CLT IN THE SOUTH

CROSS-LAM THINKING

As the United States looks for ways to reduce its carbon footprint, the commercial construction industry and architects are searching for more sustainable products that are cost effective, energy efficient, structurally sound, and environmentally friendly. At the same time, as housing starts have not rebounded to pre-recession levels, forest landowners and wood products manufacturers are seeking alternative markets. The Louisiana Forest Products Development Center, Louisiana State University Agricultural Center partnered with more than a dozen university, government and industry entities to conduct an analysis of the market environment and potential of cross-laminated timber (CLT) in the U.S. South constructed from southern yellow pine (SYP). Previous CLT research and development to date has focused on using Douglas fir and other species from the Pacific Northwest region of the U.S. as well as spruce-pine-fir from Canada and imported species from European countries. SYP MANUFACTURING Softwood lumber markets in the South have been regaining momentum since the recession of 2008 as U.S. demand continues to increase. In 2009, U.S. customers purchased close to 31 billion BF of softwood lumber which was projected to reach 49 billion BF in 2018. The recession caused a significant slump in softwood lumber demand, which in turn allowed trees to grow larger on the stump as landowners waited for low stumpage prices to recover.

In the past, independently owned, smaller sawmills made up the lumber industry in the South. During the mid2000s only about a fifth of the South’s lumber mills were larger than 200MMBF in size, while approximately 33% were smaller mills of less than 100MMBF. The number of softwood sawmills in the region declined from 420 to 298 from 1995 to 2009, producing a high of 19.5 billion BF in 2008. Today, lumber mills in the U.S. South are expanding, and are bigger with many managed and owned by large companies rather than independent owners. They currently produce about 22 billion BF of lumber.

Large sawmills are taking advantage of the low sawtimber prices in the region. Since 2011, the production capacity has increased by 3 billion BF and is on an upward trajectory from a number of variables. Housing trends, import tariffs, and an affordable feedstock have accelerated the southern pine industry.

Canadian firm West Fraser holds the largest production capacity at 3.1 billion BF, followed by Weyerhaeuser with 2.5 billion, and Georgia-Pacific with 2.4 billion. The top 10 companies in the South comprise 66% of total production capacity, and Canadian firms account for one-third of capacity. Most of these competing firms have announced plans to increase their capacity by expanding existing mills or building new ones, causing a high geographical agglomeration. In short, Southern sawmills are becoming fewer yet larger as companies seek to improve profit margins through efficiency and sourcing of low cost timber. By Richard Vlosky, Mason LeBlanc, Rajan Parajui, Charles Gale Recent survey examines awareness of CLT by SYP lumber producers.

CLT EMERGENCE Mass timber has been produced and used in many forms over the past decade. Examples are glulam beams, laminated veneer lumber (LVL), and parallel strand lumber (PSL). More recently, new entrants have been developed and are being adopted in the North American engineered wood product building materials family of products. Panel products like crosslaminated timber (CLT), naillaminated timber (NLT), dowel-laminated timber (DLT) and mass plywood panels (MPP) have experienced years of product testing, manufacturing learning curves, yet limited market space.

CLT, the focus of this article, its manufacturing and use in multi-story buildings and other structures is a well-established and fast-growing industry in Europe, but is in its infancy stage in the U.S. The potential markets for CLT in the U.S. are enormous if architects, builders/contractors, engineers, and building owners accept the product as a substitute for steel and concrete construction. The Southern U.S. has ample southern yellow pine resources to meet the potential market for CLT, as there are many sawmills in the region that have increased production significantly after the post-recession reduction in demand for dimension lumber.

Led by CLT, the North American mass timber-panel manufacturing industry is poised for substantial growth, projected to double in size in terms of projects and manufacturing capacity annually for the next four years. The International Mass Timber Conference, held in Portland, Ore. for the past three years, as well as efforts to disseminate knowledge, awareness and understanding of this emerging market by WoodWorks, a national organization, is accelerating. This is just the beginning of a very long upward trajectory for an industry that will replace traditional construction materials like steel, concrete, and masonry in many applications. Mass timber panels will also be used in conjunction with traditional building materials, further expanding markets and use. As the environmental, economic, construction, and aesthetic implications of using wood are better understood by architects, developers, builders, engineers and government officials, the mass timber industry will be firmly established in both non-residential and residential construction in the future.

SAWMILL SURVEY

A comprehensive study was conducted in fall 2018/spring 2019 to better understand the dynamics of CLT perceptions, awareness and potential for adoption from architects, non-residential builders, engineers (civil, architectural, building) and hardwood and softwood lumber mills in the study region.

