Developing and

Commercializing

Sustainable New

Wood Products 

A Process for Identifying Viable Products 

2 United States

Department of 

Agriculture

Forest Service

Forest

Products

Laboratory

General

Technical

Report

FPLGTR136
Abstract SI conversion factors 

English unit 

Conversion 

factor SI unit 

inch (in.) 25.4 millimeter (mm) 

foot (ft) 0.3048 meter (m) 

square foot (ft2

) 0.093 square meter (m2) 

cubic foot (ft3

) 0.028 cubic meter (m3) 

pound (lb), mass 0.454 kilogram (kg) 

A process was designed to evaluate the sustainability and

potential marketability of USDA Forest Service patented

technologies. The process was designed and tested jointly by

the University of North Carolina, the University of Michigan, Partners for Strategic Change, and the USDA Forest

Service. Two technologies were evaluated: a fiber-based 

product and a wood fiber/fiberglass composite technology. 

The results indicate several different ways in which the 

technologies might be exploited to produce new commercial

products for both domestic and international markets, 

through licensing of the patents and other agency/industry

partnerships. This report represents the initial effort by the 

Forest Service to work in partnership with business schools 

to evaluate the commercial potential of patented agency 

technologies and locate potential licensees and cooperators 

interested in utilizing the technologies. The Forest Service 

will seek additional cooperative ventures with university 

business schools to develop business plans for other patented, but as yet unlicensed, technologies as the next step in

the process of commercializing these technologies. 

Contents 

 Page

Introduction........................................................................... 1

Course Design, Students, and Key Participants................ 1

Course Benefits................................................................. 2

University of Michigan TeamóBusiness Plan for the 

Commercialization of Spaceboard and Reinforced 

Wood Products...................................................................... 3 Keywords: fiber-based products, wood fiber/fiberglass 

composite

University of North Carolina Team 1óSpaceboard: The 

Future is Here...................................................................... 13 

University of North Carolina Team 2óReinforced Wood 

Panel Technology................................................................ 27 

Appendix IóCourse Description and Syllabus.................. 44

New Product DevelopmentóSustainable Forest 

Products, Winter Term 2002........................................... 44 June 2003 

Session 1óCourse Overview ......................................... 44 Enk, Gordon A.; Hart, Stuart L., eds. 2003. Developing and commercializing sustainable new wood productsóA process for identifying viable 

products. Gen. Tech. Rep. FPL-GTR-136. Madison, WI: U.S. Department of 

Agriculture, Forest Service, Forest Products Laboratory. 46 p.

Session 2óThe Developerís Perspective on 

New Products.................................................................. 45

Session 3óThe Technologistís Perspective ................... 45 A limited number of free copies of this publication are available to the 

public from the Forest Products Laboratory, One Gifford Pinchot Drive,

Madison, WI 53726ñ2398. This publication is also available online at 

www.fpl.fs.fed.us. Laboratory publications are sent to hundreds of libraries 

in the United States and elsewhere. 

Session 4óAn Experienced Based Model of Successful

New Product Development and Commercialization....... 45

Session 5óManaging New Product Development in the 

The Forest Products Laboratory is maintained in cooperation with the Public Sector, USDA Forest Service .............................. 45

University of Wisconsin. 

Session 6óWhat Makes a Product Sustainable?............ 46

The United States Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national 

origin, sex, religion, age, disability, political beliefs, sexual orientation, or 

marital or familial status. (Not all prohibited bases apply to all programs.) 

Persons with disabilities who require alternative means for communication 

of program information (Braille, large print, audiotape, etc.) should contact 

the USDAís TARGET Center at (202) 720ñ2600 (voice and TDD). To file a 

complaint of discrimination, write USDA, Director, Office of Civil Rights,

Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, DC 20250ñ9410, or call (202) 720ñ5964 (voice and TDD). USDA is 

an equal opportunity provider and employer.

Suggested Course Reading Resources............................ 46

Appendix IIóPatents for Reinforced Wood Products and 

Spaceboard.......................................................................... 46

Reinforced Wood Products............................................. 46

Spaceboard ...................................................................... 46 
Developing and Commercializing 

Sustainable New Wood Products 

A Process for Identifying Viable Products 

Gordon A. Enk, ed. 

Principal, Partners for Strategic Change, Seattle, Washington 

Stuart L. Hart, ed. 

Sarah Graham Kenan Distinguished Scholar 

Kenan Flagler School of Business, University of North Carolina, Chapel Hill 

Introduction The Forest Service Patent and Licensing Program is responsible for granting licenses for the commercialization of new 

products and processes to public institutions and private 

corporations. In recent years, the program has explored the 

mechanisms that result in the successful commercialization

of products licensed by the Forest Service. This project was 

related to this effort to increase the understanding of successful commercialization and focused on two products, 

Spaceboard and Fiberglass-Reinforced Wood Products. 

This report documents the process and results of a Masters 

of Business Administration (MBA) course taught at the 

University of Michigan, School of Business, and the University of North Carolina, Kenan Flagler School of Business. 

The course was taught with the support and substantial

involvement of the USDA Forest Service, in particular the 

Forest Products Laboratory (FPL). This project benefited 

from the commitment and involvement of Janet Stockhausen, Patent Advisor for the Forest Service, and Richard 

Guldin, Staff Director for Science Policy, Planning, Inventory, and Information for the Forest Service in Washington, 

D.C. Their support is greatly appreciated. 

These two products served as the key ìcase studiesî for a 

course taught in the MBA program at the University of 

Michigan School of Business (UM) and the Kenan Flagler 

School of Business of the University of North Carolina 

(UNC). The course was taught simultaneously at both 

schools during the winter term (January and February) of 

2002. 

This MBA course was part of an innovative project undertaken in collaboration with the Forest Service Patent and

Licensing Program, which is responsible for maintaining the 

patents and licenses of inventions developed at the FPL. The 

project was initiated in late 2001, and the MBA course was 

conducted in the winter term of 2002. The course was presented in collaboration with the Corporate Environmental

Management Program (CEMP) at the University of Michigan and the Center for Sustainable Enterprise (CES) at the 

University of North Carolina. Gordon A. Enk taught the 

course at both institutions and is deeply indebted for the 

assistance of Cyndy Cleveland and Kellie McElhaney at the 

CEMP and Monica Tousenard at the CES. 

Course Design, Students, and 

Key Participants 

Seven MBA students participated in the course at the UM

and ten participated at UNC. The UM group included a 

substantial number of ìexecutive educationî students who 

were completing their graduate degrees while working in

full-time professional positions; several had responsibilities 

dealing directly with new product development in their 

companies. All the UNC students were full-time, and six

were citizens of foreign countries. This provided a uniquely

international flavor to the class. The course included both 

individual and team assignments, which were identical in

both courses. 

The FPL has a long tradition of developing new products 

and processes to improve the utilization of wood and wood 

products. It was established in 1910 and currently involves 

more than 250 researchers and scientists. The FPL focuses 

on research and development in pulp and paper products, 

housing, and the structural uses of wood. It also conducts

substantial research on the use of recycled fiber in the manufacture of paper and wood-like products. In many instances, 

the inventions and innovations discovered by the FPL staff 

are patented. 

The course description and syllabus are presented in Appendix I. The course design was based upon a proprietary model

for New Market Identification and New Product Development developed by Partners for Strategic Change in Seattle, 

Washington. This approach incorporates the learning of 

more than 30 years of work on the effective development,

technology transfer, and commercialization of new products. 
The course included substantial involvement of key representatives from the Forest Service and FPL. Janet Stockhausen made presentations and participated in several class 

sessions at both schools. This included a review of U.S. 

patent law and practice, an overview of licensing practices, a 

review of the patents for reinforced wood products (RWP) 

and Spaceboard, and an overview of the mission of FPL (see 

Appendix II for list of RWP and Spaceboard patents). 

Robert Ross and John Hunt, resident scientists at FPL, provided students with an understanding of the researchersí 

perspective and their approach to new product development.

Finally, Richard Guldin provided an overview of the mission 

of the Forest Service and the role of the FPL in that mission.

Stockhausen and Guldin participated in the review of the 

studentsí findings and recommendations on Spaceboard and 

RWP. 

In recent years it has become popular to talk about the ìtake 

awaysî when analyzing a lecture, article, or case study in a 

Business School setting. The take-aways from teaching this 

course included the following. 

• These MBA students were uniquely interested in the 

theory and practice of new product development and commercialization. They were particularly interested in and

drawn to the team-based or ìscrumî approach to new 

product development that simultaneously involves team

members from the technical/scientific, marketing, and 

manufacturing parts of a company. They could see the 

folly and inefficiencies of a linear or ìrelay raceî approach 

to new product development.

• These MBA students were excited by the notion that it

was meaningful and appropriate to evaluate the potential

of new products through the lens of the triple bottom line, 

that is, with equal consideration to the criteria of environmental quality, social equity, and economic profit. The 

concept of the triple bottom line as utilized in this course 

was based upon the contributions and writings of John 

Elkington. 

This course was designed to be focused, practical, applied, 

and based on a case study approach. The course design 

included several key components: 

• A review of selected literature focused on the practical 

aspects of successful development and commercialization 

of new products

• Many of the MBA students expressed excitement about

evaluating the potential of new products from the perspective of the productsí total sustainability as measured by 

the triple bottom line. The students had little or no problem identifying with the notion that, unless a product

meets the criteria of the triple bottom line, it will not be

sustainable, and if a company does not make products that

are sustainable, then products are very likely not sustainable. The concept of ìsustainable designî of products as 

utilized in this course was based upon the contributions 

and writings of William McDonough and Michael Braungart. 

• A practical understanding of the approach to new product

development in the forest products industry

• A review of the concept of ìsustainabilityî and a working

model of how to evaluate the sustainability of new 

products

• The opportunity for the students to directly interact with

professionals involved in the scientific, legal, and organizational aspects of new product development and 

commercialization

• The opportunity for the students to design a preferred 

model for effective new product development and then 

apply that model to a case study • Many of these students, especially the students from foreign countries, felt liberated by the notion that they could 

and should evaluate the true commercial potential of a 

companyís products based upon more than just the 

productsí impact on the financial bottom line. 

• The opportunity for the students to evaluate the commercialization potential of two patented products

The results of the course are contained in the written assessments developed by the three student teams. The students 

described a ìmodel processî for new product development

and their preliminary assessment of the commercial potential 

of Spaceboard and RWP. Each team developed a Business 

Plan that included their assessment of the commercial potential of Spaceboard and RWP and their approach to commercialization. 

• Finally, it was challenging and exciting to teach an MBA 

course to students who were interested in the topic and 

excited about taking a balanced ìtotal systemî approach 

to analyzing the potential of new products. 

Course Benefits 

The editors will allow the studentsí ìproductsî (final papers) 

to stand on their own. The students were direct and straightforward in their assessment of the commercial potential of

Spaceboard and RWP. This section summarizes the editorsí 

perspective on the ìfindingsî or ìlearningî from this course. 

2
University of Michigan Team 

Business Plan for the Commercialization of 

Spaceboard and Reinforced Wood Products

Rachel Francisco 

Jordan Golomb 

Jill Katic 

Shane LaHousse 

Sajjad Mansuri 

Fred Martin 

Mindy Murch 

Sustainable Product Solutions, Inc. 

University of Michigan MBA Program 

University of Michigan 

Ann Arbor, Michigan 

February 25, 2002 
Contents Executive Summary 

Executive Summary .............................................................. 4 Sustainable Product Solutions (SPS), of Detroit, Michigan, is 

a company committed to providing consumers with ecologically sound products and services to enhance their lives. SPS 

analyzes new business concepts using the triple bottom line. 

The triple bottom line takes into consideration the financial, 

environmental, and social effects of a product or service. 

Vision.................................................................................... 5 

Financial Bottom Line ...................................................... 5 

Environmental Bottom Line.............................................. 5 

Social Bottom Line ........................................................... 5 

SPS is currently pursuing venture capital funding for the 

commercialization of Spaceboard, a patented threedimensional pulp-molding technology developed by the 

United States Department of Agriculture, Forest Service, 

Forest Products Laboratory. SPS is looking to market nonpackaging applications of Spaceboard. Specifically, SPS is 

targeting the Office Furniture manufacturers and the Architecture & Design (A&D) community for use of Spaceboard 

in partitions. 

Market Opportunities for Spaceboard in Office Furniture 

Industry ................................................................................. 5 

Industry Description and Outlook..................................... 5 

Target Markets.................................................................. 6 

Competition....................................................................... 6 

Strengths and Weaknesses................................................ 7 

Competitive Strategy......................................................... 8 SPS will make Spaceboard out of recycled paper collected 

from Detroit. The use of this renewable resource lessens the 

impact of Spaceboard on the environment. Moreover, the dry

process for manufacturing Spaceboard is not energy intensive, furthering its environmental benefits. Furthermore, SPS 

plans to build the Spaceboard manufacturing facility in inner 

city Detroit, thereby bringing much needed jobs and tax 

revenue to the city. 

