With all the consolidation that has been going on in the SE Asian panel manufacturing industry it is in a way refreshing to find a company which is small, wishes to remain small, and knows exactly where it wants its market position to be.
Such a company is Segamat Panel Boards (SPB) in Segamat, Johor, in the south of peninsular Malaysia.
Owned by the Japanese Takeuchi
family, this company has been quietly producing its niche MDF products on a Mende-type calender line since it made its first board in 2003.
The Takeuchi family formerly owned another MDF factory with Mende-type line, in Masai, Johor and two continuous lines in Merbok as a joint venture called Merbok Hilir. The Merbok lines are now part of the Korean-owned Dongwha Group, while the smaller Masai factory is now part of the Evergreen Group
of Malaysia.
Recently, Segamat Panel Boards has expanded its operations in two directions.
Firstly, early in 2008, it bought an Indonesian-based particleboard mill,
formerly known as PT Novopan, in Pontianak, West Kalimantan.
Renamed PT Indopan Panel Boards (IPB), this mill has a Becker & Van Hüllen eight-daylight press line with a capacity of around 9,000m3 a month.
“Historically, Pontianak was very big in the wood business and a lot of particleboard plants like ours set up there in the 1990s,” explained Peter Fitch, the English ex-pat who is managing director of the Segamat MDF operations. “There has since been a sharp decline in the availability of logs and so sawmills and plywood mills have closed. However, in the first quarter of 2008, political and policing changes reduced the illegal export of logs and the local Pontianak government decided to encourage downstream processing of the remaining wood resource, of plantation acacia, rubberwood and offcuts of mixed tropical hardwoods, from the remaining local sawmills.”
The Novopan mill had ceased production six months before SPB bought it from the receivers.
“We were able to restart the line quite easily and our immediate plans are to improve the quality, efficiency and productivity and to sell to the local domestic market, initially.
“In the longer term, we intend to produce low-emission board for export and, given the right market conditions, we have space on the site to build a new, probably continuous, line there,” said
Mr Fitch.
“We went into this project 50/50 with a local joint-venture partner, which is one of the largest Indonesian furniture makers, and each company put in some experienced staff as well as re-employing some of the original local ex-employees.”
In addition to the panel production line, the factory came with a Hymmen low pressure melamine line and a short-cycle press line.
The second major recent move for SPB was the purchase of the entire production line of the former Greentech factory in Minden, Louisiana in the US from the receivers, who took control of Greentech in 2007.
This was a five-feet-wide calender-press line making thin particleboard and was first installed in 1996.
“Although this line had ceased production six months earlier, when I went over to Minden we produced particleboard from pallets straight away, which was also a good way of clearing out the site of waste wood at the same time as making panels and testing the line!” said Mr Fitch, only half joking.
Delivery of the line was one third of the way through at the time of WBPI’s visit to Segamat in early December 2008, representing a stock of 42 containers of machinery so far.
“We are looking to produce thin particleboard in 2.5 to 6mm as an alternative to thin MDF, especially for more price-sensitive markets,” said Mr Fitch.
In December, the ground was already being prepared and levelled on the Segamat site in preparation for the new factory buildings and Mr Fitch hoped to have the line up and running in April or May of this year.
He is no stranger to such pressure, having built up a Mende-type line for PTP in China under very difficult circumstances, and in a very short space of time, eight years ago (WBPI April/May 2002, p31).
The purchase includes a Bürkle laminating line for paper overlay.
“Initial capacity will be the same as Greentech had – 33,500m3 a year – but we hope to increase that figure by 20 to 30%, probably in a year’s time,” said
Mr Fitch.
Another major project for SPB involved moving another company which it has owned for many years to the Segamat site.
Formerly located in Johor, UC Gravure Sdn Bhd is a printer of decor paper for application to panels by bonding with urea formaldehyde or PVA (poly vinyl acetate) resin.
A new factory building was erected at Segamat three years ago to accommodate UC Gravure’s two printing lines, which also come under Mr Fitch’s jurisdiction as director of the site.
With all this investment in a new factory in Indonesia, a new line for Segamat and the relocation of UC Gravure, SPB did not ignore the facilities it already had – far from it.
In 2007, the company put a new 3.3m diameter main heated drum in the calender press and modified the whole press.
“We also put in a new drum number two and fitted three densifying rollers in place of roller number three at the bottom of the press,” explained Mr Fitch. Kelzenberg of Germany supplied the drums, while Binos, also of Germany, supplied the engineering and upgraded the human-machine interface (HMI).
