Al Schuler – USDA Forest Service Craig Adair – APA – The Engineered Wood Association

1. World Trends in EWPPresentation to Joint ECE Timber Committee & FAO European Forestry Commission October 10, 2000 Rome, Italy Al Schuler – USDA Forest Service Craig Adair – APA – The Engineered Wood Association Ed Elias – APA – The Engineered Wood Association

2. Outline • Definition of EWP • Compare/contrast world demand/end use applications • Demand drivers and outlook for next few years

3. 1. EWP Definitions • 1. Structural Composite Lumber (SCL) • Laminated Veneer Lumber (LVL) • Parallel Strand Lumber (PSL) • Oriented Strand Lumber (OSL) • 2. Wood I-Beams • 3. Glued Laminated Timber (Glulam)

4. 2. World Demand Trends for EWP • EWP versus conventional wood products • Compare & contrast demand in North America vs Europe vs Asia • Why the major differences??

5. Consumption of sawnwood, wood based panels, and EWPs in Europe, NA, and Japan EWP still a small market Million cubic meters 1999 data Source: APA,2000 & Timber database,2000

6. Regional EWP Markets Glulam is the only universally used EWP LVL & I-beams geared to NA LVL, Glulam I-Beams 1999 Consumption Source: APA 2000 & Jaakko Poyry 2000

7. Wood frame construction NA consumes the majority of EWPs to frame their homes To date, little used in nonresidential/commercial construction Source: APA 2000 & Jaakko Poyry 2000

8. I-beam production Million linear meters Most of the I-beams used in Residential flooring applications Source: APA 2000

9. LVL end uses North America - LVL used in I-beams primarily Europe – main uses are engineered constructions/nonresidential buildings Japan/Asia Pacific – main uses are furniture and other decorative/non structural applications Market Share Sources; APA 2000 & Jaakko Poyry 2000

10. North American EWP Markets New Nonres. Renovation Homes Buildings Export/Other Glulam 52% 38% 10% = 100% I-beams 83% 7% 10% = 100% SCL* 60% 20% 20% = 100% * Structural composite lumber products not used to make I-joists.

11. Engineered Wood Products In 1998, 8.6% of all lumber-like products* used in new home construction in North America were EWP • Beams • Floor Joists • Roof Rafters • Window/Door Headers * Lumber products only. Panels excluded.

12. Glulam consumption versus imports Glulam is the only EWP that is heavily traded internationally Trade is from NA and Europe to Japan 1000 cubic meters Source: APA 2000, Jaako Poyry 2000, & Japan Customs Bureau 2000

13. 3. Outlook

14. Why Have Engineered Wood Products Grown??? Environmental issues & trade restrictions Fewer & smaller logs, higher log prices & Continued commodity price swings Builders like the results – better value Source: APA – The Engineered Wood Association

15. Demand Drivers for EWP’s • Changing Fiber Supply leads to • Fiber Cost Increases • Lots of focus on U.S. experience, but we are seeing • Similar fiber Restrictions all over the world • Canada – reduced AAC in BC and eastern Canada • South America – rain forest harvest restrictions • China – recent harvest and wood use restrictions • Malaysia – harvest restrictions on tropical hardwoods • Russia – infrastructure problems reduce harvest potential

16. U.S. Experience :Total Timber Harvest - Public & Private - Washington & Oregon Court ordered harvest restrictions on Federal lands • Two major impacts: • Total harvest down 50% • Private share now about 78% Million cubic meters “Spotted Owl Effect” - 50% Private Public Source: USFS ( PNW –RB - 231 , May 2000)

17. EWP give higher yields from the log – that means less waste and lower manufacturing cost Final product yield (%) Source: Forintek, TJ MacMillan, USDA FS

18. Efficiency Advantages – EWPsFiber Savings in U.S. Housing • Conventional Floor System • 1700 lineal feet (531 meters) lumber/house • With 1.3 million single family houses, 8.25 million cubic meters wood fiber/yr. • I-beam system • 50% savings in wood fiber (Spelter, 1997 FPL GTR 99) 19.2 “ (48.75 cm) on center, LVL flange, same subfloor thickness, OSB web) • Save 4 million cubic meters wood fiber/year

