Trends in OSB

(Continued from previous page) sons why OSB has expanded its market share. The most important of these is the engineered aspect of the product. Significant technological advances have enabled manufac- lleadquarters Nashville, Tn. Founded tgzg

0SB Facilities (15) Hanceville, Al.; Athens, Ga.; Houlton, Me.; Sagola, Mi.; Roxboro, N.C.; Carthage, Jasper, Silsbee, Tx.; Hayward, Wi.; Dawson Creek, Fort St. John (507o JV with Canfor), B.C.; Chambord, Maniwaki, St. Michel, P.Q.; Swan Valley, Mb.

2005 Production 5.603 billion sq. ft. 1:ra" uris)

Eapacity 6.065 billion sq. ft.

200t1Production 5.548 billion sq. ft.

Ehange'04J01 +1.07o

What's lllew L-P's plant in Silsbee, which produced both OSB and SmartSide OSB siding until late 2005, now produces only OSB. Peace Valley OSB, the mill in turers to come up with "intelligent" recipes to target specific applications. A good example of this is the enhanced flooring market, where dimensional stability is a key performance expectation. Panels are engineered to suit builder needs and pocketbooks. rvith levels of "good, better and best." Wood l-joists are another example where the superior shear properties of OSB have enabled the product to very quickly capture total market share.

There is no question that builden today recognize and have come to rely on these technological advances to provide products with significant engineering content and performance reliability. And this is the real driving force behind OSB trends today. People are demanding products that are trouble free. This is true at all levels of the supply chain, from distributors and dealers through to builders and homeowners. We're seeing consumers become more discerning, educating themselves through online resources and asking for higher quality products.

BUILDING PRODUCTS

Fort St. John that L-P jointly owns with Canfor, produced its first board late last year and should achieve full production of 820 million sq. ft. this year.

Last month. L-P announced that it would shutter its OSB plant and sawmill in St. Michel indefinitely due to high operating costs.

What's lllext In 2005, L-P spent $24.3 million to update its flagship plant in Hayward and converted one line of production to SmartSide. Now the company is converting Hayward's second line to SmartSide, to be completed by first quarter 2007.

The company also will spend more than $100 million to convert its plant in Houlton to OSL in200'1.

Ground has been cleared and a rail line is being constructed for a 7O0-million sq. ft. plant in Clarke County, Al., for alate2OOT completion.

Headquafters Toronto, Ont.

Jounded tgzZ

0$B Facilities (9) Huguley, Al.; Cordele, Ga.; Bemidji, Mn.; Guntown, Ms.; Joanna, S.C.; Jefferson, Nacogdoches, Tx.; La Sarre, Val d'Or, P.Q.

2005 Production 4.172 billion sq. ft. (3/8" basis)

Saprcity 4.390 billion sq. ft.

2004 Production 3.821 billion sq. ft. Change'lll-'05 +9.2vo

What's ilew During 2005, Norbord lowered its energy costs by building biomass generators at several of its plants worldwide. At the Jefferson mill, this strategy has reduced natural gas consumption by about 857o.

What's Jlext A $135 million second line at Cordele should be completed later this year, boosting output by 157o. Next, $7 million will be spent to convert a gasfired dryer at Nacogdoches to biomass, completing plans to upgrade all Norbord OSB heat-energy systems to wood fuel.

Environmental concerns are a key part of this demand. as homebuyers ask for products that perform to higher standards or are derived from sustainable sources. They want products that save energy, and make efficient use of the resource. Engineered wood is a natural answer to this growing demand, converting more of the log and capitalizing on underutilized timber species.

The beauty of engineered wood products is that they're better engineered, providing builders with products that are trouble free and quicker to install. Dealers are able to provide builders with better products that reduce or eliminate callbacks and provide cost-effective performance. And that's what makes the new trends in OSB so exciting for dealers and distributors.

So, just what are the trends in OSB today that will impact us all? Three significant trends can be identified. The first is for continuing penetration of traditional markets as manufacturing capacity continues to grow. The second major trend is for continuing marketshare gains in non-traditional and growth markets for structural panels. And perhaps most exciting for the marketplace, the third trend is for major breakthroughs in manufacturing technology. Eventually this will allorv an expansion of the product line as a substitute for dimension lumber.

