Let the Ramp-Up Begin…
Story by Jennifer McCary,
Senior Associate Editor
Next spring will mark five years since Louisiana-Pacific started up what was to be its flagship OSB facility just a few miles from my home in Thomasville, Ala. It was a pretty big deal for the folks in our rural forestry-based economy. However, the anticipated prosperity that the company’s investment was to bring did not happen. A tragic accident within weeks of startup followed by the housing/economic meltdown that fall ushered in the “Great Recession.”
The mill has never re-opened, but it has also never been permanently mothballed. Word is the company plans to re-open when market conditions meet certain milestones indicative of a sustainable marketplace. Only then would it be feasible to make the multi-million dollar investment necessary to bring the plant online. Meanwhile, LP has announced several pre-startup job openings at Thomasville.
The folks in Clarendon, SC have also been waiting for a new OSB plant built around that same time period to go online. Grant Forest Products started the construction project there but ended up filing bankruptcy before it was finished. Georgia-Pacific bought it and two other Grant facilities. They completed plant construction in 2011 in anticipation of a December startup. But the bump up in OSB markets was short-lived so startup was pushed back. Recently, however, GP announced it was ready to ramp-up production.
Housing starts in 2012 have begun to show some life, and since housing generates nearly half of all OSB demand, manufacturers are hopeful this could be the start of a steady, ongoing recovery for the industry. APA-The Engineered Wood Assn. projects a 20% increase this year over 2011’s housing starts and another 18% increase in 2013, bringing the total up to 865,000 in 2013. Other associations are even more bullish in their estimates.
A number of other panel mills are also investing in new versatile systems and technologies that will allow them to diversify away from commodity products that are so dependent on housing. Diversifying allows added flexibility to be able to add or change specialty products as needed. That’s a trend that probably will continue as producers develop and capture market share by tailoring the product to a customer’s needs, similar to what we’ve seen in lumber markets in recent years.
A lot has changed while industry production has been curtailed which will present a number of challenges as we begin to ramp-up. For one thing, the industry is struggling to gain fair treatment by various building codes and standards such as the International Energy Conservation Code, some green building requirements and more stringent regulations on formaldehyde emissions and MACT rules.
Another issue that will probably blossom as the economy strengthens is an imbalance between labor demands and the availability of a qualified, willing workforce. Even with high unemployment, many people I visit in the forest products industry are finding it hard to hire qualified workers. They tell me it is not just a matter of skills. The real problem is a lack of motivated work ethics, especially among the younger generation, though not exclusively. However, there is nothing more motivating than an empty stomach.