​Executive Summary
 
The purpose of this project was to perform a comparative assessment of the US and Japanese 2x4 construction technologies, evaluate Japanese builders perceptions of US value-added wood building materials and identify opportunities to increase the use of US wood building materials within the Japanese 2x4 construction sector.
 
In 2008, housing starts in the US and Japan totaled 906,200 and 1.05 million units, respectively. Two by four housing starts in Japan totaled 107,747 (up 9.3% from 2007) and reached a record market share of 21.3% of total wooden housing starts and 9.8% of total housing starts. Approximately half of the prefectures in Japan had a ratio of 2x4 housing starts above the national average of 20.8%. However, in many of these prefectures, the total number of 2x4 housing starts is relatively small. The prefectures where the adoption of the 2x4 construction technology is well established, as well as where the housing market is relatively large, include Saitama, Tokyo, Hyogo, Kanagawa, Chiba, Hokkaido, Fukuoka and Aichi. These 8 prefectures represented 51.7% of 2x4 housing starts in Japan in 2008.
 
While the global economy performed poorly in 2008, exports of wood products from the US to Japan increased substantially. Total wood exports from both the US and Washington to Japan, which had been declining since 2004, recorded increases in 2008, with US wood exports growing by 6.6% while Washington exports rose by 5.2%. Softwood logs and lumber remain the primary wood products exported to Japan, although exports of OSB and veneer sheets increased significantly in 2008. Exports of value-added wood products from Washington to Japan were dominated by prefabricated buildings (25.3% of total value-added wood exports), builder’s joinery (44.8%), wooden windows (16.9%) and wooden doors (6.4%).
 
Despite the success of the 2x4 construction system in Japan, imports of US wooden building materials are constrained due to the fact that there is a Japanese version of the 2x4 construction technology that co-exists with the North American-style.  The primary difference between the two systems relates to the size of the basic construction module used in the construction process. The Japanese-style 2x4 system utilizes a 3’x6’ panel size which is based on the size of a traditional tatami mat, whereas the North American-style 2x4 system employs 4’x8’ panels in the construction process. Another difference between the two construction systems is the spacing of studs and joists; 17.9 inches (455 mm) on center in the Japanese system versus 16 inches (405 mm) on center in the North American system. In addition, the Japanese system tends to use more wood in the construction process (particularly in the structural framing) and thus tends to have higher material and labor costs, making the Japanese system less cost effective. Finally there is less labor specialization and efficient scheduling of construction tasks with specialist crews; significantly slowing down the construction process, reducing housing quality and increasing labor costs.
 
Despite the fact that most builders interviewed in this project recognize the cost effectiveness of the North American-style 2x4 construction system, relatively few Japanese builders have adopted it. Discussions with Japanese 2x4 home builders point to a broad range of factors that influence this decision. Perhaps the most important factor is that home builders in Japan are not customer-oriented in the sense that they work closely

with their customers to maximize customer satisfaction and reduce overall cost. Another factor which contributes to the widespread use of the 3x6 module relates to the strong relationship that exists between Japanese 2x4 builders and Japanese manufacturers of wooden building materials, particularly commodity wood products. Home builders interviewed during this study universally emphasized that reliability of supply and just-in-time delivery of building materials to the construction site are very important to them. Domestic manufacturers of structural panels and wood products are willing to provide this service for them whereas few foreign suppliers will.
 
This same bias is somewhat less evident in the use of value-added wood products such as wood windows, door and cabinets. In this case, we found that 2x4 home builders were much more willing to use imported building materials.  However, the biggest concern for them when specifying these products is that they should be readily available in Japan and they must be able to obtain spare parts and installation support in a timely manner. For example, some home builders indicated that they do not use US wood windows because they have difficulty obtaining spare parts and replacement windows in a timely manner and because technical support in Japan is generally not available (although some US wood window manufacturers do have representatives in Japan to handle product and installation issues quickly).
 
Another issue that affects the use of US wood building materials is Japanese home builders’ perception that US manufacturers and exporters are not committed to the Japanese market for the long-term. The perception that US exporters are ‘inners and outers’ is problematic and must be overcome in order to make greater inroads in Japan.
 
This project included a survey of Japanese 2x4 builders, with survey respondents representing 62.1% of total 2x4 housing starts in 2007. Not surprisingly, given the design of the sample frame, almost 85% of the houses built by respondents were 2x4 houses with the remaining houses being post and beam. Virtually all of the P&B builders reported that they used the 3’x6’ module. While over a third of the 2x4 builders reported that they have used the 4’x8’ module, the number of houses that they build using the 4x8 module was less than 5% of the total houses they built in 2008.
 
