By Matt Warnock and Wade Vonasek

Despite material shortages, price increases and the housing slump challenging the industry, panel producers are looking for new opportunities and are making green principles even more of a priority.


The Woodworking VIPs, an online community of readers that act as advisors to Wood & Wood Products, lists availability as the number one factor when purchasing composite panels.

With the influence of the green movement, new emissions standards, a sour housing market, and cost and availability issues, the composite panel industry is being presented with both opportunity and adversity in 2007 and into 2008. Tom Julia, president of the Composite Panel Assn. (CPA) says the single biggest issue facing the industry right now is the availability of wood fiber, in some part due to the downturn in new housing.

“With housing starts continuing to languish, sawmill activity has slowed dramatically and many mills have closed altogether,” says Julia. “This translates into fewer wood residuals for use in the manufacture of composite wood products. Until housing recovers, our members will be challenged by lower demand for products, increased costs and increased difficulty in securing raw material.”

“Poor housing starts are impacting our demand and ability to run at optimum capacity and the slowdown in sawmill output impacts our availability of recycled raw wood fiber,” says Darrell Keeling, vice president of composite manufacturing for Roseburg Forest Products. “Secondly, we are seeing increased pressure on our wood basket from pelletizing operations making industrial fuel pellets and exporting them to Europe for burning in industrial power boilers.”

“In the West there is not enough available fiber for all of the mills to run at full capacity if needed,” says Chris Bailey, particleboard sales manager for Collins Products LLC. “The fiber shortage will be an ongoing struggle.”

According to Julia, the CPA is taking steps to deal with this issue. “CPA has already reached out to these new industries and to government on how to best work together to grow the available wood basket so that everyone will have the fiber needed to supply the marketplace with the highest quality, highest value, most environmentally responsible products possible,” he says.

Paying the Price

In a survey of the Wood & Wood Products’ VIP panel, an online community of readers that act as advisors to the magazine, price increases, which the industry was dealing with in 2006 as well, were said to be the second biggest issue next to availability of raw materials. Traditionally, the rise of raw material costs means higher prices for the consumer as well.

“Pricing is becoming a major issue right now as our cost structures are changing tremendously due to our major inputs, such as wood, resin (methanol and urea) and energy spiking,” says Kevin Shotbolt, vice president of sales and marketing for Flakeboard. “Our industry has no alternative but to pass through these costs to the customer base as most mills are now operating at or below the water line. This trend will most definitely continue through 2008.”

“The current price increases are primarily cost related and indications are that we have not yet seen the full impact of resin costs,” says Lance Rooney, vice president of sales and marketing for ATC Panels.

“We are again experiencing a worldwide shortage of methanol and urea to manufacture resin,” says Keeling. “Resin prices have escalated abruptly again and we simply must pass this on. There appear to be no market indicators pointing toward a reduction in pricing.”

However, Keeling adds, in these challenges lie the largest opportunities. “We must push technology and efficiencies,” he says. “We are a resourceful industry and we will find innovative means to deliver customers premium products at competitive prices.”

“There are always many new markets that open up in our industry and new and better uses for MDF,” adds James Hurley, sales manager for Langboard Inc. “We just have to tap into the markets and continue to make a good product.”

According to the Composite Panel Assn., North American particleboard and MDF capacity remained near the same levels from 2005 to 2006.

Green Panels

The issues of environmental stewardship and green building are not new to the woodworking industry, and composite panels have taken an active role for many years.

Those interviewed agree that the composite panel industry has long been a proponent of green ideals. Because composite panels are made from recovered and recycled wood, the industry fulfills a need by utilizing wood waste.

“The composite panel industry was created to recycle wood residuals that were being burned or thrown into landfills and turn them into durable, valuable products,” says Julia. “Our environmental heritage goes deep.”

“The story that continues to remain ‘untold’ is that composite panels have always had a great ‘green’ story,” says Shotbolt. “Only now, as the green movement takes on momentum, have we started to market our association and products more appropriately in this area.”

Many agree that the growing awareness of the green movement is having a dramatic and positive impact on the composite panel industry as a whole.

“The green movement is a very positive development for my company,” says Bailey. “I believe it is a plus for the composite panel industry, as the majority of our products utilize high percentages of wood waste. This puts our industry in a good light.”

“The green movement is a huge influence on our industry right now,” agrees Rooney.

“The green movement is having a dramatic effect on our company....we are dual certified — FSC and SFI,” adds Roger Rutan, vice president, marketing and business development, Timber Products Co.

Not only do composite panels reduce refuse by utilizing wood waste, there are other environmental benefits as well.

“Composites actually sequester carbon and have a negative footprint versus burning fiber or converting it to ethanol so the carbon can be released through combustion,” explains Keeling.

Due to new uses for wood waste, the composite panel industry is forced to compete for materials with other industry segments. Photo courtesy of Timber Products Co.

The Weight of the World

Another issue that has long been important to the composite panel industry is globalization. Imported products, particularly those from China and the Far East, have been the subject of great debate for some time.

With the movement of much of the furniture industry to overseas production, as well as the availability of low-priced imports, domestic manufacturers of composite panels have had to deal with a lot of pressure from the global marketplace.

“The continuing migration overseas of the domestic furniture industry, a principal market for particleboard panels in particular, is lessening the overall domestic demand for panels, though other market sectors are growing,” says Julia.

“China’s influence is being felt most, but we also feel the impact from Europe, South America and Russia,” says Rutan.

“The RTA industry has been decimated with the importation of flat pack furniture from China and other countries,” says Shotbolt.

Not only the furniture side of the composite panel industry is affected.

“There is a large international market that ships large amounts of finished goods to the big boxes through domestic distributors,” says Mark Kable, CEO of Setzer Forest Products Inc. “This has taken a significant percent of the domestic market for mouldings.”

These movements to overseas production have had a devastating impact on some companies, including some closures.

“Capacity has declined in our industry, leaving behind only the mills that had some distinct competitive advantage,” says Bailey.

“Furniture imports into the United States will double from $8 billion in 2000 to a forecasted $16 billion in 2007, and an increasing share of the furniture production that remains in North America consists of assembly operations using panels outsourced from overseas composite manufacturers,” Julia adds.

Still, things change, and shifting economies can mean new opportunities.

“On the up side, the global marketplace is opening up opportunities to export our products due to the strength of the Euro and Canadian dollar,” Rooney says.

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