In the same year, SPB purchased a spike roll former from Binos and the cumulative effect of all these upgrades was an increase in line speed of about 15%.
“It enabled us to achieve a higher density product, and a more consistent
product, of up to 900kg/m3 density,” said the director.
The line is mainly producing 2.3 to 3mm MDF but can also manufacture up to 6mm board, although the lower price of this panel is not so attractive.
With declining availability of rubberwood, Segamat has also installed a new debarking and chipping line specifically for mixed tropical hardwood, employing a Fuji Kogyo debarker and disc chipper. The company does not mix its wood raw material, keeping to 100% rubberwood or 100% mixed tropical hardwoods in every board produced.
“We clean the logs thoroughly and have two-stage sifting to minimise the amount of latex getting through to
production,” said Mr Fitch.
With a relatively small capacity of 75,000m3 a year, SPB maintains its philosophy of focusing on niche markets. “We modify our process to suit our customers’ specific requirements.
“We are doing a lot more low-emission [of formaldehyde] boards and we have CARB (California Air Resources Board) phase one and two certification already, inspected by PSI,” said Mr Fitch.
Phase two (P2) is not actually due until 2011 so SPB is ahead of the game here. “We have also had JIS (Japanese Industrial Standard) certification since 2006 and are able to offer F*** and F****, mainly for Japanese customers,” he said.
The panels are offered in 100% rubberwood or mixed tropical hardwood. “It is all about giving the customer a choice,” said Mr Fitch. “You have to be focused on what the customer wants in order to survive.”
Perhaps partly because it is a Japanese-owned company and the Japanese know a lot about business efficiency systems, SPB has implemented an ERP (Enterprise Resource Planning) system on the management side, covering all aspects of the business from purchasing to sales and everything in between, with the data all processed on a central computer system.
“This ties in nicely with our ongoing internal programmes of LEAN manufacturing,” said Mr Fitch, referring to the business/software system for maximising optimisation of resources in a company.
“The only way to maintain our
competitiveness is to be super-efficient because we are not a big producer,”
concluded Mr Fitch.
“Our ambition is to remain a small, niche player, committed both to quality and to our customers.”

Acquired at the end of September 2008 from the Hong Leong Group, Hume Fibreboard Sdn Bhd joined the existing mills of the Evergreen Group in Malaysia, Thailand and Indonesia and became known as Evergreen Fibreboard (Nilai) Sdn Bhd.
Evergreen, headed by the dynamic J C Kuo, paid RM213m (US$59m) for the factory, which brings two MDF lines in Nilai (40km from Kuala Lumpur International Airport to the south of the capital city) to his growing family of mills.
The two production lines comprise a 10-daylight Siempelkamp hot press line, which went into production in 1992, and a Siempelkamp ContiRoll continuous press line which started up in 1996.
“The multi-daylight line was the second MDF line in Malaysia and is very reliable, with very little downtime and glue consumption lower than on the continuous press line,” said Mr Kuo. “The company had also been well run and financed by Hong Leong.”
Although the ContiRoll first started production in 1996, a major fire in late 2001 caused severe damage to the line and the replacement press re-started in 2003.
The multi-daylight line has an annual capacity of 90,000m3 from its 1.83x4.88m press, while the 8ftx23.6m ContiRoll can produce 160,000m3.
The wood supply for the Nilai mill is 50/50 rubberwood/acacia and mixed hardwoods from the locality and the mill is currently undergoing certification to FSC (Forest Stewardship Council)
standards for its wood supply.
All the production of the Malaysian and Thai mills of Evergreen Group have certification to CARB (California Air Resources Board) standard for formaldehyde emissions, inspected by PSI.
The Nilai site also has certification to ISO18000 (occupational safety & health), quality standard ISO9002 and environmental standard ISO14000. All Evergreen Group factories have ISO9002, except PT Hijau Lestari Jaya in Sumatra, and that was in the process of achieving certification last December.
In fact, talking of meeting standards, a rather special part of the former Hume Fibreboard operation which came with the MDF lines was its laboratory, extensively upgraded by the former owners in 2005. Hume always attached great importance to quality.
With all the appearance of a medical centre, the facility is equipped with a
laboratory press from Siempelkamp, designed to simulate the ContiRoll, and a mechanical fibre blender.
