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Innovative Uses of Wood Promotes Market Development and Supports Forest

Innovative Uses of Wood Promotes Market Development and Supports Forest Sustainability : A win win Situation for Society, Forest Products Industry, and Forest Owners. UNECE Timber Committee & Forum Forestier Lemanique Symposium Neuchatel, Switzerland September 23-26, 2002. Al Schuler

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Innovative Uses of Wood Promotes Market Development and Supports Forest

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  1. Innovative Uses of Wood Promotes Market Development and Supports Forest Sustainability : A win win Situation for Society, Forest Products Industry, and Forest Owners UNECE Timber Committee & Forum Forestier Lemanique Symposium Neuchatel, Switzerland September 23-26, 2002 Al Schuler USDA Forest Service Princeton, WV USA (aschuler@fs.fed.us)

  2. Background • Need to better utilize the world’s forests – 90% are underutilized • Forest sustainability requires forest management (costs $) • Many wood products are becoming mature while competition is increasing in key markets • Construction is the key market – they are in transition • Need to develop new and innovative (competitive) wood products • Solution(s) – Research and Development (conversion technology forest management including biotechnology, marketing (promoting wood use), ……………

  3. Product Category Hardwood roundwood use (MMCF) 1,2 Hardwood Poletimber Inventory (MMCF) Hardwood Sawtimber Inventory3(MMCF) Relevant share Saw logs 2000 180493 1% Pulpwood 3180 114753 3% Underutilized Forests - U.S. Example: Hardwood Inventory (MMCF) in U.S. versus hardwood RW consumption 1 Roundwood use data for saw logs, veneer logs, and pulpwood from TPO for 1995-1996 2 Roundwood use data for OSB from USDA Forest Service for 2000 3 Inventory data from FIA; average year of completed inventory for the 11 states investigated = 1994 (range: 1990 – 1997)

  4. Natural Forests : Managed vs Unmanaged – 1980’s estimate Impact – Puts too much Pressure on a few geographic regions, few Species, and sizes/grades. - need conversion Technology that isn’t species and size specific!!! Milions of hectares Source: Bowyer FPJ, February 1995

  5. Marketing - Wood Promotion Campaigns NeededStory of wood relatively unknownIn past, wood never needed to market itself because it was viewed as a logical construction necessity, but that perception is facing serious challenges – Wood is Good campaign, FPJ May 2001 Progress with Forest Certification should help!! EX. City of Seattle has adopted the LEED* green building program where wood can get a green “building credit” only if the wood comes from a plantation (< 9 year rotation), or fiber from FSC certified land!!! *LEED – U.S. Green Building Council’s Leadership in Energy & Environmental Design Standards

  6. Global Industrial Forest Plantations • Plantations less than 3% of natural forests area • Planting genetically modified trees – big role in helping Northern hemisphere based industry remain globally competitive Million Hectares Source: Bowyer, Wood & Fiber Science 3(3): 318-333

  7. Forest Biotechnology – Important role in enhancing forest industry’s competitive position in Europe and North America • Europe’s £ 146 billion forestry sector needs to improve its biotechnology potential to remain globally competitive – worth more than the chemical and mechanical construction sectors combined • 300 year old industry employs 3.7 million across the continent • Biotechnology has a role in disease control, conservation, and creating economic value • In past 50 years, emphasis of production forestry and wood based manufacturing has switched from the northern hemisphere to the southern hemisphere – to the tropics and subtropics – ex. pulp mills in Brazil and Malaysia – 20 – 40 years for profit versus 6 – 10 years • Biotechnology can improve economic performance of Europe’s (and North America’s) forest by improving quality and yields, as well as helping with preservation, droughts, and biomedicines Darran Gardner, Forest Biotechnology in Europe Forum, Edinburgh, September 2002.

