As a result of these two recent inquiries, I decided to write a more detailed synopsis of this market as it relates to the macro market as a whole both locally and globally. Although you may feel that its not important to know the world consumption I think that by taking 10 minutes to read this that it will give you a mountain top view. This can help you in ways that may not be obvious or apparent.
Please keep in mind that the cost numbers I give are averages as a whole and may not be your average.
US & CANADA MARKET SIZE
Firstly lets start with the overall size of 3DL sales volume for the US & Canada market. Based upon my relationships with other manufacturers and based upon my general knowledge of this market I think its a fair consensus to say that the current market volume in dollars is approximately $50 to $60 million in rigid 3DL Sales. This does not include flat lamination or profile wrapping grade material. In this market lets use the average price of $0.50 per square foot. Of course solids are less and high glosses are more however if we use the average of $0.50 per square foot its pretty accurate. If you can accept the market as conservatively being $50 million square feet at an average of $0.50 per square feet then it means that over 100 million square feet of 3D forming laminates are solid in the US & Canada with the current market.
Next lets try to calculate the amount of components sold. Since I don't have this information on hand I will take basic market knowledge and try to calculate. I know that there are doors that are sold for all types of price ranges however for the calculation I think that $5.00 per square foot would be a good average. Again, whites are sold for less and high gloss, custom components or desk tops are sold for more. When 3DL is used many people calculate in different ways as to the scrap rate. If you take the width of 57" this means there are 4.75 feet wide and if the bed length on average is 9 feet this gives an average of 43 feet of material. With waste on the sides for clamping the material down, between doors and on the length it is conservative to say that about 30% of the material goes to waste. Most companies bale and recycle the material however for this study lets say that only 70 million square feet of material makes it onto a component out of the 100 million square feet consumed. This means that the components sold could be approximately $350 million in sales. Many reading this article will be able to poke holes because they sell on average at $8 a square or their press is 10' long however if you really average everything out it it doesn't have a big impact on the final numbers either way. Again this is just to give a snapshot of the market.
US & CANADA FINISH PRODUCT:
Next I'd like to calculate the finished Kitchens, Office or Store Fixture prices sold based upon the components. The purpose to calculate this is to final the components impact on the final cost of the product and also to find the overall market influence of the product's final destination. This is an extremely difficult calculation but lets take a crack at it. Firstly it would be very hard to pinpoint what the final product mix is between Kitchens, Office Desktops, Store Fixtures or doors sold for refacing. Certainly there are Kitchens sold at $2K, $5K, $10K and some at $20K utilizing 3DL. There are refacing jobs sold at $2K, $5K and $8K and there are office desks sold at $400, $2K and $4K. If we can assume that most of the volume is sold at the more affordable level then we could calculate that the average cost finished cabinetry sold would be at an average of $2K. This is a very arguable number however with all factors considered I think that $2K is a safe number to use. Keep in mind that if you are buying retail that the average may be closer to $8K but the price to buy one Kitchen is much more than when buying 300 for obvious reasons. To calculate the total cabinetry or finish products sold based upon the total component sales we can say that on average there are 20 doors in a North American Kitchen with an average of 2.5 square feet for each door. It is generally agreed that this is the national average. This means that there is an overall average of 50 square feet in each Kitchen. If we use the average cost of $5 per square foot then the average would be $250 in components. For those of you reading this cringing thinking the price is too low; please keep in mind that this includes the overall total as sold in volume not the average for custom produced components. We are all familiar with Pareto's principle of 80/20 which states that 80% of events are derived from 20% of the causes. Simply put, there are 20% of larger producers doing over 80% of the volume and therefore skewing the numbers.
If we take the average of $250 in components on $2K in finished product then we can calculate that the finished product is about 8 times more than the cost of the components on average. In a small wholesale environment the numbers are closer to 10 and in a retail environment the number is closer to 15 but in a market calculation scenario the calculation would be closer to 8 due to the larger projects. So if we can say that there are $350 million in component sales then we can say that the final cabinetry or goods sold in the US & Canada are approximately 2.8 billion. I would say that in my estimation that the Kitchens alone are probably more like $1 to $1.5 billion based upon independent research that calculates that 3DL is approximately 8% of cabinetry sold however when you add in cabinet refacing, office and store fixture in final sales figures I would say that 3DL's overall finished market impact is more close to 2.8 billion in final product sales is pretty accurate. Keep in mind that this number is important to know when calculation the total market force a product has. This is a pretty interesting number to digest; especially if you are a component producer or cabinetry manufacturer.
