I agree with millworkman, all of the fake stucco (skim coat over styrofoam) and boarding has to come off...right down to the vertical studs. You can then apply the facing of your choice, I suggest HardiePlank.

Hardie siding is a good choice and to brick the whole thing would be very expensive.The bonus is you can get rid of all that “tudor” trim which IMO will make the house look much better.Please do all the sides too.

Does your homeowner's insurance cover this issue?

"The costs of redoing all the siding with hardie is very overwhelming."

Think of the costs and amount of damage if you do not replace the siding...................

Just fix the area damaged by the woodpeckers to keep costs minimal.

I believe a skilled craftsman can carefully fill the holes without needing to even replace the panel.

How to get rid of woodpeckers link

https://www.wikihow.com/Get-Rid-of-Woodpeckers

If this were only a cosmetic issue millworkman & I wouldn't be so concerned. Real stucco would thwart the most determined woodpecker. I sincerely hope I'm wrong about possible damage behind that "stucco". When the present siding is removed, if you find water damage, make sure to take lots of photos...and get your insurance agent to come out in person to view it. Because, in that instance, your homeowner's policy might cover some of the cost.

If there is water damage it cannot be blamed on the birds. I have real cedar wood siding and the woodpeckers do occasionally "test it", usually at 5am. Scaffolding takes time to set up and move, time you pay for. It might be worth checking for companies with mechanized platforms (less time), either way your lawn is going to need rehab. Good luck and please post again when you have the work started.