  8. Tool to better market wood - Life Cycle of Building Products Source: Forintek, Kozak & Gaston (2001)

  9. Wood design Wood design Steel Design Steel Design Concrete design Concrete design Embodied Embodied Global Global Air Air Water Water Weighted Weighted Solid Solid Energy Energy Warming Warming Toxicity Toxicity Toxicity Toxicity Resource Resource Waste Waste Life Cycle Analysis Results “Cradle to grave” analytical tool for quantifying the environmental impact of material choices In many cases, wood is the Appropriate environmental choice – LCA is a tool that can provides proof! Source: Forintek, Kozak & Gaston (2001)

  10. Sustainable Forest Managementwon’t happen without new markets for wood products!!! • Technological developments for more efficient processing • - allow use of greater range of tree sizes and species which • creates new silvicultural opportunities • New technology for production of wood products becoming • less dependent on specific wood characteristics of raw materials • of the forest, as with a single species or species group. • Improvements in sawing, chipping, and other areas! Source: Sayer, et. al. 1997, CIFOR paper #2; Youngs & Hammett, FPJ Jan 2001)

  11. Future Wood Fiber Source?? – need more innovative conversion technology

  12. Example – Engineered Wood Products (EWP) are environmentally friendly and can be manufactured from variety of species, sizes, grades, …

  13. Innovative Forest Products Source: Hammett and Youngs, JOF June 2002

  14. Engineered Wood Products (EWP) LVL LVL OSB Oriented Strand Lumber Wood I-Joist

  15. EWP give higher yields from the log – that means less waste and lower manufacturing cost – we need more of these products!!! Final product yield (%) Source:TJ MacMillan, USDA FS, Norbord Industries

  16. Predictable Performance & non species dependent Products via technology (I.e. performance based building codes)

  17. Construction Market Issues: An Industry in TransitionSome issues/trends that are/will impact the business climate for the world’s wood products industry!!!!Need innovative solutions – new innovative wood products

  18. Issue # 1 – Labor shortages Implications of a older labor force? More expensive labor!!! - Components (trusses, panelized wall systems, etc.) Share of employed civilian labor force 35-64 year old 16-34 year old Source: www.economagic.com/em-cgi/data.exe

  19. Labor Cost Advantages for Manufactured Housing Direct Labor share of costs (excl. finished lot and gross margins) Source: Hallahan Associates, November 2000

  20. U.S. Lumber Component Industry Growth The industry is moving toward components that are made in a factory and delivered to the jobsite. Precision cut, no waste. Builders are learning to use components. US$ Billion Sales Gross sales, US$ Billions Source: WTCA – Structural Building Components trade journal, August 2001, May 2002

  21. U.S. Homebuilding Method Estimate1,000 Units Concrete & Steel are growing. Share growth of these two is a “wood loss” of about 12,000 starts per year. 19972001 #Units%#Units % Stick Built1 1,175 79.7% 1,157 72.2% Concrete2 125 8.6% 150 9.4% Panelized3 105 7.1% 223 13.9% Modular4 45 3.1% 22 1.4% Steel Frame5 8 0.5% 30 1.9% SIPs6 8 0.5% 11 0.7% Logs 5 0.3% 5 0.3% Post & Beam 2 0.1% 3 0.2% Other 1 0.1% 1 0.1% TOTAL 1,474 100% 1,602 100% Trading Places: Stick building decline is being offset by panelization. The trend to panelization means that builders will take steps to streamline building and lower jobsite cost. They are willing to change the way they build. Source: APA 1 stick built walls and floor with pre fab roof trusses, 2 block or poured concrete walls, 3 panelized wood walls built in factory, 4 Factory built modules (not HUD), 5 steel framing used for at least exterior walls, 6structuralinsulated panels (foam core with structural panels)

  22. World Demographic Profile - 1998 Europe and Japan are older than North America – more impetus for Factory built housing/components Share of Population by Age Japan has rapidly moved to pre-cut framing and wall panelization. They’ve gone there and we’re headed there. Source: U.S. Census, World Population Profile, WP/98

  23. Japan Precut PlantsAnd % Of Post & Beam Homes That Are Precut No. of Plants % Of Post & Beam

  24. New and Innovative Building Productsand Engineered Systems

  25. Structural Insulated Panels (SIPS) A product whose time has come??

  26. SIPS

  27. Modular Construction - 1 Source: Courtesy Cardinal Homes

  28. Modular Construction – 2

  29. Modular Construction – 3

  30. LVL(Laminated Veneer Lumber) and OSB wall panels

  31. Factory Built Walls and Glulam Beams

  32. Panelized Wall System for Modular Housing

  33. Commercial Application – Glulam, I-Joists And Parallam

  34. All Engineered Wood Floor System

  35. Issue # 2 - Construction Site Waste Pounds of waste for a 2000 Sq. Ft. Home in U.S. 8,000 pounds of waste per housing start Source: NAHB

  36. Waste from German Panelized Housing Project Source: APA

  37. Wood Fiber VolumePer Unit Floor Area – efficiencies with EWP’s LVL flanged I-joist vs. Solid lumber joist: Flooring applications: 46% less than lumber @ 16” OC (on center) vs. I-joist @19.2” OC 36% less when both are at 16” OC • Spelter & others. FPL-GTR-99. 1997.

