out of the sun. The BFS plants that used to be part of ProBuild “approach wood as a manufacturing rather than as a framing endeavor,” Jay says. “Everything they do is centered around a manufacturing effort. They’ve refined it so there’s throughput, productivity, and a decent environment for men and women.”