This article focusses on the softwood lumber mill segment. Softwood lumber is the main feedstock for CLT, and as such, it is essential to better understand the supply-side. A paper-based survey instrument was developed with input from key partners versed in the sawmill sector. Mailbased survey techniques were used to assess the current market knowledge base of Southern sawmills toward CLT and its potential in the Southern U.S. A random sample was taken from the softwood sawmill sector in the study region. Following accepted survey administration practices, pre-notification postcards, a first survey mailing with a postage-paid envelope, reminder postcards, and a second survey mailing were sent to 412 sawmill recipients. After accounting for undeliverable surveys, primarily firms that had gone out of business, incomplete surveys, and nonresponses, the adjusted response rate was 18% with 51 useable responses.

SURVEY RESULTS

● Respondent Demographics The highest response rates came from the states of Alabama, North Carolina and Mississippi, comprising 18%, 16%

and 14% of responses, respectively. Least represented were Tennessee, Florida and Louisiana with 6%, 4% and 4% of respondents. Most of the sawmills were moderately sized in terms of employment, with 56% employing 20-250 people, while 6% employed more than 500 and 20% had less than 10 employees. CLT is a possible new sales channel for softwood lumber producers, so we looked at current customer bases to see where market shifts may occur. With multiple responses possible, 35% of respondents sell to wholesalers at the top of the list, followed by preservative treating companies/remanufacturers/export (18%), stocking distributors (12%), and non-residential builders (9%). ● What do they know about CLT? While the CLT market is poised for substantial growth, results indicate that respondents are generally unfamiliar with CLT. Forty-one percent indicated that they were not at all familiar with the product while 41% were somewhat familiar and 18% were very familiar. The recent establishment of a CLT manufacturer within the region seems to be slow in gaining the attention of Southern sawmills, as 53% of respondents reported they knew nothing about the current CLT manufacturers within the U.S.; only 2% were very familiar. ● Will they sell lumber to CLT manufacturers? Can they meet CLT lumber requirements? How much will they charge? While the lack in familiarity may be a concern for CLT manufacturers hoping to locate in the South, 36% of respondents said they were somewhat or very likely to sell lumber to a CLT manufacturer operating in the region, while 8% of respondents have already sold lumber to a CLT manufacturer. Seventy-seven percent of respondents would not require long-term contracts with CLT manufacturers, but 65% said they would accept them. The capability of Southern sawmills to produce CLT grade lumber

is not an issue. Generally respondents reported that they could meet CLT lumber specifications, with 65% saying they could dry lumber to a 10-12% moisture content; however, 48% are able to sort and provide higher density wood specifically for the CLT market.

Drying to CLT requirements and sorting by density comes at a premium for many of the respondents (see figure, page 35). For drying alone, 85% of respondents said they would charge a premium. Of the 26 of respondents that shared this information, the premiums ranged from, on the low end of the scale, 1%-5% (4% of respondents), to an over 20% premium (15% of respondents). Without market information on whether premiums are currently being charged, or paid, it will be interesting to see if these play out in the marketplace once CLT becomes established in the South. ● Information Needed There are many opportunities for educating many players in the CLT supply chain and influencers such as architects and builders. Softwood lumber manufacturers indicate the top areas or experiences they would like to receive or participate in to become better educated on CLT (see figure, page 35). Although this study established a general unfamiliarity of CLT and CLT manufacturers from the perspective of Southern softwood sawmills, the opportunity to increase the knowledge and expand the industry presents itself. This is an opportunity for CLT education providers to target this segment. More than 50% would like to make contacts with builders that use CLT, followed by nearly a third desiring technical specifications for CLT and feedstock that they may potentially provide. ● The Future Many respondents expressed a desire to learn more about, and potentially enter the CLT sector. At the end of the day, they also shared a positive outlook regarding CLT that will be used by builders in 2020 (see figure, page 36). Fully 58% of respondents think that CLT use by builders will increase somewhat or significantly in 2020. Only 6% thought the market for builders will decline.

Although the nexus of CLT production has been in the Pacific Northwest, CLT manufacturers are now focusing more attention on supplying the Eastern U.S. market. Production is coming on line in the South with Texas Cross Laminated Timber reopening a mill in southwest Arkansas and Jasper, Texas. International Beams (now SmartLam), the first Southern SYP CLT manufacturer located in Dothan, Ala., is already producing and selling to capacity. CLT production using SYP will continue to grow significantly over the next five years. Early adopters will enjoy a competitive advantage…if they get it right with regard to creating markets and convincing influencers/specifiers to get on board. The CLT train has definitely left the station. TP

Richard Vlosky. Ph.D. is Director, Louisiana Forest Products Development Center, and Crosby Land & Resources Endowed Professor of Forest Sector Business Development, School of Renewable Natural Resources, Louisiana State University AgCenter

Mason T. LeBlanc is a Master’s student at the Louisiana Forest Products Development Center, School of Renewable Natural Resources, Louisiana State University AgCenter Rajan Parajui, Ph.D. is Assistant Professor and Extension Specialist, Department of Forestry and Environmental Resources, North Carolina State University, Raleigh, North Carolina

Charles B. Gale is Strategic Business Analyst at SmartLam North America, Portland, Ore.