A market assessment of the potential for OSB products in the North American office furniture and door manufacturing industries.
In late 2000, a fax survey was sent to 1,867 manufacturers of wood office furniture and doors in an attempt to gauge the market potential for oriented strandboard (OSB) products in these two key industrial segments. It is hoped that this research will form the basis of marketing strategies aimed at increasing OSB use in various industrial market segments. In general, while both markets appear to be attractive for panel producers, OSB manufacturers would likely stand a better chance of market acceptance in the office furniture sector, perhaps positioning themselves as a lower-end product. This study also provides OSB manufacturers with recommendations for improving their product's market position within these highly competitive marketplaces. This may prove challenging since the degree of familiarity, acceptance, and use of OSB products among both office furniture and door manufacturers is low compared to other types of wood products. Most respondents claim that OSB products will require many technical improvements in order to successfully penetrate the industrial marketplace. That said, the most effective means of disseminating product information to industrial manufacturers about a product like OSB is through direct and personal communication tactics.
Most oriented strandboard (OSB) panels produced in North America are used as sheathing material in home construction. Continued expansion of North American OSB capacity in the next few years indicates the need to explore new potential markets. Any slowdown in the growth of housing starts could prove to be detrimental to OSB manufacturers who rely heavily on this market alone. To ensure future success, OSB manufacturers, particularly those that are not the lowest cost producers, need to view their products as more than just a commodity building material. To survive in this extremely competitive market, they need to carefully consider other potential opportunities and strategies. This may include exploring overseas markets like Europe and Asia where OSB is still not widely used. Another option would be to rely less on commodity markets and focus more on industrial or specialty markets. This has been explored to some degree by plywood manufacturers, but not to the same degree by OSB producers. Today, many wood industry experts argue that plywood has already passed its maturity stage and is now in the decline stage of its life cycle (Wood Markets 2000). If one looks closely at the sheathing industry, OSB has taken away much of the plywood residential sheathing market share due largely to lower costs. However, in the industrial market, OSB has made few inroads in capturing share from plywood specialty producers.
In late 2000, a fax survey was sent to 1,867 manufacturers of wood office furniture and wood doors to gauge the market potential for OSB products in these two key industrial segments. This research provides the starting point for OSB producers interested in expanding their market reach into industrial market segments like office furniture and door manufacturing.
Background and objectives
Today, more than 65 percent of the total volume of OSB produced in North America is used in home construction, compared to 35 percent for softwood plywood, its major competitor (Table 1) (Wood Markets 2000). The older and more entrenched plywood industry has been more successful in capturing other markets such as the industrial and remodeling markets.
At present, there is a fairly even split in the quantity of OSB and plywood manufactured in North America annually (Wood Markets 2000). However, it is projected that OSB production will increase from its current 20.4 billion square feet--3/8" basis (BSF) to 24.8 BSF by 2004. Plywood production is projected to decrease from 20.3 BSF to 17.5 BSF in the same period of time. There are up to 10 new OSB mills expected to be operating by the end of 2003, in the southern United States, eastern Canada, and western Canada. This will result in an estimated increased production of 1.5 BSF per year over the next 3 years. Excess capacity of OSB in North America could force production capacity rates down from 97 percent in 1999 to as low as 85 percent within the next few years (Wood Markets 2000).
Broadly defined, industrial markets in this context refer to manufacturers that use structural panels in the production of goods such as furniture, doors, and other finished wood products. Currently, only 4 percent of the OSB manufactured in North America is being consumed within these industrial markets, compared to 19 percent for softwood plywood products (Wood Markets 2000). The total volume of structural panels used within the United States industrial market was 6.2 BSF, with softwood plywood making up 94 percent of the total and OSB accounting for the remaining 6 percent (APA 1999). In order to ensure future successes within industrial markets, OSB manufacturers should consider competing directly with plywood in these markets, as well as with nonstructural panels like medium density fiberboard (MDF) and particleboard.
