Lumber & Plywood Product Manufacturing
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Industry Overview
The US lumber and plywood manufacturing industry (sawmills and plywood mills) includes about 5,000 companies with combined annual revenue of about $25 billion. Large companies include divisions of Weyerhaeuser, Louisiana-Pacific, Georgia-Pacific, and Universal Forest Products. The plywood, veneer, and engineered wood product segment of the industry is concentrated: the 50 largest companies generate about 60 percent of revenue. The sawmill segment is fragmented: the 50 largest companies generate about 40 percent of revenue.
Manufacturers of wood windows and doors and wood flooring are covered in separate industry profiles.
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.
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. Some sawmills specialize in producing only "stud" lumber, lengths of 5 to 10 feet with a cross section of 2 by 4 inches or 2 by 6 inches. Because their product is smaller, studmills can use smaller, cheaper logs.
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.
