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Natural Fiber Composite Industry Registered 40-50% Growth in 2000

  • Friday, 23rd March 2001
  • Reading time: about 3 minutes

The sky might be falling for a lot of high tech businesses, but one segment of the building products industry — natural-fiber plastic composites — continues to register strong growth.

Just over half of North American production of these composites comes from public companies who announced big production jumps in 2000 over the year earlier. These include:

Trex, the largest producer, up 52% in revenues
U.S. Plastic Lumber (USPL), only slightly smaller than Trex in total revenues, up over 40%
Advanced Environmental Recycling Technologies (AERT), up 38%

These growths come close to the ambitious five-year annual rate of 60% predicted in Kline’s study titled The Outlook For Natural-Fiber Composites, 2000-2005, which is now available. This study predicts especially strong growth in such applications as outdoor decking, fences, window and door parts. A mere 5% of decking consumption is accounted for by natural-fiber composites today, although this fraction is rising rapidly.

Most of the fiber that goes into these composites is from wood, with a minor portion from such crop plants as kenaf, flax and hemp. Most of these fibers come from privately held firms such as American Wood Fibers (Schofield, WI) and P.J. Murphy Forest Products (Montville, NJ). Non-wood fibers are for the most part imported from Canada.

The economic picture for this market is not completely rosy, however. Trex’s big 52% year-to-year increase belies a slowdown to 28% in the Fourth Quarter of 2000. This reflects the general downturn that affected the entire economy during this period. U.S. Plastic Lumber saw its profit cut severely by skyrocketing costs. The company blames too much attention on meeting fast growth with new capacity and not enough attention to controlling costs. USPL actually closed one plant and idled three others in January of this year, leaving it with eight in full operation. Meanwhile, bad weather curtailed operations somewhat for AERT.

As a result of these disappointing near-term events, the stock prices of publicly-traded firms making natural-fiber composites have trended downward in recent months, despite the high growth. USPL has fared the worst, falling from about $9 per share just one year ago to a range of $1-2 per share since November, 2000. AERT dropped from $2.50 to about $1.00 in the same period. Trex – the beneficiary of some favorable trade press – has done a little better and is about where it was a year ago, at roughly $30 per share. But this stock has been extremely volatile, rising at one point, in August, 2000, to nearly $60 per share.

For information on how to subscribe to Kline’s recently published study The Outlook For Natural-Fiber Composites, 2000-2005 contact Lynn Gillette directly at Kline & Company, Inc., Overlook at Great Notch, 150 Clove Road, Little Falls, NJ, 07424, at (973) 435-3448 or visit their website

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