With respect to the specification and sourcing of value-added wooden building materials, the survey found that home owners specified these products between 17% and 30% of the time, depending on the type of product.
The survey also found that 2x4 homebuilders are quite willing to use imported value-added wood building materials, with their use of these products ranging from 20% in the case of kitchen and bathroom cabinets to almost 50% for hardwood flooring and wood windows. Japanese 2x4 builder’s use of US value-added wood products was highest for hardwood flooring (18.4% of total use), interior doors (16%), wood windows (16%) and exterior doors (14%). It was lowest for kitchen cabinets (4%), bathroom cabinets (6%) and softwood flooring (7%).
 
Survey respondents reported that the most important product attributes for them were high quality (6.6 rating out of 7), reliability of supply (6.4) and low price (6.2). In terms of product quality, they reported that US value-added wood products were perceived as having only average quality. Interestingly, small builders rated the quality of US value-added building materials much higher than did large builders. Respondents also reported that US suppliers provide below average levels of products support, although small builders again reported substantially higher ratings than did large builders.
 
The survey results clearly show that the large, national 2x4 builders have a poor perception of US value-added wooden building materials, both in terms of quality and service, relative to small and medium-sized local builders. This suggests that US manufacturers and exporters should focus their marketing efforts on small and medium-sized 2x4 builders in the short-term. However, long-term success in Japan will require that US manufacturers and exporters understand and address those factors that adversely affect large builder’s perceptions of US value-added wood building materials. This should provide the basis for additional research in the future.

One product for which there is strong market potential is dimension lumber. Many of the 2x4 home builders reported that they were having trouble sourcing 2x8 and 2x10 joist material, as well as most other sizes of dimension lumber. More 2x4 home builders are now willing to accept a “home center” grade of lumber rather than the traditional higher quality J grade. This suggests that now may be a good time for dimension sawmills in Washington to reenter the Japanese market.
 
In summary, the struggling domestic housing market in the US combined with the relatively weak US dollar and strong Japanese yen provide a unique for manufacturers and exporters of wood building materials increase their presence in Japan. However, they must demonstrate a long-term commitment to the Japanese market in order to be successful.
 
The Japanese 2x4 market continues to represent a good opportunity for US manufacturers and exporters of wood products who are confronted with the worst US housing market since 1945. However, re-establishing US wood products in the Japanese market will require substantial effort on the part of manufacturers and exporters, especially those who abandoned the market during the period 1996-2006. US manufacturers and exporters who are returning to the Japanese market or who are new to this market will need to demonstrate a long-term commitment to their Japanese customers if they are going to be successful. They also need to develop a strategy for providing after sales support for their products in a variety of areas, including: timely claims evaluations, assistance with installation questions and providing spare parts and replace