19. Demand Drivers for EWP’sBuilders/customers like the product due to Better Quality and less Price Volatility

20. I-Joist & 2x10 Lumber Prices Builders wanted higher quality and stable prices. PRICE PER METER & PRICE SPREADS I-Joist $2.26 $2.85 $2.33 $2.62 2 x 10 • 9-1/2” I-Joist, 6-city delivered average • 2 x 10 No. 2 & Btr. Southern Pine,KD, 14’, Westside, mill price Source: Random Lengths Publications and Engineered Wood Trends

23. Demand Drivers for EWP’s Demographics – aging population favors labor saving construction techniques

24. An Older America – Implications for Building Materials Japan’s & Europe’s demographics are worse Distribution of Population By Age Group (%) Framing Crew Labor Pool Prime House Buying Age Group Source: US Bureau of Census

25. Labor Saving Efficiencies Examples • Applications Conventional EWP Solution • Solution • Garage Door Headers two 2x10’s nailed together one LVL beam • Floor System conventional floor I-Joist system with 80 with 133 pieces pieces (40% less) • Carrying Beams three or four 2x12’s nailed one 3 ½” (8.9 cm) LVL beam one Parallam beam • Roof Truss metal plate wood truss with metal plate wood truss system with conventional lumber chords MSR chords(25% less lumber)

26. Factory built homes and use of prefab (engineered)components gain share from “stick-built” construction. Factory built homes use more EWPs HUD Code Modular Panelized Production Builders/ Site Built Note: These estimates are slightly higher than U.S. Census estimates because they include production for export Source: Automated Builder

27. EWP’s Plants in North America Number of plants Number of plants has doubled, and average plant size is larger today Source: APA

28. North America EWP Growth Immediate growth – substitute for wide lumber (2x10’s) in residential markets Longer term – substitute for lumber and non wood products in all structural applications both residential and nonresidential/commercial markets 1000 cubic meters Glulam I-beams LVL Source: APA 2000

29. European glulam production Growth driven by interest in timber frame construction And export opportunities (Primarily to Japan) Thousand cubic meters Source: Jaakko Poyry 2000

30. Global Glulam Production Thousand cubic meters Source; R. Taylor & Assoc. Wood Markets Monthly, Sept. 2000

31. Global LVL Production Thousand cubic meters Source: R. Taylor & Assoc., Wood Markets Monthly, Sept. 2000

32. Global I-beam Production 1000 cubic meters Source: R. Taylor & Assoc., wood Markets Monthly, Sept. 2000

33. “Product Life Cycle”Competition, new technology, and changingresource driving trends to EWP Product Life Cycle *GFB – gypsum fiberboard OSL – oriented strand lumber PSL – parallel strand lumber PB Market share OSB MDF Plywood LVL, I - beams Lumber Industrial Plywood Laminated Lumber(glulam) GFB, OSL, PSL* Plastic Lumber Strawboard Develop. Expansion Rapid Growth Mature Decline Time Horizon Source: USFS

34. Potential Problems for EWPs Adding capacity too quickly easy todo with new markets

35. MSR Premiums Shrink as Production Soars Premium to #1&2 Million BF Source: Random Lengths, MSR Lbr. Producer’s Council

36. Future Fiber Supply Uncertain??? EWPs offer additional flexibility to use whatever fiber is available Why?? Here are two reasons!!!! > New conversion systems focused on small log resource e.g. flaking machines for SCL (LVL, OSL, PSL) > New resin technology/systems let us use more species

37. Facts: • We don’t use the majority of the species available to us • 2. Now, old growth is becoming “off limits” • Plantation forests offer opportunities to grow “pulpwood” size trees in • a fraction of the time required to grow “conventional size” fiber • 4. EWPs technology allows us to use a wider range of available fiber