Pressure on plywood
Posted on Sunday, May 7, 2006
URL: http://www.nwanews.com/adg/Business/154029/
MOUNTAIN PINE — Plywood turned 100 in 2005, but few celebrations were held.
One of the most ubiquitous of wood products has been under assault, and plywood’s survival — not its anniversary — has been uppermost in the minds of industry participants.
“People predicted the demise of the plywood industry in the late ’ 80 s,” said Dan Seale, a forest products professor at Mississippi State University.
Plywood is made from thin sheets of cross-laminated veneer, called plies, that are bonded under heat and pressure with strong adhesives. The product’s No. 1 challenger is oriented strand board, or OSB, which is made from small rectangular strands of wood fiber, oriented lengthwise and crosswise in alternating layers, pressed and bound together with resin. OSB and plywood tend to be sold in 4-by-8-foot sheets that range from about
3 one-fourth- to 1 / 16-inch in thickness. Since 1980, when the standards for OSB were established, the newer product has managed to capture a majority of the residential construction market’s demand for structural panels — which are used for floors, walls and roofs — because OSB is cheaper to produce than plywood, Seale said. The mix of plywood products, meanwhile, has shifted toward higher value, sanded, specialty and industrial items, he said.
“As the OSB technology gets better and better, in terms of the smoothness of the panel face, the market for plywood will continue to erode,” Seale said. “Now, will it go away completely ? No, there will always be a niche for plywood. The question is: Who’s going to be the last man standing ?”
For Jimmy Welch, who has managed Weyerhaeuser Co. ’s plywood mill in Mountain Pine since 1992, the answer is easy. Mountain Pine’s 340 workers want to be counted among the industry’s survivors, he said. They are well aware, however, of the competitive pressures that they face.
There were 115 U. S. plywood mills when Welch took charge of the mill, but by 2005 that number had declined by more than one-third, to 71, according to APA — The Engineered Wood Association, an industry trade group based in Tacoma, Wash. Since 1992, the number of plywood mills in the South — where about two-thirds of all U. S. plywood is now produced — has shrunk from 53 to 39.
Total OSB production in Canada and the United States first exceeded plywood production in 1999. As of 2005, OSB accounted for 61 percent of the 43. 1 billion square feet of the structural panels produced in North America; plywood accounted for the balance, or 39 percent.
Arkansas has five plywood mills — two owned by Georgia-Pacific Corp., one owned by International Paper Co. and two owned by Weyerhaeuser.
Georgia-Pacific’s mill in Fordyce, which opened in 1964, was the first plywood mill in the South and the first U. S. mill to fabricate plywood from southern pine rather than Douglas fir, a softwood tree native to the Pacific Northwest.
“It wasn’t until the 1960 s that they figured out how to glue southern pine veneer to make plywood,” said Craig Adair, market research director for the APA — The Engineered Wood Association.
Georgia-Pacific also operates one of the country’s largest plywood mills, in Crossett, and Arkansas’ only OSB mill, which opened in 2000 in Fordyce.
Koch Industries Inc., which bought Georgia-Pacific in November, sees opportunity in plywood, said John Ulmer, global manager for the consulting division of Adalis Corp., a Vancouver, Wash.-based firm that helps plywood mills worldwide improve their efficiency.
“A plywood mill is a very, very complicated operation,” Ulmer said. “It’s a very risky operation, and it has to change with the markets; it has to change with the timber source. It’s a living, breathing thing that has to adapt almost annually.... It is one of the most challenging of all the wood-products operations.”
International Paper has decided to exit the business. All of the company’s plywood mills, including one in Gurdon, have been for sale since July. Like many large forest-products companies, International Paper no longer wants to own everything “from the tree to the consumer” and has decided that plywood is not a “core business,” Ulmer said.
In Weyerhaeuser’s case, the company now operates six plywood mills and nine OSB mills in North America. In 2002, Weyerhaeuser ceased producing plywood at its mill in Dierks. In October, the company closed its plywood mill in Wright City, Okla.
