Global Wood Panel Consumption will exceed 282 million m³ by 2010, according to a new report by Global Industry Analysts Inc (GIA). Announcing the new report 'Wood Panels: A Global Strategic Business Report', the San Jose, California company said the recent drop in new housing construction in the US had lowered prices for structural wood panels and other engineered wood products as supply exceeded demand. Meanwhile, despite rising energy costs and worldwide competition, the European wood panels market is expected to record growth in consumption and production.Europe is the largest regional market in terms of consumption, with an estimated share of 32.2% in 2007, while China represents the fastest growing market, said GIA. Global consumption of particleboard (including OSB) totalled an estimated 108 million m³, while plywood consumption is projected to exceed 79 million m3 by the end of 2009. MDF is the fastest-growing product segment with consumption poised to grow at a compounded annual rate of 9.46% over the period 2001-2010. Consumption of wood panels in Germany, Europe's single largest market, totalled an estimated 13.6 million m3 in 2006, while China's MDF consumption is projected to exceed 16 million m3 by 2009, according to the report.

Kastamonu Integrated Wood industry and Trade Company (Kastamonu Entegre), billed as Turkey's largest wood based panel producer, has started up a new MDF line - the company's third installation in Turkey - at Kastamonu City Industrial Zone.Designed to produce 1,200m ³/day, the new 360,000m³/year Siempelkamp line has lifted Kastamonu Entegre's total MDF capacity to 660,000m3/year, ranking the company second among Turkey's MDF producers.

CVC Asia Pacific Ltd (CVC) has completed the acquisition of Asia Dekor Holdings Ltd, a company listed on the Singapore Stock Exchange. Asia Dekor is a leading manufacturer and distributor of laminate flooring, MDF and particleboard in China. Based in Shenzhen, it currently has 16 million m² of laminate flooring production, 200,000m³ of MDF and 200,000m³ of particleboard production in Guangdong.

According to the Chinese Planning and Design Institute of the Forest Products Industry, production capacity increased by 6.7 million m³ (representing about 30% of total fibreboard production capacity in 2006) in 2007. With total announced production increases, China's MDF capacity is expected to exceed 30 million m³ in 2008 and 33 million m³ in 2009. In 2007, construction was started on 18 continuous flat presses and 20 continuous press lines, with most lines expected to come on stream in 2008.

Foreign and domestic manufacturers of composite wood products will soon face stricter standards on formaldehyde emissions under new measures by the California Air Resources Board (CARB).The new regulation applies to all raw panels or products - including cabinetry, flooring, doors and furniture - which must be third party certified and labelled to show compliance.

In mid-May, Louisiana-Pacific Corporation completed the initial phase of its purchase of a 75% stake in Masisa OSB Industria é Comercio SA, which operates OSB assets in Ponta Grossa, Brazil. The purchase is being made through LP Brasil Participacoes Ltda, a limited liability company and a subsidiary of Louisiana-Pacific South America SA, a wholly-owned subsidiary of LP. The OSB mill, which went into production in late 2001, has an annual production capacity of around 375 million ft². Final close of the deal was anticipated in the third quarter of 2008 following a transition period which will allow the two companies to co-operate in facilitating LP assuming full operating control of the OSB assets. "We are very pleased with this purchase," said Rick Olszewski, executive vice president of sales and LP's speciality products businesses, and president of LP South America. "Our due diligence process confirmed our confidence in the quality of these assets and their potential to serve a growing demand for affordable housing in Brazil and other parts of South America."  

The production of veneer, whether by slicing or peeling, subjects the wood to high stresses and distortions. Even though the knives of a lathe have low sharpness angles of about 20°, the wood is still deflected at a sharp angle at the knife tip (Figure 1). This causes the veneer to split at regular intervals on the knife side of the veneer. These splits are called tension or lathe checks (see Figure 2). Their presence changes the properties of the surface, particularly in terms of permeability. Consequently, the face without the tension checks is called the "tight side" and the face with the checks is the "loose side". In general, the thicker the veneer, the greater the chance of tension checks being formed. This is because the minimum radius of curvature for a thick veneer is larger than that for a thin veneer or in other words, thin veneer is more pliable than thick veneer. If the checking is very bad, then the veneer can break. To help minimise tension checks, the wood is kept saturated and often heated to ensure that it is as pliable as possible. A compression force applied just ahead of the knife tip with a nose bar can also reduce tension checking. When laying-up plywood, the veneers placed on the outer faces should be the orientated so that their tight faces are exposed. If this is not done, then there is a risk of excessive checking on the surface with time as the veneer moves with changing atmospheric conditions. Next time you see a plywood, especially one with thick veneers, examine the edges and you may see the tension checks described above.