Executive Summary
The market for residential decking and siding products in North America has become increasingly competitive over the past two decades.  Given an increasing assortment of substitute materials, coupled with aggressive promotional and product-service campaigns of competitors, the market share for western red cedar residential decking and siding products has become stagnant.  To determine those factors that influence the selection and utilization of western red cedar as a residential decking and siding material relative to substitute products, the Western Red Cedar Lumber Association (WRCLA) commissioned the Center for International Trade in Forest Products (CINTRAFOR) to conduct an in-depth analysis of the market for western red cedar residential decking and siding products in North America.  This study brings together all available secondary sources of information known to exist for these two classes of products.  Furthermore, this study reports the results of a mail survey regarding the Puget Sound residential siding market.  The mail survey provides the WRCLA with baseline data on a potential test market.
Residential Decking Market
Treated lumber, western red cedar, redwood, and a wood-polymer composite (Trex™) manufactured by Mobil Chemical Company clearly dominate the residential decking market.  Extremely aggressive price competition, modest product differentiation, economies of scale, and well-developed marketing and distribution systems characterize the residential decking industry.  All four major residential decking materials are essentially marketed and distributed in a similar fashion.
The residential decking market in the United States is extremely large.  Government statistics reveal that over 85 percent of all single family homes include either a deck or deck-like structure (e.g., porch, balcony).  Annually, over 4 percent of all households either add a deck or replace an existing deck, leading to more than 3.5 million new decks being constructed onto existing single family structures.  Deck construction activity should increase substantially in the deck replacement market given that economic conditions are anticipated to improve or remain stable.
Unfortunately, no accurate market share estimates exist for the various decking materials available on the market.  One source estimates that treated lumber commands 82.5 percent of the residential decking market on a board foot basis, with redwood at 11.5 percent, western red cedar at 3.2 percent, and other deck materials at 2.8 percent.  This same source, however, also estimates in a different study that western red cedar controls 23.3 percent of the residential decking market.  Regardless of the estimates, it can be concluded from this source that the market share of western red cedar decking materials has been eroded by treated lumber and redwood substitutes, especially in regions of the US where western red cedar materials once dominated the market (e.g., US West).  Furthermore, the western red cedar market share is likely to continue to decline as Mobil Chemical Company increases promotional campaigns for its Trex™ wood fiber-plastic composite decking material.
The relative difference between the various products in material, installation, and maintenance costs has become the primary basis for product differentiation in the residential decking market.  After cost considerations, the choice of decking material individuals utilize when constructing a deck is mostly dependent on product quality factors (e.g., structural properties, durability, susceptibility to wear) and manufacturer and retailer service factors (e.g., product availability, price incentives, moisture content).  Unlike the residential siding market, image, beauty, and social status factors are not seen as fundamental determinants in consumer choice for decking materials.  Western red cedar does not “sell itself” on its image and beauty characteristics alone since consumers generally perceive all residential decking materials to be about the same (i.e., commodity products).  If the past holds true, marketing efforts designed to promote only image and beauty characteristics of western red cedar residential decks will likely have a limited impact on changing consumer perceptions.
Firms producing residential decking materials can implement several strategies in order to create product differentiation for materials that consumers perceive as commodities.  For instance, western red cedar producers could physically differentiate their decking products by making them easier to use, improving product quality, grade consistency, and durability characteristics, providing additional accessories, or providing additional elements of service (e.g., improved packaging, installation instructions).
Western red cedar producers could also differentiate their product through properly designed marketing efforts.  Changing price, providing discounts, offering guarantees or warranties, improving service levels, changing advertising strategy, devising promotions, and changing the image of the product are several market-oriented strategies that could be utilized to increase sales and market share of western red cedar decking materials.  The treated lumber industry has successfully used a branding strategy to create consumer awareness and knowledge of their products.  This branding strategy transformed the image of a product once viewed as substandard to that of a naturally decay-resistant product.  The result of the treated lumber industry’s branding strategy has been a decline in the use of western red cedar as a residential decking material.  The lack of a well-formulated, market-oriented strategy in the western red cedar residential decking industry will likely lead to further decline.
Residential Siding Market
Fifteen different materials have a considerable impact in the residential siding market.  Vinyl, structural panels (i.e., OSB and plywood), brick, and hardboard, however, are the dominant residential siding materials installed.  Aggressive price competition, low product differentiation despite significant contrasts between the physical attributes of the products available, economies of scale, well-developed marketing and distribution systems, and an intensification of competition among manufacturers and distributors characterize the residential siding industry.
Demand for residential siding materials is a function of two factors; namely, the level of new residential home construction starts and the level of replacement, repair, remodeling, and addition activity taking place on existing residential housing units.  While residential siding demand increases and declines with changes in the cycle of residential home building, it is relatively stable compared to many other building products.  This stability is an outcome of the size of the replacement and remodeling markets, which have accounted for anywhere from 25 to 33 percent of all residential siding use (square foot basis) during the past decade.  Despite the replacement and remodeling markets’ impressive and growing size, vinyl siding firms have been the only residential siding material manufacturers to target this market successfully.
