Reconstituted Wood Products

SIC 2493

Companies in this industry

Industry report:

The reconstituted wood products industry is comprised of establishments primarily engaged in manufacturing hardboard, particleboard, insulation board, medium-density fiberboard (MDF), waferboard, OSB, and other panelized products made from wood chips and particles.

Background and Development

According to the U.S. Census Bureau, this industry shipped goods valued at $3.5 billion in 2008. Although the industry experienced overall increases during the 2000s, a historic decline in new housing starts and a poor economy weakened demand during the last years of the 2000s. In the early 2010s, there were signs that the industry was again picking up speed, but production within certain segments remained well below recent annual averages.

Particleboard is created from wood flakes, shavings, or splinters that are discharged when wood products are processed. The particles are bonded together under pressurized heat using resin and adhesives to make an inexpensive, durable wooden panel. Approximately 80 percent of all particleboard is used to make furniture, cabinets, and doors. A hardboard, or fiberboard, panel is made from wood fibers that are steamed, rubbed apart, and compacted under pressurized heat. Unlike particleboard, only a small amount of resin or adhesive is used to bond the fibers. Hardboard has a smooth finish and is used primarily for exterior house siding, indoor cabinets, and fixtures.

Commercially useful wood particle panels resulted from the chemical industry's development of high-tech synthetic resins and adhesives, particularly during the 1960s, 1970s, and 1980s. The value of reconstituted panel shipments increased steadily during the 1980s and 1990s, reaching an estimated $5.1 billion by 1996. Shipments grew about three percent to nearly $5.3 billion in 1997. After reaching a high of $6.37 billion in 1999, shipments fell to $5.21 billion in 2001, according to the U.S. Department of Commerce.

Although a recession in the early 1980s caused industry revenues to drop slightly, improved economic conditions in the 1990s resulted in a surge in shipments of particleboard and medium-density fiberboard (MDF) from U.S. mills. The Composite Panel Association estimated that between 1993 and 1998, U.S. particleboard and MDF shipments increased 18 and 45 percent to almost five billion and 1.4 billion square feet, respectively. Particleboard shipments from Canadian mills increased almost 14 percent in 1998 to 1.24 billion square feet.

However, growth in this industry began to slow when the U.S. economy began a downturn in the early 2000s. Particleboard shipments decreased from $1.37 billion in 2000 to $1.09 billion in 2001. Over the same period, MDF shipments fell from $530.4 million to $481.2 million; waferboard and oriented strand board (OSB) shipments fell from $2.21 billion to $1.86 billion; cellulosic fiberboard shipments dropped from $131.4 million to $129.6 million; hardboard shipments fell from $1.37 billion to $1.09 billion; and prefinished particleboard and MDF shipments dropped from $667 million to $601.2 million.

During the late 1990s, MDF shipments grew steadily, increasing from $454.3 million in 1997 to $530.4 million in 2000. Applications like high-detail moldings and edge-detailed furniture continued to hold promise as MDF's share of the molding market, which grew from 20 percent in 1997 to 26 percent in 1998, was expected to grow dramatically through the early 2000s. Some analysts expected MDF to have an 85 percent share of the molding market by 2005.

Wood panel manufacturers were starting to market their products with the Forest Stewardship Council's label, which identifies companies that have been certified as responsibly managing their timber lands. With the greening trend continuing, panels made of waste and alternative materials were also in demand. In 1999, CanFiber's Riverside, California, facility announced that it had produced the world's first MDF made from 100 percent post-consumer wastewood. Other companies were making boards composed of rice straw, barley straw, or other agricultural fibers. Iowa State University researchers had developed a process to turn cow manure into MDF.

Production of cellulosic fiberboard (insulating board) fluctuated throughout the early to mid-2000s, growing from $117.7 million to $156.6 million between 2002 and 2003 before falling to $124.6 million in 2004 and recovering to $149.4 million in 2005. Particleboard shipments rebounded in 2002 to $1.2 billion before dipping to $1.06 million in 2003, but stabilized at $1.3 million in 2004 and 2005. Medium density fiberboard shipments gradually increased from $657.8 million in 2002 to $868.1 million in 2005, as did waferboard and OSB shipments, which increased from $2.04 million in 2002 to $3.97 million in 2005. Hardboard shipments also fluctuated in the early to mid-2000s, climbing from $475 million in 2002 to $622 million in 2003 before falling to $536.5 million in 2004 and $519.8 million in 2005.

More than 400 companies operated in this industry in 2007, with an industry-wide workforce of 20,415 employees and shipments of more than $6.6 million. Reconstituted wood products were responsible for 37.5 percent of market share with $466.1 million in shipments. Most industry firms were in California, Texas, Virginia, North Carolina, and Georgia.

According to industry statistics, particleboard products constituted 9.2 percent of market share with $321.6 million in shipments in 2007. OSB was produced at 13 facilities that generated $2.1 million in revenues. Although hardboard and fiberboard products accounted for only 1.6 percent of market share, the category contributed $617.8 million to the industry total. U.S. waferboard mills produced $129.7 million and hardboard shipments totaled $92.9 million.

Current Conditions

According to Dun and Bradstreet, 410 firms employed 17,400 people and generated combined revenues of $6.07 billion. By the late 2000s, OSB had become a major component of the U.S. construction landscape. In 1980, North American OSB panel production was 751 million square feet; by 2005, North American production totals reached 25 billion square feet. In 2000, OSB had outpaced plywood as the material of choice in panel building materials, and by the late 2000s had secured more than 60 percent of the market.

At the peak of the housing boom in 2005, U.S. housing starts totaled more than two million; in 2009, following the fallout of the housing market crash, new starts had plummeted to 566,000--the lowest amount since the federal government began tracking the data in 1959. As a result, OSB production facilities were approaching 50 percent operating capacity in 2009, down from over 90 percent in 2005. According to the American Plywood Association, OSB production fell by 56 percent between 2005 and 2009 from just over 25 billion square feet to roughly 11 billion square feet.

MDF fared better than OSB. According to data provided by the Food and Agriculture Organization of the United Nations, U.S. MDF production increased from 3.68 million cubic meters in 2005 to 3.90 million cubic meters in 2006 before declining over the next three years to 2.96 million cubic meters in 2009. Particle board reached production highs of 22.22 million cubic meters and 22.34 million cubic meters in 2005 and 2006. In 2009, production of particle board had dropped off to 13.48 million cubic meters.

Industry Leaders

One of the largest U.S. producers was Louisiana-Pacific Corporation (L-P), with 2009 total sales of $1.7 billion (the majority in wood products). Other companies in this industry included lumber giant Weyerhaeuser Company, of Federal Way, Washington, with 2009 revenues of $5.53 billion; Temple-Inland, located in Austin, Texas, with 2009 revenues of $3.58 billion; and Building Materials Corporation of America, of Wayne, New Jersey, with 2009 revenues of $2.75 billion;

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News and information about Reconstituted Wood Products

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