Held in Beijing in even years, the WMF show for woodworking machinery and furniture manufacturing equipment, running concurrently with the furniture accessories, materials and wood products exhibition, is considered by many to be China's 'Ligna exhibition', having a similarly broad spread of exhibitors from all sectors of the industry. Other Chinese exhibitions tend to be more focused on particular sectors such as furniture production.   Its standing is reflected, say the organisers, Hong Kong based Adsale Exhibition Services, in the number and geographical range of origin of its international exhibitors and visitors. The organisers also made much of the official support given to this 12th edition of the exhibition by the European machinery makers' umbrella organisation Eumabois. And no wonder. Many readers will remember the farcical situation in 2004 - two WMF's ago - when Eumabois expressed its strong opposition to Adsales' stand-pricing policies by staging its own exhibition in Beijing in the week following the WM Fair, as it was then known. For 2008, the hatchet was evidently buried and Eumabois came out as an official supporter of WMF.   Also in 2004, the Shanghai exhibition WoodmacChina decided to go to annual frequency instead of biennial. That decision has also been reversed this year. Two years ago, the Chinese panel manufacturing market was being viewed with some caution by the machinery makers, who expected a sharp decline in the number of new projects for MDF and/or a switch in emphasis to particleboard. Neither scenario was fully realised, as we now know. In fact the major machinery makers have more orders (from China and elsewhere) than they can schedule into their production programmes and lead times are extended to an unprecedented degree for many manufacturers - not quite the problem they were all talking about two years ago. So the mood at the show was upbeat. Although the aisles generally appeared quiet for the first three days and most exhibitors reported a fairly slow time, they all said that the quality of the visitors was high with good discussions and a number of new projects still being talked about. Shanghai Wood Based Panel Machinery Co Ltd (SWPM) was able to report concrete progress on its long-awaited continuous press, with one having started production at parent company Kronospan's mill in Slovakia in October 2007. It is 45m long and 8ft wide with a designed capacity of 500,000m³/year of particleboard in 6-35mm thicknesses. Design speed is one metre per second. For 2008, the company has two more continuous presses on order, also for Kronospan's mills in eastern Europe. One is to be 52mx8ft, for particleboard production, and the other 38mx4ft, for MDF. "We are also discussing a press for the production of thin MDF with a Chinese customer. That press will be 23.8mx8ft," said director Mr Wang Jinxing. "The market for our multi-opening press lines was affected by the imported continuous lines in 2007 and we sold 23 lines. I do not think the market in 2008 in China will be as good as 2007 because panel prices are down and capacity is high," he said. "However, for the last two years, our exports of short-cycle presses have been very good, going to Russia, Ethiopia and Cyprus. We exported five lines in 2007." Italian machinery manufacturers were well represented at the show. Among them, Angelo Cremona reported sales in China, mainly of veneer slicers, with some peeling machines too. Saw maker Giben said that sales in the primary panel industry in China were going well, largely due to its patented, new, super-thin panel loading device. Also from Italy, but with a joint venture factory, Imeas Sander Manufacturing (Suzhou) Ltd making smaller sanders, Imeas offered its large panel sanders, made in Italy, which have had increasing success in the Chinese market in recent years. One of several German companies with factories in China, Wemhöner Surface Technologies, opened its facility in Changzhou in June 2007. Since then it has sold six machines in China, two to the US and two to Turkey. This maker of membrane, membrane-less and short-cycle presses is already planning a second building at the Changzhou site to make larger presses, which will add 33% more space and is to be built later this year. Siempelkamp was promoting its high-speed thin HDF lines with speeds up to 2m/sec, employing a compactor in front of the press for boards of less than 3mm. Sales manager for China Michael Bischof said Siempelkamp had sold two such lines to Yingang, headquartered in Hebei province, for delivery to Hubei and Sichuan. One is 8ftx28.8m and the other is 8ftx33.8m. Both are due for start-up in 2009. In January, Siempelkamp sold an ultra-thin board ContiRoll press of 8ftx28.8m to go to Hupian in Anhui province. Last November, the company sold its first 4ft-wide ContiRoll, to Lishui in Jiangshan City. This press is 33.8m long and can produce 2 to 40mm at up to 1,500mm/sec, said Mr Bischof. Other orders in 2007 included two thin board lines to Sichuan Guodong in Chengdu and an MDF line to Dare Wood for delivery to Suifenhe, Heilongjiang province, near the Russian border. Weihua in Liaoning province also bought an 8ftx23.8m ContiRoll for delivery to Laojiang City. "We have a total of 13 ContiRoll lines running in China to date," said Mr Bischof at the exhibition in March. German saw maker Anthon has 23 lines installed and running in China and four more to build this year. "Thin board is very popular in China and we have developed a system to feed thin board at up to 20 boards per minute in 5.7 to 6.5m lengths. The first two lines are already running in China," said Hans-Joachim Ferchland, who has lived in China for five years. During the twelve months from January to December 2007, Dieffenbacher said it had concluded 10 new contracts for THDF continuous press plants. During the same period, Dieffenbacher started up four greenfield HDF/THDF plants in China. The company's total tally of existing continuous lines in China is now 23, with down-payment received for a thin HDF line for PTP Leshan with a 23m press, an MDF line for Weihua Fengkei (38m) and thin HDF for Guodong Changhong (26m). All are scheduled for start-up during the 3rd/4th quarter of 2009. Gordon Wu, a sales engineer with GreCon, reported that the company's new CT frame, with its ease of calibration and maintenance, was selling well in China. Spark detection/extinguishing systems are also arousing increasing interest for installation on the imported continuous lines, while GreCon's quality control equipment, both on-the-line and in the laboratory, is a common site in Chinese mills. Newly slimmed-down Metso Panelboard exhibited at the WMF this year, with its refiners, refiner segments and wood handling systems. "Our segments can save energy," said sales engineer Jansen Shang, who also said the company already has two Chinese orders for the EVO Series refiner launched at Ligna last year, both for Dare Group. Huntsman Polyurethanes has a 'world-scale' MDI plant in Shanghai and is keen to extend its product offering into the panel industry. It already supplies Chenming company for its laminate flooring production, while Zhenghe uses the resin in HDF for furniture production. Huntsman also supplies cereal straw-based board manufacturers. Argos of Norway reported selling a surface inspection system for raw MDF panels to a Chinese producer in 2007 - and increasing interest in this equipment. Firefly has a service centre in Guangzhou, opened last December for its fire prevention products. It has 12 installations in the Chinese panel industry and many in the tobacco industry. Jamshid Lodhi reported a lot of enquiries and potential projects for his company in China. Energy generation equipment supplier GTS Energy has eight plants in operation in China, with another one under construction and two under contract, said deputy general manager in the Shanghai office, Reinhold Luthringshauser. Sandvik Hindrichs-Auffermann reported strong business for Sandvik's continuous steel belt business. "The market has increased two- or three-fold since last year," said Ms Ariel Huang. American company M-E-C has supplied its drying systems to six projects - one particleboard and the rest MDF lines. The company has an office in Beijing and said it had several prospective contracts. Steinemann has supplied about 100 of its panel sanding lines in China and has had a factory in Shanghai since end-2005 making the smaller 4ft-wide machines. Since last December the company has had sanding belt conversion facilities in Shanghai too, which sends belts to Europe to go out with new machines. Electronic Wood Systems (EWS) of Germany has supplied a combined thickness/blow detection system, laboratory density analyser, infra-red moisture analysers and a weight-per-unit-area gauge to Chinese MDF maker Weihua and is to supply a similar range to Leihua. Other projects were in the pipeline at the time of WMF. Vyncke, the Belgian supplier of energy generation systems, has more than 10 plants in China, said sales manager Johan Callens, who also said he had met new potential customers at the show. Vyncke's factory in Suzhou went into production in March 2007 making combination grates. Refiner maker Andritz had 83 references in China at the time of the show, having supplied refiners to SWPM, Metso, Siempelkamp, Dieffenbacher and Sufoma lines across the country. It has a factory in Foshan City, Guangdong province. Franz-Josef Wilbois of size reduction machinery maker Pallmann said the German company supplied its first refiner to China in 1992 and to date has delivered 32 units, 13 of which have been for continuous press lines and seven of these contracts have included debarker, chipper and chip storage. Twelve were supplied with a chip washing system. The company has had an office in Beijing since 2003, employing five people. Sia Abrasives of Switzerland has the subsidiary Guangzhou Sia Abrasives Co Ltd and has been on the China market for almost 20 years and in the panel business for the past 15. The Guangzhou factory carries out conversion for all types of belts. Berndorf Band of Austria claims to have about 50% of the endless stainless steel press belt market in China and reported 10 projects starting this year, with more to come. Bernorf has a service organization based in Beijing. Size reduction machinery maker Maier of Germany's latest orders include hammer mills and a drum chipper to Foshan in 2008. Last year the company sold a screen to the Sinhua/Krono mill in Beijing, mills for surface layer to Hong Kong Hunwai and complete flaking department and knife grinding machine to Furen in Fuzhou. The recycling industry is becoming increasingly interesting in China, according to Maier's ceo Robert Loth. Speaking to the exhibitors for the panel industry at the show, WMF 2008 would seem to have been a success, though many felt that running it over a weekend was probably a mistake. Visitor numbers appeared low, but it would seem that it was the more junior members of customers' staff who did not attend this time. The decision makers apparently did and I heard nobody say they would not be exhibiting again in two years' time.