According to market share estimates prepared exclusively for this study, vinyl siding products control 36.7 percent of the residential siding market.  Trailing vinyl siding in market share are structural panels (27.9 percent), brick (17.2 percent), hardboard (13.2 percent), western red cedar (2.5 percent), and aluminum (2.4 percent).  In the past eight years, the total residential siding market has grown at an average annual rate of 0.46 percent.  Vinyl siding use has grown at an average annual rate of 10.25 percent.  The only other residential siding material to experience growth in this same period has been western red cedar, which has grown at an average annual rate of 3.52 percent.  The market share growth of vinyl siding has come at great expense to the producers of aluminum siding, as well as to hardboard and structural panel siding producers.
Relative differences in material and installation costs typically establish the competitive relationships between the materials used in the residential siding market.  Unlike decking materials, however, products in the residential siding market, especially brick and western red cedar, are differentiated to a much greater degree by the image that they project.  Past research has shown that consumers perceive vinyl, aluminum, hardboard, and plywood residential siding materials to be close substitutes for one another.  Therefore, these four residential siding materials compete primarily on price and installation cost.
Relative to competing residential siding materials, consumers tend to see western red cedar as being expensive and time-consuming to install.  Western red cedar residential siding material is also seen as possessing price instability and poor grade consistency.  However, consumers believe that western red cedar has a tremendous curb appeal and a high status image, being nearly equal to that of brick.  Unfortunately, the image and beauty characteristics of western red cedar residential siding are neutralized by consumer perception of western red cedar’s high cost.
It appears that the competitive position of western red cedar is not optimal relative to other residential siding materials.  Promotional literature for western red cedar siding stresses heavily its quality image, while other important characteristics such as price and durability tend to be mentioned infrequently.  While the actual cost of installation for western red cedar siding is greater than that of competing residential siding materials, there is speculation that most consumers perceive the cost as being substantially more than it actually is.
Survey of Puget Sound Residential Siding Market
The demand for residential siding in the Puget Sound market should increase over 1994 and 1995 levels since, according to survey respondents, there is an expectation for new home construction to increase substantially.  Survey results clearly reveal that the 8.9 percent market share for western red cedar in the Puget Sound residential siding market has declined over the past five years.  Unfortunately, this study cannot determine at what rate the market share has declined or what factor(s) triggered the decline (e.g., higher prices, lower quality of material, lack of product availability).
The following four residential siding materials have a significant presence in the Puget Sound market: OSB, hardboard, plywood, and western red cedar.  Builders indicate that their use of wood fiber-cement residential siding has increased substantially over the past five years.  This may be the result of the increased promotional effort on the part of a major producer of wood fiber-cement siding (Hardi Plank) in the US West. 
The Puget Sound market represents a disproportionately large share of the national market for OSB residential siding.  Two factors may be working either independently or together in creating this disproportionate market.  First, OSB residential siding manufacturers (namely, Louisiana-Pacific) may be specifically targeting the Puget Sound market through promotional efforts due to distribution advantages associated with the market and its port access.  Second, builders may simply have a preference for OSB residential siding due to its ease of installation and their preference for a material that has the “curb appearance” of real wood.
While installation of western red cedar siding occurs more often as new home prices increased, the effect was found to be not significant.  In fact, installation of western red cedar siding occurs in nearly equal proportions (square foot basis) on new homes across all price ranges.  This suggests that western red cedar is being accepted more readily as a siding material for new lower-end-priced homes.  If this is the case, then builder perceptions of western red cedar’s high status/quality image and beautiful appearance may be eroding.
Analysis of the survey data reveals that western red cedar siding’s very low rating in product consistency and uniformity, as well as its low rating along the easy/low cost maintenance attribute, is disturbing.  However, it offers western red cedar siding manufacturers, wholesalers, and retailers considerable opportunity, since alterations in these perceptions can be made with relative ease with changes in manufacturing methods, quality control practices, and distribution.
Western red cedar manufacturers should make a concerted effort to change the quality of their shipped product.  In particular, the survey results suggest that manufacturers address issues dealing with product consistency and uniformity.  The WRCLA should actively manufacture and promote high-grade western red cedar residential siding products in such a manner that the product consistency and uniformity perceptions of their products are nearly equal among builders to that of brick, hardboard, stucco, and OSB residential siding materials.  Improving western red cedar siding’s product consistency and uniformity, or creating a high-grade branded western red cedar residential siding product, will at the same time improve the perception that builders have of western red cedar’s image status and beautiful appearance.  As such, an improved, high-end western red cedar residential siding product may warrant a premium price.
A promotional effort should be made to address western red cedar siding’s poor perceptual rating on the low cost and easy maintenance attribute.  How can the perception of this attribute be improved? First, the material can be prefinished using a high grade stain or primer and a reliable and consistent application process.  In addition, the material should be grade-consistent and not placed on the market in green condition.  Third, promotional literature addressing long-term maintenance issues should be considered.  This literature should accompany every lift of western red cedar sold, and it should also address the proper method of installing western red cedar residential siding.
Finally, western red cedar siding manufacturers, wholesalers, and retailers should make a strong attempt to avoid price competition.  The results of this study indicate that price competition conflicts with builders’ perception of a residential siding product’s high status/quality image and beautiful appearance attributes.  Creating a conflicting image of western red cedar siding has likely decreased its demand among high-end home builders while at the same time increased demand among lower-end home builders.  This shift in the market, however, has not been substantial enough for western red cedar siding manufacturers, wholesalers, and retailers to recoup profits that have historically been made in the high-end market.
 