IMPORTANCE OF 3DL Cost:
Whenever you analyze a product its also important to figure out your products cost as it relates to the entire cycle of the product. Since there is an average waste of 30% this increases the average price of 3DL from $0.50 to $0.65 in terms of real cost to the producer. If the average square feet is 50 then the total cost for 3DL is $32.50 in material in a finished product selling price of $2K and components sold at $250. This means that that the 3DLs cost is approximately 13% of the final components cost on an across the board average and is a 1.6% of the final product's selling point as a market average. I have seen this number be as little as 8% and for some companies it averages 10% but whether its 8% or 13% its still a small portion of the final component price and at 1.6% of the final cabinetry price its an insignificant factor for the final cabinetry or end product cost. With some products such as solid surface the product cost can be as much as 30% to 50% of the final product cost. So in the solid surfacing market if you can save a customer 20% on material cost its a big deal in relations to the final product cost however in 3DL the cost of the laminate simply doesn't have as big of an impact. This is the primary reason that companies prefer a quality 3D Laminate as a norm rather than simply the lowest cost 3DL.
GLOBAL 3DL MARKET:
From my colleagues in this business that sell laminate internationally, I have heard that the global consumption of 3DL Thermofoils is approximately $400 million is US dollars Although I don't personally have the knowledge to validate this number I feel that its probably pretty accurate. Although markets vary greatly from Asia, to the US & to Europe we can attempt to calculate a global average of component cost and also a global average of final product cost.
GLOBAL COMPONENT COST:
Based upon my research I estimate the global component cost average is more close to $4 per square foot rather than the US average of $5 per square foot. If you take the entire world, the cost of thermofoil is also a bit lower globally as well. Partly because the manufacturers typically are larger in Asia and also in Europe on average. North America tends to have many more small shops as a whole. The primary reason is that the cabinetry produced for North America tends to have larger custom and semi custom markets whereas globally they use standard 32mm increments. This creates a scenario where larger producers thrive whereas the custom and semi custom cabinetry insulates the smaller producer in North America to some degree. This is important for the custom component producer. So in regions such as Asia or Europe they typically buy 3000 yard runs rather than by the single roll although this has been changing with the global market conditions.
Based upon my research I estimate the global component cost average is more close to $4 per square foot rather than the US average of $5 per square foot. If you take the entire world, the cost of thermofoil is also a bit lower globally as well. Partly because the manufacturers typically are larger in Asia and also in Europe on average. North America tends to have many more small shops as a whole. The primary reason is that the cabinetry produced for North America tends to have larger custom and semi custom markets whereas globally they use standard 32mm increments. This creates a scenario where larger producers thrive whereas the custom and semi custom cabinetry insulates the smaller producer in North America to some degree. This is important for the custom component producer. So in regions such as Asia or Europe they typically buy 3000 yard runs rather than by the single roll although this has been changing with the global market conditions.
Based upon $400 million of 3DL being sold this would mean that the global consumption of 3D Laminate thermofoils is 8 times larger than that in the US & Canada. This means that there is over 800 million square feet of 3DL thermofoils consumed yearly and by my estimates this equals $3.2 billion in component sold which could equal more than $40 billion in finish goods sold utilizing 3DL as its product.
It should be noted however, that although the US is 25% of the world GDP that it consumes on 13% of the worlds 3DL. It would safe to say that 3DL is less popular in the US as a whole when comparing it to some other markets.
CONCLUSION:
In conclusion, I hope that having this information gives you more awareness of the size of the local market and also the size of the global market for our product segment. I also hope that it gives you insight on how the cost of the 3DL does or does not impact the component or final cabinetry cost.
As you have read this article, I hope that you keep in mind that these numbers won't necessarily affect your business. They are only used to calculate the market size and the market impact as affected by 3DL. If you are not in the business of selling the lowest cost door you can and you are more focused on custom then your numbers will much different than the national or global average.
I also find that information gives us perspective and gives us more confidence in our decisions. I have found that in life sometimes information that appears to have no correlation to your daily life, it in fact gives us more supportive evidence for our decisions as a whole.
For future story ideas or things you'd like me to research please feel free to email or call me anytime.