The Mountain Pine mill — whose lathe peeled its first 8-foot-long pine log into a sheet of one-eighth-inch veneer in December 1970 — was originally designed to produce 100 million square feet of plywood annually, on a three-eighth-inch equivalent basis, Welch said. Today, the mill can produce 280 million square feet of product. About 80 percent of Mountain Pine’s veneer is “laid-up” into plywood, ranging from
11 three plies that measure / 32 of an inch in thickness to nine plies 1 that measure 1 / 8 inch in thickness. The remainder of the veneer is shipped to a sister Weyerhaeuser mill in Natchitoches, La., which uses the material to produce laminated veneer lumber, or LVL, a parallel-laminated product that is used to manufacture the flanges for wooden Ijoists (beams that support floors or ceilings ). The core of each log that is peeled at Mountain Pine — about 2. 5 to 3 million logs annually — is planed flat on two opposing sides and sold to companies that treat them for sale as landscape timbers.
THE OSB CHALLENGE OSB’s major advantage is its price, said Ted Mitchell, a plywood buyer for E. C. Barton & Co., a Jonesboro-based buildingsupply retaile r. Seven-sixteenths-inch OSB currently can be bought at a mill for about $ 265 per 1, 000 square feet, or $ 8. 48 per 4-by-8 sheet, while comparable half-inch plywood costs about $ 300 per 1, 000 square feet, or $ 9. 60 per sheet, Mitchell said. OSB tends to be less expensive than plywood because OSB costs less to manufacture, said Matthew Pelkki, a forest economist at the University of Arkansas at Monticello. “Because you’re using chips, you can use a lower quality resource and there’s less waste,” Pelkki said. The trees can be younger, smaller and cheaper, and their shape and whether they have knots is much less important, he said. The chips used to make OSB also require far less handling than 4-by-8 sheets of veneer, said Henry Spelter, a forest economist at the U. S. Forest Service’s Forest Products Laboratory in Madison, Wis. “A little flake you can toss around, and you don’t have to worry about whether it breaks or not because it’s so small. Its sorting and handling is a lot easier to automate, and that makes the process a lot less labor-intensive,” Spelter said. Mill manager Welch is well aware of the handling required by veneer and plywood. “We have to touch every piece of wood. Somebody has to pick it up.... It is physical, hard work,” he said. Unlike plywood mills, OSB mills are not limited to producing 8-foot-long sheets, Spelter said. By increasing sheet size, OSB mills can reduce trim and edging losses and increase mill throughput. “You can’t peel a 16-foot log — there’s just too much waste until you get the log to the ‘round-up’ size — but you can make a 16-by-24-foot OSB panel and then rip it to size,” he said. Plywood, however, has certain advantages over OSB, such as how it reacts to moisture, Spelter said. “OSB is a compressed product — the panel is more compressed than the wood that went into it — so the density is higher. When you compress wood and then you suddenly expose it to moisture, it tends to go back and find its own shape. That’s called irreversible swelling, which plywood doesn’t have,” he said. Plywood also is stiffer and lighter than OSB, rated higher in its ability to hold a screw or nail, and is more impact resistant. Given its unique characteristics, plywood is used almost exclusively for furniture frames, fiberglass-boat construction, roll-up truck doors, truck trailer linings, concrete forms, agricultural bins, and for marine uses when treated.
PLYWOOD’S DURABILITY New products that use veneer, like laminated veneer lumber, have been a major reason for the survival of Southern plywood mills, Ulmer said.
Even more important has been “the hottest market for wood products since the second World War,” he said. Low interest rates, a building boom, hurricane reconstruction and the military demand for panels in Iraq have led to some of the highest plywood prices in 60 years.
“The plywood industry in 2004 and 2005 has enjoyed a resurgence, a renaissance; they’re making money,” Ulmer said.
One result of the strong demand has been an increase in plywood and OSB imports, which are forecast to total 2. 58 billion feet in 2006, down about 5 percent from 2005, according to APA — The Engineered Wood Association. Most softwood plywood imports come from Brazil and Chile, and most OSB imports come from Europe. Imports of both are expected to decline because of exchange rate shifts, rising transport costs and substantial new domestic production capacity.
A $ 60 million expansion of one plywood mill was announced in November by the Roy O. Martin Lumber Co. of Chopin, La.
“This addition will allow the company to peel smaller, less expensive timber that is abundant on our company-owned lands to make products needed in today’s panel markets,” Roy O. Martin III, the company’s president, said in a prepared statement.
More importantly, however, are the new and generally much larger OSB mills that are planned or under construction in Alabama, Georgia, South Carolina and Canada. Charlotte, N. C.-based Huber Engineered Woods LLC, for example, announced plans Tuesday to build a $ 200 million OSB mill near Swainsboro, Ga., that will be able to produce 650 million square feet of panels annually.