Europe’s wood-based panels industry saw its first signs of real recovery during 2003 – and the UK was no exception. Alastair Kerr, director-general of the Wood Panel Industries Federation (WPIF), which represents UK wood panel manufacturers, is periodically asked where he sees the industry today and in the future.
He said commenting on the present is the easy bit, but looking to the future will always be a matter of opinion, which will vary depending on where it is being viewed from. Sitting between the manufacturers and their market enables the WPIF to look at the broader picture.
There are currently eight wood panel manufacturing plants in the UK; one producing OSB, five producing chipboard; and two producing both chipboard and MDF.
Expanded production capacity
Mr Kerr said: “Chipboard production in 2003 was 2.24 million m3 whilst production of MDF was 835,000m3, OSB was around 300,000m3. In terms of particleboard and MDF consumption, UK manufacturers supply about two-thirds of the total.”
Production capacity has expanded significantly during the past 15 years fuelled by increasing demand from the two core markets – furniture and construction. Mr Kerr said: “The position in the UK has been mirrored in western Europe which at times has led to over capacity with consequential impacts on prices, but at all times the industry has been moving forward.
Commenting on the development plans of deputy prime minister John Prescott, he said: “The UK chipboard market is mature and whilst some growth is expected on the back of Mr Prescott’s housing plans and the hope that a significant share will go to timber frame, there is unlikely to be a new greenfield site manufacturing line built in the UK in the foreseeable future.
“Instead the industry will work to gain more market share through production efficiencies, service improvements and value adding. With a number of the UK panel presses in excess of 20 years old, it is likely that some will be replaced with efficient continuous presses, which have greater flexibility in terms of panel sizes, density profile and so on.”
The MDF and OSB markets, slow over the past two years due to depressed economic conditions, remain on the upward path. Here again, said Mr Kerr, the trend leans towards value adding, with a rise in production capacity for laminate flooring and production efficiencies being gained through upgraded plant.
“There are many influences on the market, which will collectively bring about change. For example, the UK’s demand for furniture is increasingly satisfied by imports and construction techniques are changing with a move towards system building and off-site construction. Environmental pressures are forcing designers and builders to consider whole-life costs and eco-ratings are being required for houses and components. Wood products should do well, but more effort is needed to get the message across.”
From a manufacturing perspective, he said, the biggest challenge is responding to the tightening environmental demands placed on a large scale industrial processing operation, whilst remaining competitive.
“The life-blood of any manufacturing industry is its raw material and the panel industry is one of the largest consumers of UK timber. There is increasing demand being placed on the UK’s wood fibre resource and in the future electricity and heat generation will be a major competitor for the wood. In the short to medium term this presents a threat to the panel industry, but there are also opportunities, one of which is to supply even more of its own energy requirements from renewable sources. Who knows, as experts in the business of wood conversion and drying, it’s even possible that the industry could move into the wood fuel supply market.
Changing UK market
“It is clear that the market is changing but the UK will always remain a major consumer of wood-based panels. Operating in an international environment, panel manufacturers are well accustomed to change, and whilst there are some interesting challenges ahead the industry has a good track record of responding to the challenges such that we can expect to see a strong manufacturing base well into the future.”
The manufacturers are also upbeat. Hill’s Panel Products supplies mainly into the kitchen and bedroom industry. Managing director Stephen Hill said: “People are spending money as they have realised they are increasing the value of their house. It is difficult to say how long it will last – house prices are going to start stabilising and interest rates are creeping up, but I don’t think that is going to affect things greatly.
Increased sales
“We have seen increased sales across the board over the past year of getting on for 20% – something we have not seen since we started from zero in 1991. We always dealt with small to medium-sized companies, but some larger companies are coming to us now because they want to cut out the manufacturing process.”
Hal Eccles, marketing manager at Lawcris Panel Products, believes the industry has come of age. “Old attitudes and stereotypes of the industry are changing. Our customer base now expects quality service and product at a competitive price,” he said.
“With more and more regulations and developments in both products and services, it is vital for a successful company to be informed – and to keep its customers informed – to retain a competitive edge. Added value will keep companies in the market.”
The company’s veneer director, Phil Hall, said that while the veneer industry is getting more selective, prices are taking a battering and are causing some to cut corners in quality.
Stocking different qualities
“We tried to keep a large range at a reasonable quality, but customers demand the highest quality at the lowest price. Now we are stocking different qualities at different prices and educating our internal and external sales staff to get more involved with the customer, so helping us to supply them with the correct product.”
He advises end users to be more up front about the application when ordering veneer. “Veneer is the most problematic product in the industry as the decision of what is deemed poor quality or is aesthetically pleasing is down to the eye of the individual. Everyone from the veneer producer to our warehouse staff and the end-user has an opinion.
“Both melamine and laminate sales are increasing daily and I am looking over my shoulder. However, there will always be a need for the real thing.”
Kronospan sales director Colin Singleton said the company is seeing a buoyant MDF and chipboard market. “We are receiving enquiries from around the world – with people coming to us rather than us having to chase them,” he said.
“We are also seeing opportunities for growth with value added products, in particular melamine faced chipboard and MDF which we supply predominantly into the furniture and DIY sectors.”
That growth is helped by new wood decors developed to keep Kronospan at the forefront of the latest European design trends.
He is optimistic about the market. “There seems to be some equilibrium in supply and demand and growth is moving forward. The panels market has been in the doldrums for two or three years, but things are beginning to turn round fast on the back of a strong housing and refurbishment market. And although that market keeps changing, in the short and medium term it is looking good.”
Sonae managing director Tony Hackney also believes the UK market has become more stable. “Even though UK base rates have continually increased, leading to a further strengthening of the pound against the euro, imports appear to be less active,” he said.
“The sales prices of particleboard increased by approximately 10% over the first half year. Construction activity is strong although the furniture market remains less buoyant, with installed MFC capacity exceeding total demand.”
He said plans are under way to improve capacity and Sonae is setting standards for effective recycling. “Spiralling costs are a major concern, with imposed increases from power generators for electricity in excess of 50% and increased resin costs fuelled by rising oil prices.
“Customer confidence and subsequent demand for indigenous products and a strategic approach to partnerships is a welcome development in the market and presents a very positive outlook.”