The economic crisis in North America obviously continues to have most of the world in a state of considerable nervousness as other countries ponder the likely knock-on effects for their economies.
However, in this issue's Focus on North America, we begin with two articles looking at the US economic situation and the effects it may have going forward: the first article considers the implications for the US housing economy in general and the effect on the panel industry (p25), while the second looks at the situation from a panel manufacturer's perspective (p28). I think you will find them less depressing than you may imagine.

Stimson Lumber Company has been in business a long time, starting in the state of Michigan in 1850. The founder, T D Stimson, moved west, buying timber and establishing several mills throughout the region. Ownership remained within the family: Harold Miller, his grand-daughter's husband, headed the company when it made its move to the present location, a little valley bordering the Coast Range, one of the country's most productive timber areas. Earlier, the company bought timberlands there and half its present timber supply still comes from perpetually managed company lands.

The Association was organised in Portland, Oregon on May 16, 1933 as the Douglas Fir Plywood Association (DFPA) and held its first meeting a month later in Tacoma, Washington, where it has been headquartered ever since. Getting going wasn't easy, however. "I recall 1933, when the Douglas Fir Plywood Association took its first halting steps, as a daunting time for all but the most incurable optimists," remembered plywood industry pioneer and one-time DFPA President Norman Cruver when the Association celebrated its 50th anniversary in 1983. "In an era of global unemployment, hunger and bankrupt businesses, plywood manufacturers had to be optimistic to invest in something for the future, but which could not immediately influence markets still in the grip of depression," Cruver recalled. A major potential boost to the fortunes of the Association's members occurred in 1934 when Dr James Nevin, a chemist at Harbor Plywood Corporation in Aberdeen, Washington, developed the first fully waterproof adhesive. That promised a much improved product suitable for more demanding applications, but the industry still faced major obstacles. Product quality and grading systems varied widely from mill to mill, individual companies lacked the technical resources to research and develop new uses and new customers had to be made aware of the product and convinced of its benefits - all in the midst of the Great Depression. The struggling organisation limped along until 1937, when a handful of industry leaders sequestered themselves on the Washington coast to hammer out a new and more effective charter. Mr Cruver, who was there as a member of the DFPA Management Committee, remembered: "For almost a week in early November 1937 we debated the objectives and structure of an organisation that needed a clearer mandate if it was to succeed". The new charter fashioned at that meeting made market development and the advancement of industry-wide product quality standards top priorities - APA mandates that continue to this day. Before long, technical services, including, and especially, engineering expertise, were added to what became and remains the Association's mission - To work in partnership with members to develop and maintain markets through excellence in APA trade-marked product promotion, quality assurance and technical and educational support. With the coming of World War II and the end of the Depression, the plywood industry began to grow dramatically. The war was a proving ground for the product. Plywood barracks went up around the country, the navy patrolled the Pacific in plywood PT boats, the air force flew reconnaissance missions in plywood gliders and the army crossed the Rhine River in plywood assault vessels. When the war ended, the industry geared up to meet the demand for construction grade plywood created by the booming post-war economy. The industry that in 1934 boasted 17 mills and produced 400 million ft² (3'8in basis) of plywood had by 1954 grown to 101 mills producing almost four billion ft². Ten years later, with the development of new technology facilitating the manufacture of southern pine plywood, the first of numerous southern pine plywood mills opened in Fordyce, Arkansas. Before long, the South was as important a plywood-producing region as the Pacific Northwest. Having outgrown its name, the Douglas Fir Plywood Association became American Plywood Association (APA) in 1964 and then in 1969, to keep pace with its members' growing need for technical support, APA dedicated a new 37,000ft² Tacoma research centre, still one of the most sophisticated applied research laboratories in the world. Demand for plywood continued to grow as the list of uses continued to expand: sub-flooring, wall sheathing, roof sheathing, exterior siding, soffits, stair treads and risers, concrete forming, upholstered furniture frames, crates, bins, boxes, shipping containers, truck trailer linings, pallets, cabinets, boats, recreational vehicles, signage, highway noise barriers, shelving, agricultural buildings, do-it-yourself home projects, and on and on. Another milestone occurred in the late 1970s when the Association promulgated new performance standards which opened the marketplace door to an innovative new type of structural wood panel - oriented strand board, or OSB. Made of wood strands rather than veneer, the new product employed the same principle of cross-lamination as did plywood, thereby providing the performance benefits of orienting the wood grain in alternating layers. These 'performance-rated panels', whether plywood or OSB, are designed and manufactured to meet the demanding performance requirements of specific end-use applications, such as sub-flooring, wall and roof sheathing and exterior siding. The idea of 'reconstituting' wood fibre to improve on wood's inherent structural properties, whether as veneer for plywood or as strands for OSB, has led in recent years to a technological revolution and the acceptance and use of whole new categories of engineered wood products, such as glued laminated (glulam) timber, wood I-joists, laminated veneer lumber (LVL), oriented strand lumber (OSL) and so on. With its growing OSB constituency, and then also with the addition to its membership of these other engineered wood product manufacturers, in both the US and Canada, the American Plywood Association changed its name again in 1994 to APA-The Engineered Wood Association. The 'APA' was retained as part of the name because of its widespread reputation for quality within the design, construction and regulatory communities. Today, APA, as the organisation is still commonly called, represents approximately 160 softwood plywood, OSB, glulam, wood I-joist, structural composite lumber and other structural engineered wood product mills in 22 US states and seven provinces of Canada. Its services and activities are equally diverse. Among those are: New product qualification; quality auditing and testing; standards development and maintenance; building code and regulatory body liaison; development of end-use recommendations; user and specifier field support; electronic and printed product and application information; market research; demand and production forecasting; product and systems application research and testing; marketplace education and training; product promotion; and industry communication.   "It's a tough year to be celebrating an anniversary," notes APA President Dennis Hardman. "The housing market is the worst its been for a quarter century and the industry is facing difficult times. On the other hand, our 75 years as an organisation is powerful testimony to this industry's ability to maintain solidarity and to come back strong from adverse market conditions. "We've done that time and time again and that's certainly something to celebrate."

Roseburg Forest Products, one of the US' largest family-owned forest industry companies, is located in Dillard, a small southern Oregon town of perhaps 5,000. Together with the headquarters, Dillard houses Roseburg's huge particleboard plant, along with the company's large sawmill, two big plywood mills - and others. Probably the most impressive feature of the Dillard plywood operation is plant #1's huge Raute six-deck, 23-section jet dryer which dries veneer for both Dillard mills. The new dryer can handle 21,000ft², 3'8in basis, of veneer hourly. It replaced two much less productive dryers. Rick Ghramm, who manages both plywood plants at Dillard, commented, "That's been an awesome dryer for us".An RCO was installed to handle emissions.

Jiangsu Changshu Dong Fang Corporation Ltd, a government owned company, built its first MDF line in 1995. Located in Changshu City, Jiangsu province, that 15,000m³ a year single-opening line was purchased from Shanghai Wood Based Panel Machinery Co Ltd (SWPM) and is still in operation today. In 1999, the company built its second MDF line, from the same machinery supplier, but with a multi-opening press and annual capacity of 60,000m3. The third MDF line, built in 2000, had another SWPM multi-opening press, with a slightly larger annual capacity of 80,000m³, and was the first of a series of annual additions to the company's capacity. It was built in Hongze, Jiangsu. 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."