  38. Issue # 3 : Homebuilding Industry Consolidation Rationale: • Lower capital costs – important because 65% of builder’s assets tied up in inventory • Operating and O/H efficiencies • Land control – land development costs exceed 25% of new home • Brand recognition – mobile society and some builders want to sell you your starter home, move up/custom, and retirement home – brand loyalty – consumer “lock in” • Deeper pockets – larger builders have money for R&D, product development, etc.

  39. Consolidation in U.S. HomebuildingWill Accelerate Industrialization Trends Top 10 Market Share* Top 100 Market Share* * Homes closed by largest for – sale builders Source: NAHB, Housing Economics, May 2002

  40. Issue # 4: Substitution Many key conventional wood products are mature – losing market share to substitutes – steel, concrete, EWP’s, …

  41. North American Wood Products Consumption – most wood products (70%) go to residential markets a lot at stake here if housing industry starts shifting away from wood building materials/systems 2001 Structural Panels 37.6 BSF(3/8) 2001 Lumber 60.6 BBF Industrial 24% Industrial 25% R&A 31% R&A 20% New Residential* 50% New Residential* 39% NR 5% NR. 6% *New Residential incl. SF, MF, and Mobile Homes Source: RISI

  42. Construction “Product Life Cycle” Alternatives to “mature” Lumber and Plywoodconventional wood expected to continue losing market share to materials with less maintenance, stronger, predictable performance, … FJ lumber MSR Lumber Sales $ Engineered Components LVL & I - Joists OSB Roof Truses Plywood Autoclaved Concrete Lumber Industrial Plywood Conventional Concrete Block Laminated Lumber - glulam ? GFB, OSL, PSL Steel Studs Plastic Lumber Foam Core Panels Introduction Growth Maturity Decline Time Horizon Source: USFS

  43. Building Material “S” Curves “S” curves - product life cycle for one product Most products ”max out” near 80% - many wood products have “maxed out” – that’s why substitutes are making inroads Market Share (%) Generic S Curve Plywood S Curve OSB S Curve I-Joist S Curve** *Sq. Ft. Footprint, single family, trusses & truss/rafter combination ** Raised wood floor share Sources: USDA Forest Service, APA, & Wood Products Council

  44. Adoption of Technology (S – Curve) and Costs – Need R&DNew technology has to be competitive Innovation Growth Maturity 90% S – Curve for adoption of “new products” Cost Curve “New Products” 10% Time Horizon Source: USFS LVL

  45. Interesting R & D Statistics US Canada Sweden % Forest Sector GDP 1.6 3.0 3.7 Commercial forest (000 Sq Km) 1956 2450 240 Forestry R&D (US$ million) 471 113 65 Forest Products R&D (US $ million) 1712 94 260 Interesting annual R&D spending comparisons: Pfizer - $4.35 Billion Merck – $2.45 B Intel – $3.76 B IBM - $5.29 B Weyerhaeuser - $ 55 million Entire U.S. Forest Products Industry - $1.72 Billion Sources: Forintek Canada Corporation, www.multex.com

  46. Trade Balances: Industries that spend more on capital improvements (R&D) generally have more favorable trade balances – 2000 basis Industry CAPEX / Shipments* Trade Balance Wood HH Furniture 2.1% - 7.0 billion $ Synthetic Rubber 6.5% +0.3 billion$ Plastics & Resins 6.5% +6.2 billion$ Automotive Parts 5.0% + 1 billion$ Commercial Printing 4.4% + 0.4 billion$ Agric. Chemicals 4.6% + 2.8 billion$ Industrial Chemicals 8.4% + 1 billion$ Telephone. Eqpt. 3.3% + 3 billion$ Aircraft Parts 5.2% +10 billion$ * Total capital expenditures divided by value of shipments for latest year available

  47. Innovative Forest Products Won’t happen unless we spend more on R & D Source: Hammett and Youngs, JOF June 2002

  48. Steel Framing Implications If builders and wood products suppliers don’t solve the labor cost, waste, and other problems, someone else will…………………… Tons of steel in site built Residential construction Source: NASFA, 2001

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