Mexico City-based Rexcel, part of the Mexican chemicals-to-food and property conglomerate Desc SA de CV, came to dominate the Mexican particleboard sector as a result of its timely 2005 acquisition of the northern business of Paneles Ponderosa in Chihuahua. Today, Rexcel has set its sights on expanding its particleboard capacity still further and dreams of one day launching Mexico's first world-scale MDF plant, once the nation's severe wood fibre crisis is resolved. The acquisition was a good fit between Paneles, an established exporter of particleboard and low pressure laminate panels to the US, and Rexcel, a quality board maker with a strong position in decorative and high pressure laminates. Since 2005, Rexcel has been engrossed in completing its merger programme for the integration and improvement of the Paneles Ponderosa plant in Chihuahua city. Phase one of the extensive programme involved bringing together the differing business cultures, rationalising product lines and restructuring some of the merging companies' operations. It also included a major maintenance overhaul of the Paneles facility's Bison/Dieffenbacher continuous press line, aimed at getting the best out of its current capacity. The overhaul, involving work on areas such as electrical maintenance and the dryer, was completed in early April this year, according to Rexcel managing director Carlos de la Hoz Trigos. In a second phase, Rexcel is planning a series of investments to tackle bottlenecks in various parts of the Chihuahua line, currently producing 180,000m3/year, to bring the plant up to its full potential capacity of more than 300,000m³/year. This will see a thorough de-bottlenecking exercise upstream of the Dieffenbacher press, which was only installed in 2001 after fire destroyed Ponderosa's old eight-opening Siempelkamp press. Fibre preparation, the dryer and the glue kitchen and blending will be upgraded, Mr de la Hoz told WBPI in an interview at Rexcel's Mexico City headquarters at the end of March. Investment of between US$4-6 million has been earmarked for this project, but the company plans to delay its go-ahead by several months because of the current weak state of the US furniture market. "We put it on standby for maybe six months because the natural market, aside from Mexico, is the south, central south and south west US and the current activity of the US market is not very solid," said Mr de la Hoz. The work should be completed within the next year and a half. Rexcel runs a second, 35-year-old, panel plant hundreds of miles south at Zitácuaro in the rural state of Michoacan. There, an old Siempelkamp batch press with an original capacity of just 35m³/day was coaxed and upgraded over the years to offer a current output of 185,000m³/year. The company remains proud of this well-run facility, with its highly efficient wood processing section and panel finishing lines, serving primarily the Mexican market. The firm's third unit, in Lerma, west of Mexico City, is located alongside its formaldehyde and resins plant and acts as the company's laminating centre. While it does not produce any particleboard, it has given Rexcel its reputation for the production of high pressure laminates and a range of melamine and finish foil panels. Since the Rexcel takeover both units, in Lerma and Chihuahua, have seen job cutbacks and the new owners aim to improve the structural efficiency, particularly at the laminating centre. Rexcel wants to share Lerma's expertise in resin technology and formulations with its Chihuahua workforce. Each of the three plants has low-pressure laminating capacity and there are finish foil presses at Zitacuaro and Chihuahua. The southern mill has two Wemhöner melamine lines, a one million m²/year finish foil press and a Vits impregnation line. The former Ponderosa facility operates two Siempelkamp melamine lines and a new Wemhöner press is being installed to operate before the end of the year, said Mr de la Hoz. Veneered board is still an important market in Mexico and, as part of its restructuring, Rexcel switched a veneer press from its new northern plant to Lerma where it began delivering product in May. Lerma runs three high pressure laminate (HPL) lines. With an eye on freight costs, in its restructuring measures the company has looked over its enlarged capacity to ensure customers are served by the correct plant. On the product front, Rexcel found that some HPL customers also wanted melamine laminates. With the two lines it was able, unusually, to offer the same design for both HPL and low-pressure board. The firm was also able to rationalise Ponderosa's range of melamine panel designs, keeping several with the highest volume and dropping the rest, explained Mr de la Hoz. It is that clear Rexcel, backed by the muscle of its quoted parent group, is keen to invest and expand in the panels sector. But its executives are only too well aware of the challenges facing their industry. Today, there is great uncertainty over how best to resolve the serious issues surrounding the management of Mexico's forest land and the acute shortage of good quality raw material for its forest products industry (see p28). "We would love to have an MDF plant, but first we need to have the wood supply [in Mexico]," admitted Mr de la Hoz. Rexcel is already studying how best to proceed with this but the work is still at a "very preliminary" stage, he stressed. Pressed on the likely timing for such a project, the chief executive believed it could come to fruition in less than 10 years. "We are still working on that...if there were enough wood supply now we would already have a project for MDF," he confided. So, what is Mexico's biggest panel maker doing to try to shift the barrier across its road to progress? Apart from adding its voice to those of fellow producers calling for fundamental change in government policy covering the forests, it is involved in direct action to improve the situation. With hope turning increasingly to a possible solution through fresh plantation development in Mexico's south east region, a Rexcel subsidiary planted 10,000ha of eucalyptus in Tabasco state. The fast-growing trees are already beginning to reach maturity, today ranging from four to seven years old. But part of the long-term solution to the industry's supply problem is more fundamental. It requires a change in the mentality of a big section of the Mexican population towards sustainable exploitation of the nation's forest resources, believes Mr de la Hoz. In just one move to educate the population and stimulate reforestation, his company runs tree nurseries at its sites, which offer seedlings and technical help to local people wanting to plant them. Members of the community, Rexcel employees and their families and authority representatives are invited to take plants on the 'Dia del Arbol', or Tree Day, each year. The Zitacuaro site nursery, launched back in 1992, produces one million pine and cedar seedlings per year and has helped reforest 7,000ha locally since it started. Rexcel has already been supplied with new wood as a result, according to the chief executive. His company is developing a similar nursery in the more arid conditions at the Chihuahua plant, where it aims to grow pine seedlings for distribution, he told WBPI. There is one potential drawback to developing fresh wood resources in Mexico's more fertile south eastern states: panel producers, whose operations are concentrated in central and northern Mexico, face the added cost of hauling their raw material more than 1,000 miles from new plantations there. The Rexcel boss believes the sector should focus in the short term on growing more wood and accepts that it could take more than a decade for producers to relocate closer to any distant new fibre source.