The furniture sector was the largest industrial consumer of structural panels in the United States in 1998, with an annual consumption of 1.873 BSF (APA 1999). Next largest was the transportation group at 1.650 BSF, followed by the wood products group at 1.027 BSF (this group includes other secondary wood products like doors, windows, millwork, and cabinetry). The two groups that used the least amount of structural panels were the low incidence industries (various industries using relatively small volumes of structural panels) and the manufactured materials handling group (wood boxes, wood pallets and skids, and wood containers), with annual consumptions of 0.824 BSF and 0.792 BSF, respectively. The total volume of structural panels consumed by all industrial manufacturers increased significantly from 1992 to 1998, with the most significant increases occurring in the furniture group (+179% to 1.873 BSF) and the wood products group (+189% to 1.027 BSF). While it is not prudent to imply trends with only two data points, at the very least this suggests that there is a growing market for structural panels in the industrial sector, especially among furniture and wood products manufacturers. Continued market research is essential for a better understanding of the marketplace and to maintain this rate of growth in the future (APA 1999).
The focus of this study was on a better understanding of market opportunities for OSB within two industrial markets that are exhibiting considerable growth: wood office furniture and wood passage door (interior and exterior) manufacturing. The decision to select these two industrial groups was based on both input from industry representatives and a consideration of each sector's size, structure, and potential for OSB manufacturers to make market inroads.
Wood office furniture
In 1996, the North American office furniture sector (excluding metal) had an annual production valued at approximately $US 3.75 billion, with the United States accounting for over 80 percent of that total (Industry Canada 1998). In 1998, the total volume of OSB used in wood office furniture was negligible compared to softwood plywood (APA 1999). This is clearly an area in which OSB manufacturers have the potential to gain market share. Although no literature was found on the Canadian consumption rate of OSB and softwood plywood in the office furniture market, it can generally be assumed that the trends closely follow those of the United States.
A study by Vlosky and Wu (2001) showed the types of raw materials that are used in the furniture and cabinet industries in the southern United States. The results spanned across the three major furniture sectors (wood household, office furniture, and upholstered furniture) and indicated that the most commonly used raw material was solid wood at 63 percent, followed by wood-based panels (including OSB) at 33 percent. However, a closer look at the office furniture sector alone revealed a different story. In this sector, solid wood (hardwood and softwood) accounted for 42 percent of the market share, while wood-based panels accounted for 55 percent. Office furniture manufacturers consume a significantly higher volume of wood-based panels compared to the rest of the furniture market in the southern United States. Unfortunately, due to its geographical limitations, results of this study could not be extrapolated to the remainder of the North American office furniture sector.
In 1996, a study was conducted on the volume of doors manufactured in the United States from 1994 to 1995 by material and application type (BCM 1998). The study categorized door applications into two types: residential entry doors (exterior) and residential passage doors (interior). It was predicted that approximately 12.5 billion units of residential entry doors would be sold in the United States by 1999, 20 percent of which would be made from wood products. Approximately 30.5 billion residential passage doors would be sold, 95 percent of which would be made from wood products. It can be assumed that the ratio in Canada would be similar to that of the U.S. market.
Unfortunately, apart from that study, there exists very little market intelligence with respect to the North American wood door manufacturing sector. Furthermore, the few estimates that do exist are mostly reported as part of a larger door and window industry. In 1996, the total production value of the North American wood door and window industry was approximately $US 17.3 billion, with the United States accounting for over 90 percent of the total (Industry Canada 1998). Since there is a strong and obvious correlation in North America between annual house construction activity and the volume of doors manufactured, a valid proxy of the magnitude of the door market can be obtained simply by observing trends in housing starts and repairs. For example, in the United States, total housing starts in 2001 were approximately 1.5 million units and are forecasted to increase to 1.575 million by 2004 (Wood Markets 2000). Approximately 78 percent of the existing houses in the United States are at least 16 years old or older, meaning that they will soon be in need of repair and remodeling, a sizable market with 1998 expenditures exceeding $US 124.1 billion (Wood Markets 2000). The expectation of continued strong housing starts, as well as a stable repair and remodeling market, indicates a good potential for market expansion by wood door manufacturers.