Murphy lost its plywood plant in that fire, but gained not only a brand new engineered wood products mill (see p40), but also a long-established hardwood plywood operation at Springfield. The company's purchase of Georgia-Pacific's hardwood plywood mill there, owned by GP since 1967, brings new opportunities to Murphy in a specialised output, along with a well-experienced crew to operate it; about 30 workers and managers from the Sutherlin mill came to work in the hardwood plywood mill after the fire. The mill has 215 full time employees and many stayed on after Murphy's purchase. The mill has managed to maintain a two-week market file, despite current US market and economic problems. The company moved its headquarters to Springfield, Oregon, which means a much-reduced driving schedule for Mr Murphy, who made the hour's drive from his Eugene home to the Sutherlin headquarters for many years. Kris York is mill manager. The hardwood mill peels no veneer, but both green and dry softwood veneer - which make up 95% of the hardwood plywood - come from Murphy's Elma, Washington and White City, Oregon veneer plants. A Coe five-line, 17-section, jet dryer and a four-line, 21 section, dryer dry the incoming green veneer. Both have automatic feeders. A novel project mingled the two dryers' output into a single line. Automatic Raute and Mecano grading works this line, video-scanning knots, knot holes and surface roughness - an important consideration for hardwood plywood.A Raute Patchman automatic veneer patch line follows, upgrading the softwood veneer which underlies faces and backs. Mr Murphy said one of the biggest assets is this Patchman for the solid core, which guarantees good material under the skins. A six-station veneer grading room separates grades by customers' specific grading requirements. The process begins with blanks, or 'platforms', calibrated to specific thicknesses, which are the first pressing step. These go back to lay-up for face application and are then pressed again. The mill also has a conventional one-lay-up line. It also has two 4ft and two 8ft Globe spreaders. Two Columbia 30-opening 4x8ft presses have SparTek automatic chargers and shop-built automatic off-bearers, followed by pie racks. Skinner and cut-off saws follow. A four-head Timesaver top-only sander handles thin board. Another six-head Timesaver has three top and three bottom heads. Two patch lines and an in-line turner - all shop-built - follow. An extensive finishing line, with most coating equipment by Black Brothers, can emboss, sand, stain, top coat, groove and print; the components can be rolled in and out of the line, depending on the desired treatment. Two new automatic banding machines handle the bundles. The mill loads about a dozen truck-loads daily, with an additional two or three rail cars. Much of the output is precision manufacturing, rather than mass production, and the company goal is to develop long-term relationships. Panelling is available with overlaid wood veneer or paper overlays. Another product is MDO (medium density overlay) overlaid plywood for signs and concrete forming. This product has a patch-free hardwood veneer under the MDO overlay face for a smooth, durable and consistent matte concrete finish. Murphy also applies a chemically-reactive release agent, thus minimising concrete build-up. A calibrated core/platform for cabinet and furniture manufacturers has a precision inner ply with +/-0.005in variation across the sheet. The plant has about 250,000ft² of floor space and about 100 acres of land. Both the dryers and the presses are heated by burning dried wood waste in a two-line Energex system. The dryers are fed hot air from one and the other provides heat for an Abco boiler generating steam for the hot presses. Excess hot air is piped to the finishing line for curing, while UV light cures UV material.

That fire resulted in big changes for Murphy, a company that dates back to 1909. Drawing on that background of continuous improvement, president John Murphy not only decided to buy a Georgia-Pacific hardwood plywood operation to the north in Eugene, Oregon, but he chose not to rebuild the destroyed plywood plant his firm bought in 1985. In its stead, he determined to erect a modern US$60m engineered wood products operation - Murphy Engineered Wood Products - and it provides much better veneer utilisation than the old plywood plant. Market niches played a big part in both decisions. Particularly in today's weak market, a replacement under-layment mill was not a viable solution, while EWP could generate considerably more income from the raw material. The new mill is gradually ramping-up production, and is now running at about 60%, according to Mr Murphy. His design calls for 4.5 million ft³ annually, or about 400,000ft³ monthly. It is operating two shifts with 60 employees. A third shift will add 25 more. It was all an inhouse project, said plant manager Greg Gassner, a 20-year Murphy veteran. The mill was planned entirely within the company, which was also general contractor on the job. Such work as concrete, earth and electricals were sub-contracted, mostly to local firms. The mill is an important asset for the small town of Sutherlin, which has a population about 7,300. Murphy's project started in November 2006. "The wettest November since…", Mr Gassner declared. "It seems like forever, when you're up to here in mud." Oregon winters can be wet. The new building housing production equipment covers 215,000ft². Fire spared the shipping warehouse and maintenance shop. Raute supplied the entire production line - its newest - and outsourced a few machines. Mr Murphy is most pleased with the installation. Mr Gassner said LVL is not designed for aesthetics, it's "a structurally designed product built for structural strengths, for such uses as beams, headers, flange stock and I-joists". The new mill has no peeling line. The veneer supply is all shipped in, mainly from Murphy's own plants. That veneer goes to a Raute six-deck, three-zone jet dryer by way of an automatic feeder and then goes out through automatic off-bearing and through the Metriguard and a Mecano VDA camera vision automatic grader with scanners and light bars. These units determine strength and grade. Next is a Raute 12-bin automatic sorter/stacker line. Suitable veneer for LVL use is separated from the other grades, which are packaged and warehoused for sale. Regular customers buy veneer every week. The lay-up line employs phenolic glue, which Murphy mixes with Hexion supplies as it feels this gives better control. The glue is spread with a curtain coater. The veneer goes to a flying saw, then to a Raute pre-press from where the billets proceed to the Raute 90ft, four-opening hot press. Mr Gassner says experiments continue on pressure, temperatures and cycle times. "We can run some fairly exotic press cycles. We continue to explore pressure settings and we can run different temperatures at different stages. It isn't like the old presses," he recalls. Billets are pressed in 11'2in, 13'4in, and 31'2in thicknesses and in lengths from 32 to 66ft. From the Raute outfeed, the billets individually cycle through an EWS blow detector and transfer individually via a vacuum crane to a transfer chain. A 13-ton overhead crane loads them for transfer to a Paul billet saw where arbors are set up for rip width and edges are eased. The product is stamped, goes through the sealing line, where top, bottom and all four edges are sealed, and then to the stackers where bundles are accumulated for the automatic packager. Here they are bar code tagged, and then fork lifted outside to the shipping area. Some customers have changed over from rail to truck shipment which means they carry less inventory. A rail spur runs beside the plant. Mr Murphy described the wood supply for the new EWP mill. "We have veneer plants with dryers at White City, Oregon and Selma, Washington. We bought the Selma mill from Weyerhaeuser last August in a strategic move for Sutherlin. We wanted to get into a wood basket with Douglas fir with the strength characteristics of our Sutherlin plant," he said. "Washington Department of Natural Resources, has a lot of state land around that mill. We're not an exporter, so we are able to use that material in the veneer plant. Maybe 60% of our wood for Sutherlin comes from Elma. We get 30% from White City and we buy some on the outside." Describing the new mill, Mr Murphy commented: "We haul some veneer with our own trucks. We take 70 truckloads a week and supply 80 to 90% of it ourselves. We're using all Douglas fir now, from 1'8in through 1'6in".

