APA, SFPA Form Strategic Alliance

APA and the Southern Forest Products Association (SFPA) announced in June the formation of a strategic alliance to advance the interests of the memberships of both organizations.

The alliance formalizes and broadens long-standing cooperation and collaboration between the two associations. It is designed, said officers of the two groups, to improve the competitive position of wood products systems against nonwood construction materials, reduce duplication of effort, and increase efficiencies, thus maximizing the return on association member dues. Several companies are represented by both associations.

Activities under review for new or expanded joint administration and management include market research, demand and production forecasts, media relations, engineering support, codes and standards work, product literature, electronic communications, advertising and publicity, trade show exhibiting, education and training, industry meetings, international market development, and market support services.

SFPA represents 35 companies operating 138 southern pine lumber mills in a dozen states across the South. APA represents approximatey 150 North American engineered wood product facilities.

Structural Panel Forecast Revised Upward

North American structural wood panel production is expected to reach 39.6 billion square feet (3/8" basis) this year, according to APA’s revised mid-year forecast. The new outlook is 800 million square feet higher than the Association’s earlier projection, and 900 million feet more than the industry’s 1998 record production mark.

The revised picture is based largely on the expectation that U.S. housing starts will match last year’s total of 1.6 million. Residential construction is expected to account for 600 million feet of the demand increase. Combined gains in the industry’s remodeling, industrial and nonresidential construction markets also are expected to more than offset declines in export shipments. (See related story below.)

Strong Dollar, New Capacity Fueling Export Slump

Strong domestic market demand, rising European production capacity, increased imports of Asian and South American panels, and the high exchange value of the dollar continue to conspire against North American structural wood panel exports, particularly in Europe.

Exports this year are expected to total 1.3 billion square feet according to APA’s revised mid-year forecast, essentially matching last year’s total, but off about 50 percent from 1997.

Soft demand in Europe is underscored by the slow consumption of the European Union’s 650,000-cubic-meter nil duty softwood plywood quota. The quota limit was not reached this year until mid-June, compared to March or April most years in the past.

What about the future? It should improve as Asian economies recover and currency exchange rates moderate. But forces at work, including in particular the increase in European production capacity, will continue to present a sizeable challenge, notes APA International Marketing Director Ed Elias.

Since 1995, European softwood plywood and OSB capacity has grown by some 900 million square feet (800,000 cubic meters), to nearly 1.47 billion feet (1.3 million cubic meters). Those products have the advantage of shorter delivery times and are free of the tariffs and quotas that North American producers face. Moreover, an additional 820 million feet of new OSB capacity has been announced for two mills to be built in France and Germany.

The challenge for the industry, notes Elias, will be to maintain its presence in Europe so that it will be in a position to capitalize on more favorable international economic circumstances when they occur.

Capacity Forecast Suggests Demand Gap Ahead

U.S. and Canadian structural wood panel producers are expected to add more than six billion square feet (3/8" basis) of net new production capacity by the year 2003, according to APA’s revised July forecast.

The estimate is based on announced plans for new mills, anticipated closures, OSB capacity creep, and the best-guess speculation that two additional mills will begin production in 2002 and 2003, said APA Market Research Director Craig Adair.

Industry production this year is expected to run at 95 percent of capacity, one of the highest rates on record. That ratio is forecast to fall to 88 percent next year, however, and to decline to 80-85 percent in 2003. The industry’s historical average is 88 percent.

By comparison, the production-to-capacity ratio dipped to 87 and 86 percent, respectively, in 1995 and 1996, during which time 6.3 billion square feet of net new capacity was added.

The July forecast will be updated again this fall.

SFPA Plans Expansion of 2001 Expo

The already giant Expo forest products machinery and equipment exposition sponsored every two years by the Southern Forest Products Association is preparing to grow even larger.

The show’s primary emphasis in the past has been logging, harvesting and sawmilling. But plans are underway to feature and attract the engineered products segment of the industry through cosponsorship of the 2001 event with APA--The Engineered Wood Association.

The joint sponsorship arrangement is part of a recently formed strategic alliance between the two associations. For more information about Expo 2001, contact Exposition Director Lionel Landry at 504-443-4464, or see SFPA’s website at sfpa.org.

Charlotte Version of Portland Show Scheduled

Miller Freeman Inc., producers of the annual Wood Technology Clinic & Show in Portland, Oregon, announced it will expand the show to Charlotte, North Carolina next year.

Scheduled for Sept. 14-16, 2000, the Wood Technology Clinic & Show--Charlotte will mirror the Portland event, except that it will be tailored for the southeastern U.S. and eastern North American wood products industries, organizers said. The three-day event will feature a large product and equipment exhibit area, and conference sessions on a variety of processing and management topics.

More information about the Charlotte show can be found at wtcscharlotte.com The 1999 Portland show, meanwhile, is scheduled for March 15-17 at the Oregon Convention Center.

Also See:
Industry Restructuring

The Greatest Story Never Told

Forest Certification, Part 1

Y2K and Beyond

The Pro-Wood Initiative--On the side of right