The main objective of this research was to ascertain the market potential for industrial OSB products in the North American wood office furniture and door markets. Previous studies have concentrated mostly on the use of OSB as a sheathing material for home construction. Until now, very little information has been gathered on other potential uses of OSB. Specific objectives of the study included: 1) measure the degree to which these manufacturers are using wood-based panels and determine the product attributes that are of importance to them; 2) measure the manufacturers' awareness, use, and perceptions of OSB as an industrial material; 3) explore the most effective means of developing and disseminating promotional information regarding OSB's industrial use for these manufacturers; and 4) make general recommendations to OSB manufacturers on ways of improving their product based on an analysis of actual and perceived product strengths and weaknesses.
Two fax surveys were developed and administered in late 2000, one targeting the North American wood office furniture manufacturers and the other targeting North American wood door manufacturers. The two questionnaires were similar, differing only in the categorical responses of four questions. Each questionnaire was divided into four main sections: 1) company information; 2) materials used in office furniture/doors; 3) wood panels use in office furniture/doors; and 4) OSB use in office furniture/door manufacturing. In general, the survey instrument asked general questions at the beginning of each section and more specific ones toward the end. In an attempt to maintain the interest of the respondents, several different forms of questions were incorporated into each questionnaire. Most of the questions had a fixed number of categorical responses, but some were open-ended to allow for opinions to emerge. Several attitudinal scales were used, including numerical scales, category scales, behavioral intention scales, Likert scales, rank order scales, and sorting scales. Questions were designed in such a way that any company could answer them, regardless of size, geographical location, or knowledge level of OSB.
A fax survey was selected over other survey methods due to the ease of sending bulk faxes to companies across North America, faster rates of data collection, and budgetary constraints. Some of the companies listed in the sample frame did not register a fax number and could not be included in the survey. This may have created a bias to the survey, especially from the exclusion of smaller companies, and some caution should be observed in the interpretation of results. Nonetheless, the data collected in this descriptive research was quantitative in nature, allowing for inferences to be made regarding total populations, provided that nonresponse error was not present.
Companies under study were selected using simple random sampling procedures to ensure an unbiased and representative sample. A list of 973 passage door manufacturers and 894 office furniture manufacturers was obtained from three sources: an Internet service, an industry association, and a commercial list provider. Specific instructions were given to each list provider to randomly select names from their respective lists of wood door and office furniture manufacturers in Canada and the United States. These lists were merged together (with duplicate contacts removed) for a total study sample frame of 1,867 manufacturers. (1) More than 95 percent of the companies identified were in the United States. The reason for this imbalance is simply that there are higher numbers of door and office furniture manufacturing companies in the United States than in Canada.
The sample included a wide range of wood door and office furniture manufacturers with respect to geographical location, firm type and size, material manufacturing type, and production level. For example, the door manufacturer sample included those involved in the production of custom doors, wood doors, French doors, industrial doors, etc. The office furniture manufacturer sample included manufacturers of computer office furniture, home office furniture, and standard commercial office furniture products. Within each category, companies were also subcategorized in terms of specific items that they manufactured. For example, within the office furniture category, there were companies that specialized in the production of chairs, computer desks, or some other office furniture product. This wide diversity captured a representative sample frame of the North American office furniture/door manufacturing population.
All of the companies surveyed were contacted via fax a total of four times. At first, the survey instrument was faxed along with a cover letter explaining the survey instrument and main objectives of the research. Companies were subsequently contacted three more times, each within intervals of between 2 to 3 weeks. Each time, a cover letter was sent reminding companies to fill out the survey questionnaire. The questionnaires were addressed to the Purchasing/Specification Manager of companies. To ensure a high response rate, the survey instrument was kept to four pages (the estimated time to complete the survey was less than 20 minutes), a toll-free 1-800 number was provided to answer any questions that respondents may have had, and complete confidentiality was assured to all participants.
