Australia’s fabricated wood manufacturing industry has experienced a period of decline, with revenue shrinking due to weakening demand from downstream manufacturers and rising competition from imports, according to a report by IBISWorld.
Data show industry revenue has fallen at an annualised rate of 0.1 per cent over the past five years, with total revenue expected to reach $1.7 billion in 2024-25 following a projected 1.4 per cent decline.
High timber costs and subdued construction activity have further weighed on local manufacturers, making it increasingly difficult to sustain operations.
Shrinking plantation tree availability has kept timber prices elevated, limiting manufacturers’ ability to pass rising costs onto customers.
Concurrently, ongoing import penetration has exacerbated competitive pressures, making it challenging for domestic producers to sustain profitability.
IBISWorld notes that the construction sector, which accounts for approximately 80 per cent of industry revenue, has experienced divergent demand trends, with multi-unit apartment construction slowing while material and labour costs have surged.
High-profile collapses of builders, such as Metricon, have further dampened industry confidence and activity.
Particleboard, a key product segment in fabricated wood manufacturing, has been particularly affected by declining apartment construction.
This product, widely used for its cost-effectiveness, has seen revenue contract due to reduced demand and increased reliance on imports.
Despite these challenges, manufacturers continue to position themselves near high-demand regions, with the eastern seaboard remaining a central hub for industry activity.
Looking ahead, IBISWorld projects modest industry growth over the next five years, although significant hurdles remain.
Falling plantation tree availability is expected to persist, creating supply constraints that could further pressure local manufacturers.
However, potential government initiatives aimed at bolstering replantation efforts may provide some relief by supporting timber resource availability.
The competitive landscape of the industry remains shaped by pricing and quality considerations, with manufacturers required to meet industry standards while catering to price-sensitive retailers and construction firms.
As the market adjusts to shifting economic conditions and construction sector fluctuations, industry participants will need to navigate evolving demand patterns and cost pressures to remain viable.
While the full extent of future market developments remains uncertain, IBISWorld suggests that regulatory support and increased investment in sustainable timber resources could play a crucial role in stabilising the sector in the long term.
More insights on the industry’s trajectory are available in the full IBISWorld report.
