Arauco: New King of the Wood Composite Panel Hill

Arauco, a major forestry player in Latin America, is on the verge of becoming the largest manufacturer of particleboard and MDF in North America.

Arauco’s stunning June 8 announcement that it would acquire Flakeboard’s seven composite panel mills came five months after the Santiago, Chile-based company cemented its purchase of Uniboard’s huge particleboard/MDF/TFM complex in Moncure, NC.

Arauco said it will pay $242.5 million to take over Flakeboard lock, stock and barrel before the end of the year. The Uniboard mill will be incorporated under the Flakeboard name. The resulting eight-mill company will have an annual production capacity of 1.6 billion square feet on a ¾-inch basis, the most in North America and third most in the world.

Up until its purchase of the Uniboard Moncure complex, Arauco’s North American presence was mainly limited to a sales and service office in Atlanta. That outpost is about to become part of a global leader in composite panels.

Flakeboard of Markham, ON, had claimed the crown of North America’s largest particleboard/MDF producer by virtue of its purchase of six Weyerhaeuser mills in 2006. One of those mills, a particleboard plant in Simsboro, LA, was sold to Roseburg Forest Products last fall.

During a press conference held at the 2006 International Woodworking Fair in Atlanta, Kelly Shotbolt, president and CEO of Flakeboard, said he was “surprised” that his company was able to win the bidding war for the Weyerheauser mills, especially considering that there were about 30 companies and investor groups interested in the Weyerhaeuser properties.

Of course, 2006 was a far different economic environment. Housing construction was on a torrid record pace lifting the fortunes of kitchen and bath cabinets, furniture, flooring and other secondary wood products. Immediately after assuming control of the Weyerhaeuser mills, which Weyerhaeuser acquired via a 2002 hostile takeover of Willamette Industries, Flakeboard added melamine lines to several of them. In addition, Flakeboard secured FSC chain of custody at all of its mills.

This MDF plant in Malvern, AR, is getting its fourth owner since I toured it in 1986. Then owned by Willamette Industries, it was acquired in a 2002 hostile takeover by Weyerhaeuser; sold to Flakeboard in 2006 and is now about to be purchased by Arauco. The U.S. financial meltdown and housing crisis could not have come at a worse time for Flakeboard or for any of its competitors for that matter. Roseburg and SierraPine, for example, each closed mills. The fact that Flakeboard managed to sell off one mill and keep the other seven open during the Great Recession is a great accomplishment in and of itself. 

Incidentally, the Malvern, AR, MDF plant that is part of the Arauco buy-out of Flakeboard, has a special place in my heart. It was owned by Willamette when I toured and wrote about it in 1986.