Located in the dusty silver mining town of Hidalgo del Parral, deep in the heart of Mexico's big northern state of Chihuahua, Duraplay de Parral SA de CV, the 50-year-old former lumber company, has enjoyed strong particleboard sales across the US border in the past couple of years. It benefited from the booming US housing market and falling panel supply in the US and Canada, but, like other Mexican exporters, Duraplay has seen a slowdown this year due to the US market slump. As a medium-sized producer in a panel sector dominated by one big player, Mexico City-based Rexcel SA de CV with over half the production, Duraplay is focusing on particleboard and growing its value-added product range. This means selling more panels with melamine, finish foil and veneered finishes to niche markets in Mexico and the US. There is little doubt the US downturn means Duraplay will now feel growing competitive pressure from both local and North American board producers. Nevertheless, the Mexican producer is sure it can pick up increasing business from the country's powerful 'maquiladora' chain of assembly plants along the US frontier. "Traditionally, they [maquiladoras] bought board from the US mills. Now, they are buying from Mexican producers. That will be a growth market for us," said a confident Emilio Ayub Touché, president of Duraplay. The US furniture industry is certainly expected to continue feeling the heat of Asian competition. But the Asian cloud has something of a silver lining for the Parral company, according to Mr Ayub. "With all the changes in the structure of the furniture industry in the US, which was hit hard by imports from China, some [furniture] players are beginning to look to Mexico, located close by, for competitive costs," he told WBPI during an April visit. Duraplay is "betting on that", not least because two years ago the group went downstream itself, launching its own ready-to-assemble (RTA) flat-pack furniture operation on the US border in Ciudad Juárez. "It's the continuation of our strategy to roll into value-added business. We wanted to go downstream, adding to the chain of value," explained Mr Ayub. He admits that moving into a totally different market is a "challenging experience". Now, with the RTA sales growing slowly, the family-owned group is seeking an alliance to allow it to work with "an established company" in the business and get into the bigger market, he said. Duraplay, with a total particleboard capacity of 140,000m³/year, runs two lines at its Parral plant: one a 108,000m³/year Bison unit with a Dieffenbacher single-opening press producing 8x48ft standard thickness panels; and the other a smaller Mende line producing thin board. Located in the heart of Chihuahua, the producer draws its supplies of ponderosa pine from the mountain forests to the south and west of the state, which are still controlled by Mexico's traditional community-based 'ejido' system. Wood, mainly for the particleboard line, is trucked up to 250km from southern Chihuahua and part of neighbouring Durango state. Larger logs, used for plywood, are hauled up to twice that distance from Duraplay's log yards in the mountains of western Chihuahua. Only 15% of its particleboard output is sold as raw board as most goes through to the finishing process. Duraplay operates two Wemhöner melamine laminating lines, a Bürkle finish foil line, soon to be upgraded, and an Anthon cut-to-size system installed in September 2006. Value-adding includes cut-to-size and 30% of all its finished panels are melamine faced, according to operations development manager Ramón Castro. One product where Duraplay has enjoyed a healthy export market for its particleboard is 'bullnose' shelving for the US, which accounts for around 12% of total output. This market too has weakened with the construction downturn and the product is particularly price-sensitive, said Mr Castro. Although his company is not an MDF producer, it buys in the panel from Flakeboard in the US and laminates it for resale in its bid to add value to its business. In support of the group's RTA offshoot, and to bolster its laminating capacity, a second Wemhöner melamine line was installed in October last year. Another project will see finish foil production upgraded with the arrival of a new Harland foil laminator to replace the Bürkle equipment. Other planned investment includes upgrading the Bison board line's glue kitchen and blending section with Imal equipment by August this year. This is required because Duraplay, which supplies its own resin, cut resin emissions to meet market demand, explained Duraplay's technical adviser, Austrian Ewald Zucker. The panel maker is also a manufacturer of softwood plywood, directed at 'face grade' products as well as construction applications. Business is "tough and competitive" at present and Mexican producers are under great pressure from imports to find new ways to market the traditionally well-received ponderosa pine plywood. Little goes to waste at Duraplay where a trimming and squaring machine converts peeler cores to fence posts, for example. The Parral company, originally founded by a family 50 years ago, ran into financial difficulties in the 1990s and was rescued by Mr Ayub's family. The original family owners still has a stake in the business. Today, Duraplay compares itself with a newer particleboard player on the Mexican scene, Masisa Mexico SA de CV, subsidiary of the Chilean group Masisa SA. Masisa runs a 149,000m³/year particleboard plant to the south, in Durango state, and the two firms rank as medium-sized producers. As president of the Mexican panel makers' association ANAFATA, Mr Ayub is only too aware of the major challenges - not least the ever more serious national lack of quality wood - facing producers. Mexico's failure to protect and expand its forest resource over decades, and the lack of long-term security for tree plantation investors, have inhibited industry growth. One example of how sector development is being stifled is its inability to sustain a single world-scale MDF plant in a country where MDF/HDF consumption was above 300,000m³ last year. "The [fibre shortage] situation has not changed in the last few years. If anything, it has got worse," admitted the ANAFATA president. Looking longer-term, Duraplay itself is keen to expand its particleboard production and capacity and is not ruling out going into the MDF business when conditions are right, Mr Ayub told WBPI. For the time being though, any radical new plans for expansion by Duraplay seem set to remain on hold in today's climate of deep uncertainty about the future direction of Mexico's wood panel industry. Although there is a glimmer of hope for a potential breakthrough, with new plantation projects beginning to take shape in several states, even the most promising ones in the south will take some years to mature. Consolidation in the sector seems set to continue and Duraplay is content to pursue its current policy for now. "For the time being, I think our strategy should continue with adding as much value as possible and having very tightly targeted market segments," said the Duraplay president.