Dare Global is a diverse industrial company producing metal foil for cigarette packets, bright metal car trim and computer products. And wood based panels. The group decided to enter the panel business in 2002 with its Dare Wood division and has followed a path of unrelenting expansion ever since to become one of the biggest suppliers of panels in China - and the world.

It is no secret that the US forest industry, chilled by a housing slump, is far from booming at present. Consequently staff in machine manufacturers served by the industry must use some imagination to keep their businesses on the move. One such is Mike Tart, sales manager of Globe Machine Manufacturing, which has been a fixture on Tacoma, Washington's waterfront since 1917. Mr Tart puts it succinctly when he says he will be travelling to more places requiring a passport. With a cool US market, his sights are set, like many others, across the Atlantic and Pacific oceans, as well as South America.

Since its foundation in 1985 Schattdecor has shown dynamic growth, making it arguably the market leader in printed decor paper. With production plants in Germany, Poland, Italy, Russia, China and Brazil and with a further two new plants scheduled for start-up in the first half of 2009 in the US and Turkey, the group supplies printed decor paper to the timber products industry where it is mainly used for the surface enhancement of kitchen furniture and laminate flooring. Strongly focused on modern design, Schattdecor employs a team of decor paper specialists in Thansau, Germany to translate the latest interior design trends into products which meet market demand.

Mr Shotbolt is president and ceo of Flakeboard Company Ltd, Markham, Ontario, Canada, a very large panel producer, and he presented the keynote speech at the International Wood Composite Symposium in Seattle in April (see p36 for full report). "We ride the cycle. We need to be prepared for it," Mr Shotbolt advised his audience. "It's the equivalent of musical chairs. When housing started to come down, the music crashed." He said methanol and urea price spikes last September added another US$5m in annual costs to a typical mill. Urea alone showed a 60 to 80% increase. He said wet process hardboard is fighting its way back, aided by the fact that its resin costs are lower than MDF, while particleboard is shedding capacity when need for it is growing. Looking to the future he predicted that forest products will not continue to trade globally, saying: "This product doesn't ship well". This would indicate more local manufacturing. "But energy is the long term problem for the industry," he declared. Mr Shotbolt said Flakeboard believes there is considerable waste in the supply chain and far too little research and development to address the lagging competitive stance in North America vis-à-vis international panel producers. He said the focus needs to shift to higher-value products and to products engineered to both reduce costs and meet specific end-uses. The following events have created unprecedented conditions: * Weak US housing and high foreclosure rates reduce demand for composite panel products * Tight lending markets make it more difficult to qualify for mortgages * Wood costs are increasing as sawmills curtail production * Energy costs are increasing, with oil at record levels * Lower house prices impact consumer spending * Imports from China, South America and Europe take growing market share of composite panel downstream markets. He added that environmental regulations will add US$200m to capital expenditure. Mr Shotbolt recalled, "After the 'tech wreck' and 9/11, the US led world interest rates to the lowest levels on record in an effort to protect the economy, but many 'cautious' investors still wanted fixed-income investments. "US housing became the prime target area to attain higher interest rates from high-credit-risk borrowers. Lenders expected house values to continue to increase and offered low introductory 'teaser' rates to sub-prime borrowers. "House values are now in decline and sub-prime mortgage foreclosures are accelerating as those short-life 'teaser' loans come up for renewal and are reset to much higher levels than the introductory rates." Mr Shotbolt said estimates are that banks will take over US$500bn in write-down losses - world credit markets will seize up and interest rate spreads will widen as banks re-price risks. Housing forecasts continue to be weak and will remain so this year and beyond. He said the issue now is the duration of the slump, not the depth, as we are close to the bottom in housing starts. Meanwhile, unsold new home inventory sits at 8 to 10 months and, while price reductions (9%) have started, sufficient inventory has not moved and further price drops, perhaps by 20%, are necessary to spur higher sales, he suggested. Lower home values have impacted consumer spending and may push the US into recession, said Mr Shotbolt, adding that particleboard and MDF demand lags housing starts by six months. There are associated effects for composite panels: Mr Shotbolt said low housing sales mean less demand for lumber so sawmills are curtailing production, dramatically reducing the quantity of residual sawdust and shavings. Competition for residuals is intensifying for uses in 'clean' bioenergy and animal bedding, while the pulp mills have contracted the whole-tree wood chippers because pulp remains in strong demand. Resin costs are another important negative factor for the industry. The contract price hit US$2.86/gallon from US$0.96 last summer. Capacity was constrained by natural gas shortages in Chile, forcing Methanex to shut three methanol plants. However, methanol prices dropped to US$1.90 for April contracts. Mr Shotbolt said the drop in housing will be deeper and longer than originally forecast and that weak demand and high costs have depressed margins. In particleboard, he said the Sonae Tafisa start-up in Lac Megantic, Canada, will set the tone for the balance of 2008, while new capacity will impact MDF markets further in the south and east. Also, hardboard is now competitive with thin MDF as resin costs spike. With the housing market downturn and MACT (Maximum Achievable Control Technology) - related mill closures, there will be capacity curtailment, he said. Five North American particleboard mills have closed since last November - 7% of the industry's capacity - and the industry is starting to balance production to meet the lower demand. Two North American MDF mills have closed since November.MDF consumption in North America still exceeds shipments from North American mills, presenting significant opportunity for those mills to capture markets currently held by imports. Furniture imports remain high as furniture from solid wood, plywood and composite panels continues to flood in, mainly from China. Thus more North American furniture companies have closed, gone bankrupt, or shifted to Chinese imports, while component parts such as cabinet doors are also being produced offshore. Meanwhile, the weak US currency is creating a non-tariff barrier to imports. Working towards stability, he said that rebalancing of supply and demand is under way. Mill curtailments from wood fibre shortages and mill closures from MACT-related spending will determine market strength over the next 18 months, said the speaker, while reduced imports from Europe and South America, due to currency and cost factors, bring new opportunities to domestic supplies. He said Flakeboard is leveraging its strengths and growing its business. It has advantages in both scale and modern mills, as well as an advantageous fibre supply. The company's multiple locations allow for regional supply to a local customer base and it has vertical integration into decorative products and high-value speciality product offerings which can absorb freight costs. Technological breakthroughs in resin application methods offer cost savings and/or use of a wider range of resin options, concluded Mr Shotbolt.

