Lumber & Plywood Product Manufacturing
Description
Companies in this industry manufacture and engage in sawing dimensional lumber, boards, beams, and other reconstituted wood products, as well as the use of sawmills to plane rough lumber. Major companies include divisions of Georgia-Pacific, Louisiana-Pacific, UFP Industries, and Weyerhaeuser (all based in the US), as well as Canfor and West Fraser (both based in Canada), Ilim Timber (Germany), Stora Enso (Finland), and Sumitomo Forestry (Japan).
Worldwide production of wood products in 2023 grew by $788.45 billion and is expected to reach $1.15 trillion by 2028, according to Research and Markets. The top lumber and plywood-producing countries include Indonesia, Japan, Malaysia, and China, according to Food and Agriculture Organization (FAO).
About 4,300 lumber and plywood product manufacturing establishments (single-location companies and units of multi-location companies) operate in the US, generating annual revenue of about $50 billion.
COMPETITIVE LANDSCAPE
Demand is closely tied to the level of home construction. The profitability of individual mills depends on efficient operations, because most products are commodities. Large companies enjoy economies of scale in purchasing. Small companies can often compete successfully by focusing on a local market. Sawmills can operate with only a modest investment of capital, but plywood mills require expensive equipment and therefore are usually plants with high annual volume.
The veneer, plywood, and engineered wood product segment and the sawmill segment of the industry are both concentrated: the 50 largest firms account for about 70% and 50% of revenue, respectively.
US trade in lumber is substantial due in part to the close proximity of the large timberlands in Canada. Disputes between the US and Canada about import quotas or tariffs are frequent. Although transportation costs for Canadian lumber are high, stumpage costs are generally lower than in the US. US exports of lumber and wood products are small.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sawmills process raw logs in a few simple operating steps. Logs are debarked and cut into "cants" that are further cut into finished pieces of lumber, using either circle saws or bandmills. Once lumber is cut to size, it may be sold as "green" lumber or may be stacked and dried to a specific moisture content through air- or kiln-drying. Kiln-drying involves stacking wood in shed-like structures and ventilating with hot air for ten to 30 days. Many sawmills produce a range of "dimension" lumber, lumber of various standard lengths, widths, and thicknesses. The lumber and plywood product manufacturers main products include softwood dressed 2-inch lumber by about 30%, wood trusses (about 25%), hardwood rough lumber (20%). Other products of the company include softwood rough lumber account for about 15% of the industry's revenue.
Plywood mills are more complex than sawmills. Raw logs are debarked, cut to size, and heated with steam or hot water. The resulting "flitch" is rotated on a large lathe and pressed against a long, sharp blade, to peel off a continuous layer of wood called a veneer. Softwood veneers are usually 1/10 of an inch thick and may be more than 100 feet long. The veneer is cut to size and dried. Sheets of veneer are then sprayed with glue (usually a phenol-formaldehyde (PF) resin or a urea-formaldehyde (UF) resin), stacked on top of each other with the grain of the wood in alternating directions, and sandwiched in a hot-press that forces the pieces together and cures the glue. The ends are then trimmed and the product may be sanded. The standard size for plywood is 4 feet by 8 feet, with a 3/8 inch thickness most common.
Oriented strandboard (OSB) is manufactured similarly. Debarked logs are cut into 100-inch lengths and fed into a waferizer where they're sliced into thin strands (also called flakes or wafers) that are several inches long. The strands are dried, mixed with resin and other additives in large blenders, and formed into mats on trays or moving belts. Several layers are laid down, with the wood strands in alternating orientation, and the mats are rolled and cured in a hot-press. OSB is generally made in the same sizes as plywood and has similar strength characteristics, but is cheaper because it can be made from smaller, lower-quality logs.
Other types of panels, including particleboard, hardboard, and medium density fiberboard (MDF), are made from wood residues like sawdust, shavings, and chips that are ground to a desired size, dried, mixed with resin, and hot-pressed. (The ingredients to manufacture these panels, and OSB, are called the "furnish.") Such boards aren't as strong as plywood and OSB. Engineered wood products (EWP), such as glue laminated timber (glulam); laminated veneer lumber (LVL); and engineered I-joists, are produced from lumber that is dried, glued, and hot-pressed to create beams with greater structural strength than dimension lumber.
A large sawmill may have an annual capacity of about 300 million board feet (mmbf). The output of panel mills is measured in millions of square feet. A large plywood mill may have a capacity of 300 million square feet.
