Toronto’s Norbord riding the rising wave of OSB sales

July 22, 2016

By: Globe and Mail

For years, it was known as the ugly duckling, cheaper alternative to plywood.

One design maven described it as “like the turkey loaf of building materials.”

But oriented strand board – OSB for short – has come into its own over the past 3 1/2 decades as a major player in North American wood-frame housing construction and is increasingly used for industrial and other applications.

Structural OSB panels – made of wood strands that are resin-bonded under high pressure and heat – are mostly used as floor, roofing or wall substrate in home building.

They’re also getting play these days on fashionable interior-decoration websites as a “shabby-chic” finishing material.

Capitalizing on OSB’s rise like no other forest-products company is Toronto-based Norbord Inc.

Norbord, once a diversified forestry company, has shed assets over the years and focused on OSB. Now boasting annual sales in the $1.5-billion (U.S.) range and a market capitalization of about $2.4-billion (Canadian), it bills itself as the world’s largest producer of OSB.

The $763-million acquisition in 2014 of Vancouver-based Ainsworth Lumber Co. Ltd. gave Norbord – whose operations were concentrated in the U.S. southeast – a strong presence in Western Canada as well as a foothold in the promising Japanese market.

Right now, the steadily growing number of housing starts in the United States is giving Norbord a big boost, and low-key, media-shy chief executive officer Peter Wijnbergen says there are major growth opportunities in Europe and Asia.

Under Norbord veteran Mr. Wijnbergen, who took over as CEO 2 1/2 years ago, the company is also noted for its single-minded attention to cost cutting and productivity enhancement at its 15 OSB mills.

“When OSB was first brought to market in the early 1980s, it was originally promoted as a cheap substitute for plywood. Well, of course, that set you down the wrong path from Day 1 and it has taken quite a while to get away from that image that people associate with it,” Mr. Wijnbergen said recently in a rare interview, at Norbord’s R&D centre in an industrial park in the Montreal suburb of St-Laurent.

Among the factors helping upgrade OSB’s popularity are its low cost; innovations that have made it stronger and better suited to a variety of construction and non-construction uses; and the fact it’s made from small, fast-growing trees such as aspen or poplar and that the entire tree is used in the production process, thus reducing its environmental impact. Even the bark is used to generate energy at the mills.

Plywood manufacturing, in stark contrast, uses only about 50 per cent of the wood material and relies on bigger slow-growth trees, said Mr. Wijnbergen, who came to Canada as an exchange student from Holland and decided to stay.

“We can use smaller, cheaper trees and use all of it and the process is highly automated.” Only about 100 employees are needed at Norbord’s most productive plants, a fraction of the personnel required to churn out a similar volume of plywood, he added.

“They are very efficient in making the widget they produce,” U.S. independent research analyst John Tumazos said. “They’re very focused.”

Norbord’s main rivals are all U.S.-based: Louisiana-Pacific Corp., Weyerhaeuser Co. Ltd. and Georgia-Pacific LLC.

Norbord – formerly known as Nexfor and before that as Noranda Forest Inc. – enjoys a big advantage over Canadian lumber producers: OSB is excluded from possible penalties on shipments to the United States, unlike softwood lumber. The previous Canada-U.S. softwood lumber agreement expired last October and there is a one-year grace period allowing Canada to try and negotiate a new deal to avoid a potentially costly trade war with the United States.

Mr. Wijnbergen anticipates a steady, if not spectacular, recovery in U.S. housing starts, rising to about 1.2 million this year from 1.1 million the previous year. But he’s also buoyed by the fact that Norbord can better manage growth through a fragile recovery because there are more non-construction end uses for its product. For example, the company supplies customized OSB to the upholstered furniture industry.

“The overall market for us is much more robust than it was [several years ago],” he said.

Staff at the R&D centre are tasked with coming up with new uses and ways to engineer Norbord’s products.

“We kept an eye on plant productivity. Now, we’re able to look a little more at innovation. The focus is becoming a little more on the product development side,” Mr. Wijnbergen said.

By: Globe and Mail

Your comments.

  1. Doug Ballard says:

    It’s important to continually educate the public on the versatility and reliability of engineered wood products. The scientific community along with proven manufacturers continue to develop exciting solutions for conventional and new construction methods as well as architectural features that were not previously possible.

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