For measuring those all-important formaldehyde emissions, there is a perforator cabinet and a spectrophotometer. Dessicator tests are carried out in a
separate, air-conditioned, room.
Hume always supplied some of its
production to Japan and thus made good use of the laboratory in its product
development for that market, offering Super E0 panels.
A mixture of E1, E2 and E0 is produced on both lines at Nilai.
The resin is supplied from Evergreen’s own resin plant at Batu Pahat, further south on the peninsula.
Since the Nilai factory has three-stage forming on its production lines, it could in theory use pMDI resin in the core of the MDF.
“There is potential to increase capacity by adding another refiner and we could then, in theory, have a separate dosing system for pMDI,” agreed Mr Kuo.
“However, it is only in the long term that we may try to increase the capacity. For the moment we are looking at minor improvements; there is some room for improvement in costs here, but the plant runs well and makes a good product. With integration into the group, there could be some streamlining to cut costs – for instance, using our own resin supply has already saved quite a lot of money and we are carrying out our own maintenance rather than sub-contracting it as Hume used to do; that was a high cost before.
“There are other synergies too. For example this factory is similar in terms of spare/wear parts requirements to our Hat Yai [Thailand] factory, which also has Siempelkamp ContiRolls.”
In fact the group, with its several acquisitions and own start-ups totalling one particleboard and 10 MDF lines, now has machinery from most of the world’s major suppliers, somewhere.

Bringing it all together
The headquarters of the Evergreen Group is at the original Batu Pahat plant, where it all began for this rapidly growing company.
“All data from all the factories is collated in Batu Pahat and eventually we will centralise purchasing for all the plants there,” said Mr Kuo. “We have expanded the group a lot in recent years and we have a Hume culture, Takeuchi/Merbok culture and an Evergreen culture. We are selecting and keeping the best from each. We are a mix of all our plants in terms of people
and experience.”

Mieco is part of the Bandar Raya Developments Bhd Group of Companies. It started up its first particleboard (or chipboard) line in 1976 and claims that, in the process, it became the first panel maker in Malaysia to utilise rubberwood as its raw material.
The company today has two particleboard factories, located in Gebeng and Kechau Tui, Pahang and these have a combined capacity of approximately 900,000m3 a year. The most recent of these lines is the one in Kechau Tui, near Kuala Lipis.
Mieco’s headquarters is on the 30th floor of an office building in the centre of Kuala Lumpur and it was there that I went to interview managing director Dato’ Yong Seng Yeow (the word Dato’ is equivalent to the title ‘Sir’ in the UK).
Mieco’s first line was built in Semambu in 1976. However, it ceased production early in 2005 as its Dieffenbacher single-opening press was no longer economical, explained Dato’ Yong. The line is ‘mothballed’ and awaiting sale.
The second line, in Gebeng, has a Siempelkamp ContiRoll continuous press and was still running to full capacity at the time of our meeting in early December 2008. All the production of this line is subject to value-adding, with melamine faced chipboard (MFC), paper faced electron beam-cured panels, polymer-faced boards and direct post-formed panels for use as worktops, door elements and office automation system (OA) furniture. Of this production, 40% is for domestic markets and 60% is exported, to over 20 countries.
Mieco Livin Style is a range of DIY book shelves, CD towers and other items of furniture.
Mieco had a long-standing relationship with German particleboard maker Kunz and since Kunz’s takeover by another German panel manufacturer, Pfleiderer, the relationship has continued and Mieco is now selling Pfleiderer’s high pressure laminate, Duropal, as part of its range.
“We also carry out benchmarking on downtime, reject panels and so on and exchange this and technical information with Pfleiderer,” said Dato’ Yong. “We thus know where we stand in terms of efficiency compared with European producers and can see areas where we need to improve to be more efficient. We also benchmark costs to see where we can save money.”
The most recent plant at Kechau Tui (Lipis) went into production in 2005 with a brand new Dieffenbacher CPS continuous press line (WBPI Feb/March 2005). The press is 41.6m long and the foundations and all ancillary equipment were built to allow for extension to 60m – something which Mieco still plans to do when the market is right.
“The plant was doing well until August last year, then the market turned down and crude oil, and therefore resin, prices rose steeply. That was a dreadful time for us,” said Dato’ Yong. “We are currently running at about 65% of total capacity at Lipis; we have stopped Sunday working and are running shorter shifts whereas we used to run 24 hours, 362 days a year.”