​Abstract
 
Despite Japan’s relatively small size, residential housing starts have exceeded those in the US throughout the 1990s, totaling 1.57 million units in 1994.  However, the cost of residential housing in Japan is substantially higher than in other developed countries.  In an effort to address this problem, the Japanese Ministry of Construction (JMOC) recently announced an action program to reduce the cost of residential housing 33% by the end of the century.  Numerous factors have been cited as contributing to the high cost of residential housing in Japan, including high labor costs and low labor productivity, a lack of skilled carpenters familiar with the 2x4 system, non-standardized building materials, a lack of competition in the construction industry, restrictive building regulations, high building material costs, inadequate construction management systems, and an inefficient and extended distribution system from imported building materials.  Many industry observers in both the US and Japan feel that one way to reduce residential construction costs would be through the adoption of North American 2x4 construction technology as an alternative to the more traditional but less efficient post-and beam construction technology.
US construction professionals familiar with the Japanese construction industry indicate that the small segment of Japanese contractors currently building 2x4 houses have modified the 2x4 system to fit their traditional construction system.  These modifications have resulted in a hybrid construction technology that fails to achieve the production and cost efficiencies inherent in the North American system.  Exploratory interviews with building professionals who have worked on residential construction projects in both the US and Japan identified a number of areas where the Japanese 2x4 construction system differs from its US counterpart in terms of these efficiencies.  The primary areas where significant differences were noted included foundations, interior wall finishing, ceiling framing techniques, finish carpentry, labor specialization, and project management skills.
In order to take full advantage of the efficiencies inherent in the North American 2x4 construction system, it is important that Japanese designers, contractors, and carpenters develop a basic understanding of the North American 2x4 system.  This implies that the transfer of 2x4 technology should occur at a variety of skill levels within the Japanese residential housing industry.  At a minimum it is important that four groups be included in a any 2x4 technology transfer programs:  designers/architects, carpenters, construction site supervisors, and project managers.
The process of effectively transferring 2x4 construction technology requires that US contractors and carpenters be allowed to work with their Japanese counterparts.  However, the perceived and real difficulties involved in obtaining work visas for US construction professionals in Japan have effectively restricted this component of technology transfer.  A review of existing policies related to the issuance of work visas for US construction professionals and skilled workers would support total technology transfer and provide benefits for both the residential construction industry and home buyers in Japan.  This strategy would provide the basis for rationalizing construction costs and management systems within the Japanese residential construction industry.

​Executive Summary
The reduction in timber supply in the U.S. Pacific Northwest region to protect the northern spotted owl is just one of a number of similar, ongoing adjustments in timber supply globally. The rapid rise in wood product prices experienced within the last 12 months -- an increase of 100 percent--is suggestive of a substantial supply reduction rather than a cyclical housing recovery impacting demand.  As such, the price adjustment in the wood products markets is forcing a permanent change in wood flow, rather than the cyclical changes associated with demand fluctuations. The reductions in timber supply will continue to impact market prices until adjustments of wood flow in world markets are complete. Many global producers will expand their production with higher wood prices.  One result is that international producers benefit while consumers must pay the higher prices.
Supply reductions are not limited to U.S. Pacific Northwest regional production but also include hardwoods from the tropics, and, prospectively British Colombian products. Tropical hardwood producers are reducing their harvests to meet sustainable timber harvest targets evolving from International Tropical Timber Organization (ITTO) negotiations. These reductions do cause reactions in markets. We can expect the substitution of softwood plywood for hardwood plywood in Asian markets since there are relatively fewer alternative hardwood suppliers than softwood. Specification differences in plywood manufacturing are not easily met by North American producers, leading to a pre-disposition of this demand shift to be in logs rather thin panels, although manufacturing specifications could also change over time with investments in panel plants dedicated for export markets. As for British Columbia, a provincial "fast track" study is currently underway for each forest planning unit. These studies are expected to recommend lower harvest levels in favor of changing environmental policies of the same magnitude as the spotted owl related reductions in the U.S. Pacific Northwest region.
We have utilized the CINTRAFOR Global Trade Model (CGTM) to analyze the global impacts of these supply reductions. The CGTM is a global forest sector model developed over the last decade at the International Institute for Applied Systems Analysis in Austria and the University of Washington. This model has been used most recently to understand the impacts of constraining tropical timber production in Asia in studies commissioned by the World Bank and the London Environmental Economics Center for ITTO.
This report analyzes the supply impacts on prices, who pays, who benefits, and what may be the broader environmental implications of new supplies replacing previous supply patterns through changes in international trade flows. The study also examines the implications of greater exports from Russia, the only country with a substantial inventory of mature softwoods.
Major conclusions from the analysis are:

• The cumulative impact of a 33 million cubic meter supply reduction--while only 4.5 percent of the global supply--is significant. It produces observable responses from other regions to offset the decline in harvests, including a 16 percent redirection of trade flows.
• The reduced number production in the constrained region is redistributed among major competitors around the globe. Major gains are made by higher-cost forest producers as log prices allow marginal producers to expand their production.
• Reduced product supply is substantial, leading to a 30 percent reduction in product demand by 1995 as a result of higher prices. While this analysis does not directly address the impacts of this demand reduction on non-wood product consumption, one can expect a greater use of energy-intensive non-wood substitutes to replace the loss in wood product demand.
• Over the short term, higher-cost producers harvest more area to offset the timber supply reduction. Anywhere from 1.12 to 1.61 hectares are harvested for every one hectare preserved. The range depends on estimates of timber stocking levels on the replacement hectares. The harvested area ratio increases to a range of 1.59 to 1.91 if Siberia were to expand its timber harvest levels.
• Over the longer term, these impacts are exacerbated as higher productive forest lands in the Pacific Northwest and British Columbia are replaced by less fertile forest lands. The annual loss in forest land productivity is estimated between 17 and 44 percent, depending on stock level assumptions and the response from Siberia, These annual productivity losses are cumulative and will add to the ratio of harvested to preserved area as high-volume, old growth stocks are replaced by lower-volume, second growth timber with longer rotations. In addition, these high-cost producers are likely to have limitations in their processing infrastructure, leading to additional waste both in the mill operation and at the forest harvest level.
• Consumers are the major losers. They pay $2.5 billion dollars as a result of the timber supply reduction, Mill operators also lose. Gains by southern mills are only 20 percent of the losses to mill operators in the west. Timber producers gain $1.4 billion dollars. These impacts are reduced substantially if Siberia expands its timber harvest levels.

Concerns over wetlands, other species preservation, federal below-cost timber sales, and sustainable harvest levels in other regions will add further strains on global wood supplies and cause a greater shift in regional timber production as other areas will respond to offset any timber supply reduction. Additional supply constraints will magnify the impacts with more wood demand shifting to non-wood substitutes.
Environmental tradeoffs may be counterproductive through increased harvest acreage. While timberland is preserved in the U.S. Pacific Northwest Westside region and British Columbia, greater areas in other producing regions are harvested to offset only 60 percent of the timber production decline. The shift from high to low productive areas may well result in new environmental problems. Non-wood substitution will increase carbon dioxide emissions, for example.
While current short-term market conditions show U.S. prices well above those implied in this analysis, economic theory and the CGTM would suggest these prices will come down as international markets adjust and international consumers absorb a portion of the cost. However, there are many reservations as to the desirability of increasing harvests in other regions, which may result in. institutional constraints around the world. The process of globalization of timber shortages may become more difficult to address than is evident from historical experience.
 

