Rapid response

It was American painter and writer Walter Anderson that famously said that bad things happen in life but it was how you responded to them that defined you.

When the coronavirus pandemic hit earlier in 2020, it was a challenge to companies worldwide, including in the wood-based industries.

For wood-based panels manufacturing technology specialist Dieffenbacher this period has been one of great learning and it developed a mindset to look forward, accept the “new normal” and adapt business practice to ensure it was able to effectively serve the global wood-based panels industry.

The fifth-generation Eppingen-based company, a leading manufacturer of press systems and complete production plants for the wood-based panels, composites and recycling industries, learned quickly when the virus hit from its colleagues in China. “They started a crisis team in China and in February we started this similar committee in Germany, learning a lot from our colleagues in China how to handle the situation - especially the sanitary side and with masks,” said Stefan Zipf, Dieffenbacher’s general manager Business Unit Wood.

Working from home was implemented for office staff, while online meetings managed to speed up scheduling of customer meetings. Wearing masks was introduced at Dieffenbacher locations.

In the absence of travelling, Dieffenbacher relied heavily on its local presence globally in Asia, South America, North America, Russia and across Europe.

“What helps us very much is our local presence in important regions of the world. Our local people were able to connect with the customer and keep the lines alive, keeping the customer happy. This is what we managed quite well during that time.

“On the other hand, we have missed the personal contact, especially if there are new customers on board, as it’s always good to meet personally.

“We learnt new things, we made sales contracts by video conference negotiations, we did some servicing issues by video conference and also provided help online for line start-ups, supporting local people. The technology was already there but now we really began to use it. So, I think this is a big positive thing to come out of this crisis - to get some things done quickly and better.” Mr Zipf said there is a rethinking of how to do business in the future in light of the pandemic, making greater use of online and Industry 4.0 technology.

“This will come more in the coming months, to help customers be more efficient on the cost side. It is currently more case by case and the long-term aspect is not yet there but I am sure it will come and things will change. I am pretty sure we will not travel as much as before.”

Mr Zipf said he was travelling again within Europe during the summer, visiting Luxembourg and Portugal.

“I felt really safe travelling there. It’s interesting we flew for many, many years and now we go back to Frankfurt airport and it’s a different situation, much less people but you feel really safe, you have masks, everything is clean and well-organised. On the customer side it was very clear that you have to wear a mask. I didn’t have an unsafe situation or feeling.”

Projects

When Covid-19 hit, Dieffenbacher understandably recorded a hesitation in new business enquiries.

“Luckily we had a good order book from the end of last year,” Mr Zipf explained.

“We had to ensure the supply chain could continue to deliver existing projects, and on the other hand to work on new projects.

“We had no delays in our supply chain delivering projects. From the customer side, there was one Chinese project which was delayed at the beginning of the coronavirus outbreak in February because they postponed the project. But it restarted recently.”

Mr Zipf said the first Covid lockdown period necessitated a short delay on a customer new particleboard project between the end of mechanical installation and startup. But it has since come on-line and is up to capacity.

“All the other projects are on track. Looking back now, there was nothing we couldn’t supply - there was always a solution. Travelling was restricted, but movement of goods was not affected in the global economy.”

In addition, several new project discussions that had been frozen started to unfreeze again in June, with several now agreed.

One project currently being delivered is a new particleboard facility to Algeria. Delivery was scheduled for November/December 2020 and start-up during 2021.

Another project ongoing is a new greenfield MDF project for Nile Wood in Egypt which will utilise plantation raw material.

The parent company behind Nile Wood has interests in multiple different industries.

“It is a very professional customer and they have lots of expertise in building plants and production.”

At the time of our interview in October, Dieffenbacher had recorded five new wood based panel plant orders in 2020, with the possibility of others closing before the end of the year.

This included an order in July for a MDF plant including an 80-meter-long CPS+ (650,000m3 annual capacity) for Chinese wood-based panels manufacturer Guangxi Lelin Forestry Development Co Ltd. It will be a world record for the longest continuous press used to produce wood-based panels. Plant construction is scheduled to start in the second quarter of 2021 in the southern Chinese city of Chongzuo, not far from the Vietnamese border. Start-up is planned for fall 2021.

Dieffenbacher supplied a high-speed THDF plant to Guangxi Lelin in Nanning in October 2019.

Before the pandemic started an order was also received for a replacement single-opening press for Lombardo in Italy. Capacity will be similar – 70,000m3 – to the existing capacity, but the new technology will enable production of thinner products. It is scheduled for delivery by Christmas, with installation in January.

Two other Chinese orders have also been received in 2020, including a ‘super particleboard’ line order for Guangx Fenglin with an annual capacity of 500,000m³.

Global Markets

One of the positive notes during the pandemic is that wood-based panel manufacturer production output levels have been good.

“The feedback we get from many different customers is that their production was not low, it was even high in some cases in recent months, especially on the OSB side,” explained Mr Zipf.

“We see in North America and Europe that the building sector is moving up and up, furniture is doing OK, we see laminate flooring coming back. So overall, our customers globally are positive right now and we can get more projects on the table with upgrades on existing lines.

“In Europe we see a lot of upgrades, modernisations, efficiency changes on existing lines, but I do not see any greenfield investments right now.”

Mr Zipf described the Russian market as continuing to be quiet on the investment front – a situation existing before the coronavirus crisis. The exception is the 2019 order for a new Swiss Krono OSB plant in Sharya including a 65m long CPS+ .

Elsewhere in Eastern Europe, he described the particleboard market as quite saturated now especially in Poland. Increasing capacity for OSB in eastern Europe is a topic though. “I think North America is picking up, it looks like OSB prices are now making people think about new investments and adding capacity on OSB.

“In South America we haven’t seen too much going on there, but this was also the case before the pandemic.

“Asia was the first market we received orders after the start of the pandemic because it went back to normal business much earlier than we did [in Europe]. This region is still a major part of our business and is strong.”

Mr Zipf described the Southeast Asia market as quiet, following a big wave of investments in recent years with new MDF lines in Thailand and Malaysia.

“Our expectation for this year and next year is the revenue of Dieffenbacher will be lower than it was before but this is not a problem for us,” said Mr Zipf.

“We can live with it and we are prepared for it. We also are prepared for a scenario if there is more business coming, but our expectation is a little bit lower than the years before. You cannot forget that from February to July there were no decisions [from customers] which will result in a gap in order income.

“But I hear good feedback from whoever I talk to on the customer side and this gives us confidence that business will continue and there will be lots of opportunities.”

With fewer expected new lines, modernisation projects are a high priority and the Dieffenbacher modernisation department has been very busy with orders.

This includes conversion of lines, giving them extra lifespan, improving board quality and reducing consumption of glue, energy and raw materials. Forming and wood preparation are a big area of focus for increasing efficiency.

Future

“It’s important to look forward and accept the new normal, it’s not wise to wait until everything gets back to the ways things were,” said Mr Zipf.

“We have to adapt now and to start doing business in a way which is new to all of us and we have managed quite well.”

Mr Zipf explained that because Dieffenbacher continually looks to streamline and make its business more efficient, it didn’t need to take restructuring actions when the pandemic hit.

“So, we can focus on the customer, look to the future and keep hold of our experts and in-house knowledge. This is very important for us.”

With the Ligna exhibition coming up on the new September 27-October 1 dates, it is the tradition timeline for innovations to be launched.

“We have a few things coming which we are working on, following the megatrend of Industry 4.0 and digitalisation to improve the lines and make life easier for our customers.

“Also, on the machine side there are some developments, so there will be a few things coming up at Ligna.”