[.et's take a look at the first trend of capacity growth. Curiously, history has a way of repeating itself. In 1994-

1995, favorable market conditions and healthy selling prices for manufacturers stimulated a period of growth in OSB manufacturing. Between 1994 and 1999, over 9 bilIion sq. ft. (3/8" basis) of new capacity was brought to market. The inevitable and somewhat predictable result of this was a temporary deflation of prices, until such time when less cost-competitive plywood manufacturing facilities would shut down and market demand would eventually rise again to absorb the new capacity.

Now we find ourselves at a similar point. The high residential construction activity over the past three years has led to record-setting prices for structural panels. Once again this is expected to lead to OSB capacity additions in the near future. Recent announcements by OSB manufacturers are suggesting the addition of 9.6 billion sq. ft. (3/8" basis) of new capacity between 2006 and 2010. These capacity additions will likely fuel additional marketshare gains in the traditional residential construction segments.

The second noteworthy trend is for OSB market expansion in applications beyond conventional sheathing. Perhaps most significant is the continuing marketshare gains made by engineered wood products such as wood Ijoists.

The share of engineered floor systems in North American single family home construction has grown to about 45Vo and is forecast to grow to a whopping 55Vo by 2010. Their growing popularity means more OSB is being used as webstock material and as rim board elements, which tie the wood I-joists together.

There are also external factors contributing to the product line expansion. Consumers' increasing awareness of the need for energy conservation and the corresponding emerging trends for green building design have resulted in innovations that benefit everyone. Radiant barrier sheathing is an excellent example of this, offering homeowners significant energy savings on cooling costs with a short payback period. The radiant barrier technology has actually been available to the market for many years, but energy conservation awareness is bringing new focus to the prod-

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lleadquarters Federal way, wa. founded tgoo 038 lacilities (9) Arcadia, La.; Grayling, Mi.; Elkin, S.C.; Sutton, W.V.; Drayton Valley, Edson, Alb.; Wawa, Ont.; Miramichi, Hudson Bay, Sask.

200[ Production 4.078 billion sq. ft. (3/8" basis)

Gaprcis 4.3 billion sq. ft.

2001t Production 4.081 billion sq. ft.

What'g lllew In April, Weyerhaeuser consolidated five separate operating units into a single unified business solution for residential builders and dealers. Named ilevel, the new division is comprised of established products and services-including Structurwood OSB.

A mid-July fire at the Drayton Valley mill caused no structural damage, but operations were suspended for a week so damaged equipment in the blending area of the plant could be replaced.

What's lllext Weyerhaeuser recently became the first OSB manufacturer to be certified through the NAHB Research Center, which is providing third-party quality assurance for Weyerhaeuser's OSB mills in Sutton, Grayling, Elkin, and Arcadia.

llerdqurrtcre Vancouver, B.C. lounded tqsz 0$B ]rcilitieg (7) Bemidji, Cook, Grand Rapids, Mn.; Grand Prairie, High Level, Alb. (5OVo JV with Grant); 100 Mile House, B.C.; Barwick, Ont.

2005 }roduclion 3.229 billion sq. ft. (3/s" basis) Gaprcitf 3.355 billion sq. ft. 20lH hoduction 2.037 billion sq. ft. Ghrnge'll4J0[ +58.5vo

What's llew Last year marked Ainsworth's first full year of operation at the four OSB plants acquired in 2004. Few upgrades were required at the Barwick mill purchased from Boise, but a number of capital investments were made at the three Minnesota mills bought from Potlatch-including upgraded wood rooms where

logs undergo entry processing and an upgraded press at Grand Rapids.

Just after New Year's, a fire at the Grand Rapids mill damaged the wood storage area and shut down operations for two weeks. Two days after reopening, production was curtailed for more than a month so press equipment could be repaired. Further problems with the newly installed hydraulic components curtailed production for several more weeks.

What's l[ert Construction costs for a second production line at Grande Prairie have risen from $160 million to $260 million, as the project was expanded to include a continuous press that will allow flexible production of OSB, OSL and LSL. Once completed in spring 2007, the new line will add 600 million sq. ft. of capacity.