2009 was a tough year for substrate and veneer suppliers, but a slight recovery is expected to start in 2010, and continue into 2011 and beyond.

According to Tom Julia, executive director of the Composite Panel Assn., preliminary figures show combined particleboard, MDF and hardboard shipments were down 17 percent from 2008 to 2009, after falling almost that much the year before — the result of unprecedented softness in end-use markets, such as furniture and cabinets. Julia adds that the CPA, which tracks composite panel shipments in all of North America, “expects shipments to begin recovering in the spring and fall, though the year as a whole will not be much better than flat. More significant recovery should come in 2011 and 2012, but it will be gradual,” he says.

2009 did not fare any better for the hardwood plywood, engineered wood flooring and hardwood veneer industries, says Kip Howlett, president of the Hardwood Plywood and Veneer Assn. “2009 was the worst economic depression in most industry leaders’ memories.” Howlett adds that many of his members are cautious as to how fast a recovery will occur. “For 2010, while there are some signs of an economic upturn, signals from key market segments remain mixed. For export veneer, trade barriers and soft overseas markets have impacted these sectors. Imports continue to have huge shares of the U.S. domestic market for hardwood plywood and engineered wood flooring,“ he says.

Information provided by CPA provides an historical comparison of U.S. and Canadian particleboard shipments. 2009 shipments are extrapolated based on data from 89.5% of the U.S. industry and 97.8% of the Canadian industry. (Mexican data has been censored due to a low response rate.)

Information provided by CPA provides an historical comparison of U.S. and Canadian MDF shipments. 2009 shipments are extrapolated based on data received from 80.9% of the U.S. industry and 92.8% of the Canadian industry.

While expressing some optimism for 2010, there are still challenges to be faced. The biggest challenge to the composite panel industry, Julia says, is access to wood fiber. “Without ready access to this fiber, and without it remaining affordable, the composite panel industry, all its customers, and the hundreds of thousands of jobs affected in the U.S. alone, are at risk.
“CPA has taken the lead in opposing the federal government’s Biomass Crop Assistance Program, through which the U.S. Department of Agriculture is trying to dole out $514 million in taxpayer subsidies in a manner that will divert the very wood fiber the composite panel industry depends on and instead let it be burned as fuel. It is among the most poorly conceived public policies imaginable, and must be changed so it accomplishes its goal of fuel diversity without hurting domestic jobs and consumer choices,” he says.

Also weighing on the composite panel industry is the regulation of formaldehyde emissions. “The challenge is to finally put the issue of formaldehyde emissions from industry products to rest, and to give regulators and consumers full confidence that everyone in the affected industries is doing the right thing. We believe this can best be done by extending the CARB rule to the entire nation, as is contemplated by S.1660, the federal bill championed by CPA, the Sierra Club and many other groups throughout the supply chain. If passed by the Senate and House of Representatives early this year, this important legislation will give the U.S. EPA the necessary structure and direction to formulate a rulemaking later this year such that a national standard will be in place sometime in 2012,” Julia says.

While the composite panel industry combats challenges on the home front, many of the hardwood plywood and veneer industries’ problems are coming from abroad. “The biggest challenges we face are continued penetration of imports in the engineered panel market,” says Howlett. “For the veneer industry, export market barriers restrict some markets from U.S. produced veneer. Log exports of U.S. hardwoods have resulted in more veneer of U.S. hardwoods sliced in China than is being sliced in the U.S.”

Howlett also cites the LEED system’s “bias against wood because LEED is not based on a life cycle approach (LCA),” as a challenge to be faced by the industry. “Other systems which utilize LCA-based approaches provide a great opportunity for hardwood products. Engineered products add the benefit of better product yields. Climate change and the need to reduce the carbon footprint benefit all hardwood products because production residues can be used in other wood products or for bio-based renewable energy.”