That hasn’t changed the company’s intention to invest in improving efficiency at the mill and plans are well under way to replace the energy system at Lipis.
“We are currently using diesel fuel to heat the thermal oil and have been planning to put up an energy plant utilising waste from our factory and oil palm waste too. That project will go ahead and will take about 15 months to realise,” said the managing director. “We are talking to a number of potential suppliers worldwide at the moment. However, the Malaysian government is encouraging the use of oil palm waste to make biofuel for transport at a substitution rate of 10-15% and that will increase competition for raw material for our energy production.”
In terms of competition in the panel market, Dato’ Yong predicts there will be changes: “I believe there will be some consolidation in Thailand and Malaysia. In Malaysian MDF we have already seen it happening with Dongwha and Evergreen [taking over some mills]. There used to be six or seven companies in Malaysia but now there are basically two, plus Robin Resources.
“In particleboard, the smaller mills will find it difficult to compete. The biggest competition is from Thailand with Vanachai, Metro, Green River Panels, Panel Plus, Rayong – and to a lesser extent SPB.
“But the demand is still there for particleboard and it was not generally being affected by MDF until recently when MDF prices came down, but I think that is temporary.”
Mieco is considering going into MDF and other related panel manufacturing itself in the longer term to enable it to offer the full panel range from one source.
“Right now, though we are talking about survival,” said the managing director. “We have to pull through this difficult period, then we will be stronger. Then we can look at expansion. We will also consider building a glue plant, given our current capacity of around 900,000m3 on lines two and three combined.”
When the company goes ahead with its planned press extension at Lipis, the mill will have a capacity of 2,000m3/day rather than the current 1,500m3, making a resin plant even more desirable.
In fact line two in Gebeng, built in 1995, has a nameplate capacity of 620m3 a day but is now capable of 800m3, thanks to a little ‘tweaking’ by Mieco staff.
Looking to the future wood supply, Mieco is actively engaged in research & development (R&D), in cooperation with a Malaysian institution and an overseas partner, on replacing rubberwood and tropical hardwoods with plantation species with a shorter rotation.
“We are fortunate that in Mentakab in the state of Pahang – between our mill sites in Kuantan and Lipis – we have 10,000 acres given to us by the government for plantations and so we can either plant the results of our R&D, or acacia, or rubberwood,” said Dato’ Yong.
“The government will have to facilitate manufacturers who export,” he said. “It needs to get its act together to increase the amount of rubberwood plantations and it needs to help us bring down our energy costs. A couple of years ago rubber prices were very high and that meant the trees were not cut. The government has given some encouragement to replanting, with a RM200m (US$55m) grant, and that is a good sign.
“There are two programmes – for latex production and wood production – in which the government gives the planters a 3% ‘soft’ loan where they only pay interest after they have harvested the wood or the latex. This will help but the gestation period is very long.”
Whether markets are good or bad, panel producers have to meet all the latest standards and Mieco has been active in that area too.
“We have had CARB [California Air Resources Board] certification since last October [certified by PSI] and we have just gained JIS [Japanese Industrial Standard] certification,” said Dato’ Yong. “We already had JAS [Japanese Agricultural Standard] but JIS is at a higher level. We are producing F**** and F***, and Super E0 panels, using conventional urea resins with formaldehyde scavengers.”
The company is also in the process of getting its wood supply certified with chain of custody – certifying that it comes from a legal and sustainable source – and Dato’ Yong expected that certification before March this year.
Mieco also has ISO14001 environmental standard, 18001 occupational health and safety, 9001 quality assurance and Lloyds register quality certification.
The company is clearly ready for the upturn in the market when it comes and has many plans in place to take full advantage of any improvement and to capitalise on its strengths as a sizeable particleboard producer.

The Green River Wood & Lumber Manufacturing group has annual sales of US$450m emanating from one furniture factory in Taiwan, five in China, one in Malaysia and seven in Vietnam. It also started production at its only panel factory (so far) in Hat Yai, Thailand in September 2008, where it makes particleboard (see p36).
Green River started in business in
furniture making in Taiwan and moved into Malaysia in 1988 as its first
overseas venture.
The Malaysian furniture operation is located in Port Klang, in the state of Selangor on the west coast of peninsular Malaysia and not far from the capital city Kuala Lumpur.
Each furniture factory in the group operates as an independent unit and the Malaysian operation is the only one to concentrate solely on dining furniture. Other factories variously produce bedroom furniture and kitchen cabinets and hardwood flooring.