Results of this market assessment on the potential for OSB products in the North American office furniture and door manufacturing industries are reported in five sections. First, a brief overview of the response rates and respondents is given, followed by findings related to each of the four major research objectives, under the following headings: 1) use of wood-based panels in industrial markets; 2) awareness, use, and perceptions of OSB as an industrial material; 3) promoting OSB to industrial markets; and 4) product attributes of OSB as an industrial material.
Response rates and respondents
An attempt was made to reach 1,867 office furniture and door manufacturers across North America and 1,619 were successfully reached by fax; 248 fax lines were no longer in service. Taking account of the respondents who were unreachable yielded a response rate of 11.9 percent (192 usable surveys out of 1,619 contacts, 109 office furniture and 83 door manufacturers). Alternatively, response rate can be re-calculated by eliminating respondents who returned a survey but did not take part in the study because they felt unqualified to answer the questions (31 in total). This yielded an adjusted rate of 18.6 percent. In either case, the response rate in this industrial survey is considered acceptable for extrapolating to the total population of North American wood office furniture and door manufacturers (Kanuk and Berensen 1975).
The presence of nonresponse bias was measured using a series of statistical tests. Most notably, the response patterns between early and late respondents were compared on key survey variables using a series of two-tailed t-tests and z-tests (a = 0.05). The variables tested included number of years in business, market reach, and company sales. This approach is widely accepted and is based on the assumption that late respondents (in this case, those that responded after the fourth appeal) are a valid proxy for nonrespondents (Armstrong and Overton 1977). No statistically significant differences were detected in any of the analyses and, therefore, there was no indication of nonresponse bias.
The majority of the respondents classified themselves either as company managers, presidents, vice presidents, purchasing agents, or owners. Thus, most people who filled out the survey were fully qualified to answer it. The majority of responding office furniture and door manufacturers had been in business for less than 30 years. Only 12 percent and 17 percent of the office furniture and door companies, respectively, had been in existence for over 60 years.
Approximately 10 percent of office furniture and door manufacturers reported having sales of over $US 50 million in 1999. The majority of producers (44% and 46% for office furniture and door companies, respectively) had annual sales of between $US 1 million and $US 9.9 million. The majority of the office furniture and door manufacturers had markets that were national, regional, or local; only 5 percent had international markets.
Use of wood-based panels in industrial markets
The first objective of this study was to determine the degree to which North American office furniture and door manufacturers are using wood-based panels (e.g., plywood, OSB, particle-board, MDF) compared to solid wood in industrial applications and to uncover some of the underlying motivating factors involved in material specification. To that end, survey respondents were first asked to state their preference between wood-based panels and solid wood in their respective industrial applications and to explain the reasons for their preferences.
Approximately 77 percent of the office furniture manufacturers surveyed preferred using wood-based panels to solid wood in furniture applications. Some of the more commonly stated reasons for this preference included the fact that wood-based panels are perceived to be more cost effective, environmentally friendly, available, stable, uniform, durable, and consistent. Furniture manufacturers who prefer to use solid wood generally do so because they are in the business of making higher end custom furniture. It should be noted that some respondents stated that the decision to use wood-based panels should be based on the products' end-use applications. For example, some respondents stated that wood-based panels are ideally suited for knockdown furniture and educational/commercial applications.
Only 39 percent of the door manufacturers surveyed stated that they preferred using wood-based panels, with 24 percent having a preference for solid wood and the remainder either having no opinion on the matter or stating that the decision depended on the end-use application (i.e., wood-based panels for paint-grade doors, solid wood for stain-grade doors). In fact, the decision to use wood-based panels or solid wood in doors and door components seems to be largely driven by customer needs and requirements. Some respondents who would have preferred to use wood-based panels did not use them because of their customers' requirements for solid wood. This requirement for solid wood was strongest among custom manufacturers since wood-based panels were not acceptable to their high end customers because doors and door components made from wood-based panels are perceived to be of lower quality. That said. there were a number of positive comments with respect to the use of wood-based panels in a door manufacturing context, which echoed the responses of furniture manufacturers.