​Executive Summary
Background and Purpose
This research is based on the following strategic issues facing the softwood lumber industry in Western North America: 1) the economic importance of the lumber industry for Western North America; 2) factors affecting the operating environment of the industry; 3) changes in customer needs; and 4) the need for information in the area of strategic planning.
The main purpose of this study is to provide information regarding the marketing strategies employed by Western North American sawmills. The results of this study will aid strategic planning in the Western North American lumber industry, and its purpose will be achieved by describing the marketing strategies used in the Western North American lumber industry and by comparing and contrasting the marketing strategies employed by U.S. and Canadian lumber producers.
Research Methodology
The theoretical background for this research is based on extensive research work reported by several authors in the area of strategic planning and marketing strategies. The concept of marketing strategy,  especially that used in operationalization, has its theoretical and methodological base in the work by professor H. J. Juslin at the Department of Forest Products Marketing in University of Helsinki in Finland. This concept examines marketing strategy based on strategic decisions concerning: products, customers, market areas and competitive advantages. The generic competitive strategies are assessed based on Porter's (1980) model.
The data for this study were collected via personal interviews during the first half of 1991. A purposive sample of 79 companies was selected and a personal interview was conducted with 81.0 percent of the companies that were contacted. The data were analyzed using univariate methods of analysis. The results are presented mainly in two categories, namely the Western U.S. and British Columbia, Canada.
Profile of Respondent Companies
The production of respondent companies represented 65.4 percent of the total lumber production in the targeted area in 1990. Over two-thirds of the production was commodity products in both countries. British Columbia firms exported a much higher proportion of theft production (6.5 times) than the responding firms in. the Western  percent. However, 92 percent of the commodity products produced in British Columbia were exported to the U.S.
According to annual gross sales, responding firms were represented by relatively more small and big companies in British Columbia than in the Western U.S. In both countries, the companies interviewed concentrate on serving just a few types of customers. The five major customer types identified buy 92 percent of the production in both countries.
Marketing Strategies
The present production of companies reflects strategic decisions they made in the past This might explain the differences found between production figures and product strategies. The present product strategies should be actualized in the future. The product strategies give a clear indication that 9ompanies in British Columbia are moving from commodity products to spe¬cialty and custom-made products. in the Western U.S., commodity products are still being emphasized quite heavily; however, some indication of a move toward specialty and custom-made products can be observed.
According to customer strategies, companies in both countries are rather selective when choosing the customers to be targeted. Western U.S. companies are more selective versus responding firms in British Columbia. That is somewhat surprising, because Western U.S. companies continue to emphasize a commodity product strategy.
Regarding market area strategies, companies in both countries are very selective in choosing their market area. Western U.S. companies are perhaps more selective compared to responding firms in British Columbia, according to the interview results.
Connections Between Marketing Strategies And Marketing Functions
The marketing strategies are realized through marketing structures and functions. Marketing structures are marketing organization, planning and information systems, contact channels, and channels of physical distribution. Marketing functions can be divided into contact functions (personal contacts, marketing communication and market information) and product functions (product planning, pricing and physical distribution). The functional levels are presented in this study through the measurement of export marketing channels, product development and collection of market information.
Exports of products were divided into 12 different export marketing channels. British Columbia exports 85 percent of its production (most to the U.S.) compared with only 13 percent of responding U.S. firms' production going to international markets. In general, British Columbia companies seem to be using somewhat more direct contacts with end-users and they also use more domestic agents than companies in the Western U.S.
Over half of the companies in the Western U.S. and over two-thirds in British Columbia are pursuing continuous and systematic product development The companies with no product development (less than 15 percent of all responding firms) are found among the companies that are applying a commodity products strategy, a specialty products strategy or a combination of these two., The most important stating point for product development in both countries was to more effectively utilize raw materials and adapt production to raw material possibilities. For companies applying a specialty products strategy, raw materials seem to be an even more important stating point than for companies applying other product strategies.
In general, responding firms did not perceive a great deal of difficulty in connection with research and development. The largest problems in the Western U.S. appear to be the economic resources and the organization of research and development In British Columbia the largest problems are technological and economic resources.
In both countries, most of the companies are collecting market information either continuously or occasionally. Also in both countries, companies applying a commodity product strategy or a specialty product strategy appear to be more occasional and casual in their collection of market information.
Connections Between Marketing Strategies and Profitability of the Companies
In the Western U.S., over 70 percent of the responding companies were profitable, whereas in British Columbia under half of the companies were profitable in 1990. Only 37 of the 64 responding firms in both countries provided information on their profitability. The connections between marketing strategies and profitability were not found to be statistically significant
 
 

Executive Summary
Anecdotal information from US architects and contractors with experience in residential construction projects in Japan indicates that Japanese construction professionals often do not fully understand the North American-style 2x4 construction system and often employ construction techniques that can compromise the structural integrity and/or long-term performance of these homes. A recent study by CINTRAFOR estimates that 2x4 construction costs in Japan range from 2 to 2.5 times higher than in the US (Eastin et al. 1995), partly due to differences in the way that the technology and construction management practices are implemented in Japan. The CINTRAFOR study suggested that Japanese construction professionals could improve their cost effectiveness and improve the quality of 2x4 homes built in Japan by increasing their understanding of North American-style 2x4 construction technology and construction management practices.
This research project was designed to provide specific information about how North American-style 2x4 homes are built in Japan. The specific objectives of this research project were to:

1. provide information to help Japanese construction professionals rationalize and reduce 2x4 construction costs through a more efficient transfer of North American-style 2x4 construction technology;
2. identify areas where a more efficient transfer of North American-style 2x4 construction technology could help improve the structural integrity and long-term performance of 2x4 homes in Japan; and
3. provide information to support the development and implementation of the 2x4 technology transfer program administered by the Washington State Department of Community, Trade and Economic Development.