The privately-owned Chengdu Shengda company was founded 11 years ago as a laminate flooring producer, becoming the first company to manufacture that product in China. Competitor Power Dekor was already distributing laminate flooring in the country, but only imported the laminated board and then machined it in China. In the early days, Chengdu Shengda imported high density fibreboard (HDF) and laminated and machined it in its own works, but later purchased the board in China as better quality material became available from domestic panel producers. In 2007, Shengda produced 10 million m² of laminate flooring - second only to Power Dekor - from its two Chinese factories. One is in Qinbaijiang and the second is in Wenjiang, both within greater Chengdu City. Power Dekor was in fact bought by investment group CVC Asia Pacific in March this year, adding it to MDF maker PTP which CVC already bought in September 2006. It seems likely that CVC will merge the significant laminate flooring interests of its two subsidiaries. But Shengda is not only involved in laminate flooring. In Shanghai it has a factory established four or five years ago producing solid wood and bamboo flooring and was the first to make the latter product. Here it also produces multi-layer wood flooring and was the second company in China to enter into that business. Shengda's fourth factory is in Yibin, also in Sichuan, producing bamboo plywood panel as raw material for the Shanghai flooring factory. "We are the only company in China producing all kinds of flooring," said Sun Han, general manager of the new fibreboard factory. "Seventy percent of our laminate flooring market is in China and 30% is exported to more than 70 countries." To help to promote its 'Shengda' brand laminate flooring, the company employs the services of world champion hurdler Liu Xiang in its advertising campaigns. It is not surprising that Shengda decided to make its own HDF to supply the base board for that laminate flooring business and the company formed a subsidiary, Sichuan Shengda Man Made Fibreboard Co Ltd and placed a contract with Dieffenbacher in 2006, making a down payment in November of that year. The group considered all three suppliers of continuous press lines at that time: Siempelkamp, Dieffenbacher and Metso Panelboard, before deciding on Dieffenbacher in a close-run finish with Siempelkamp, apparently. The potential advantages of Metso's cooling zone were considered, but the company decided it could not justify the additional cost. After-sales service was another important consideration, said Mr Sun. Machinery installation began on August 4, 2007 and the first board was produced on December 27. "I am told this was the quickest start-up in China," said Mr Sun, who has considerable experience in the panel industry, having previously worked for the Kronospan panel factory in Beijing (Beijing Sinhua). "Our contract [with Dieffenbacher] was very special," he continued. "We only placed the order for equipment from the sifter to the saw after the press with them. The chippers were sourced locally in China and the 48in refiner came from Andritz of Austria." The CPS continuous press is 18.22mx8ft. "The maximum thickness we produce is 12mm but 80-90% of our production is 3-5mm HDF, with 3mm generally having a density of around 870kg/m3 but this depends on customer demand - we do not only supply board for use in laminate flooring. We supply to our own factory and to outside companies, depending where we can get the better price." The wood supply comes from a maximum radius of 300km and comprises small diameter roundwood - logs and branches. "We have our own forestry company, which we founded about five years ago, and we already have about 100,000mu (6,700ha) on a mountain - in fact we own the mountain!" said Mr Sun proudly. "Our boss, Mr Jiang Changzhen, used to work in the forestry department of Sichuan province as deputy director and we have a company strategy with wood at the centre: one centre, different directions. This currently means MDF, HDF and laminate flooring, but we are also planning a door and window company." Shengda has 1,000 shops around the country selling its branded flooring products. "This year the company will go to the stock market and we have already sent the documentation to the government for this," said Mr Sun. "We expect to launch our shares in July this year, on the Shenzhen market. "Then we will invest in another three MDF/HDF lines as three subsidiary companies. At least two of those lines will be continuous. We will also have a second division in each of these companies to handle the forestry business - planting trees and selling the larger diameter wood to the general market. However, the primary purpose of the forestry activity will be to supply our own lines." At present, the company is still concentrating on laminate flooring as its value-adding activity for the immediate future but is considering direct printing at a later date, although Mr Sun said that the market is not yet that big in China. "Laminate flooring consumption has shown very fast growth but direct print is slow at present. Of course it depends on qualities such as abrasion resistance and design."  As far as the MDF/HDF market in Sichuan province is concerned, Mr Sun has no concerns: "Consumption in this province alone is two million m³/year and we, Sichuan Guodong and PTP Leshan only account for a total of 600,000m³, plus a few small local lines. So, there is plenty of room in the market"

Picking up reports on forest products markets in North America has become dangerous to your health! However, claims about how bad the markets are, and seemingly will be for months/years to come, are often overblown rhetoric. Recent examples include comments that the current housing slump is the worst in over a century. Evidently the claimant has not heard of the Great Depression; it would be hard to find a housing market weaker than that of the 1930s. Too many analysts are simply too young to remember past cycles or too near-sighted in their outlook; they often have little or no perspective. Others are simply perpetual 'bears', wallowing exultantly in doom and gloom. This is not to say that the condition of forest products markets in the US is not critical. The sub-prime mortgage crisis has triggered a landslide of defaults and foreclosures and these will get worse before they get better (starting after mid-2008). Greedy lenders over-played their hand and are now paying for their excesses, but the fall-out for the broader construction industry, the people who work in it, and its suppliers, has made them unfortunate victims of these excesses.This market correction is particularly nasty (comparable to that of 1980-82), but housing starts will not drop to zero, and markets will recover as they always have done (Fig 1).   Housing markets the key Most readers are familiar with the negatives facing the US housing market; high inventories of unsold new and existing homes, falling prices, tighter lending requirements, a US economy in or close to recession, higher inflation resulting from oil at over US$100/barrel and surging food prices. These factors will combine to make US recovery slow and hesitant, at least in its early stages. However, there are positive factors supporting housing. First, the underlying demand remains strong and growing (unlike the early 1990s when the demographic underpinnings for housing were still weakening). US housing demand through at least the middle of the next decade will average 1.90 million units per year or higher. In contrast, total housing production in 2007 fell to 1.44 million units (single family, multi-family and mobile homes) and will flirt with the one million mark in 2008. Consequently, the excess production recorded in 2004-5, of approximately 500,000 units (2003 and 2006 housing production were each close to underlying demand), was largely offset by the 2007 shortfall of around 450,000 units. In 2008, housing production will be 750,000 to 900,000 units below underlying demand, and a shortfall of at least 250,000 units can be expected in 2009, even as housing markets recover. On the other hand, if US housing remains weaker than expected in 2009, then this shortfall will be even greater, resulting in even higher probability of a strong rebound subsequently. The resulting cumulative production shortfall of over a million housing units constitutes pent-up demand which will positively impact housing markets - and wood panels demand - after 2009. Housing production will therefore again exceed the two million mark (most probably in 2010-2011) as contractors struggle to meet underlying demand. The benefits of such a recovery for North American wood products demand are obvious. Critics will argue that this housing bust is different. That is true; all cycles have their unique characteristics, but the foundations for a turnaround are already being laid. Mortgage rates are not high; qualified buyers can secure a 6%, 30-year fixed-rate mortgage, while adjustable rate mortgages are available at still lower rates. By historical standards, these rates are not a barrier to market participation. Falling home prices will be a boost for demand as buyers take advantage of a 'buyer's market'. The aggressive cutting of interest rates by the Federal Reserve and the fiscal boost being provided by the Federal government will haul the US economy out of recession after mid-year and overall housing activity will consequently be in recovery before the year's end. If oil prices tumble from their early 2008 record highs before the year-end (highly likely given the level of speculative activity in the oil markets), then the US recovery will be boosted as inflationary pressures abate and consumer confidence rapidly recovers.   North American panel markets For many market participants outside the region, the North American obsession with housing may be hard to comprehend. However, unlike Europe, Asia and Latin America, where the primary markets for wood panels are more evenly divided between all end-use markets, in the US new residential construction and repair, remodelling and additions together often constitute more than 80% of total domestic market demand for products such as OSB or wood I-joists. Wood panels are either used directly in construction (in the typical wood-frame house system employed in North America) or in furniture and fixtures installed or purchased for a home. The two-year drop in consumption resulting from lower levels of housing construction has been reflected in lower production and imports. The pattern being experienced in 2007-8 is not new, though; these cycles have all been experienced several times over the past 40 years. Given our preliminary estimates of 2008 structural panel production (OSB plus softwood plywood), the peak-to-trough fall will be 21%, similar to the 19% decline recorded 1978-1982, but greater than the cyclical declines recorded 1988-1991 and 2000-2001 (Fig 2). For the OSB industry, this is the first economic cycle where the drop in economic activity has overwhelmed growth in market share, resulting in an estimated 17% peak-to-trough drop in North American production (Fig 3). This drop, in combination with a surge in new capacity, largely explains the angst being experienced in the region's OSB industry. Meanwhile, North American softwood plywood production of little more than 11 million m3 in 2008 will be 27% off from 2005, and 51% lower than the peak of 22.6 million m3 recorded in 1987. Non-structural panel (particleboard and MDF/HDF) demand will also suffer a significant cyclical retreat through 2008. However, this drop reflects a more complex story than for structural panels. Even during the housing boom of 2003-6, particleboard production dropped as the attrition in the North American furniture industry cut into the single largest end-use market for particleboard and MDF. In contrast, thin panel (HDF) production edged higher even as output of thick MDF slipped. Initially, the drop in thick MDF was mitigated by growth in mouldings but this strength has atrophied over the past two years, along with the housing market. Consequently, particleboard production in North America will experience a peak-to-trough drop of 20% between 2005-8, while MDF's loss will be a more moderate 12%. More significantly, particleboard production in 2008 will also be 27% below its 2000 peak, reflecting the drop in furniture production since the late 1990s.   Forecast outlook 2008 will be an atrocious year for the North American wood products industry, but recovery in demand and prices should be underway before the year's end and will strengthen in 2009. This recovery will re-establish profitability and several new production and consumption records will be set in 2010-11 (Fig 4). Currently, there is little or no more downside risk; prices are already below cost and most of the decline in consumption has already occurred. At this point, the main issue is too much supply. The attitude of producers needs to be, "If I don't have an order, I don't produce". Piling product into warehouses is equivalent to 'shooting yourself in the foot'. Extended indefinite capacity closures, short-time working and intensive management of inventories will enable pricing to recover to at least cash-cost levels and provide opportunities for moderate profitability in periods of seasonal strength during 2008. Sustained recovery in production will not be justifiable until there are clear reports of increased housing activity and general strength in the economy. Such strength is unlikely to show before the spring of 2009, at which point a combined cyclical recovery and the seasonal upswing will help propel wood panel markets out of the abyss and into the sunlight.