The furniture produced at Port Klang is not of the pile-it-high-and-sell-it-cheap low end variety but solid dining tables with quality veneered surfaces, and solid wood chairs, aimed principally at the mid to upper end of the North American furniture market, where 75-80% of production goes. The balance mainly goes to Russia.
Although Green River has just started up its own particleboard factory, the table tops in Port Klang are in fact made principally of MDF, employing two thicknesses of 18mm laminated together to make a 36mm nominal top. Around 10% or less of the panel product used in the factory is particleboard – it is more suited to the cabinet work carried out in the kitchen and bedroom furniture factories of the group, or sold in its local market to outside customers.
The panels in the base storage units of some tables, where there are wine racks, cupboards and/or drawers, are also MDF.
“We used to use E2 grade MDF but from mid-January 2009 we switched to 100% E1, P1 due to the CARB (California Air Resources Board) regulations in the US,” said Albert Hsueh, who is in charge of R&D marketing for the Port Klang company.
“We are currently thus meeting CARB phase 1 (P1) but in 2011 we will meet P2, which will need at least E0 panels.”
The CARB rules are quite stringent and testing of a piece of furniture for compliance can even mean ‘de-constructing’ that item and testing its individual components – such as the MDF without its factory-applied veneer layer. CARB’s arrival has been well publicised, but Mr Hsueh has still found that customers are not necessarily aware of the implications.
“Under CARB, we are considered to be a ‘fabricator’. Often, our customers in the US are unaware of the effect of the CARB regulations and we have to supply the information to them. In fact, one or two customers didn’t even realise the regulations existed – and one of them was actually in California!”
As it would be hard to differentiate raw boards which did comply with CARB P1 from those which didn’t, and separate stocks would have to be kept, Green River has moved totally to P1-compliant MDF.
“We are one of the first factories in Malaysia to be fully compliant,” said Mr Hsueh. “It was a big headache for us – especially as we had to dig out a lot of the required information on our own – but we are there now. The P2 level seems unreasonable at this time but we will have to comply of course.”
Some components of the furniture that is assembled and finished at Port Klang are made on the premises and some are shipped in from Taiwan and Vietnam, or from local sub-suppliers. Turned table pedestals for instance are made in a Green River-owned facility close to the main factory, while chair backs in the white (ie unstained/
unfinished) are bought in. Seat frames and stretchers are made on site.
The chairs are made of solid rubberwood and the seats are upholstered inhouse. The chairs and the veneered table tops and legs are stained and finished to match each other in cherry, oak or birch finish.
There are five ranges of dining furniture, known as Contemporary, Cottage, Transitional, Classic and Mission.

Handmade in Malaysia
Much of the work at Port Klang is done by hand and there are 800 workers of many Asian nationalities employed there.
The chair backs, frames and stretchers are dipped in tanks of stain and then hand wiped and hung on a moving overhead
conveyor to dry.
Until the end of 2008, seat bases were plywood but Green River was unable to find a CARB-compliant plywood manufacturer and has thus had to change over to solid wood panels. However,
plywood table aprons (deep edges) for circular tables are CARB-exempt because they are bentwood.
In the raw materials warehouse are packs of particleboard from Metro of Thailand, and of MDF from DongWha of Malaysia, all marked up as P1 compliant. We have to keep those labels for two years as part of our CARB compliance,” said Mr Hsueh.
The factory consumes around 900-1,000m3/month of MDF panels and 200m3 of particleboard.
Veneer is hand-laid onto the MDF table tops, which are then hand fed to a press, after which they are passed through Sheng Shing wide-belt sanders. They are then quality checked before being stained and spray finished.
Where circular table solid wood edges are to be embossed with a pattern, this is pressed into the wood in a special curved press with appropriate dies.
At the end of the line, and following visual inspection at each stage of the production process, the table and chair kits of parts are packed into cardboard boxes, with moulded polystyrene protection, for shipment to any one of 160 customers worldwide. Everything is made to order – the factory holds no stock of finished furniture. It does, however, have a two-storey showroom on site to show off its different sets of dining furniture to best effect.
Green River as a group has no intention of standing still with the production facilities that it has. “We are looking for investment opportunities in countries that are new for us and are always keeping our eyes open but in the current economic climate we are taking our time. We will wait and see what happens in 2009,” concluded Mr Hsueh.