Spaceboard Product Description........................................... 8 

Spaceboard Operations ......................................................... 8 

Facility Location ............................................................... 8 

Manufacturing Facility...................................................... 8 

Raw Materials................................................................... 8 

Given the sustained growth in the Office Furniture industry

and the interest in the A&D community for environmentally 

friendly products, SPS believes that there exists a large 

opportunity for the commercialization of Spaceboard. 

Spaceboard provides great advantages over fiberglass products by reducing the health hazards involved in manufacturing. The environmentally safe and sustainable properties of 

Spaceboard give it an advantage over non-traditional specialty synthetic composite fiber products. While the costs of 

Spaceboard are currently somewhat higher than that of the 

current products used in office partitioning, SPS will focus 

on developing a market with allergy clinics and other environments where health is a serious concern. Creation of 

partnerships with innovative magazines and trade associations in the A&D community will produce the volume demand and necessary pull market to make Spaceboard profitable. In the long term, SPS hopes to pursue additional 

applications and the bottom of the pyramid applications for 

Spaceboard, using renewable resources in communities 

across the world. 

Research & Development ................................................. 9 

Employment...................................................................... 9 

Spaceboard Opportunities and Risks to Triple 

Bottom Line .......................................................................... 9 

Environmental Considerations.......................................... 9 

Economic Considerations ................................................. 9 

Social Considerations........................................................ 9 

Analysis of Reinforced Wood Products................................ 9 

Environmental Considerations.......................................... 9 

Economic Considerations ................................................. 9 

Social Considerations...................................................... 10 

Literature Cited ................................................................... 10 

Appendix AóAdditional Potential Market Segments and 

Uses..................................................................................... 11 

Appendix BóCurrent Partition Core Sub-Assembly 

Descriptions and Specifications.......................................... 11 

In addition to Spaceboard, SPS had considered the commercialization of Reinforced Wood Products (RWP). Due to our 

environmental, social, and economic analysis of the sustainability of RWP, we have decided not to proceed with the 

commercialization of RWP. Rather, SPS intends to focus all 

energy on the successful commercialization of Spaceboard.

4
 

Vision Social Bottom Line 

Social impact is among the very first considerations SPS will 

make. Before determining where to locate a factory, SPS 

will look at unemployment rates, living conditions, and 

educational opportunities of a region. SPS will select areas 

to manufacture based on where it can make the greatest 

contribution to society. SPS can alleviate unemployment 

rates by hiring and training unemployed workers. It can 

improve living conditions by paying its employees a fair

wage and sharing the profits. Finally, SPS can improve 

educational opportunities in the area and for the areaís residents by donating a portion of its profits to support education. This charitable contribution could be donated directly

to the public schools in the area, used for scholarships for 

the children of its employees, and used to fund educational

grants for local public schools and colleges. 

Sustainable Product Solutions (SPS), of Detroit, Michigan, is 

a company committed to providing consumers with ecologically sound products and services to enhance their lives. SPS 

analyzes new business concepts using the triple bottom line. 

The triple bottom line takes into consideration the financial, 

environmental, and social effects of a product or service. 

Financial Bottom Line 

SPS will only pursue products that clearly demonstrate longterm profitability in market analysis. This will be achieved

by developing new environmentally friendly products for 

both the ecologically conscious community and the average 

consumer. SPSís products will focus on efficiency and 

quality, giving them an edge over existing products. SPS has 

developed a protected market position by licensing a family

of patents for a product called Spaceboard that is produced 

using a unique manufacturing process. After SPS establishes 

a domestic market, it will explore additional domestic applications such as those listed in Appendix A and at the bottom

of the pyramid opportunities. Bottom of the pyramid products would be inexpensive, quality products for the benefit 

of the two-thirds of the worldís population who earn less 

than $1,500 per year. Although returns from individual sales 

in this market will be small, the market is very large. This 

would allow SPS to earn abundant financial benefit while 

providing a needed product for the masses. SPS believes its 

overall success is rooted in superior economic performance 

and sustainable growth in both domestic and international

markets.

SPS would encourage its employees to become active in 

their communities. Their long-term goal is to provide each of 

its employees paid time off to perform community service 

and to fund the projects in which its employees participate, 

such as cleaning up local parks and building new recreation 

areas for children. SPS believes in community involvement 

because its corporate success is intrinsically tied to the success of its employees. Providing opportunities for all employees to continually strive for excellence while being 

contributing members of their communities is key to this 

overall success. 

Together, the three branches of the triple bottom line form a 

sustainable company. The triple bottom line method of new 

product and new business development will allow SPS to be 

profitable while working in an ecologically conscious manEnvironmental Bottom Line ner and contributing to the betterment of society.

The environmental bottom line is focused on both the product and the manufacturing process. Products should be made 

of recyclable or renewable resources and the product itself 

should be easily recyclable. SPS strives to produce products 

that can be made from wastestream materials such that new 

products can be created at lower costs and can reduce landfill materials. SPS will also leverage Design for the Environment processes by evaluating natural resource and energy

use throughout the product lifecycle. 

Spaceboard is one product that fulfills the corporate objectives of SPS. Spaceboard is manufactured using a patented 

three-dimensional pulp-molding technology that has been 

licensed along with its non-packaging applications (U.S. 

Patents 4702870, 4753713, 5314654, 5198236, 5277854, 

and 6190151) from the United States Department of Agriculture, Forest Service, Forest Products Laboratory. SPS is 

initially looking to market Spaceboard to Office Furniture 

manufacturers and the A&D community for use in partitions. 

Market Opportunities for 

Spaceboard in Office 

Furniture Industry 

SPS is also concerned with how its manufacturing will affect 

residents in the areas where it gathers raw materials and 

operates its factories. SPS intends to manufacture in a way 

that minimizes hazards to human health. SPS will require its 

manufacturing sites to limit effluents and noise. Manufacturing facilities will be built to blend in with their environments 

in an aesthetically pleasing way. Ultimately, the environmental bottom line of SPS is to enhance and protect natural 

environments and habitats while preserving the rights of 

current and future generations. 

Industry Description and Outlook 

The target Office Furniture industry is traditionally a slow 

growth, but stable, industry concentrated in western Michigan. The industry is environmentally conscious and is always seeking nontraditional materials to reduce its environmental impact and improve performance. The industry is

5
continually looking for ways to add value to their products

through the use of technology and environmentally safe 

products. 

The U.S. Office Furniture market is large and has been 

growing (Table 1, Fig. 1). Furniture industry growth, however, is projected to decrease over the next few years reflecting the current slowdown within the U.S. economy. Downsizing within many Fortune 500 companies has reduced 

demand for new Office Furniture. Although this reduction in

demand is somewhat mitigated by the growth in the market 

for small and medium-sized companies, overall these smaller 

companies purchase have reduced per capita quantities of

Office Furniture. In addition, noticeable shifts are occurring 

in Office Furniture preferences, manifesting in the increased 

popularity of refurbished or remanufactured furniture and 

ready-to-assemble (RTA) designs. Together these factors are 

creating a downward pressure on the new U.S. furniture 

market (Table 2). Despite this slowed growth in the Office 

Furniture industry, the potential market is still large and 

holds great possibilities for products that provide differentiation in the way that Spaceboard does. 

Limited differentiation between manufactures has defined 

the Office Furniture market by price and customer service 

rather than product attributes. Opportunities for improved 

profitability exist in generating increased differentiation, cost 

containment, and operating efficiencies. 

Target Markets 

Given the competitive environment for Office Furniture, 

both the Architecture & Design (A&D) community and 

Office Furniture manufacturers are looking to differentiate

their products from the masses. Spaceboard, used as a sustainable alternative material in Office Furniture, specifically 

partitions, will fill this niche. Spaceboard provides the 

acoustical and strength properties required for office panels

and eliminates the health concerns associated with existing 

products. Therefore, SPS intends to target the A&D community and the Big Three Office Furniture manufacturers to 

market new, ìgreenî office partitions made from Spaceboard. 

The target market can be segmented into two markets, the 

A&D community and Office Furniture manufacturers. The 

A&D community is more environmentally conscious and 

less cost sensitive than are Office Furniture manufacturers. 

The A&D community also drives the trends and specifications for building materials and Office Furniture, so they can 

create a pull demand. The Office Furniture manufacturers 

are cost sensitive, yet environmentally conscious to some

extent and cater to the demands of the A&D community. 

Given this relationship, Spaceboard will appeal to the furniture manufacturing community as a unique and environmentally sensitive product. 

Table 1óValue of U.S. Office Furniture shipments,

1990ñ2000 

Value of Office Furniture 

Current dollars Constant dollars 

Year Value 

(×106$) 

Change 

(%) 

Value 

(×106$) 

Change 

(%) 

2000 13,285 8.50 7,320 7.10 

1999 12,240 ñ0.90 6,832 ñ1.10 

1998 12,350 7.80 6,910 8.20 

1997 11,460 14.1 6,384 13.40 

1996 10,040 6.40 5,631 3.50 

1995 9,435 6.60 5,438 3.00 

1994 8,850 8.50 5,280 4.20 

1993 8,160 5.80 5,065 3.90 

1992 7,710 6.70 4,876 6.90 

1991 7,228 ñ8.10 4,560 ñ10.40 

1990 7,863 0.40 5,087 ñ2.80 

Figure 1óValue of U.S. Office Furniture shipments,

1990ñ2000. Dollars (x109

)

Year

Table 2óForecasts for U.S. Office Furniture 

market, 2001ñ2002 

Year Volume (×109

) Change (%) 

2001 $ 10.914 ñ17.8 

2002 $ 9.952 ñ8.8 

Percentage 

20

15

10

5

0

ñ5

ñ10

8

14

0

Current dollars

 % Change

1990 1991 1992 1993 1994 

1995 1996 1997 1998 1999 

2000 

10

12

2

4

6

Additional follow-up markets exist. To see a list of those 

SPS has identified, refer to Appendix A. 

Competition 

The Spaceboard partition core application is intended to

replace the separate subcomponents (fiberglass sheet and 

acoustical board) with a single unit (see App. B). Competitors are considered suppliers of these subcomponents. 

Fiberglass sheet is typically supplied directly from the fiberglass manufactures and non-traditional specialty synthetic 

6
 

composite fiber manufacturers. The U.S. markets for these 

materials are dominated by a small number of large manufacturers: Owens Corning, SaintñGobain (CertainTeed), 

Johnís Manville, Knauf, and Thermafiber. Overall U.S. 

insulation industry revenues in 2000 were $6.8 billion (billion as109

) and growing at an annual rate of 3.2% (National

Insulation Association 2002). These companies have leveraged the economies of fiberglass production scale into products for a variety of applications in addition to the office 

partition industry. Several companies within this industry, 

most notably Owens Corning and Johns Manville, have filed 

for Chapter 11 bankruptcy protection reflective of asbestosrelated liabilities (Owens Corning 2000). Although breakdown of revenues within individual business segments for 

each company was not conducted, the emphasis on the building and automotive industries within press releases indicates 

the office partition segment is not a major revenue driver 

(Owens Corning 1999). No major public company was 

found deriving a substantial proportion of revenues from the 

partition panel market. Minimal existing competitor response 

is anticipated to Spaceboardís entry into the fiberglass sheet 

partition panel market because of the low proportion of 

business constituted by the partition panel market and the 

industryís large vested interest in existing manufacturing. 

The acoustic panel market is dominated by the same companies that are active in the fiberglass sheet market, although 

the market is much more fragmented. In addition to these 

mineral fiber based product offerings, the acoustical panel

market does have a more environmentally sustainable alternative from a company called Tectum. The vast majority of 

Tectumís product line is focused on the ceiling panel market, 

but a complete wall panel system containing sustainable 

materials is available. Limited knowledge is available on this

privately held company, and it is not known what value the 

wall panel market contributes to their total income. This 

company must be regarded as a potential threat within this 

market, especially given the similar market positioning. 

However, the threat appears to be minimal. Despite a 

50-year history of producing essentially the same product,

the product is 2 to 4 times the cost of mineral-based products

(BuildingGreen 1998). It is questionable if Tectum could 

maintain economic competitiveness with Spaceboard 

products. 

Strengths and Weaknesses 

Spaceboard provides great advantages over fiberglass insulation by reducing the health hazards involved in processing 

the end products, eliminating any risk of end user exposure, 

and eliminating exposure during recycling operations at the 

end of the product life cycle. Fiberglass mats utilized with 

office partitions contain warnings within the Material Safety 

Data Sheet (MSDS) about the health risks of fiberglass 

exposure, including most notably a reference as ìpossibly

carcinogenic to humansî (MSDS 2000). An increasing 

number of end users are becoming aware of the effect of 

interior environment of their wellbeing and the potential risk 

of airborne respiratory size fiberglass fibers. This is in turn 

placing pressure on manufacturers to consider more environmentally benign materials. This potential liability is 

motivating partition manufacturers to eliminate fiberglass, 

especially the cutting of, from their production processes. 

An additional strength of the Spaceboard Partition Panel 

application is the replacement of several subcomponents 

with a single unit with the obvious savings in assembly

labor. Additionally the need for subassembly bonding adhesives is eliminated, especially important to the allergensensitive target markets. 

