CPA, APA Leaders Size Up Situation

Leadership from two of the major primary panel production associations provided 2022 year-end reports, while also looking ahead to 2023 and both pointed to economic issues moving forward.

“This year (2022) was more ‘back to normal,’ as the COVID pandemic was mostly in the rearview mirror. There were still a few ‘hangovers,’ with the supply chain still being constrained and a shortage of workers limiting productivity,” commented Andy O’Hare, president of Composite Panel Assn. (CPA).

O’Hare added, “The new boogieman is sticky inflation and its cousin high interest rates. We saw the effects of the latter two elements in the fourth quarter of 2022, with declines in composite wood panel shipments. The commercial and residential housing markets have been significantly impacted by the increased interest rates, which will negatively impact construction activity into at least the first half of 2023. We can be hopeful that inflation will wane progressively over the year and be back in the 3-3.5% range by Q4 2023, with an accompanying reduction in interest rates.”

Formaldehyde and climate change policy developments dominated in 2022, O’Hare said, with most of the formaldehyde action occurring in Canada. Health Canada finalized its Formaldehyde Emissions from Composite Wood Products regulations in 2021 and CPA worked with the ministry throughout 2022 to clarify several details in anticipation of the rule going into force in January 2023.

In the U.S., EPA rolled out an updated version of the Integrated Risk Information System (IRIS) for formaldehyde, a hazard and exposure assessment for the chemical, which will inform the risk assessment under the Toxic Substances Control Act (TSCA). The IRIS assessment is presently under review by the National Academy of Sciences.

Meanwhile, the U.S. Congress passed a climate change bill in August, titled “The Inflation Reduction Act,” which is heavily focused on promoting carbon free electricity generation and incentives for electric vehicles. There are also provisions encouraging the federal government to procure “low carbon” building materials, which could enhance consumption of products made with composite panels. Potential benefits for CPA members will be clearer in 2023 when these programs are implemented.

With climate change being a focus of the national and international policy dialogue, Gary Heroux, CPA technical director, initiated a study late 2022 to complete the environmental lifecycle work begun several years ago. This work in 2023 will examine the “plant gate to grave” portion of the composite panel lifecycle. This will allow CPA to account for the fate of the carbon stored in composite panels after the products in which they are contained have reached the end of their life.

Mark Tibbetts, President of APA—The Engineered Wood Assn., described 2022 as a year of transitions. “Thankfully, we put much of the disruption of the pandemic behind us. We held our first Annual Meeting since 2019. We also returned to routine mill audits and in-person meetings within our Technical Services and Field Services divisions.”

One lingering impact, Tibbetts noted, is inflation—with the response of tightening monetary policy being felt most acutely in the housing market. On a year-over-year basis, new housing starts dropped 16.4% since November 2021, with single-family construction declining 32.1% over the past 12 months.

“I believe we are in store for a shallow recession and don’t buy into the Fed taking its foot off the break,” Tibbetts said.

Tibbetts noted several positives. APA’s proposal to allow OSB sheathing in floor construction in high-velocity hurricane zones in Florida, mainly Miami-Dade/Broward counties, was recommended to the Florida Building Commission for approval as part of the 2023 Florida Building Code by the Florida Code Committee.

APA’s Quality Services Div. spent much of the year conducting a comprehensive review of APA’s quality program and APA is aligning processes across regions, improving documentation and quality of the work product.

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