In an attempt to uncover the underlying factors involved in the specification of wood-based panels, office furniture and door manufactures were given a list of product attributes and asked to rate their level of importance with respect to making the final purchasing decision. A 10-point numerical scale was used to measure the importance of 13 product attributes; 1 = not at all important and 10 = extremely important. The attributes included: aesthetics, availability/supply, brand name, delivery time, environmental friendliness, general performance, overall quality, price, safety of the installed product, service, straightness, strength/stiffness, and surface uniformity. Means for each attribute were computed and one-way analyses of variance (ANOVAs) ([alpha] = 0.05) were performed on the means to detect significant differences for both office furniture and door manufactures.
For office furniture manufacturers, all but two of the product attributes listed were highly rated (> 18) as important considerations in the material specification process. Environmental friendliness and brand name were rated significantly lower than the other 12 attributes. Similar results were obtained for door manufacturers, with four attributes being rated significantly lower than the others. Again, environmental friendliness and brand name were rated significantly lower than the other attributes, with brand name being statistically the least important attribute. There was no statistical difference between the safety of the installed product and price attributes, which were both rated higher than brand name and environmental friendliness, but were significantly less important than the remaining nine attributes, which were all highly rated (> 8) and statistically similar.
Awareness, use, and perceptions of OSB as an industrial material
The second objective of this study was to gain a better understanding of North American wood office furniture and door manufacturers' awareness, use, and perception of OSB as an industrial material. Specifically, respondents were asked to state their level of knowledge regarding various industrial wood products (shown in Fig. 1 for office furniture and Fig. 2 for doors). For each industrial product, a 5-point interval scale was used; 1 = not at all knowledgeable and 5 = very knowledgeable. Means were computed and results for both office furniture and door manufacturers are summarized in Figures 1 and 2, respectively. One-way ANOVAs ([alpha] = 0.05) were performed on each industrial group to test for differences in knowledge levels.
[FIGURE 1-2 OMITTED]
The results show that office furniture respondents were most knowledgeable about hardwood lumber, MDF, particle-board, and plywood, between which there were no significant differences. However, they were significantly less knowledgeable about OSB products. In the case of door manufacturers, a significant difference was detected between the knowledge levels of solid wood products (hardwood and softwood lumber) and wood-based panel products (plywood, MDF, particleboard, LVL, hardboard, and OSB). However, OSB was not statistically different from the other wood-based panels.
Additional information on the volumes of OSB and other wood-based panels used as industrial raw materials was collected and is shown in Figure 3 (office furniture manufacturers) and Figure 4 (door manufacturers). Office furniture manufacturers rated particleboard as the most commonly used wood-based panel product in furniture applications, followed by MDF, edge-glued panels (solid lumber), plywood, and more distantly, hardboard, and OSB. Approximately 2 percent of the materials used by the wood furniture manufacturers did not fit into any one specific category and therefore this was categorized as "other" (e.g., veneer, melamine, and oriented strand lumber). For door manufacturers, edge-glued panels (solid wood) were by far rated as the most commonly used wood-based panel product, at more than half the volume. This was followed by MDF, particleboard, hardboard, OSB, and softwood plywood. Only 1 percent of the materials used by the respondents fell into the "other" category.
The results indicate that office furniture manufacturers have a high preference for reconstituted wood panel products such as particleboard, MDF, and plywood, which accounted for 71 percent of their total wood use. Conversely, reconstituted wood panel products accounted for only 29 percent of door manufacturers' wood use. Edge-glued panels (solid lumber) used by furniture manufacturers represented 19 percent of the total wood-based panel use, whereas, for door manufacturers, this proportion was much higher at 59 percent. In the case of OSB, the proportion used by both office furniture and door manufacturers was very low at 3 and 4 percent, respectively.