The International Wood Composite Symposium seems to have made a permanent move to Seattle, Washington from its long-time home at Washington State University in Pullman, Washington. In fact, meeting veterans still refer to it as the 'Pullman meeting'. Attendance stood at 173 and of these, 25% were board manufacturers, 50% suppliers, 20% education and research and 5% associations. Kelly Shotbolt, president and ceo of North America's largest MDF and particleboard producer, keynoted the symposium. Then Steve Zylkowski, director of the quality services division of APA, Tacoma, Washington, said slumping housing demand in the US has created a strong headwind for engineered wood products. He said US residential construction has plunged at a record pace, but commercial building continues to increase. Low-rise non-residential construction continues to be an attractive market for wood products. "Unfortunately, wood framing still represents less than 10% of the total low-rise construction market in North America. Five major North American wood products associations are working to expand that market," he said. He said glulam hit bottom this year, but is starting to climb back, as are I-joists. Mr Zylkowski advised that the following is necessary to get housing starts up again: lower home prices; better liquidity/credit; increasing sales to lower inventory; consumer confidence; and a stable economy. "We have two out of five and that isn't enough," he indicated.He said the housing recession is causing a national recession and the traditional remedy is to use lower rates to spark housing to lead the economy, but this can't happen because of the huge housing inventory. "Housing and wood products will suffer for another year," he warned. Sunil Ramachandra, Armstrong World Industries, Lancaster, Pennsylvania, described his company as a global leader in hard floor coverings, ceilings and cabinets, with annual sales of US$3.4bn. The company is working on computer analysis of wood flooring. His laboratory has developed a 3'4in panel with hardwood MDF core. President Laszlo Döry of the European Panel Federation (EPF) said, "Climate change is one of the most pressing and complex issues facing society today. The countries that have ratified the Kyoto Protocol recognise this and are developing measures to adapt to climate change and also to mitigate its effects. This development opens up new threats, but also new opportunities for the economic value of forests and the environmental value of forest products. As part of the important role that forests can play in providing well-being to citizens, forests and their products can also make an important contribution toward the problem of climate change."  However, the potential benefits of using wood products to reduce carbon dioxide emissions are not recognised by governments, and not well understood by individual consumers, said Mr Döry; forest-based industries need to take a united position if they want to be recognised for their role in the climate change fight. The EU woodworking and furniture industries' production value is e230bn/year, employing 2.3 million workers. The key wood problems are inaccurate forest inventories, small forest owners' reluctance to enter the wood markets and large forest owners' lack of interest in market share, said the speaker. Higher wood prices allow them to earn what they need by cutting less. Policy is directing the long-term price of wood to its energy content, thereby linking it to fossil fuel prices. The challenges are soaring production costs, increased competition for wood raw materials, growth deceleration in the construction sector and increased competition, especially for extra-EU exports. Panel production in Europe is 62% particleboard, 21% MDF, 7% plywood, 6% OSB and 4% hard/softboard. This excludes Russia and Turkey, said Mr Döry. Michael Zimmerman, Sauder Woodworking Co, Archbold, Ohio, described his company as a ready-to-assemble furniture manufacturer and one of the largest users of particleboard and MDF in North America. The furniture is made primarily by laminating paper to particleboard and MDF, cutting to size, edge-banding the appropriate sides and boring the parts. The parts are hand-packed and shipped flat. The company works with 100 different panels. Mr Zimmerman said: "In order to compete in the current furniture market, we need to value-engineer our units to meet all the required specifications and yet hit extremely competitive pricing." Harald Schwab, Wilhelm Klauditz Institute, Braunschweig, Germany, said: "Formaldehyde is a most simple, but highly reactive organic compound. It is a natural trace and an important substance for chemical and technical applications - and for hygiene purposes. It is used for the formulation of wood based panel adhesives."  In 1980 some European countries started with formaldehyde regulations on particleboards. He said emission standards have been tightened since 1984, but do not apply to wood based panels to which no formaldehyde-containing materials are added during production, in production, or in post-production processing. John Bradfield, Composite Panel Association, Gaithersburg, Maryland, said the California Air Resources Board (CARB) restrictions on formaldehyde emissions are now in place and will have a worldwide impact. The current proposal would reduce emission rates by 60 to 85% from the current low levels in two phases - the first on January 1, 2009 and the second on January 1, 2011. "The new limits will create a technical challenge for adhesive producers and their customers in the composite industry. However, the CARB rule will lead to an opportunity to market products where formaldehyde emissions are not an issue. Composites already have one of the greenest wood products stories with their nearly 100% recycled/recovered wood usage rates." The CPA/EPP requirements are the most widely-specified environmental certification programme for composite wood panels in North America. They require using all recycled or recovered wood fibre and formaldehyde emissions which meet CARB phase 1 levels. Frédéric De Champlain, FPInnovations-Division, Forintek, Canada, said, "Formaldehyde is a confirmed human carcinogen and is, among many sources, released from UF-bonded wood composite products used for furniture and structural panels. "Even if the industry has reduced by more than 80% the formaldehyde that emanates from these products since the 1980s, public concerns about air quality in working and living spaces are increasing the need for lower, or zero, formaldehyde emitting products. This has resulted in stricter regulations around the world." In North America, average formaldehyde emissions from panels is 0.15 to 0.20ppm. New standards provide 0.04 to 0.10ppm in off-gassing. A major challenge is not only to produce these low-emitting products, but also to ensure that the sampling and analytical methods are sensitive and reproducible enough at these low levels. He said increased sealing of homes to save heat energy has increased the formaldehyde problem. Mario Colombelli, Duratex