Going for a dozen

In the same location, the fourth, identical, line was built the following year. The fifth line had a capacity of 100,000m³ of MDF and was built in Xuanchang, Anhui province, in 2002. The following year saw line six, again with a capacity of 100,000m³, built in Fengyang, Anhui. Line seven appeared in Huaiyin, Jiangsu, in the same year as Fengyang (2003). This one had an annual capacity of 80,000m³. A major structural change for the company also came in 2003. Mr Li You Yu, who had joined the company as chief executive in 1998 having been brought in to rescue the business from financial difficulties, became the outright owner and president of the business, changing its name to the present title of Jiangsu Dongdun Wood Industry Group. Up to this time, all the lines had been supplied by SWPM with all-Chinese machinery. However, in 2004, Mr Li bought his first particleboard line (and his eighth panel production line) and this time he chose Sufoma as the supplier. The 80,000m³/year multi-opening line was installed at the site in Hongze and this line also marked another departure for the company as, for the first time, it purchased some machinery from outside China. This comprised chippers from German manufacturer Maier and a dryer from M-E-C of the US. The company reverted to 100% Chinese-sourced machinery for its ninth line in 2005. It also returned to MDF, building a 100,000m³/year multi-opening-press Sufoma line, equipped with a Sufoma refiner; the refiners for the other lines had all been supplied by SWPM. This ninth line was built in Liyang, Jiangsu province. Line 10 followed in 2006. It was back to SWPM for the entire line, including the refiner, and it had a 100,000m³ annual capacity. Number 10 was built in Taihe, Anhui. In common with the majority of his competitors, Mr Li then decided to go for an imported continuous press for his eleventh line. This came on stream in 2007 with a Dieffenbacher CPS continuous press of 26.3mx8ft, equipped with the flexible infeed/wedge compactor for the production of thin board. Rated at an annual capacity of 180,000m³, Mr Li said this line is in fact capable of producing 250,000m³/year. Breaking the Chinese machinery mould rather thoroughly, line eleven has Pallmann of Germany chipping and refining, GTS Energy plant, Steinemann sander and Anthon panel sawing system. "This gives us a grand total of around one million m³, including the particleboard line, and puts us among the top five MDF producers in China," said Mr Li proudly. I asked him why there was just line number eight producing particleboard. "The market is not so good for particleboard in China. Most of the raw material for the particleboard comes from recycled city waste and collection of that is difficult at this time," he said candidly. Eleven lines is not likely to be the end of the story for Dongdun though - Mr Li plans a twelfth, for MDF production. The line was not yet ordered at the time of my visit in March, but it will be another imported continuous line with capacity "in the 150,000 to 200,000m³ range," according to the president. "We hope to have start-up of line twelve during 2009." Value-adding has not been ignored by Dongdun either, with a laminate flooring line having been installed at the Changshu City site in 2004. It is a Sufoma line with annual capacity of two million m², but Mr Li said he has no plans to add any more laminate flooring capacity. However, he does plan to add short-cycle pressing lines at some time in the future. With regard to wood supply, the president said that he was able to satisfy the needs of all his lines, so far, utilising different species at the different sites. Lines one to eight, and 10 and 11, utilise poplar and mixed woods, while line 9 uses pine and mixed woods. The trees are grown by farmers who plant on state-owned land. Dongdun has a plantation in Changshu City and one in Huaiying City, both in Jiangsu province, although these trees are not yet ready to harvest. Mr Li plans to use that wood for lines one to four only. There are concerns among many industry observers that there is now too much MDF capacity extant or planned in China and Mr Li acknowledged that there could be more difficult times ahead. "In the future the competition will become stronger and stronger and the price will go down, but at the moment it is a good and profitable business. "Costs are rising, too, but we have our own resin plants at each site and at the beginning of each year we set a budget for resin and calculate an average cost and manage the business accordingly." So is this a good time for Dongdun to be planning its twelfth line? "We already have a lot of MDF lines and a lot of experience in the industry," said the company president. "If we stop expanding, maybe another company will come along and want to take us over. So we must expand and get stronger and have the chance to take over other smaller companies. You must always advance even though the competition is strong in China." Things were beginning to look very uncertain for the global economy at the time of my visit to Dongdun in March and Mr Li could see the possible effects on his business. "Maybe growth will slow in China and maybe even go down in the future," he said. "There are many MDF mills in this country and many may close. I expect there to be one or two hundred mills in the future and this gives us a good opportunity to expand. We have a good profit and good mill management and we will gain more experience and better management skills. "If and when the Chinese economy goes down, my management will already be at a high level of competence and we will be able to face strong competition. "Our profits will go down with increasing costs but we will be in a strong position to face this competition. Also, the Chinese furniture industry is expanding and is a main consumer of MDF - the two industries are growing together."