Information was also obtained on the perceptions of manufacturers regarding the use of OSB as an industrial material. Twelve attributes were listed--adhesion. density, dimensional stabilin, ease of finishing, fire performance, internal bond strength, machinability, panel squareness, screw homing capabilities, strength/stiffness, and surface smoothness. Respondents were asked to use a 5-point interval rating scale as it relates to OSB's performance on each of these attributes; 1 = very poor and 5 = excellent. The results indicate that many respondents perceived that there are problems associated with using OSB in industrial applications, with some explicitly stating that it does not meet with their standards and expectations.
A one-way ANOVA test ([alpha] = 0.05) revealed that the majority of office furniture respondents believed OSB's performance level on two attributes to be significantly worse than the remaining attributes: ease of finishing and surface smoothness. The nine remaining attributes were rated significantly higher with respect to OSB's performance, but were all statistically equal to each other. A similar one-way ANOVA test ([alpha] = 0.05) for door manufacturers yielded somewhat more diverse results, with three significantly different groups of attributes emerging. OSB's performance with regard to ease of finishing, fire performance, machinability, and surface smoothness were rated poorly, while dimensional stability, internal bond strength, panel squareness, and strength/stiffness were rated highly. The remaining three attributes, adhesion, density, and screw holding capabilities, fell between the high and low rated groups, but were not statistically different from each other.
Promoting OSB to industrial markets
The third objective of this study was to explore the most effective means of developing and disseminating promotional information with regard to the industrial use of OSB in the wood office furniture and door manufacturing sectors. Respondents were asked to rate the sources of information that they used when deciding to learn more about new materials by means of a 5-point numerical scale; 1 = never use and 5 = always use. Means were computed for each promotional method and the results are summarized for office furniture and door manufacturers in Figures 5 and 6, respectively.
[FIGURE 5-6 OMITTED]
According to the office furniture respondents, the top three methods used for disseminating product information were other manufacturers' experience, journals/publications, and sales personnel. On the opposite side of the scale, the three methods that received the lowest average ratings were sponsorships, seminars, and conferences. Similarly, according to door manufacturers, the top three methods used for disseminating product information were other manufacturers' experience, sales personnel, and journals/publications. The three promotional methods that received the lowest average ratings were sponsorships, conferences, and the Internet. These findings seem to indicate that direct personal communication methods tend to be more effective as a potential means of increasing OSB use among office furniture and door manufacturers than more indirect methods like the Internet, conferences, and sponsorships.
Product attributes of OSB as an industrial material
The fourth and final objective of this study was to make recommendations to OSB manufacturers on ways of improving their product in the context of gaining market share within industrial markets. To obtain this information, respondents were asked to rate a number of product attributes as they relate to OSB used in industrial applications. Results indicate that there are many negative attitudes with respect to the industrial use of OSB. Many respondents indicated that unless major improvements are made to the product, it will not be suitable for use in furniture and door applications. In order of incidence, some of the major complaints that respondents had with OSB are:
* too expensive;
* poor surface uniformity and smoothness;
* low moisture resistance causing chips to swell and destroying paints;
* veneers and laminates do not adhere properly;
* low screw- and staple-holding ability;
* poor aesthetics;
* too hard on tooling;
* voids on the face are not acceptable.
Nearly one half of all respondents felt that their customers would perceive furniture and doors made from OSB as being of low quality, with only 4 percent stating that their customers would perceive products made from OSB as being of high quality. Over 20 percent of office furniture manufacturers felt that their customers would perceive products made from OSB as being of medium quality, with the remaining 27 percent having no opinion. For door manufacturers, approximately 14 percent felt that their customers would perceive products made from OSB as being of medium quality, with the remaining 35 percent having no opinion.