A weakness of Spaceboard is that it has not undergone feasibility acceptance per tests defined by the Business and 

Institutional Furniture Manufacturers Association (BIFMA). 

These standards are intended to provide manufacturers, 

specifiers, and users with a common basis for evaluating 

safety, durability, and the structural adequacy of the specified furniture, independent of construction materials 

(BIFMA 2002). These test standards are generally accepted 

as the determiners of acceptance for materials used in the 

business furniture industry. Although Spaceboard is currently untested, given the current accepted use of similar 

materials (medium density fiberboard, chipboard, and other 

wood-based materials) there is no reason to believe the 

standards would preclude use of Spaceboard. 

Cost is the most significant disadvantage of Spaceboard. 

Fiberglass insulation and acoustic panel manufacturers 

benefit from large-scale processes while the state of the art 

process for Spaceboard is an inherently inefficient process 

still in its infancy. A comparative analysis of partition panel 

manufacturer cost expectations and Spaceboard indicates 

approximately a $3/ft2

 versus $1/ft2 cost disadvantage for 

Spaceboard (Janet Stockhausen, Forest Products Laboratory,

personal communication) (Table 3). It is estimated that the 

majority of the industry will accept upwards of a 15% increase in partition core costs in exchange for elimination of

the fiberglass liability. However, current Spaceboard production processes and scale does not support economic feasibility in the partition panel core board market. At minimum, a 

scaling of the existing wet-form production process, or more 

likely an implementation of new production process based 

upon a dry form technology, is required to meet the cost

targets. The strategy outlined in the following section is 

Table 3óComparative cost analysis of Spaceboard

and partition core

Product cost 

($) 

Area 

(ft2) Cost/ft

2

Spaceboard 90.00 32 2.81

Partition corea 14.96 15 1.00

a

Current competitive cost. 

7
anticipated to enable development of capabilities to eventually participate in the lucrative Big Three furniture manufacturers market. 

Competitive Strategy 

Anticipating that early production processes will be insufficiently optimized to compete directly with mass market 

competitors, a three-stage strategy will be undertaken to 

eventually develop required efficiencies and economies of 

scale: 

1. Spaceboard will be initially positioned as an alternative to

partition panel core boards that contain fiberglass and adhesive, for individuals hypersensitive (allergic) to traditional particulate and gas emitting units. Allergy clinics or

other environments frequented by individuals with a compromised immune system will be targeted in this stage. 

The severe consequences of noncompliance of these facilities to their unique requirements are expected to drive a 

value proposition sufficient to support current production 

process efficiency ($2 to $3/ft2

). 

2.Cashflows from the initial secured market will be used to

finance a second generation of production process that

supports expanded market presence through emphasis 

upon general environmental friendliness and sustainability. Through partnerships with innovative magazines and 

trade associations in the A&D community, product features such as recycled fiber content and favorable energy

intensity will be emphasized to the public, in addition to 

the already established improved air quality. It is anticipated that by the end of the second stage, Spaceboard will 

be established within the influential A&D community as 

the required component within office furniture utilized by 

the environmentally conscious market that supports superior indoor air-quality. 

3. Finally, continued development of production efficiencies 

and leverage through economies of scale will enable production economies sufficient to challenge majority-market

competitors for supply to the Big Three furniture 

manufacturers. Reputations established in the first stages, 

combined with patented processes, will enable superior

margins. Once these cashflows are established, the 

alternative markets can be addressed (App. A). 

Spaceboard Product 

Description 

Spaceboard is manufactured using a patented threedimensional pulp-molding technology that has been licensed 

along with its non-packaging applications (U.S. Patents 

4702870, 4753713, 5314654, 5198236, 5277854, and 

6190151) from the U.S. Department of Agriculture, Forest

Service. Spaceboard provides the acoustical and strength 

properties required for office panels, the first application 

pursued by SPS. 

Spaceboard Operations 

Facility Location 

As part of its vision for social responsibility, SPS will locate 

its facility in a low-income community. Given the need for a 

large quantity of recycled material and the need to be close 

to Big Three furniture manufacturers, SPS has chosen to 

locate its facility in Detroit, Michigan. This location will 

provide jobs for local residents as well as much-needed tax 

revenue for the city. SPS also believes that the city and state 

government will have an incentive to aid SPS in establishing 

its business in the city, because it will offer not only employment benefits, but also environmental benefits. 

Michigan currently has a 16% recycling rate, which is behind the average of 26% for Great Lake States, as reported 

by BioCycle in their 12th annual nationwide survey, which 

examined disposal, incineration, recycling, composting, and 

wood recovery activities (Michigan Recycling Coalition 

2002). Michiganís recycling rate falls behind states in all six 

of the other national regions except the Mid Atlantic, which 

has a 15% average. SPS would help Detroit increase its 

recycling rate by purchasing recycled paper thereby encouraging the paper recycling process, which would benefit the 

city and the state. 

Manufacturing Facility

The SPS manufacturing facility will be built in an aesthetically pleasing way. It will use some solar power (amount yet 

to be determined), low energy lighting, and low energy

heating and cooling systems. It will also use best available 

technology to reduce effluents and waste. Ultimately, the 

environmental bottom line of SPS is to enhance and protect 

natural environments and habitats while preserving the rights 

of current and future generations. 

Raw Materials 

Spaceboard will be made out of recycled materials collected

from Detroit and the surrounding suburbs, thereby ensuring 

a sustainable and renewable resource stream. The wastestream that would contribute to the manufacturing of 

Spaceboard would decrease paper incineration and increase 

wood recovery activities. Recycled paper products are available in the Detroit Metro area and generally cost less than

the national average (Recycling Manager 2002). Use of 

recycled paper prevents forests from being wastefully cut,

uses less energy than does the logging of standing forests, 

keeps waste out of landfills, and is less polluting than the 

harvest of virgin trees (Lind 2002). SPS will also make 

every effort possible to ensure that the products will be 

recyclable, working with both its suppliers and buyers to

8
 

create environmentally friendly fire retardants that will 

facilitate recycling of Spaceboard at the end of its lifecycle. 

Research & Development 

Research and development is still required to ensure the 

product meets standards and specifications required by

BIFMA. Since our strategy is focusing on a niche application, the time and resources required for research will be

lower than if targeting multiple applications. 

Employment 

SPS wants its employees to feel a sense of ownership and 

community. Therefore, SPS will institute profit sharing. In 

addition, SPS will provide paid time off to employees to 

pursue community service in inner city Detroit. SPS will 

also donate a percentage of its profits to support education. 

This charitable contribution could be donated directly to the 

public schools in the area, used for scholarships for the 

children of its employees, or to fund educational grants for 

the local public schools and colleges. SPS will form a board 

of employees to distribute the funds. SPS believes in community involvement because its corporate success is intrinsically tied to the success of its employees. Providing opportunities for all employees to continually strive for excellence 

and contribute to their communities is key to SPSís 

philosophy. 

Spaceboard Opportunities and 

Risks to Triple Bottom Line 

Environmental Considerations 

As discussed in detail throughout this report, Spaceboard has 

significant environmental opportunities. The most important 

of those include the following:

• Spaceboard uses recyclable material that is both a sustainable resource and contributes to waste reduction. 

• SPS will focus on using a low energy ìdryî method of 

manufacturing. 

• SPS will work with its suppliers and buyers to develop fire 

retardants that maximize recyclability at the end of Spaceboardís life. 

Economic Considerations 

A significant amount of research and development has already been put into Spaceboard. It is already patented, which 

will help protect the manufacturing process as the business is 

launched. Also, Spaceboard has the potential to be a disruptive technology, especially to that portion of the worldís 

population that is hypersensitive to chemicals and particulates put into the air by existing Office Furniture products. 

There are no competitors playing in this niche, which will 

help SPS become the leader in this industry. Other applications for Spaceboard apply to the bottom of the pyramid, and 

this product has potential in international markets (App. A). 

The biggest concern is the fact that the current processing 

creates a product that is more expensive than what the total

market might be willing to bear. However, the initial target 

market segments that the Office Furniture manufacturers can 

capitalize upon, allergy clinics and the like, are likely to be 

willing to pay more for a product with minimal health concerns. In addition to this segment there are many other applications for Spaceboard, which helps make this a sustainable 

product.

Social Considerations 

There are many social benefits that arise from Spaceboard. 

One of the most important is based on the location of the 

plants. Jobs will be provided in low-income areas that will 

include a fair wage and profit sharing that will provide an

incentive for employees to stay with the company. This will 

also provide tax revenue for these low-income areas to help

build up their communities. SPS will be active in donating 

and supporting local communities with philanthropic efforts.

Analysis of Reinforced Wood 

Products 

At first glace, there appeared to be a need and market for 

reinforced wood products (RWP), especially in the areas of 

home improvement and security. However, after further 

analysis, the product does not appear to be sustainable on the 

environmental, social, and economic fronts. Thus, SPS will 

not be pursuing it as a potential product.

Environmental Considerations 

Though there are inherent benefits to RWP, such as the use 

of new growth wood, the main ingredient in these products

is fiberglass. Fiberglass is considered by many to be toxic 

and dangerous to humans and it is not biodegradable. While

the finished product will not have heath risks, the process to 

make the product will expose workers to chemicals and 

fiberglass particles. Also, using fiberglass will make the 

product nonrecyclable. Wood treated with reinforced wood 

products will also become nonrecyclable. While the treated 

part of the wood could be cut out and the remainder recycled, the reality is that few people are willing to take the time 

and effort needed to do such conservation. In addition, the 

chemical industry is energy intensive. 

Economic Considerations 

RWP is already patented, but there is limited time left. 

Though the cost of the fibers and raw materials is low, RWP 

is a nondisruptive technology; it is more of a product enhancement. RWP would enter a crowded market; there are 

9
BIFMA. 2002. Business and Institutional Furniture Manufacturers Association standards. 

http://www.bifma.com/standards/index.html

many other products on the market that consumers will look 

to first when thinking of both home improvement and security. For home improvement, the application is defined as 

strengthening for wood, primarily for reinforcing cutouts. 

Consumers already use products such as metal plates and 

plastics when making cuts in wood. Builders will be extremely cautious about using RWP to lessen wood usage in

trusses, because there are no historical data to support the 

safety of this practice. In addition, the company producing 

such a product will face an up-hill battle in convincing building inspectors that this process is safe and in getting building 

codes changed to support use of the product. To further 

develop this product, multiple alternative markets would 

need to be found, but even with additional markets, sustainability in a crowded market seems limited.

Lind, F. 2002. The eco-friendliness of recycling paper. 

Cornell Forum for Environmental Issues. February 21, 2002.

http://www.rso.cornell.edu/Ursus/sp99paper.html 

Michigan Recycling Coalition. 2002. 

http://www.michiganrecycles.org/ 

MSDS. 2000. Mat faced fiber glass products material safety 

data sheet, ID 1041. Issue date 08/11/00. 

http://www.jm.com/msds/en1041.html

National Insulation Association. 2002. Resource library. 

http://www.insulation.org/niamagazine/article.cfm?id=NN01

Social Considerations 1206 

While RWP may provide increased security when used to 

reinforce doors and windows, it will not be perceived as the 

best way to secure oneís home. Steel doors and bars over 

windows are better crime deterrents. Moreover, although 

production of RWP would provide some employment, the 

economic analysis indicates that the employment would be 

unsustainable over the long term because the product is 

unsustainable. 

Owens Corning. 1999. Annual earnings statement.

http://www.owenscorning.com

Owens Corning. 2000. 2Q 2000 financial results. 

http://www.owenscorning.com

Recycling Manager. 2002. The independent guide to secondary materials prices. Published biweekly at

www.amm.com/recdman/recprmnu.htm

Literature Cited 

BuildingGreen. 1998. Natural-fiber acoustic ceiling panels. 

Environmental Building News. 7(4). 

http://www.buildinggreen.com/products/acoustic_panels.html

10
 

Appendix AóAdditional 

Potential Market Segments 

and Uses 

Other applications 

• Manufactured homes 

• Disposable cafeteria trays (substitute for Styrofoam trays) 

Automotive appl • Temporary housing in military/refugee camps ications (base material for components) 

• Replacement for plywood (especially where weight is a 

concern) 

• Headliner 

• Rear shelf panel 

• Drywall 

• Spare tire cover, trunk floor 

• Toys (e.g., walls for build-your-own ìquick connectî 

playhouse) • Door trim panel 

• Instrument panel • Pallets 

• Energy-absorbing material for areas with head impact 

concerns 

• Replacement for hardboard 

• Construction of housing and schools in developing nations 

Aircraft applications 

• Signs 

• Tray tables 

• Storage container construction 

• Interior walls 

• Food and drink carts

Appendix BóCurrent Partition Core Sub-Assembly 

Descriptions and Specifications 

Partition Core Sub-Assemblies 

Description Specifications

Molded surface assembly

Molded surface fabric composite Polyester backed fabric 

Acoustic core 

Synthetic textile pad 0.310 in. thick, 50 g/ft2 

Chipboard 0.60 in. thick 0.2 lb/ft2 

Panel door 

Door inner structure Wood/fiberboard/hardboard

Sight/sound barriers PVC 

Fiberglass 7 lb/ft3

Marker board assemble 

Markerboard surface High pressure laminate 

Markerboard and tackboard core Industrial insulation board, 15 lb/ft3

Adhesive PVA glue 1002ñ5000 and air products 

11
12
University of North Carolina Team 1 

Spaceboard: The Future is Here 

Dario Becerra 

Sung Dae Jin 

Daniel NunooñQuarcoo 

Frederico Moura 

Christine Zambrana

University of North Carolina 

Kenan Flagler School of Business 

Center for Sustainable Enterprise 

University of North Carolina 

Chapel Hill, North Carolina 

February 20, 2002 
Contents Executive Summary 

Executive Summary ............................................................ 14 The purpose of this business plan is to provide the Forest

Products Laboratory with a business model of how to explore the commercialization potential of Spaceboard. This

plan is written from the perspective of consultants advising

Forest Products Laboratory. Spaceboard is a product capable 

of transforming several industries, including pulp and paper, 

wood, agricultural, construction, furniture, and lumber. 

