Companies in this industry engage in the sawing of dimensional lumber or make veneers, plywood, engineered wood members, or reconstituted wood products. Major companies include divisions of Georgia-Pacific, Louisiana-Pacific, Universal Forest Products, and Weyerhaeuser (all based in the US), as well as Canfor and West Frasier Timber (both of Canada), Ilim Timber (Germany), Stora Enso (Finland), and Sumitomo Forestry (Japan).
Annual worldwide sawnwood (lumber) production totals more than 450 million cubic meters, according to the Food and Agriculture Organization of the United Nations. The global wood panel market is expected to exceed 470 million cubic meters by 2020, according to Global Industry Analysts. The top lumber and plywood producing countries include Canada, China, Germany, Russia, and the US.
About 3,800 lumber and plywood product manufacturers operate in the US, generating annual revenue of about $44 billion.
Demand is closely tied to the level of home construction. The profitability of individual mills depends on efficient operations, because most products are commodities. Large companies enjoy economies of scale in purchasing. Small companies can often compete successfully by focusing on a local market. Sawmills can operate with only a modest investment of capital, but plywood mills require expensive equipment and therefore are usually plants with high annual volume.
The plywood, veneer, and engineered wood product segment of the industry is concentrated: the 50 largest companies generate about 70% of revenue. The sawmill segment is fragmented: the 50 largest companies generate about...