While the tone of this report might appear to be negative, this is not the intention. The reader should keep in mind that the primary purpose of this project was to identify construction practices that negatively impact the structural integrity and long-term performance of North American-style 2x4 homes in Japan.
Given the emphasis of this project, it is unavoidable that the tone of the discussion could easily be construed as being overly negative. However, it is important to emphasize that in many of the projects visited, particularly those being built by large construction companies, the technical team observed that the quality of construction was very good. While it is always dangerous to generalize, the technical team found that larger home builders, and the home builders with more experience with the 2x4 construction technology, generally were building good quality North American-style 2x4 homes. In contrast, the team observed that the projects with the lowest quality ratings were managed by smaller construction companies or companies with little or no experience in building North American-style 2x4 homes.
The results of the construction cost assessment and the technical assessment indicate that technical training seminars should focus on the following areas:

• rough framing techniques and lumber specification
• construction detailing
• specification of imported building materials

• exterior finish details
• interior finish details
• insulation and energy efficiency details
• construction management and planning
• architectural design and details

Another important consideration in the design of a technology transfer program relates to the long-term maintenance of 2x4 homes in Japan. In order to ensure that North American-style 2x4 homes built in Japan provide the long-term performance that is expected of them, a strategy must be developed to ensure that they receive routine maintenance. It is critical that routine maintenance services be provided, whether by the homeowner, the building contractor, or an independent maintenance contractor.
Finally, some sort of independent certification of North American-style 2x4 homes built in Japan should be considered. The certification process could focus on the structural components of the home or could be extended to include the routine maintenance of the home as well. A certification program would not only ensure that North American-style 2x4 homes are built using the correct construction techniques but it could provide a forum to facilitate the provision of technical training programs in Japan.
It is critically important, from the US perspective, that the structural integrity of North American-style 2x4 homes in Japan is not compromised by the incorrect application of North American-style 2x4 construction technology. From a long-term strategic market development perspective, it is imperative that Japanese builders and carpenters be properly trained in 2x4 construction technology in order that the growth of this important segment of the Japanese housing market not be jeopardized by substandard product performance.
Given the Japanese expectation of high quality, the long-term growth potential of the 2x4 market is dependent on maintaining the quality of the North American-style 2x4 houses being built in Japan. From a marketing perspective, the role of quality is more important than low price in Japan and every effort should be made to ensure that the North American-style 2x4 construction technology is implemented correctly by Japanese contractors and carpenters. Failure to ensure the correct transfer of North American-style 2x4 construction technology would contribute to a perception by Japanese home buyers that 2x4 housing is poor quality, and would undermine efforts by North American companies and industry associations to further develop this growing segment of the Japanese housing market.
Over the long-term it is equally important that US value-added manufacturers and exporters work to gain greater acceptance of US wooden building materials in the other segments of the Japanese housing industry: post-and-beam and pre-fabricated housing. This includes learning how building materials are specified, by whom, what factors affect the specification process, and how to influence the specification process effectively to increase the use of US building materials in these segments of the Japanese residential construction industry. Similarly, it is equally important that US exporters better understand the role of maintenance and product support factors (e.g., local inventory, product installation instructions and support services, and product maintenance literature) on the competitiveness of US building materials in Japan. Other factors such as product distribution and product support affect the overall success and acceptance of North American-style 2x4 projects, although these were not a part of the terms of reference of this project.

​This report presents the results of an investigation into softwood lumber grading systems used in Europe with an emphasis on systems used, or proposed, for international trade transactions.  The report also presents comparisons and approximate cross-references of these systems with North American grades.  This involves the use of previously published comparisons as well as new material developed during the course of this study.  The study also briefly examines the nature of the European softwood lumber market and its future prospects.  The information presented in this study represents a step in the direction of improving the North American manufacturer’s understanding of Europe.
 
The information contained in this report relied principally on a search of available literature in the University of Washington Library system, reports sent in response to out letters to various European testing and research organizations, and conversations with representatives of the American Plywood Association and Western Wood Products Association.  Consequently, interpretations regarding historical background and current status of lumber grading practices in Europe may be limited by not having the opportunity to observe practices first hand or to converse with firms heavily involved in European trade.  It is believed that the information contained in this report is a fairly accurate description of major events and combined with the grade cross-reference will be useful to North American producers.