Spaceboard can be constructed using virgin or recycled fiber 

to produce various three-dimensional structures. Spaceboard 

can be used as a substitute for the tons of wood harvested 

each year for structures. Financially, given the ample availability of raw materials and moderate capital investment

required to develop a processing plant, Spaceboard presents

a viable investment. 

Construction, Furniture, Packaging, and Pallet Industries.. 15 

History of Spaceboard..................................................... 15 

Product Characteristics ................................................... 15 

Potential Applications..................................................... 15 

Market Assessment of Applications ............................... 16 

Market Analysis.................................................................. 16 

Industry Analysis............................................................ 16 

Market Demand .............................................................. 16 

Customer Analysis.......................................................... 17 

Competitor Analysis ....................................................... 17 

Channel Systems............................................................. 17 

Given the usage of fiber, Spaceboard can be customized to

the end userís performance criteria for maximum strength or 

effectiveness. Spaceboard production is energy intensive but

environmentally friendly if the product is not mixed with any

synthetic compounds. The end result is a multipurpose product that has the potential to be a disruptive technology. 

Given the competitive nature of Spaceboardís ecosystem, the 

Forest Products Laboratory offers a licensee the following 

opportunities to increase shareholder value and gain market 

share: 

Strategic Marketing Plan..................................................... 18 

Strategic Market Assessment.......................................... 18 

Product Analysis............................................................. 18 

Tactical Marketing Strategy................................................ 19 

Product............................................................................ 19 

Price ................................................................................ 19 

Promotion........................................................................ 19 

Location .......................................................................... 19 

Design and Development.................................................... 19 1.Be first to mass market Spaceboard with potential multiple 

Cost Analysis generation designs .................................................................. 19 

Variable Cost .................................................................. 19 2. Be first to achieve full volume production with the design 

Fixed Cost....................................................................... 20 

3. Be competitive in industry race between falling market 

prices driven by fragmentation and falling costs driven by

volume 

Manufacturing and Operations Plan ................................... 20 

Raw Materials................................................................. 20 

Geographical Location.................................................... 20 4. Deter new entrants and competitors through a family of 

Manufacturing Process.................................................... 20 patents 

Management Team.............................................................. 21 

Spaceboard can be used in the construction, furniture, packaging, audio electronics, and agriculture industries. Such 

flexibility is due to the variety of agricultural, wood, and 

industrial fibers that can be used to produce Spaceboard. 

Identified applications include pallets, packaging goods, 

audio speakers, material for musical halls and production 

studios, furniture panels, floors, decks, walls, roofs, marine 

structures, and plant beds. 

Critical Risks, Problems, and Assumptions........................ 21 

Industry Risks................................................................. 21 

Company Risks............................................................... 21 

Personnel Risks............................................................... 21 

Market Appeal ................................................................ 21 

Timing Risks................................................................... 21 

Financing Risks............................................................... 21 

In the interest of time we narrowed the focus of our business 

plan to a single application of Spaceboardópallets. We did 

not address potential applications in the agricultural and

marine industries, for example. However, in the Industry

Market Research and Analysis section of the business plan 

we explored the construction, furniture, and corrugated 

containers industries as well. 

The Financial Plan .............................................................. 21 

Conclusion .......................................................................... 22 

Appendix AóMarket Research.......................................... 23 

Responses From Forest Products Laboratory ................. 23 

Appendix BóCost Analysis............................................... 24 

In the United States, most landfills are no longer accepting 

wooden pallets for disposal and yet millions of pallets are 

14
 

introduced yearly. Spaceboard presents a unique opportunity

for a company to creatively destruct the pallet industry with

innovative products. Pallets produced with Spaceboard offer 

the following characteristics: as strong as wood, lightweight, 

customizable, nonhazardous, recyclable, and produced from

recycled fiber. 

The honeycomb structure has other important features, 

including thermal and acoustical characteristics. The airfilled spaces inside the honeycomb can provide thermal 

isolation. The honeycomb also weakly reflects audio waves 

and can be used to mitigate noise. 

Additional information on Spaceboard is given in AppenFibergla dix A. ss-reinforced wood products (RWP) represent an 

extension of an existing product and are not as environmentally friendly as Spaceboard. Spaceboard has more commercialization potential and opportunities than do RWP because 

Spaceboard could be considered a disruptive technology. 

Potential Applications 

The customization capability of Spaceboard added to its 

physical properties allow it to be used in a wide range of 

applications, both as a substitute and as a complementary 

product, and production could be targeted toward niche or 

mass markets. Applications could be categorized in three 

broad categories: Construction, Furniture, and Packaging/Pallets. 

Construction, Furniture, 

Packaging, and Pallet Industries 

History of Spaceboard 

Spaceboard can be used in the Construction market mainly

as a substitute product for walls, doors, floors, ducts, or 

stairs. The high strength/weight ratio is the key success 

factor in approaching this market. Spaceboard could substitute for plywood, hardwood, or concrete, because it is more 

sustainable and less expensive than these materials. Its ease 

of handling, customization capability, and light weight

makes it possible to construct a house in a short time without

requiring special machinery, tools, or skills. In this application, Spaceboard would serve as a complementary product

and could be used as a temporary solution for housing needs 

in poor communities, in places devastated by natural forces 

(hurricanes, earthquakes), or for military use. It also can be 

used in niche markets like aeronautic and naval applications, 

where the heaviness of the entire structure is critical. 

Spaceboard was developed and originally patented in 1987 

by the USDA Forest Service, to be used in the field of structural wood components. The product and process were 

upgraded several times, and the last patent was issued in

1994. The original patent will expire in 2004; until then, the 

Forest Service pays fees to maintain the patent. The Forest 

Service can license companies to make applications of 

Spaceboard, charging fees (execution, maintenance, and 

royalties) for each application, negotiable case by case. 

Product Characteristics 

Although Spaceboard was originally produced with wood 

fibers (new or recycled, from hardwood or softwood), it can 

actually be produced with any fiber. This flexibility is very 

important, especially in reducing the effects of pulp market

prices in the raw material costs, because the main raw material can be easily changed. 

In the Furniture market, Spaceboard could serve as a substitute for products made of steel and wood, like tables, 

shelves, and boards. Its light weight makes it very useful for 

portable or single-use furniture. The ability to shape Spaceboard into many forms and multiple finishing possibilities 

makes this product very attractive for modern furniture 

design. 

The production process is also very flexible and can be 

customized to meet product specifications. The process can 

be wet or dry, continuous or batch. Several additives can be 

used to increase strength, waterproof, or finishing, although 

a sheet of Spaceboard made of wood fibers without any

additives is 100% recyclable. The whole process can be 

implemented following almost all concepts of sustainability, 

except if chemicals are used to increase product properties or 

if drying is needed (high level of power consumption). 

In the Packaging/Pallets market, Spaceboard presents a highvalue added solution because of its strength/weight properties. The physical characteristics and recyclability of Spaceboard enable it to be substituted for typical packaging/pallet 

materials, such as wood, paper (corrugated cardboard), 

plastic, and steel. Compared with wood, Spaceboard has a 

better strength/weight ratio and can be made in any shape, 

reducing assembly workload and the need for nails. Compared with paper, Spaceboard is more resistant to weather 

conditions (waterproof) and supports heavier weight. Compared with plastic and steel, Spaceboard is more easily recyclable and environmentally safe; for military use, it retains 

less radioactivity than does steel. 

The size and shape of each sheet of Spaceboard is customizable, increasing the number of possible applications, including non-flat surfaces. A typical sheet of Spaceboard has 

one flat side and a honeycomb structure on the backside. The 

honeycomb increases the strength in the direction normal to

the sheet, without adding much weight compared to that of 

solid wood. This strength level can be adjusted based on the 

fiber used, the production process, and the width and height

of the honeycomb walls. 

15
Market Assessment of Applications • Geographical clustering of competitors: High degree of

concentration (six companies account for 50% of the marConstruction market ket), mainly in North Carolina and South Carolina 

• Market size: US$30.6 billion/year in 2000 (National

Home Center News) Packaging/Pallets market 

• Market size: US$4 billion/year in 2000 (Industrial Resources, Inc.) • Predicted annual growth: 1% (U.S. Census Bureau and 

Deutsche Bank estimates) 

• Predicted annual growth: 1% (Industrial Resources, Inc.) • End users: Construction companies, tradesmen, and ìdo-ityourselfî people 

• End users: According to the National Wooden Pallet and 

Container Association, no one economic indicator can predict the demand for pallets because of the diverse end-use 

sectors and national variations of seasonal and cyclical

trends. However, the grocery and food industry does account for roughly a quarter of all pallets used. 

• Substitute product: For hardwood flooring, wall panels, 

roof panels, marine and aeronautic structures 

• Distribution channels: Direct sale to construction companies, retailers, wholesalers 

• Customer characteristics: Price sensitive, commodity 

driven • Substitute product: For wood, plastic and steel pallets 

(96% of pallets purchased in the United States come from

• Market characteristics: Fragmented, high entry barrier, trees); boxes, tubes, cushions 

competitive 

• Distribution channels: Direct sale

• Geographical clustering of competitors: Spread across the 

United States • Customer characteristics: price sensitive, commoditydriven; high demand for customizable products (There are 

more than 400 different sizes of pallets used in the U.S. 

alone.) 

Furniture market 

• Market size: US$5 billion/year in 2000 (Furniture 

Research Institute) 

• Market characteristics: Fragmented, highly competitive; 

recycling considered to be the fastest growing and most

profitable segment of pallets 

• Predicted annual growth: 3% (Furniture Research 

Institute) 

• End users: Furniture manufacturers, tradesmen, and ìdo-ityourselfî people; major U.S. markets for household furniture are the metropolitan areas of New York, Chicago, Los 

Angeles, and Washington, D.C. (Furniture Research 

Institute) 

• Geographical clustering of competitors: Spread across the 

United States 

Market Analysis

• Substitute product: For low and mid-range furniture Industry Analysis 

The USDA Forest Service estimates there are 1.9 billion

wooden pallets in the United States. Of these, one billion 

pallets are in use, 175 million pallets have been repaired or 

recycled, 225 million have been completely discarded in 

landfills, and 100 million have been abandoned or lost. An 

estimated 2,800 U.S. establishments are currently manufacturing wooden pallets, with total annual sales of $3 billion in 

the United States and $400 million in Canada (Industrial 

Resources, Inc.). 

• Distribution channels: Sole dealers, independent dealers, 

superstores, mass merchandisers, office discount, wholesalers, public purchasers, direct sales; distribution system

is quite a complex aspect of the U.S. office furniture industry, as the growing trend towards cheaper and simpler 

products has determined growth in the number of distribution channels existing within the sector (Furniture Research Institute).

• Customer characteristics: About 60% of office furniture 

demand is accounted for by big purchasers; this share is

not expected to grow in the next 2 years, while significant

increases are expected for SoHo and home office products; price sensitive (Furniture Research Institute) 

Market Demand 

Approximately 420 million new wooden and plastic pallets 

are purchased each year (USDA Forest Service). The enduser consumer comes from a variety of industry sectors, 

which are largely comprised of distributors and retailers of 

consumer products and building materials and the U.S. 

military. Any entity interested in shipping bulk or heavy 

• Market characteristics: Concentrated, high entry barrier, 

competitive 

16
 

goods is a potential consumer of pallets. Issues faced by 

these consumers with regard to pallets are centered on the 

financial drain of having to repeatedly replace or repair 

broken pallets and the environmental impact of discarded 

pallets. Industry surveys show that 50% of pallet users expect to purchase more pallets in the next 5 years (Industrial

Resources, Inc.). 

Pallets are a necessary component when transporting goods. 