The market share for OSB within industrial sectors is very limited. OSB is presently consumed at proportions of 3 and 4 percent (by sales) within the office furniture and door sectors, respectively. In order to increase OSB's use in the marketplace, specific target markets and technical strategies must be undertaken. Based on an assessment of some of the comments and suggestions obtained from the open-ended survey questions, some potential marketing strategies may include, but are not limited to, the following:
* OSB manufacturers must address some of the major technical problems mentioned by many of the respondents (i.e., surface smoothness, aesthetics, moisture resistance, etc.) prior to entering the competitive office furniture and door markets.
* OSB manufacturers should emphasize the product's advantages (i.e., strength, dimensional stability, etc.), and ensure that all consumers are aware of them by having brochures and fact sheets in door and office furniture outlets.
* OSB manufacturers need to ensure that their product is price competitive in the marketplace.
* Office furniture and doors made from OSB should be displayed in trade shows and showrooms, so that other manufacturers can see the end products in person.
* Partnerships between OSB manufacturers and office furniture and door manufacturers are essential to introducing OSB into these markets.
In the last few decades, North American forest companies' access to high quality wood fiber has decreased significantly. One clear advantage of using OSB is that it can be made from lower quality trees with faster growth rates. Aspen and yellow pine are two examples of fast-growing trees that are used in the production of OSB products. The end result is an engineered wood panel that is more stable, uniform, and lower priced than solid wood.
The North American OSB industry is expanding at a considerable rate and has managed to capture significant market share in the construction sector. However, continued expansion will require the development of additional markets for OSB, not only to maintain its growth, but also to mitigate against the reliance on a single market. Two important industrial sectors that have already accepted wood-based panels, and thus warrant further market exploration, are the North American office furniture and door manufacturing industries. This may prove to be a formidable challenge for OSB producers, however, as OSB usage in each of these sectors is comparatively low.
In general, these sectors are satisfied with the performance of wood-based panels relative to solid wood products. Today, for example, most low- to medium-quality furniture in the marketplace is made either from plywood, particleboard, or MDF, with a layer of melamine or veneer covering the surfaces. A good quality veneer serves to increase the market value of a furniture product and gives it aesthetic qualities comparable to that of high-end solid hardwood furniture, but at a much lower cost. Even some of the more fickle door manufacturers acknowledged the excellent attributes of wood-based panels. However, at the same time, they mentioned that they had no choice but to use solid wood due to high customer demand; end-users often still believe that solid wood products are superior to wood-based panels.
Concurrently, the North American value-added wood industry is under a great deal of pressure to innovate and compete in an increasingly fierce and global marketplace. An industrial segment like the U.S. furniture sector provides an apt example of this reality, with furniture imports rising dramatically and exports flattening out (Bullard and West 2002). That being the case, the industrial use of OSB panels presents a potential opportunity for furniture producers to make inroads into international markets through innovation and cost competitiveness.
The survey results show that industrial buyers find wood-based panels, in general, to be more economical and readily available, as well as technically more stable, uniform, durable, consistent, and defect-free than solid wood. However, these positive attributes do not necessarily apply to OSB products, one of the more recently developed woodbased panel products. Results of this study indicate that both the technical performance and the image of OSB must be improved to expand usage in these two sectors. In addition, a well-established brand name and the promise of an environmentally friendly product are not enough to capture and maintain these industrial markets.
Technical improvements for OSB are required with respect to surface quality characteristics, workability, machinability, paintability, swelling, and aesthetics. No doubt, each industrial sector has specific technical requirements that they consider critical and OSB producers would be well served by working closely with large potential industrial accounts in developing specific technical requirements and determining if OSB can attain the desired specifications at reasonable costs. As one respondent stated. "OSB requires further engineering." a comment that seems to typify many industrial manufacturers' reactions and reticence regarding the use of OSB in the office furniture and door manufacturing sectors.
