François Robichaud, FEA Partner, provided an update and outlook on engineered wood products, which are heavily influenced by the health of the US housing market (given that 80% of MSR, I-Joists and LVL is used here). All three products will thus decline and recover in line with FEA’s related market forecasts with some variation. MSR lumber is considered a product on the rise with its precise characteristics and potential in the growing prefabrication market. As such, Robichaud expects consumption to rebound in 2021, in line with 2019 levels (about 1.5 BBF) and then grow an average of 9.5% per year through 2024 (to about 2 BBF). The story of LVL will be similar but with sharper declines in 2020 (20%) and then 9.1% per year growth through 2024 (as mass timber and other applications are developed). I-Joists’ short term future will follow suit but longer term will be less positive, given the trend to floor trusses and modular design.

Art Schmon, FEA partner, provided an overview of mass timber panels and markets. Differentiating the products in the mass timber category from traditional commodity lumber, Schmon described them as “non-commodities” employed in a “vertically, integrated building solution business”—where the manufacturing process is only about 25% of the business. Although two-thirds of the 101 existing good-sized plants are in Europe, more than one-quarter are in North America and they are expanding rapidly. From 2013 to 2016, the number of plants tripled to 12 and two more are pending in 2020/21. The key difference between their use and consumption is that the vast majority of Europe’s consumption is in construction applications, while more than two-thirds of North American production goes into access matts for ground protection (e.g., for the oil and gas industry, big civil projects, etc.). Looking forward, FEA forecasts consumption to drop 15% in 2020, but double in 2021 and increase an average 65% per year through 2024. The growth will occur in matt applications but also construction given the pending tall-wood code changes in 2020 and 2021 in Canada and the US, respectively.

Lucus Epp, Engineering Manager at StructureCraft, provided an overview of his company, the history of mass timber and why its consideration and use is growing. Key points driving demand, according to Epp, include: the speed of construction and erection and associated small-crew size; the aesthetics of exposing wood and associated environmental and health/well being benefits; increased testing and thus awareness of its safety from a fire performance perspective; engineering benefits such as lighter buildings and seismic considerations; and increasingly—as the market grows—its cost competitiveness vis-à-vis competing products.

Mike Schmidt, President of Auto Construct spoke of the challenges and opportunities that lie in the emerging business of industrial scale, panelized manufacturing, such as that being pursued by Kattera. The business model—employed by others such as the automobile industry—involves mass production with digital and other cutting edge technology so as to ensure high speed, supply dominance and profitability. The key challenge for wood-based industries lies in the quality or lack of precision in the raw material, given the high importance on speed and throughput. The cost of poor quality feed stock, given the downstream challenges created, can be as high as 30%. And until higher levels of precision can be guaranteed, the industrialization of North American framing will be limited. In closing, Schmidt’s three takeaways were: i) the financial implications of raw material quality grows exponentially in industrial-scale, capital intensive panel manufacturing operations; ii) the forest products industry lacks a cost effective raw material solution; and iii) the gap is closing with new entrants.