It is clear that the wooden pallets industry is growing, with

trends indicating a two-fold need for recyclability. The cause 

for these trend is the volatile cost of lumber the increased

focus of society on environmental concerns. First, consumers are looking for more durability. The demand for plastic 

pallets has been on the rise; usage increased from 3 to 4 

million units in 1995 to 10 to 13 million in 2000. That number was expected to increase to 20 million by the end of

2001. Multiple-use pallets have reached 30% of the market 

share, compared to just 5% in 1985 (Industrial Resources, 

Inc.). Some companies specialize in repairing damaged 

wooden pallets. It is evident that consumers are interested in

extending the life cycle of the pallet for economic reasons. 

Therefore, consumers would welcome the cost savings that

would be afforded by a stronger pallet. Second, as evidenced 

by the 325 million discarded pallets in the United States, 

there is a problem with disposal of damaged wooden pallets. 

This is considered a serious problem at shipping ports, where 

an abundance of damaged wooden pallets have piled up. 

Most pallets are used once and then discarded. Given this

waste, there are boundless environmental benefits to having 

reusable pallets and pallets made from recycled material 

since 96% of pallets purchased in the United States are made 

of wood. In response to environmental concerns, the recycling sector is growing at a rapid pace. In the past 3 years, 

wooden pallets that had been used or damaged were recycled 

30% more often than in previous years (Industrial Resources, Inc.). 

Customer Analysis 

As mentioned previously, the end-user consumer comes 

from a variety of industry sectors, which is largely comprised of distributors and retailers of consumer products and 

building materials and the U.S. military. Any entity engaged

in the transport or storage of bulk, heavy goods, or equipment is a potential consumer of pallets. Ownership of pallets 

changes frequently as pallets are often not returned to the 

entity originating the shipment. 

Competitor Analysis 

Michigan and Pennsylvania have the highest concentration 

of pallet manufacturers in the United States. The majority of

manufacturers are located near heavy manufacturing areas 

(Industrial Resources, Inc.). However, one competitoró

IFCO Systems North Americaóis located in Houston,

Texas, and is one of the largest pallet recycling companies in

the United States. This company was able to generate $229 

million in revenues from pallet services in fiscal year 2000, 

providing a complete range of services for pallet management, from sales, supply, and storage through back dock 

management, reconditioning, and disposal. Through this

well-rounded value-added approach to serving its customers, 

IFCO was able to generate a 12% operating margin on this

business alone in fiscal year 2000. 

Other major players include Potomac Supply Corporation 

and Pallet Management Systems Inc., which generated $89 

million and $72 million in revenues in fiscal year 2000, 

respectively. These companies also specialize in providing a 

well-rounded value-added approach to serving their pallet

customers. On top of offering variety in customization options, these companies offer distribution and logistical services targeted towards solving such industry-wide issues as 

disposal and return transport. Presumably, this ìwhole productî offering enables such companies to be industry leaders. 

(See Strategic Market Assessment for explanation of 

concept.) 

As a result of the growing concern for recyclability, pallet 

manufacturers will increasingly specialize in extending the 

life of the wooden pallet or introducing substitute materials. 

For that reason alone, the competitive landscape for the 

pallet manufacturing industry may exhibit significant change 

in the next 5 years. This may lead to an increase in mergers 

and acquisitions, as companies try to build capacity to meet 

the new demand for recyclability, which will require increased investments in new technology that many small

companies will not be able to afford on a stand-alone basis. 

Channel Systems 

The general infrastructure that supports the pallet industry

demand stems from a variety of sources. A majority of industry players have taken advantage of the Internet by offering services ranging from a wealth of information on their 

product offerings to exclusive, online pallet information 

management systems that facilitate pallet inventory management and pallet retrieval. Another center of consumer and 

pallet manufacturer exchange is the National Wooden Pallet

& Container Association (NWPCA), an international trade 

association representing manufacturers, recyclers, and distributors of pallets, containers, and reels. This organization 

endorses members (pallet manufacturers) and supports industry needs. A majority of pallet manufacturers are members, so when a customer, for example, visits the NWPCA 

website they are provided a wealth of information on pallet

design possibilities and suppliers. Other methods for industry participants to reach consumers are through local broker 

networks that are embedded in manufacturing communities. 

Larger customers may organize their own pallet manufacturing or distribution centers.

17
Strategic Marketing Plan 

Strategic Market Assessment 

Given the necessity for transport of bulk goods, pallet manufacturing will continue to be a high volume, commodity 

business. The industry is highly fragmented, where pallet

manufacturers locate themselves closest to consumers. Location has been a critical competitive advantage for pallet 

manufacturers because of low cost and the reorder demands 

of small-scale consumers. However, for large-scale consumers, location is not as much a necessity. Rather, large-scale 

consumers demand a distribution infrastructure that supports

this scale. In this case, a pallet manufacturerís membership

to the NWPCA may facilitate a large-scale consumerís 

search for affiliated pallet manufacturers or large-scale pallet 

manufacturers like IFCO Systems. 

To drive sales in this market, many pallet manufacturers 

have developed a ìwhole productî offering geared towards 

attracting consumers from competitors and to addressing

market needs such as two-fold recyclability. The whole 

product concept describes a range of supplemental services 

(i.e., reverse distribution and logistics services) designed to

satisfy needs associated with the use of a particular product,

coupled with customization of the product to suit the needs 

of the consumer (i.e., custom labeling or pallet design). 

(Note: Geoffrey Moore describes this concept in detail in 

Crossing the Chasm.) This approach enables barriers to 

entry to be created by competing pallet manufacturers, as 

manufacturers who offer less services get blocked from

acquiring new customers and lose opportunities to serve 

large-scale consumers. The whole product offering by todayís pallet manufacturers targets a reduction in replacement 

and repair costs and environmental concerns. For some

companies, offering repair services and reverse distribution 

and logistics services accomplishes this. Facilitated by high 

technology and the creation of management information 

systems, pallet service offerings have grown. However, 

environmental concerns have not been completely addressed 

by this industry. Many steps have been taken to increase 

pallet life cycle, as evidenced by the growing popularity of 

plastic pallets and treated wood; one chemical used to treat

wood is extended polystyrene (EPS). However, wooden 

pallets remain a customer preference, signifying the need to 

find better solutions to curtail the negative environmental 

impact of wasted wood and non-recycled wood. 

Product Analysis 

Using Spaceboard to create a pallet satisfies what the industry is looking to offer its consumers in terms of durability, 

life cycle costs, and environmental responsibility. However, 

a more tangible differentiating element to Spaceboard, aside 

from the competitive advantage afforded by the patent, 

would be the added benefits to the pallet manufacturer and 

consumer. The pallet manufacturer benefits in terms of 

streamlined production that creates potential for reduced 

labor and increased safety for its employees, while the consumer benefits from the light weight and versatility of the 

product.

Structurally, Spaceboard will create a pallet that is in fact 

stronger, easier to produce, and versatile than wooden pallets. This product has a higher strength to weight ratio compared with that of wooden materials, while weighing much 

less. To increase the strength or durability further, synthetic 

fibers can also be incorporated into the Spaceboard manufacturing process. Additionally, the product is uniformly strong, 

given its three-dimensional characteristics. A pallet 

manufacturer may find this three-dimensional feature 

beneficial because it may streamline the manufacturing 

process, given that this material can be designed and formed 

to near net shape with fewer processing steps. This also 

creates an avenue to improve employee safety since no nails

are required, reducing splinter injuries. Many of these 

benefits will be translated into consumer savings. Fewer 

repairs resulting from structural integrity, lower shipment

and recovery costs (lighter weight), and the elimination of 

volatile material costs (lumber prices) can reduce initial and

overall life cycle costs for the consumer. Furthermore, the 

design versatility that Spaceboard affords creates boundless 

opportunities for a pallet manufacturer to capitalize on and 

for consumers to customize the product to their needs. 

From an environmental standpoint, Spaceboard provides the 

solution that the industry is looking for. First of all, Spaceboard reduces the need for virgin fiber and cutting down oldgrowth forests. Second, depending on customer specifications, the product can be made without resins that contain 

formaldehyde. Third, it can be made from 100% recycled 

materials. These factors, coupled with the reusability afforded by the strength characteristics of Spaceboard, provide 

a well-rounded alternative to address the environmental

issues faced by wooden pallet manufacturers. 

The structural and environmental benefits of Spaceboard 

will create a significant competitive advantage for any company licensed to use this technology. To successfully capitalize on this, the company would have to create a whole product offering that satisfies the demands of the productís life 

cycle. This will include building a distribution infrastructure 

that is cost effective for both small- and large-scale potential 

consumers and offering a pallet information management

system (PIMS) that is accessible to consumers. A PIMS will 

enable consumers to get a greater return on their pallet investment and, as a result, consumers will reward the company that does this best with renewed business. Therefore, 

there is potential to build a brand name, where consistent

quality and service will be trusted most to yield cost savings. 

In a commodity driven market, this aspect will be critical 

when patent protection expires. 

18
 

Tactical Marketing Strategy Location 

Distribution channels must mimic that of competitors, while 

gaps in industry distribution are thoroughly explored. While

the lightweight aspect of Spaceboard may alleviate distance 

barriers created by high shipment costs, it may be necessary

to open a small distribution center in a highly concentrated 

consumer location. 

Product 

The Spaceboard pallet should be marketed as the premiumquality product that it is. All differentiating benefits must be 

outlined for consumers to see the value added to their respective business by purchasing Spaceboard pallets. To be a 

viable substitute product that competes successfully, the 

Spaceboard pallet must be offered as a whole product. Design and Development 

The Spaceboard pallet must be offered as customizable to

satisfy not only industry specifications but also consumer 

needs. To build on this, custom labeling, painting, and logo 

branding or stenciling must be offered. Also, packaging 

accessories (including bubble packs, shrinkwrap, strapping, 

bags, and tape) must be offered at a discount when consumers choose Spaceboard pallets. 

Cost Analysis 

The present study is a first approach to define the feasibility 

of the project and was developed as simply as possible to

facilitate the sensibility analysis. Considering the quality of

the information gathered, we recommend a later enhancement to improve the accuracy of the analysis. 

The first assumption is about the pallet geometry, settled 

with the standard width and length (48 by 40 by 6 in.). Two 

densities are employed in the weight estimate: dried pulp

density (750 kg/m3

) and Real Space Occupied (15%), which 

take into account the empty space inside Spaceboard, depending on the width and arrangement of the honeycomb. 

A PIMS is another product dimension that must be offered to

Spaceboard pallet consumers. Consumers want to know 

pallet inventory levels at their facilities, pallet retrieval data, 

pallet handling specifics, and surplus pallet disposal figures. 

This consolidated information will provide a greater return

on pallet investment for consumers by lowering management

costs, reducing handling costs, and minimizing lost pallets. 

Building on this competency, a Spaceboard pallet manufacturer (the company) must also offer reverse distribution and 

reverse logistics services. This way, the benefits to using

Spaceboard pallets will extend beyond what industry competitors are successfully offering. The Spaceboard pallet 

consumer must know that the companyís service offerings 

are consistent, with quality unmatched anywhere. 

Administration is usually considered as a fixed cost, but here 

it will be treated as 4% of the sales. The capacity of the plant 

is 45 pallets per hour working at full load, but the early

months will operate under capacity, not only by the curve of 

market penetration but also by the learning curve, which is

considered in efficiency to calculate every quarter in the cash 

flow analysis (see Appendix B). At 45 pallets/hour, two 8-h 

shifts, and 25 days/month, 216,000 pallets will be produced 

per year, signifying almost 0.05% of market share for each Price plant.

Given that this product is substituting a commodity product, 

there is little room for major mark-ups to communicate the 

premium-quality message. Spaceboard pallets will be offered 

at a slightly higher (approximately 7%) price. Product benefits must be strongly communicated to justify the higher 

cost, and a cost savings analysis for the estimated useful life 

will be a critical tool. In addition, the company must become

a member of NWPCA, as this will endorse the productís 

worth. 

Variable Cost 

FiberóFiber could be a mix of virgin and recycled, since 

the virgin fiber improves resistance and recycled fiber reduces the cost. Both types of fiber tend to have significant

variations in price, but it is assumed a fixed price of $90/ton 

for recycled and $400/ton for virgin. An optimal blend is

settled with 90% recycled and 10% virgin. The price is 

estimated at $121/ton and fixed for the next 10 years. 

Thermal EnergyóThe most efficient system comes from a 

co-generating process, where the steam employed to dry the 

pulp is the residual energy in a higher energy system (i.e., 

electric generator). Therefore, it would be very convenient to

place the Spaceboard facilities near a large factory like a 

pulp mill or a thermoelectric plant to take advantage of low 

energy, which is sometimes wasted by such facilities. 

Promotion 

The design versatility and light weight of Spaceboard pallet 

must be exploited. A few consumers should be offered a free 

customized trial sample period. Customers to receive a free 

trial should be selected based on the potential for the largest

sales volume. Results of customer trials should be advertised 

at trade shows and in NWPCA publications. At this level, 

opportunities to build the brand name will emerge as the 

companyís whole product delivery is proven. Discounts can 

be offered on first orders. 