In addition, the image of OSB needs to be improved among OSB manufacturers and industrial customers. The positive attributes of OSB (including its strength and security of supply) need to be communicated to industrial sectors using third-party testimonials, journals, industry publications, and personal sales calls. These were the most common and accepted methods of information dissemination for both the office furniture and wood door sectors. Further market research on potential industrial customers can be used to determine the best message and delivery mechanism to communicate the positive qualities of OSB for industrial products.
In the final analysis, there is a clear need for OSB producers to diversify their markets in North America by creating markets for differentiated panel products. Results of this survey generally indicate that manufacturers of wood-based panels are well poised to make market inroads into two industrial markets: the office furniture and door manufacturing sectors. This research has uncovered some of the problems that will need to be solved by wood-based panel manufacturers in order to successfully expand OSB usage into these potential target markets.
Population increases in North America, along with a decreased supply of high quality wood fiber, have resulted in an ongoing shift toward the use of composite panel products in industrial markets. Today, there is an increasing market opportunity for structural panels, such as plywood and OSB, within the industrial marketplace. Given the intense competition in industrial markets among composite panels, structural panels, and solid wood products, producers must have a good understanding of their customers' needs to remain competitive.
In order to maintain growth, OSB producers need to focus more on value added markets instead of solely producing lower value commodity products. This may include exploring overseas markets like Europe and Asia where OSB is still not widely used. Another logical option would be to direct some marketing activities at industrial or specialty applications. This option has been successfully deployed by plywood manufacturers to some degree, but not by many OSB producers. Currently, comparatively little of the OSB manufactured in North America is being consumed within industrial markets. This point is made all the more salient when one considers that North American OSB production is expected to increase substantially in the short term. Without market expansion, this could result in an industry-wide over-capacity situation.
This study explored the possibility of market expansion into two key industrial markets: the wood office furniture sector and the wood door sector. In general, while both markets appear to be attractive for panel producers, OSB manufacturers would likely stand a better chance of market acceptance in the office furniture sector, perhaps positioning themselves as a lower-end product. That said, many industrial buyers have several concerns with respect to OSB's technical characteristics. To successfully penetrate industrial markets, OSB producers need to address these concerns with both product enhancements and targeted promotion.
Table 1.--End uses of structural panels by volume (Wood Markets 2000). OSB Softwood plywood (%) Residential 65 35 Remodeling 19 28 Non-residential 10 10 Industrial 4 19 Export 2 8 Figure 3.--Wood-based panels used in office furniture manufacturing (by volume). Other 2% Edge-glued Panels 19% Plywood 13% OSB 3% Particleboard 39% MDF 20% Hardboard 4% Note: Table made from pie chart. Figure 4.--Wood-based panels used in door manufacturing (by volume). Other 1% Edge-glued Panels 59% Plywood 3% OSB 4% Particleboard 11% MDF 15% Hardboard 7% Note: Table made from pie chart.
(1) It should be noted that an effort was made to exclude manufacturers primarily involved in the production of non-wood-based products. It was felt that these companies would not contribute to an understanding of the market potential for OSB in industrial markets. Thus, inferences from this study refer only to manufacturers of "wood" office furniture and doors.
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The authors are, respectively, Market Research Analyst, Forintek Canada Corp., 2665 East Mall, Vancouver, BC, Canada V6T 1W5; Associate Professor and Associate Professor, Dept. of Wood Science, Faculty of Forestry, Univ. of British Columbia, 4041-2424 Main Mall, Vancouver, BC, Canada V6T 1Z4; and Group Leader, Markets and Economics, Forintek Canada Corp. The researchers wish to thank Ainsworth Lumber Company, Ltd. for its support and sponsorship of this project. This paper was received for publication in March 2002. Article No. 9464.
Robert Kozak *
David Cohen *
Chris Gaston *
* Forest Products Society Member.
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|Title Annotation:||oriented strandboard|
|Author:||Tabarsi, Erfan; Kozak, Robert; Cohen, David (Dutch activist); Gaston, Chris|
|Publication:||Forest Products Journal|
|Date:||Jul 1, 2003|
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