Regarding particleboard capacity in North America and western Europe, never has our headline phrase been more appropriate. The 2008 WBPI survey of particleboard capacity reveals that for North America and the EU15 countries, capacity in 2007 increased by just 0.4%. Overall capacity in the entire region including eastern Europe and Russia increased by 4.6% or 2,769,000m3 – entirely located in eastern Europe. The macro-economic parameters governing North America and the EU15 were not at all conducive to expansion activities in particleboard and, in fact, contributed to a virtual paralysis of
the industry.
The analogy of the Western Front in Europe in World War One is quite apposite; the industry has almost reached the stage of ‘trench warfare’.

There are small forays forwards, matched by various retreats, but the strategic picture is stagnation. However, for the protagonists – those in the trenches – it has been (and will be for a year or so) a hard slog to ‘keep their feet out of the mud’ and to avoid ‘sticking their heads over the parapet’!
As tables 1 and 3 show, the actual number of protagonists is declining as well. This has had a marked effect in Canada where, as shown in table 2, average line size has jumped to the highest level of all regions involved. This is the result of the combined effect of four line closures and the new large installation at Sonae Tafisa’s Lac Megantic mill.

North America
There have been no reported changes during 2007 for the US and Mexico. Indeed, there is no reported ‘capacity creep’ either. The US saw a one-third drop in housing starts compared with 2006 (and as recently as July 2008, housing starts were at a 17-year low).
With major uncertainties as to future fixed and variable costs of particleboard production, the industry has no low-risk options, other than to stay in the trenches for the time being.

There was a 0.5% increase in capacity recorded in this region for 2007. Within EU economic growth, this represents a retrenchment – hardly surprising given the poor economic performance of several of the major economies during the year, which has continued during 2008 and is likely to worsen into 2009.
2007 (and 2008) has seen particleboard prices at variable cost levels as demand slackened swiftly in some of the leading consuming countries. Without offering a diatribe on housing recession, credit crunch, slowing exports and an increasing share of imports, suffice to say these factors have not helped.
During 2007 in the EU15 there was more talk of mill closures than there was of new projects. The UK accounted for virtually all of the capacity growth that there was in the EU15.

Other Europe
Capacity in the rest of Europe (‘other Europe’) grew by 16.7% during the year with new mills coming on stream in Russia, Romania, Lithuania and Slovakia.
The latter was the most notable for being the first major project in this region
incorporating the Shanghai Wood Based Panel Machinery Company’s (SWPM) continuous press. This, naturally, was at
a Kronospan site, since Kronospan
owns SWPM.
There was little change in Turkey – other than a slight downward revision in capacity, principally because of statistical adjustments. About 1.25 million m3 of new particleboard capacity was opened in Russia, which consequently became the fourth largest producer in the world behind China, Germany and the US.

Future Capacity Changes
The combined capacity of North America and the EU15 will decline during 2008 by 2.2%, or nearly one million m3, as shown in tables 5 and 6.
Table 5 is unusual in that it shows, for the first time, no effective increases in capacity for two consecutive years in North America. The industry seems to have no new projects for particleboard in the pipeline and neither does it report very much in the way of capacity creep.
Adjustments to existing lines could have a small impact on unit fixed costs but variable costs are the real problem.
Extra production could impact gross sales values but where is the demand? There seems to be a tendency (noted in previous years) for operators to attempt to increase panel unit value. This takes the form of surface finishing, cutting-to-size and low-emission boards, for example. There are rewards, pitfalls and challenges in this strategy as well.
However, medium to long-term, if managed adroitly, it affords a more secure option – if such a word can be used at this time!
At the end of 2007, Flakeboard in North America announced suspension of production at one line in Albany. The line is not dismantled and is still shown as existing in 2007 and 2008. With little or no prospect for a market reversal in 2009, this line may yet close permanently, which would mean a loss in capacity of 180,000m3 per annum.
Among the EU15 mills there is only one major new line – at Egger, Rambervillers in France, but three smaller lines will close, resulting in a neutral impact on French total capacity.
Closures will also occur at Genk, Belgium and Cella in Spain.
However, on a more positive note, Kronospan’s mill at Bischweier in Germany will add a net gain of 206,000m3 per annum, while the Saviola mill at Viadana in Italy will also make a net gain, with press changes, of about 100,000m3 per annum (see WBPI Aug/Sept 2008, p46).
Overall, though, EU15 capacity will decline by about 200,000m3 per annum.
More worrying is that there are no reported gains for 2009. Why will this come about? It is sufficient to cite Spain as an example.
In 2006, Spain saw a record of 920,000 dwelling starts being made. During 2007/08, such starts will fall to 300-500,000 units. This volume drop is greater than the total number of housing starts in several EU15 countries such as the UK, France or Germany.
It might be early to make such a prediction but it is not likely that EU15 will ever regain its share of regional, or even world, capacity. EU15 capacity in fact looks set to remain sluggish for at least five, and maybe even 10, years.
Table 7 shows the upward march of the other European country capacities – Turkey and Russia in particular. The size of the new Turkish mills is surprising, given the acute raw material situation in that country.
Table 8 illustrates clearly the future role of ‘Other Europe’ in the Western World’s particleboard industry. Time will tell if Russian and Turkish advances are too bold.

How the Listing was Compiled
The WBPI listings for 2007 (2006 figures) were reviewed and modifications made using other published sources and data received directly from the mills. Published information was reviewed for news of capacity changes. These sources included relevant trade magazines, association reports and equipment suppliers’
reference lists.
Self-completion enquiry forms were
distributed to the mills, requesting current and future capacity data. These forms contained the information the mills provided the previous year. Other questions were asked about non-standard production, future production rates, price movements and cost changes. The form was also posted on a special website. Responses amounted to 61% of the North American industry and 31% of existing European capacity.
The mills’ own reported capacities are used wherever possible because this is the basis upon which they make their estimates of future capacity and production changes. Where this information is not available, published sources are used, usually on the basis of 330 operating days per year.
Conversion of ft² to m3/year is made with 1,000 ft² equal to 1.77m3.