Sawmills are located close to their source of timber because of the high costs of transportation. Large operators often use timber from their own lands. Both large and small operators also buy timber from private lands and federal and state forests. Logs are bought at market prices. Average "stumpage" prices can vary sharply from year to year. Softwoods like Douglas fir and Southern pine are used for most lumber and structural panel manufacture. Hardwoods like oak and maple are used to make veneered panels for cabinet and furniture manufacture.
Worldwide production of wood products in 2023 grew by $788.45 billion and is expected to reach $1.15 trillion by 2028, according to Research and Markets. The top lumber and plywood-producing countries include Indonesia, Japan, Malaysia, and China, according to Food and Agriculture Organization (FAO).
About 4,300 lumber and plywood product manufacturing establishments (single-location companies and units of multi-location companies) operate in the US, generating annual revenue of about $50 billion.
COMPETITIVE LANDSCAPE
Demand is closely tied to the level of home construction. The profitability of individual mills depends on efficient operations, because most products are commodities. Large companies enjoy economies of scale in purchasing. Small companies can often compete successfully by focusing on a local market. Sawmills can operate with only a modest investment of capital, but plywood mills require expensive equipment and therefore are usually plants with high annual volume.
The veneer, plywood, and engineered wood product segment and the sawmill segment of the industry are both concentrated: the 50 largest firms account for about 70% and 50% of revenue, respectively.
US trade in lumber is substantial due in part to the close proximity of the large timberlands in Canada. Disputes between the US and Canada about import quotas or tariffs are frequent. Although transportation costs for Canadian lumber are high, stumpage costs are generally lower than in the US. US exports of lumber and wood products are small.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sawmills process raw logs in a few simple operating steps. Logs are debarked and cut into "cants" that are further cut into finished pieces of lumber, using either circle saws or bandmills. Once lumber is cut to size, it may be sold as "green" lumber or may be stacked and dried to a specific moisture content through air- or kiln-drying. Kiln-drying involves stacking wood in shed-like structures and ventilating with hot air for ten to 30 days. Many sawmills produce a range of "dimension" lumber, lumber of various standard lengths, widths, and thicknesses. The lumber and plywood product manufacturers main products include softwood dressed 2-inch lumber by about 30%, wood trusses (about 25%), hardwood rough lumber (20%). Other products of the company include softwood rough lumber account for about 15% of the industry's revenue.
Plywood mills are more complex than sawmills. Raw logs are debarked, cut to size, and heated with steam or hot water. The resulting "flitch" is rotated on a large lathe and pressed against a long, sharp blade, to peel off a continuous layer of wood called a veneer. Softwood veneers are usually 1/10 of an inch thick and may be more than 100 feet long. The veneer is cut to size and dried. Sheets of veneer are then sprayed with glue (usually a phenol-formaldehyde (PF) resin or a urea-formaldehyde (UF) resin), stacked on top of each other with the grain of the wood in alternating directions, and sandwiched in a hot-press that forces the pieces together and cures the glue. The ends are then trimmed and the product may be sanded. The standard size for plywood is 4 feet by 8 feet, with a 3/8 inch thickness most common.
Oriented strandboard (OSB) is manufactured similarly. Debarked logs are cut into 100-inch lengths and fed into a waferizer where they're sliced into thin strands (also called flakes or wafers) that are several inches long. The strands are dried, mixed with resin and other additives in large blenders, and formed into mats on trays or moving belts. Several layers are laid down, with the wood strands in alternating orientation, and the mats are rolled and cured in a hot-press. OSB is generally made in the same sizes as plywood and has similar strength characteristics, but is cheaper because it can be made from smaller, lower-quality logs.
Other types of panels, including particleboard, hardboard, and medium density fiberboard (MDF), are made from wood residues like sawdust, shavings, and chips that are ground to a desired size, dried, mixed with resin, and hot-pressed. (The ingredients to manufacture these panels, and OSB, are called the "furnish.") Such boards aren't as strong as plywood and OSB. Engineered wood products (EWP), such as glue laminated timber (glulam); laminated veneer lumber (LVL); and engineered I-joists, are produced from lumber that is dried, glued, and hot-pressed to create beams with greater structural strength than dimension lumber.
A large sawmill may have an annual capacity of about 300 million board feet (mmbf). The output of panel mills is measured in millions of square feet. A large plywood mill may have a capacity of 300 million square feet.
Sawmills are located close to their source of timber because of the high costs of transportation. Large operators often use timber from their own lands. Both large and small operators also buy timber from private lands and federal and state forests. Logs are bought at market prices. Average "stumpage" prices can vary sharply from year to year. Softwoods like Douglas fir and Southern pine are used for most lumber and structural panel manufacture. Hardwoods like oak and maple are used to make veneered panels for cabinet and furniture manufacture.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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