Steam yield, in terms of heat consumed to dry a ton of pulp, 

depends of many factors that are out of the scope of this

study but could be summarized in pressure, temperature 

(saturated steam is more efficient), heat transfer efficiency, 

19
ventilation and general efficiency of the system (including

heat and condensation recovery). The most common system

to generate steam is the boiler, which is usually fed by hydrocarbons, whose price is linked to the variations of the 

international oil price. As such, an assumption of 3,000 

steam lb, at $9/103 lb @ 80 psig, yields the cost of drying at

$27/ton. 

The easiest and most expensive way to generate steam in this 

case is to erect a new boiler fed by oil or gas. However, 

another source of energy could be analyzed, such as biomass, sawmill, bark, and other industrial waste with low 

thermal efficiency at a lower price. 

Taking into account other facilities required by the whole 

manufacturing process and the investments required, the best

option would be to build the Spaceboard plant inside an 

underutilized paper mill (which is not too difficult to find). 

This way, it is possible to start with low investment risk

when employing the cleaning, refining, and feeding systems 

available in the wet end.

Electric EnergyóElectric energy will be required to power 

machinery, pumps, refiners, and vacuum systems for the 

formation, pressing, and drying of Spaceboard. An index of 

660 kW⋅h/ton was chosen to determine how much electric 

energy is required; the price of 4.62 cents for each kilowatt 

hour (kW⋅h) is the average in the United States over the past

10 years for the industry. Although there are big differences 

among states, the price for every state has been more or less 

stable. 

Fixed Cost 

AmortizationóIt is considered that an original investment

of $2 million would be enough to build the plant next to an 

existing recycled paper mill to produce the amount of pallets 

stated in the previous text. The debt has 10 years to be paid

and is assumed at an interest rate of 3.5%. 

LaboróThe level of machinery at the plant will determine 

how many employees are required. For the assumed investment just mentioned, three workers would need to be hired 

to operate the plant, at $20/h each. The total labor cost 

would be $480/shift. The wage of $20/h is estimated by

averaging holidays, insurance, benefits, etc. It is assumed the 

plant will be closed on Sundays. 

Manufacturing and 

Operations Plan 

Raw Materials 

Spaceboard has the potential to make use of the aggravation 

caused by wood in the packaging and shipping industry.

Spaceboard was invented as an alternative application for 

short fiber/hardwood that was dumped into the landfills. As 

short fibers were not reusable in the papermaking process, 

the scientists decided that compression molding process 

could make some useful product. 

1. This technology could significantly enhance the basic 

Chapman Process of hardboard production to create a 

product exhibiting strength characteristics comparable to 

that of wood. 

2. The blend can consist of 90% recycled and 10% virgin

fiber. 

3. In a molded forming process, a panel (4 by 8 ft) of Spaceboard can be produced efficiently in up to 1-in. thickness;

it can then be fabricated to make shipping pallets. 

Geographical Location 

Given the necessity of recycled wood and high consumption 

of energy, it would be advisable to locate the facility in close 

proximity to an area where recycled wood and energy are 

easily accessible. There are two options for locating the 

plant: 

1. Near a large factory like a pulp mill or a thermoelectric 

plant in to take advantage of low energy

2. Inside an underemployed paper mill, given the fact that it 

is possible to minimize the risk by employing the cleaning, 

refining, and feeding systems available in the wet end. 

Manufacturing Process 

Putting aside all other techniques used to make composites, 

using a silicon and stainless mold is the critical operative in

setting Spaceboard technology. Many forms of recycled and 

post-industrial waste fiber can be used as the raw material. 

1. A simple, proven, and inexpensive production line can be 

established to generate several hundred panels of Spaceboard per day. 

2. The concept uses pulped furnish from old corrugated 

board or other recycled paper destined for the landfills. 

3. By distributing a layer of furnish (slurry of raw material 

fiber) over the proprietary mold, the system extracts the 

water out of the sheet of Spaceboard to form a 4- by 8-ft

molded hardboard sheet. 

4. The sheet then goes through a ìcoldî press to remove 

water. The final stage requires a steam-heated, multiopening press to physically form the furnish in the shape 

of the mold and then heat it to ìbone dryî while pressing 

at 150 lb/in2

 for shape, strength, and hardness. 

5. Once the sheet is made, fabricators will cut the 4- by 8-ft 

sheets into appropriate segments and then glue them into

the final product form. 

6. Stacks of the final product will be shrink-wrapped and 

shipped to the customer for immediate use. 

20
 

7. A unique 3D fiberboard of structural molded fiber (SMF) Personnel Risks 

needs to be applied. 

In terms of acquiring and producing Spaceboard, the two 

biggest personnel risks in our view are underestimating the 

cost of engineers, designers, and technical workers. The 

company needs to compensate these employees fairly, and 

depending on the regional location of facility, the competition for hiring them will be fierce. The company can respond 

to employee financial needs by operating a sustainable enterprise. Financially, compensation packages should includes 

stock options, 401(K) plans, and profit sharing. Socially, the 

employees should be offered an ergonomic, safe, and nontoxic work environment. The company should be responsive 

to the needs of the community and not waste resources by

discharging pollutants into the environment and water 

supply.

Spaceboard manufacturing considerably reduces the amount

of energy required to produce an ìequivalent productî if

there had been a requirement to make the product from

wood. The final consideration for manufacturing is the 

significant reduction in use of wood that occurs when displacing wooden throw-away products with recycled paper in

the form of Spaceboard. 

Management Team 

Not applicable to this business plan. 

Critical Risks, Problems, and 

Assumptions From an expansion perspective, as the company grows 

quickly they may struggle to find quality workers on the 

market who can learn the business quickly unless the company already has overcapacity. Another issue is addition of 

new customers who require customized products. This will 

further challenge employees and expansion efforts. 

Industry Risks 

In our research, the only potential direct competitor is Sonoco. Sonoco has a license from the Forest Products Laboratory (FPL) for packaging application using Spaceboard. 

Headquartered in Hartsville, South Carolina, Sonoco is a 

global manufacturer of industrial and consumer packaging 

products and provider of packaging services. The company

views itself as a leader in the packaging goods industry.

Given the exclusive licensing arrangement to which FPL 

subscribes, we do not view Sonoco as a direct competitor. 

However, nothing prevents Sonoco from pursuing other 

licensing agreements from FPL since the company already 

manufactures and sells pallets. The company could be a 

formidable competitor given its financial standing and global 

operational reach. Its mission statement and most recent 

annual report suggest that the company will continue to 

focus on growth through acquisition and double-digit 

growth. 

Market Appeal 

The companyís biggest challenge is to effectively communicate the value of its productóspecifically, how Spaceboard 

adds value to not only the customer but also the ìtriple bottom line.î Another obstacle is to sustain the staying power of 

Spaceboard in the market. 

Timing Risks 

As with any product, Spaceboard could probably end up as a 

niche product because the mass market is not ready for such 

a technology. However, due to government regulations, for 

example, the pallet or another industry such as construction 

may be forced to look for new sources of raw material in

their production process, thereby giving Spaceboard mass 

market appeal. 

Other primary competitors are the wood and plastic pallet 

industries. We see no reason why a licensee of Spaceboard 

cannot compete in this environment. With the existing competition, entrenched industry ties, and positioning, we would 

not be able to price compete with them in the market. Rather, 

we will compete on the superior attributes and potential 

value of Spaceboard. 

Financing Risks 

Financing risks are not applicable to our business plan. 

However, the financial risk for the company will depend on

credit terms and contracts with customers, as well as on how 

effectively account receivables are handled and whether 

favorable payment conditions can be obtained from 

creditors. 

Company Risks 

The company will have to contend with the issues of expiration of Spaceboardís family of patents, new market entrants

such as plastics, and patent infringements from competitors. 

To protect against any intellectual infringements, the company may need to take legal action against companies that 

unfairly use the licensed patent for Spaceboard. 

The Financial Plan

The size and location of the production plant or plants along 

with the product line mix will influence the financial plan. If 

Spaceboard is licensed to an existing company, such as 

International Paper, with already existing capacity and re21
sources, then some items discussed in this section on the 

Financial Plan will be irrelevant. In this case, the company 

will be concerned with acquiring equipment and working

capital. However, if we were advising a start-up company 

interested in producing Spaceboard, we would suggest securing funding through a combination of angel investors, 

family, and friends. The following typical arrangement could 

be devised. Management would contribute cash equal to a 

determined amount per founder. Equity shares equal to 25% 

of authorized shares would be issued to investors in exchange for cash. Managers would own a combined percentage of the company equity. The company could be formed as 

a corporation, with authorization to issue shares of par value 

stock. To attract employees, the remaining shares in the 

company could be reserved for employee recruitment, retention, management bonuses, and future investors. 

We do not believe that the pallet business will generate the 

substantial profits that a large-scale investor would expect. 

We attribute this to two significant factors. First, a commodity market is based on intense competition. Second, there is a 

limit to the amount that cost can be driven down either 

through production processes and inputs. It is very likely the 

licensing company can extract favorable deals from the 

recycled fiber or energy industries. One can assume that FPL 

engineers and technicians will need to work with the licensee company to produce Spaceboard using a continuous 

process. If we could reduce the energy cost, we can provide 

higher profits enough to attract large-scale investors. We

believe that given a 5-year plan and low cost employees, we 

could provide a return. 

Our conclusion is that Spaceboard has all the unique properties and attributes to be a disruptive technology. Although 

2 years remain for the Spaceboard patent, FPL should continue marketing the technology to the furniture, agriculture, 

music and performance studio, construction, and packaging 

industries. The marketing strategy for the pallet industry is

the strength, light weight, and ease of recycling of Spaceboard products. Also, companies such as Johnson and Johnson can invest in small pallet-making machines and produce 

Spaceboard in-house. In construction, governments and 

relief organizations could use prefabricated structures designed using Spaceboard. Spaceboard is also a good substitute for plywood in underdeveloped countries where forests 

have been depleted. 

Long-term debt financing would be secured for capital

equipment purchases used by the company. Under current 

market conditions, the loan should bear an interest rate less 

than 11% and be collateralized by the capital equipment. 

Rental equipment such as office furniture could be financed 

through a revolving loan agreement. The value of the loan 

would equal the original purchase price of the equipment

and the revolving debt secured by the rental equipment.

Working capital would be financed through a line of credit

not to exceed a predetermined amount. 

The company is free to determine its cost structure. A sample fee structure for Spaceboard may be that it is sold to

clients on a contract basis or at market rates. All customized 

requests will be on contract basis. The majority of contracts 

will be for a fixed number of sheets at a specified price to be

delivered during the contract life. At signing, the equivalent

of one-third of cost will be due as a prepaid deposit. It is 

expected that the average collection time will be 45 days. 

Overall, there is expected risk, however little, of uncollected

sales. 

The benefits of Spaceboard are a high margin resulting from

low production cost, reduction of pollutants emitted into the 

atmosphere, and reduced depletion of virgin forest through 

the use of low quality hardwood. Mixed wastepaper can be 

used as raw material without preparatory processing to

remove large contaminants such as clay, plastics, and staples. The open-cell grid allows Spaceboard to be used in or 

with a wide variety of structures. Another advantage of this

patented technology is that the fibers in Spaceboard can be 

processed using either dry or wet vacuum techniques and 

bonding can be accomplished using either heat, pressure, or 

adhesive agents, or any combination of these. Spaceboard 

production is versatile and can use either batch or continuous 

processes. Also, the use of molds that press in one direction 

lower the cost of production. 

Conclusion 

After examining the commercialization potential and plans 

for Spaceboard in the pallet industry, we have determined 

that the product has enormous applications and promise. 

Based on the business model for pallets, we believe that

positive cash flows will not be difficult to achieve, and that 

profitability is likely if a company has an exclusive license 

or family of patents. Nevertheless, patent infringements are 

expensive to litigate, and it would be advisable for the company to also have a unique production competence that is

difficult for competitors to replicate. These measures will 

help mitigate the low barriers to entry for any company 

producing Spaceboard after the patent has expired and the 

products enters a crowded and price-competitive industry. 

22
 

Appendix AóMarket Research 

Responses From Forest Products 

Laboratory

1. What support (load capacity and structural) does Spaceboard offer in terms of vertical and horizontal strength 

when compared to wood or plastic? Shock absorbency?

See the Spaceboard 2 information on the FPL web site

for information.

2. Is Spaceboard rot and warp resistant? Can it be made 

resistant to weather and termites? Flameproof? 

Yes, with chemical treatment, Spaceboard can be 

made resistant to weather, insect infestation, and fire. 

3. What is the typical average production schedule for 

Spaceboard? 

Average production time depends on board thickness. 

Typical Spaceboard takes about 30 seconds to dry. 

A 1-in.-thick board takes 30 to 40 min to dry; 

1-in.-thick Spaceboard can be dried by microwave 

 energy in 5 min. 

4. How reparable is a Spaceboard pallet in the event of light

damage? 

A pallet made from Spaceboard is not as easily repaired 

as a wooden pallet. To repair a chip that affects the 

structural integrity of the pallet, more fiber cannot be 

injected into the pallet. If the inner core is damaged, a

wooden piece can be inserted (routed out) and glued in 

place to obtain the desired resistance. 

