Technology Roadmap: Lumber and Value-Added Wood Products
7.1 Introduction and Overview

Industry Vision and Driving Forces

Demand for engineered wood products has grown dramatically over the past ten years, and it is growing at the rate of 250 million board feet (equivalent) per year in the U.S. alone. While the uninterrupted economic boom over the same period has clearly had a favourable effect on such growth, the industry sees it as driven by a number of underlying forces, and expects its progression to continue.

In all Canadian regions other than the Pacific Coast, growth in this industry sector has been led by changes in resource characteristics. Trees harvested have been getting smaller as a result of shorter rotations and other factors. Engineered wood products offer the wood industry a unique opportunity to use and add value to smaller, lower-quality logs. In some cases, they allow structural applications for under-utilised, non-traditional species, including aspen and plantation trees (hybrid poplar). As a result, the Canadian wood industry has seized on this opportunity, especially in Alberta and Eastern Canada (where logs are smaller), and engineered wood products have become the fastest growing sector of the industry.

Like all remanufacturing and value-added activities, the manufacturing of engineered wood products has been encouraged by governments at all levels, because of their potential for optimum resource utilisation, job creation and export potential. In view of the issues affecting the industry's future, including raw material availability, skilled labour availability, research and development requirements, etc., and given the fact that much of the industry will continue to consist of small and medium companies, government commitment and support can be expected to be critical.

The imposition of a quota on Canadian softwood lumber shipments to the U.S. has motivated an increasing number of mills to move into the production of engineered wood products and systems, or other new value-added wood products. Under the quota system, mills tend to maximise the value of their lumber exports by concentrating on higher grades. Lower grades are therefore available locally for remanufacturing and value-added production. In the future, the quota system may be replaced by a different arrangement, and the value-added sector sees this as a threat as it may reduce its access to affordable lumber. However, whether the quota is maintained or replaced by some form of "free" trade, it appears likely that the incentive to add value to wood products at source, or close to it, will remain.

High lumber prices are a boost to growth in the engineered wood product sector, as they tend to encourage substitution. While high prices obviously open the door to steel and other non-wood substitutes, they have been a major factor in the acceptance of engineered wood products, which were traditionally more costly. This is not the place to speculate over fluctuations in the North American economy over the next decade, and lumber prices will most likely reflect such fluctuations, but it is safe to assume that, on the whole, the wood supply will continue to be restricted, and prices will generally remain on the high side, favouring engineered substitutes.

Architects, engineers and builders appreciate the quality and reliability of engineered wood products. Individual components used to manufacture them are checked to ensure that they possess adequate physical and mechanical properties before being admitted into the production process. Quality control is strict and products are normally subjected to third-party certification. Design values of engineered wood products are precisely known, and variations limited. Every piece meets agreed specifications, with no rejects at the building site. To maintain an acceptable level of reliability, the industry will need to develop more detailed knowledge of its raw materials, including specific properties of individual species (as opposed to conventional species groups).

Engineered wood products can be designed to meet the specific and changing requirements of the building industry and building owners (for example, longer spans, reduced building time). Selling prices may be higher than for conventional lumber, but installed unit costs tend to be lower, especially in the complex structures demanded by today's markets.

Over the years, all materials have evolved, and so have building techniques. The increasing use of prefabricated building systems on building sites also favours the selection of pre-engineered components designed for easy installation, and this trend has been reinforced by a shortage of skilled building construction labour.

To take advantage of market opportunities and to develop the right products at the right time, the industry will require sophisticated market knowledge of the type used in consumer products, including consumption trends, evolution of distribution systems (for example, e-commerce), and required attributes.

While this document discusses evolving technology in connection with existing engineered wood products, their very nature makes them an ideal conduit for innovation, and new products are being developed at an accelerating rate. Engineered wood products represent the wood industry's best strategy to maintain market share in residential construction, increase it in commercial construction, and expand export markets by delivering better value to end-users in a competitive world. In the current climate, innovation can be expected to continue and to play a critical role in the Canadian wood industry's success. However, successful innovation will need to take place in a context of market-driven building systems development.

To maintain market share in the face of aggressive competition from steel and concrete, and to penetrate markets where wood is not a traditional building material, the wood industry needs to create and promote design options and system performance attributes which are not necessarily associated with wood itself: durability, fire resistance, resistance to extreme loads, or ease of installation This implies the development of innovative products as part of innovative systems. This essential issue goes beyond the scope of the present report, but it deserves to be covered in a separate study, and a recommendation to this effect is included in Section 11.

While design is the key to new products, existing products will maintain market share through enhanced cost-competitiveness and adoption of state-of-the-art technology to reduce production costs. This will rely on the development of decision-aids and cost-effective approaches to automation.

Because engineered wood products are used in structural applications, they have to meet strict code requirements and approval procedures. As these have traditionally been built around conventional products, they can prove extremely difficult and costly for new products and systems, in spite of efforts by various organisations to solve the problem of market access. The problem becomes even more serious in overseas markets, where the cost of securing all the necessary documents reaches far beyond the capabilities of most producers.

Because EWP are used in structural applications, their continuing growth is dependent on the availability of advanced engineering skills, not only in manufacturing, but also in research and development, and in marketing the products.

Overall, the industry sees itself in a very optimistic light, with almost unlimited potential in the U.S. and elsewhere, and there is every reason to believe that such enthusiasm is supported by reality. In the final analysis, however, its continued success will depend on its ability to maintain momentum through dynamic market knowledge and advanced technology, and to turn these into market value.