SA, Såo Paulo, Brazil, whose 50-year-old firm is building the world's largest MDF plant, said the Brazilian MDF market is experiencing a high growth period. He said this is Brazil's "magic moment", with home construction booming, and that more MDF production is needed. His firm opened its first hardboard line in 1955. It has its own forests. The new mill at Agudos, Såo Paulo is a US$200m project producing 2,300m³ of board daily. Ken Pratt, Olympic Panel Products LLC, Shelton, Washington, said customer needs are more valuable than manufacturing needs. Of sales, he said: "You basically have to be a consultant, not a glorified order taker." Speaking of the value of speciality panels he said you have increased margins, predictable sales volume, partnership loyalty, reduced risks during commodity dips and growth opportunities for both partners. Mr Pratt said: "We have 15 to 20 new ideas in the hopper at any one time. About half come to fruition. About 80 to 90% of the ideas come from our customers." Lacramioara Schulte auf'm Erley, NanoDynamics Life Sciences, Inc, Pittsburgh, Pennsylvania, described nanotechnology as manipulating matter on the atomic and molecular level to create new materials and processes. She said that it has been too costly to use in many areas, but advances in technology, and new commercial uses for the tiny materials, will allow nanotechnology to become more cost-effective. Durability of wood products refers in part to their resistance to microbial attack. Biological contaminants include bacteria, mould, mildew, fungi and viruses. One technology is based on encapsulation of biocides into the naturally occurring nanotube clays, which allows slow release. Biocides are important agents which could replace copper chrome arsenate treatments. Encapsulated biocides facilitate incorporation of heat labile biocides into wood composite materials, protect and keep biocides dormant until needed, and release them at a controlled rate. The materials can be incorporated into the wood composite materials during the processing, or as finishing. Kai Greten, Fagus-GreCon Greten GmbH & Co KG, Germany, said spark extinguishing systems in mechanical or pneumatic conveying systems are valuable for fire prevention. Sensors can detect sparks and burning embers and automatically extinguish them by water spray or other systems. This can prevent fires or dust explosions further on in the line. The delay between spark detection and extinguishing water flow is 0.2 of a second. "Every spark is dangerous and many disturbances can be traced by the plant operator at any time, due to a millisecond-accurate data recording of the sensor." Hauke Kleinschmidt, Electronic Wood Systems GmbH, Germany, explained on-line measuring systems. He said extended press length and market growth for thin panels has created significant production line speed increases, up to 6.5ft/sec. He credits improved drying, forming, pressing and handling equipment. He explained that minimum density variations during mat forming are necessary to optimise production speed. Thickness data collection in the press exit area must follow high panel speed, simultaneously with blow detection. He said traditional measuring equipment uses gaps between the boards for calibration. "New solutions must calibrate on-line instruments where little or no gaps exist, due to the high production speed. "The increased production speeds make it difficult to obtain panel weight because the time for weighing it is not long enough, or there is simply not enough space to install a mechanical scale between the cross-cut saw and star cooler," Mr Kleinschmidt concluded. Jamie Hague, CSIRO, Clayton, Victoria, Australia, said: "The Australian forest industry generated sales of $14.1bn in 1999-2000, accounting for 7.5% of Australia's manufacturing industry and 1% of GDP". There are currently 1.7m ha of industrial plantations established in Australia. Of these, one million ha are softwood. There are 164 million ha of native forest covering 21% of the continent. Just 1% is logged commercially. Australia's wood production has been unable to meet consumer demand. "The Australasian panels industry has considerable experience in addressing formaldehyde emission issues. It is possible to achieve required emission levels with amino plastics without incurring prohibitive costs. MDF has proved to be relatively straightforward. Particleboard presents greater challenges of furnish pH, new catalysts and resin spread," he concluded. Bruce Broline, Arclin, Springfield, Oregon, said: "Amino resins are the most widely-used adhesives in the forest products industry. Despite the importance of these resins, some of the frequently used methods of determining free formaldehyde give erroneously high values when time dependency is not taken into account. "Quantification of formaldehyde in amino resins is a non-trivial exercise". Björn Engström, Casco Adhesives, Sweden, presented thoughts on NIR spectroscopy for formaldehyde emission measurements. He said laboratory results were encouraging and demonstrated the possibility of formaldehyde emission measurement in just seconds. He reported that an NIR probe has been developed and a full scale installation has shown good results in comparing calibration of NIR with measured formaldehyde emissions. However, the ability of calibration models to compensate for process drift is still not satisfactory. Anke Schirp, Fraunhofer Institute for Wood Research, Braunschweig, Germany, said his group is researching lightweight particleboards for the furniture industry, varying from 300kg/m3 to 500kg/m3. The first project uses annual and perennial plants such as hemp, sunflower, topinambur, maize and miscanthus. The light parenchyma cells are particularly suited. The experiment used different conventional and natural adhesives such as urea or tannin-formaldehyde resin and PMDI. Board properties were compared with reference particleboards made from wood. A second project, funded by the German Ministry for Education and Research, developed a lightweight particleboard based on foamed adhesives. This included foaming urea formaldehyde adhesive using air and surfactants; mixing expandable, gas-filled microspheres and polystyrene into UF adhesive; and using formaldehyde-free foam-generating polyurethane adhesives. Chris J Watt, Columbia Forest Products, Bellingham, Washington recounted that in 2003 Columbia Forest Products, after using traditional UF glue for 40 years, embarked on a project to use a soy protein-based adhesive using cationic amine polymer-epichlorohydrin as a fortifier. This produced a novel adhesive with superior durability and lower overall cost. The UF adhesive within Columbia's hardwood plywood operations contributed to plant emissions and limited durability and did not fit with Columbia's moves towards sustainable products. Mill conversion took three years, starting in 2005. It involved retro-fitting glue lofts with new high-shear mixers and glue pumps. The exercise of implementing the new technology now acts as a model for further company innovation.