5. Are there any quality (consistency) issues with current

production machine technology?

No. Just like any production process, if high quality raw 

materials are used and the process is efficient, the quality of the Spaceboard manufactured will be high. 

23
Appendix BóCost Analysis 

units yield / Ton ( $ / un ) ( $ / ton ) Fiber Price Mix ( $ / Ton )

Fiber ton 1 121 121 Virgin 10% 400

Electric Energy Kwh 660 0.046 31 Recycled 90% 90

Thermal Energy steam pounds 3,000 0.0090 27 Furnish 121

Variable Costs per ton 179

per pallet 3.8 48" x 40" x 6" inches meters dm^ 3 kg

Wide 48.00 1.22

Pall / hour hour / day day / year 1000 pall / year Length 40.00 1.02

Production 45 16 300 216 High 6.00 0.15

Gross volumen 188.8

$ / shift shift / day day / year 1000 $ / year Net volumen Dens.Space 15% 28.3

Labour 480 2 300 288 Weight Dens.Pulp 75% 21

Every shift of 8 hours, three workers @ 20 $/hr

annual rate Invest (1000$) years pmt ( 1000 $)

Amortization 3.5% 2,000 10 240 Pallets per hour

Shifts per day

Sale price / pallet 8 I nitial investment

Sales ($ 1000 US) $1,728 Densities

Var.cost $820

Labour $288

Amortization $240

Administration $69 4% as percentage of sales

Margin $311

Main parameters to play
25

Quarterly Forecast

Lineal Growth 123412341234

Sale price / pallet 6.5 6.5 7.0 7.0 7.5 7.5 8.0 8.0 7.5 7.5 8.0 8.0

(pallets / hour) 15 20 25 30 35 40 45 45 45 45 45 45

Prod. (pallets/quarter) 18,000 24,000 30,000 36,000 42,000 48,000 54,000 54,000 54,000 54,000 54,000 54,000

Sales ($ 1000 US) 117 156 210 252 315 360 432 432 405 405 432 432

Efficiency 70% 75% 80% 85% 90% 95% 100% 100% 100% 100% 100% 100%

Var.cost 98 121 142 161 177 192 205 205 205 205 205 205

Labour 72 72 72 72 72 72 72 72 72 72 72 72

Amortization 60 60 60 60 60 60 60 60 60 60 60 60

Administration 5 6 8 10 13 14 17 17 16 16 17 17

Profits 22 78 78 52 52 78 78

Cummulate Profits 7 84

Quarterly Forecast

Annual Growth 123412341234

Sale price / pallet 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0

(pallets / hour) 15 15 15 15 30 30 30 30 45 45 45 45

Prod. (pallets/quarter) 18,000 18,000 18,000 18,000 36,000 36,000 36,000 36,000 54,000 54,000 54,000 54,000

Sales ($ 1000 US) 144 144 144 144 288 288 288 288 432 432 432 432

Efficiency 80% 80% 80% 80% 90% 90% 90% 90% 100% 100% 100% 100%

Var.cost 85 85 85 85 152 152 152 152 205 205 205 205

Labour 72 72 72 72 72 72 72 72 72 72 72 72

Amortization 60 60 60 60 60 60 60 60 60 60 60 60

Administration 6666 12 12 12 12 17 17 17 17

Profits 78 78 78 78

Cummulate Profits

1st YEAR 2nd YEAR 3rd YEAR1st YEAR 2nd YEAR 3rd YEAR

(117) (104) (73) (51) (7)

(117) (221) (294) (345) (352) (330) (252) (175) (123) (71)

(79) (79) (79) (79) (7) (7) (7) (7)(79) (159) (238) (317) (324) (332) (339) (347) (269) (191) (114) (36)
26
University of North Carolina Team 2 

Reinforced Wood Panel Technology: 

Product Application Reviews

Jason Coccia 

Kevin Freeman 

Claudia Guthrie 

Lindsay James 

Rafael Martin 

University of North Carolina 

Kenan Flagler School of Business 

Center for Sustainable Enterprise 

University of North Carolina, 

Chapel Hill, North Carolina 

February 28, 2002 
Contents Executive Summary 

The USDA Forest Service Forest Products Laboratory (FPL) 

in Madison, Wisconsin, is the nationís leading wood research institute. The focus of FPL research has primarily 

been on how to derive useful applications from wood products to benefit the housing, furniture, and other wood and 

paper related markets. In their bid to intensify the development of wood products that have significant commercial

potential without sacrificing environmental and sustainability concerns, FPL has decided to engage industry experts and 

business students to help improve the marketability of their 

products, which were developed using cutting edge 

technology. 

Executive Summary ............................................................ 28 

Section 1óApplications of Fiberglass-Reinforced Wood 

Panel Patents....................................................................... 29 

Application 1óReinforced Wood Safety Doors............ 29 

Application 2óRWP Reinforcing Patches for 

Engineered Lumber......................................................... 31 

Section 2óSustainability Assessment................................ 35 

Stage 1óSustainable Product Development and 

the Triple Bottom Line.................................................... 35 

Stage 2óThe Sustainable Corporation and the Natural

Resource Based View ..................................................... 39 

The Kenan Flagler Business School (KFBS) of the University of North Carolina at Chapel Hill is one of the institutions picked to collaborate with FPL as part of this new 

commercialization drive. The MBA students enrolled in the 

course have been charged with the task of advising FPL on 

the following issues: 

Section 3óComparison of RWP and Spaceboard 

Products .............................................................................. 39 

Section 4óConclusion and Recommendations.................. 40 

Literature Cited ................................................................... 41 • Define a model for New Product Development that can be 

utilized by FPL. Appendix AóRWP Product Application Research 

Contact................................................................................ 42 • Analyze the commercial potential of two patented 

products developed by FPL. Appendix BóNew Housing Completions and 

Characteristics..................................................................... 42 • Compare the commercialization potential of the two 

products. Appendix CóMembership list of APAñThe Engineered 

Wood Association............................................................... 43 • Explore the characteristics of these two products and 

determine if they are sustainable. 

• Make recommendations to FPL on how to move forward 

with the commercialization process and the integration 

of New Product Development thinking into their 

organization. 

For the purposes of this project, KFBS students were split 

into two groups, with our group choosing to focus on reinforced wood panels (RWP). The issue of defining a model

for new product development was addressed in a presentation to FPL and USDA Forest Service personnel at KFBS in

February 2002, and those materials are provided in a separate document. This paper deals with the final four points on 

the abovementioned list. Specifically, we look at two applications for RWP that we believe hold commercial promise:

reinforced wood doors and engineered lumber reinforcing 

patches. Section 1 examines the commercialization potential 

of these two applications. Section 2 assesses the characteristics of these applications through the lens of sustainability. 

Next, we compare the commercialization potential of RWP 

products and Spaceboard products in Section 3. Finally, in 

Section 4 we conclude with some recommendations for FPL 

on how to better pursue current and future commercialization efforts. 

Research contacts for RWP product applications are listed in

Appendix A. 

28
Section 1óApplications of 

Fiberglass-Reinforced 

Wood Panel Patents 

Public HousingóPublic housing is generally located in

high crime areas and public housing projects are subject to

considerable budget constraints. A fiberglass-reinforced 

door would provide added safety from intruders and improved aesthetic appearance for these units at a reasonable 

cost compared with the simple steel doors generally used. 

Today there are over 4 million HUD assisted units in the 

United States alone. Assuming that HUD would be willing 

to replace the entry doors on a minimum of 10% of these 

units over a period of 2 to 3 years, the revenue potential is

considerable. Additional research is required to understand 

the market for new housing projects. 

Application 1óReinforced Wood 

Safety Doors 

Traditional exterior wood doors do not possess as much 

strength as steel doors to resist heavy impact or extreme 

weather conditions. Together with weatherstripping, a door 

frame, and a threshold, doors keep external elements at bay.

The support from each of these items, however, still does not 

address the vulnerable places on a door such as the areas 

supporting the doorknob and door hinges. The reinforced 

wood panel (RWP) technology patented by the Forest Service provides a viable solution to this problem. 

Military HousingóAccording to a representative from the 

National Association of Home Builders, the demand for 

doors that provide added security from intruders will rise for 

military housing and embassies located in other countries. 

This demand stems from the recent terrorist attacks on the 

United States. and heightened awareness of security issues. 

The size of this market is difficult to assess at this time and

needs further review. 

The primary applications for entry doors include singlefamily homes, multi-family dwellings, and commercial 

buildings. On the market today, one can find a tremendous 

variety of steel, fiberglass, and wood composite exterior 

doors that are aesthetically pleasing and provide security

from extreme weather, fire, and intruders. Each type of door 

has its own unique set of qualities and addresses a variety of

needs. For instance, some steel doors on the market come

with a 5- to 10-year warranty to guarantee quality and durability. Fiberglass doors also come with such guarantees; 

however, they do not provide resistance to fire. Insulated 

steel continues to dominate unit sales in the entry door market, but greater emphasis is being placed on a broader range 

of products such as fiberglass and wood composites (National Glass Association 2002). 

Resources Necessary for Commercialization of 

Reinforced Wood Safety Doors 

The successful introduction of most new products usually

follows a well thought out and elaborate process. This involves careful examination of the market conditions, manufacturing and distribution challenges, and the resources 

necessary for the sponsoring company to make a successful 

commercial launch. A similar framework, as described in the 

commercialization model, will be followed in outlining

resources necessary for the commercialization of RWP. 

Market Assessment for Reinforced Wood Safety

Doors The door market is highly fragmented with over 325 steel

door manufacturers and 250 wood door manufacturers. 

There is a growing trend toward consolidation in this industry, as evidenced by the increasing number of mergers and 

acquisitions as well as the expansion of the top 100 door 

manufacturers (National Glass Association 2002). 

Reinforced wood products are being positioned as an alternative to steel doors or a solution to safety concerns regarding the resilience of entry doors in public and military housing. This means an ability to determine the major players 

within both the steel and wooden door markets. To understand where these players believe value could be added to

the existing product is key to having a successful commercialization strategy. Market trends and stage of market life 

cycle will have to be determined to assess the most appropriate market segment for RWP and the timing of its introduction to that market. 

Given the wide variety of choices in the traditional entry

door market, the team explored alternative markets for doors 

manufactured with fiberglass-reinforced wood. Three areas 

of interest arose from the initial investigation of possibilities: 

Severe Weather Housing ReplacementóCoastal areas 

plagued by severe weather and natural disasters present

significant revenue potential. In North Carolina, for instance, 

11,000 homes affected by Hurricane Floyd in 1998 are being 

rebuilt. The goal is to keep the cost of a home below 

$35,000 and to provide a stable, weather-resistant dwelling. 

Fiberglass-reinforced wood entry doors would keep the cost

in an acceptable range for this project. Individuals in other 

disaster-prone areas such as in Florida and New England 

may also consider this product an affordable alternative to

provide safety and peace of mind. 

Other customer-related insights from market studies would 

provide additional important information including but not

limited to

• Customer demographics 

• Customer buying power 

• Customer profitability 

• Value chain characteristics 

29
• Price elasticity 

• Desired outcomes for integrating new technology

Such assessments require good industry market research 

using both primary and secondary data from sources that

include various focus groups pooled from

• Tradesmen 

• Architects and contractors 

• Manufacturers and distributors (e.g., Home Depot, Weyerhaeuser, Premdor) 

• Building societies and associations (e.g., National Association of Home Builders) 

• State and local government officials (e.g., Durham Public

Housing Council)

Secondary sources may include census data and industry

specific reports. Third party research firms could be contracted to produce this kind of market assessment report, or 

the internal research unit of the company acquiring the technology could undertake such a task. 

Availability of Raw Materials / Inputs 

In general, raw materials for RWP are widely available 

commodities. Careful selection of sourcing partners is necessary to ensure competitive pricing inputs. Wood, epoxy 

resins, and fiberglass mats are the primary inputs. 

• WoodóThe availability and cost of wood varies with the 

type desired. 

• Epoxy resinsóEpoxy resins are readily available from a 

number of manufacturers. The cost of the resins varies depending on the properties desired. The cost of epoxy resins can range from $45 to $75 per gallon and may be subject to air hazard charges. 

• Fiberglass matsóFiberglass mats are also readily available from a number of manufacturers. The cost varies according to type of product desired:

• Corrosion resistant fiberglass mat: $25/yard 

• Chopped strand mat: $9/yard 

• Woven roving: $14/yard 

Requirements for Manufacturing, Distribution, 

and Market Commercialization 

Manufacturing and DistributionóA company acquiring 

the RWP technology could be one that is new to the industry

or a firm that is already fully engaged in the wood processing industry, be it furniture, doors, or a related wood applications market. For a company new to the market, entering the 

market would require setting up a manufacturing plant that is

capable of producing RWP in a manner that is not only able

to fully leverage the technology but also efficiently manage 

the process to realize the potential cost advantage that RWP 

applications could have over steel and its applications in

residential housing construction. A new company will also 

have to develop channels of distribution, which may require 

either displacing established competitors, which would be

expensive and difficult, or creating a wholly new channel in

an seemingly matured market. 

