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The future of engineered wood panel availability.

Wood & Wood Products recently talked with Bill McCredie, executive vice-president of the National Particleboard Association. The interview focused on the factors that might affect the availability of medium density fiberboard and particleboard in the future.

Wood & Wood Products: There is a lot of concern among MDF and particleboard (PB) users about the impact of timber set asides on the future supply of these panels. What can you tell us about the impact of timber harvesting policies on the future availability of PB/MDF?

McCredie: Over 80 percent of the wood used to manufacture PB/MDF are "residuals" from lumber or plywood manufacturing such as chips and savings. If the volume of lumber and plywood produced is reduced for any reason, including a lack of timber supply or poor market conditions, chips and shavings will not be available for the production of PB/MDF.

Western board manufacturers have been especially hard hit by the drop in timber supply. Oregon alone has 11 PB/MDF plants that account for more than 25 percent of the U.S. production of these products. However, in the last five years, the number of lumber and plywood conversion facilities in Oregon and Washington have dropped by over 100 mills, a reduction of more than 20 percent. Needless to say, this puts a premium on the remaining supply of wood residuals. PB/MDF manufacturers that were historically able to satisfy their wood supply requirements within a 100-mile radius of the plant now routinely go out 200 to 300 miles. This results in increased competition for available supplies and in increased transportation costs.

W&WP: Does this drop in lumber and plywood production jeopardize the availability of PB/MDF?

McCredie: Not immediately. Oregon is currently an extreme example. While no Oregon PB/MDF mills have been permanently shut down for lack of wood, some production curtailments have occurred. Mills in the East and South are in better shape for wood supply. What will happen is that eventually the increased cost of wood residuals delivered to the mill will be reflected in the cost of the panel to the user. We don't believe that the relationship between timber supply and consumer prices has sunk in yet with the general public. Whenever possible, we encourage our downstream consumers to become educated on this issue.

W&WP: What about the other basic raw materials used to manufacture particle-board and MDF, such as adhesives? Are there any concerns, for example, about the availability of urea-formaldehyde resins?

McCredie: Both urea and formaldehyde are produced from methanol, a product of natural gas. Resin manufacturers tell us that the long-range supply of these products is relatively stable.

W&WP: Speaking of formaldehyde, have there been any changes in the PB/MDF industry lately regarding formaldehyde emissions from panels?

McCredie: Absolutely! Both resin manufacturers and panel producers have made giant strides in the last year in reducing formaldehyde emissions from wood panel products. As the technology improves, industry emission standards are racheted down incrementally. A new industry standard for particleboard flooring products, called NPA 10-92, went into effect December 1, 1992, that reduced allowable emissions from 0.3 ppm to 0.2 ppm. And a new ANSI particleboard standard is also being developed with the 0.2 ppm level for flooring products. As panel manufacturers meet these new lower levels, industry average emission levels will be on par with the most stringent standard level in Europe, the German E1 standard.

W&WP: We have heard rumors that panel manufacturers may be required to convert to alternative resins. Is this still a possibility?

McCredie: It is still a possibility but becoming more remote. The newest urea-formaldehyde resin panels have formaldehyde emissions approaching those from phenol-formaldehyde resins. Both P-F resins and isocyanate resins would add substantially to the cost of the product. At this time, both the EPA and Consumer Products Safety Commission have expressed satisfaction with the progress that industry is making with U-F resins.

W&WP: From the board user's perspective, are the current environmental regulations directed at the PB/MDF industry going to threaten the supply of panels?

McCredie: We hope not. Many of the new regulations involve permitting, monitoring and record keeping obligations. These all add to the cost of production but don't necessarily jeopardize current volume.

What does concern us are the interpretations of the regulations under the Amended Clean Air Act that require a "new source review" of new sources of potential emissions. These reviews can be very restrictive of plant expansions or construction of new plants. We are aware of two wood panel plant expansion projects that are on hold because their sponsors could not provide what EPA considered to be "best available control technology" for minimizing plant emissions. There are also new regulations under development that could affect both production costs and mill capacities. Obviously, if no new production capacity can be built, the supply and demand ratio will eventually become very tight.

It's important to remember, however, that most of the timber supply and environmental problems affect all sectors of the wood industry, not just PB and MDF. In fact, PB and MDF manufacturers have greater flexibility in locating and using different wood resources than do many "solid" wood converters.

W&WP: So what is the bottom line regarding the future of panel availability?

McCredie: To use an overworked expression, we are cautiously optimistic. During the relatively depressed market of 1992, the particleboard industry operated at 88 percent of its capacity and MDF operated at 92 percent. Both sectors set all-time shipment records. But while there is some room for additional production within the existing capacity base, there are no major increases in industry capacity imminent. We believe that the demand for these panel products will continue to grow, that the environmental hurdles will be surmounted and that additional capacity will be built to ensure continued supply.
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Publication:Wood & Wood Products
Article Type:Interview
Date:Feb 1, 1993
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