Companies already in the re-engineered wood business 

would have to adapt their existing machinery and manufacturing process to accommodate the inclusion of reinforcing 

fiberglass laminates. To manufacture reinforced wood doors, 

epoxy resins and fiberglass mats must be applied to the area 

that surrounds the doorknob and the hinges. A machine 

would have to be added to the manufacturing process to

spray the epoxy adhesive over the required areas. Pre-cut

fiberglass mats would then be pressed to the epoxy surface 

before it hardens. This could mean little financial outlay. 

Energy and labor requirements seem to be potential areas of 

significant expenditure that companies adopting RWP technology may have to consider. 

Marketing and EducationóA firm needs resources not

only to obtain the necessary market intelligence as well as 

manufacturing and distribution competencies, but also to

achieve the managerial and technical know-how to test

market and distribute the product. These resources may be 

available both within and outside of the company. Internal

competencies should enable the company to effectively map 

out the competitive landscape to determine the number and

density of competitors and substitute products, barriers to 

entry, and ability to control channels of distribution and

assess potential synergies that could be obtained from the 

marketplace. Internal resources for training, capital equipment, infrastructure, and manufacturing capabilities requirements are all necessities for successfully implementing 

a launch strategy. 

However, a firm may not necessarily have to be burdened 

with all the technical and marketing requirements needed for 

a new product launch. Partnering with outside groups whose 

business focus provides the needed synergies can help leapfrog the process. In the case of RWP, tests for missile penetration, flammability, and durability could be coordinated

with research laboratories or trade groups that have the 

resources and capabilities to conduct these tests. Such an 

approach could significantly reduce the financial strain and 

enhance the marketing and adoption of the technology into

the market. 

Some research institutions and consumer organizations 

have been identified that could provide support for the 

commercialization of RWP. We recommend that any partner 

choosing to commercialize RWP should contact these organizations, which include:

30
31

1. Test laboratories of the National Association of Home

Builders, 

this project are restrictions on the size and placement of 

holes drilled through these engineered products. It is often 

the case that architects fail to adequately take into consideration the placement of mechanical systems in their designs. 

As a result, the tradesmen and contractors charged with 

installing these systems on site are often faced with a dilemma. The best placement for a given electrical run or 

drainpipe may not be an option. They are restricted from

drilling holes of the necessary size and placement by engineered wood manufacturers who will not guarantee the 

structural stability and strength of their products if they are 

altered beyond strict parameters. As a result, the tradesmen 

and contractors must find alternate routes for the mechanical 

systems, usually requiring more time and materials, or, in

extreme cases, the design of buildings may have to be altered 

to accommodate the placement of necessary mechanical 

systems. 

2. Blue Sky Foundation, a non-governmental organization 

that provides storm-resistant housing, 

3. Missile Testing Laboratory of Clemson University, and 

4. North Carolina State University. 

Application 2óRWP Reinforcing 

Patches for Engineered Lumber 

Patent Number 5,720,143, ìLocalized Notch Reinforcement

for Wooden Beams,î elucidates a very specific application 

for the fiberglass reinforcing technology developed by

Dr. Robert Ross and others at FPL. According to Dr. Ross, 

this application has been successfully employed in structures 

using heavy wooden beams that span significant distances. 

While this application certainly can add value to projects 

utilizing these materials and construction techniques, conversations with Jay Fulkerson, an architect based in Chapel 

Hill, North Carolina, brought to light an alternative application for this technology that our team feels holds great promise. 

This waste of time and materials presents an opportunity for 

FPLís wood reinforcing technology. By strengthening the 

wood around openings for mechanical systems, we believe 

that reinforcing patches could allow for larger holes in engineered lumber with fewer restrictions on placement. The 

ability to optimize placement of mechanical systems would 

save time and materials on the job site, creating a significant

amount of value for potential consumers. 

Mr. Fulkerson, who specializes in residential and light commercial designs, suggested that reinforcing fiberglass 

patches might prove to be the solution to a problem that he 

had encountered in several buildings. The problem relates to

the placement of mechanical systems (i.e., electrical systems, 

plumbing, and HVAC) under floors supported by engineered 

lumber, such as laminated beams and wooden I-joists. While

these engineered lumber products are very strong and have 

largely been a boon to the construction industry, they also 

have certain limitations. The key limitations in relation to

Market Assessment for Reinforcing Patches 

While it is difficult to exactly quantify the potential market 

for a reinforcing patch for engineered lumber, we can begin 

to scope this potential by examining historical trends and 

forecasts for new, single-family home construction. Figure 1 

shows the number of new, single-family homes completed 

and projected to be completed from 1987 through 2003 (see 

Appendix B for raw data). Although the annual number of 

0

200

400

600

800

1,000

1,200

1,400

'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03

Source: US Census Bureau and National Association of Homebuilders

Figure 1óNew single family homes (×103

). 
0

200

400

600

800

1,000

1,200

1,400

'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00

Total completed (000s) Full or partial basement 2 stories or more

Source: U.S. Census and National Association of Homebuilders 

Figure 2óNew homes with basement or >2 stories (×103). 

Wood Used in New Residential Construction, 1998 & 1995

What kinds of building materials are used in residential construction? What is the product volume by type of material? The answers to these questions are contained in this new residential market study, available from the Wood 

Products Council. 

The Wood Products Council, a group of wood products associations and related partners, commissioned a study of 

all wood products used in residential construction in 1998 to follow up a 1995 study. Conducted by the NAHB 

Research Center, the study also provides details on the use of nonwood structural materials such as steel and 

concrete. An executive summary provides a comparison between 1998 and 1995 as well as an earlier 1988 study. 

The following comprehensive data are provided for both 1995 and 1998: 

• Components: Foundations, Floors, Walls, Roofs, Millwork and Outdoor Structures. 

• Products: Softwood and hardwood lumber (framing, boards, beams, treated), softwood and hardwood plywood, 

OSB, glulam, I-joists, LVL, Parallam, and Timberstrand 

• Regions: West, South and North - U.S, East and West Canada. 

This 157-page report is free to member companies of the sponsoring associations and is available to consultants 

and other interested parties for $600, Form SPE-1108. 

new, single-family homes dipped as low as 800,000 units in

1991, since 1999 the number of new homes constructed has 

been above 1.2 million annually. Additional data can help to 

narrow this market. Given the problems that a reinforcing 

patch for engineered lumber is trying to address, we should 

limit our potential market to those homes that require mechanical systems to be placed in the spaces as flooring support systems. In other words, this product would have little 

value in a single-story home with a crawlspace. However, 

homes built with finished or unfinished basements and/or

two or more stories would require mechanical systems to

share space with a flooring support system. Figure 2 shows 

the percentage of homes with these characteristics superimposed on the total number of new homes built from 1987 

through 2000 (see Appendix B for raw data). 

Using these new numbers, the potential market shrinks 

somewhat, but judging from the past few years it appears 

that construction of new homes with these qualifying characteristics will range from 400,000 to 600,000 annually. 

While these data can give us a general idea of the potential 

market size, to more accurately gauge the potential market 

for reinforcing patches in this application we would want to

know more about the sales and consumption patterns for 

engineered lumber products. This information is available in

the form of market studies commissioned by the Wood 

Products Council. It was not within the scope or the resources of this project to obtain a copy of this marketing 

report, which is available through the APAñThe Engineered 

Wood Association website at www.apawood.org. The report

most relevant to our analysis, ìWood Used in New Residential Construction, 1998 & 1995,î is described in the inset.

32
The pertinent data we would seek from this report are estimates of the amount and purpose of engineered lumber used 

in new home construction. Based on these estimates we 

could then determine the amount of engineered wood that is

used in flooring systems and could potentially cause the 

previously discussed problems for mechanical systems installers. As a final piece of analysis, we would conduct 

interviews with mechanical systems installers (electrical, 

plumbing, and HVAC) to quantify how often problems with 

system placement arise and how much time and material are 

wasted in creating a work-around solution. Once this data

was gathered, we could then estimate the potential number 

of applications for a reinforcing patch per new home and 

total number of patches used per year given various estimates of market penetration. 

In summary, despite the limitations of our market analysis, 

we believe that there is significant potential for a reinforcing

patch for strengthening the wood around openings for mechanical systems. The National Association of Homebuilders 

estimates that pressure from both the government and private 

sectors will limit the supply of older, larger trees, thus driving the growth of engineered lumber products. Given that

most of these products will go into residential and light 

commercial structures, it is likely that the problems weíve 

discussed will confront a growing number of contractors. 

Thus, if the proper testing, certification, and education can 

be done in support of the reinforcing patch, we believe that a 

significant market for the product will exist. 

Product Development Requirements and 

Challenges 

Four areas must be addressed for application of a reinforcing 

patch for engineered lumber to succeed in the identified 

target market. These areas are: 

• Testing 

• Raw Materials/Manufacturing 

• Distribution 

• Marketing/Education 

It is important to explore each of these areas thoroughly and 

determine whether any insurmountable barriers to launching 

the product exist. If there are such barriers, it is much better 

to find it out at this early stage of product development than 

after much more time and many more resources have been 

expended. If no such barriers are found, a thorough knowledge and understanding of these areas will be key to the 

successful launch of the engineered lumber reinforcing 

patch. 

For the engineered lumber reinforcing patch to gain acceptance in the target market, a significant amount of testing of 

the product in its intended application will have to be conducted. Specifically, we believe that extensive tests of the 

reinforcing strength of the product must be conducted to

prove our contention that the product can add enough structural stability to engineered lumber to allow for larger holes 

to be made with fewer restrictions on their placement. While 

the tests already conducted on reinforced wood products for 

bolted wood connections clearly demonstrate the strength 

that can be achieved with a reinforcing product, tests specific 

to different types of engineered lumber and the placement 

and size of holes in each of these must take place to gain the 

approval and acceptance of both engineered lumber manufacturers and building inspectors. 

After structural testing, we believe that tests concerning the 

flammability of an engineered lumber reinforcing patch are 

necessary to gain market acceptance. If the product does not 

have flame resistance at least equal to the underlying material, it will be worthless as a reinforcing agent. If in the event 

of a fire the patch burns away, the structural strength of the 

engineered lumber is no better than if the patch had not been 

used and thus would preclude the drilling of larger holes. 

Creating a combination of fiber and adhesive that has the 

desired flammability characteristics is key to the success of 

the product and can only be determined through testing. 

Finally, the wear characteristics of the reinforcing patch

must also be assessed. Here we are concerned with the performance of the patch over time. Questions such as ìWill the 

patch fail to maintain adhesion?î and ìWill the fibers degrade?î must be answered. In addition, the performance of 

the product under unlikely, but foreseeable, circumstances 

must be tested. For example, Will the product maintain its 

reinforcing properties if it gets wet as the result of a leak or

flood? Can substances in the underlying wood, such as sap 

or other adhesives, degrade the reinforcing properties of the 

patch?

As this discussion illustrates, testing of an engineered lumber reinforcing patch will have to be extensive. However, it 

is of paramount importance to determine whether or not the 

patch will perform as we predict and to gain the acceptance 

of key market players. This being said, it is not necessary for 

the FPL to conduct this testing on its own. Indeed, there may

be organizations with both the capability and incentive to

assist the testing of an engineered lumber reinforcing patch. 

Two organizations that we believe might be willing partners 

in this endeavor are APAñThe Engineered Wood Association and the National Association of Homebuilders. We

believe the APA would have a great deal of interest in determining the viability of a reinforcing patch as an adjunct to

its membersí products. From our perspective, such a product

would only increase the versatility and ease of use of engineered lumber, thus providing added value to the consumer. 

The National Association of Homebuilders is also likely to

have interest in the results of such tests. From their perspective, the product could potentially save time and money on 

job sites. If these potential savings are significant, the Asso33
ciation will have a vested interest in the success of the engineered lumber reinforcing patch. 

Availability of Raw Materials/Inputs 

The issues of sourcing raw materials and developing manufacturing capacity were not ones that we were able to consider in depth for this project. However, we believe that

there are important issues that should be addressed in this

area. Given that an engineered lumber reinforcing patch is 

unlikely to be a material intensive product, we find little 

reason to believe that the sourcing of raw materials will be a 

significant hurdle in its commercialization. It might be conceivable that if some exotic fiber and/or adhesive are used, 

raw material acquisition could pose a problem. However, we 

consider it much more likely that more common materials 

such as fiberglass and readily available adhesives will be

used in the formulation of the product. 

Requirements for Manufacturing, Distribution, 

and Market Commercialization 

ManufacturingóWe are looking for the ability to produce 

engineered lumber reinforcing patches in the quantity that 

we predict will meet demand at a cost that will allow us to

reap a profit. Again, given the relatively basic nature of the 

product itself, we do not foresee that acquiring adequate

manufacturing capacity will pose a significant constraint on

developing this product. It would, however, be wise to look 

to companies that already have expertise in the materials that 

make up our product and explore the possibility of partnerships with these organizations. Two such companies that we 

believe have potential in this regard are 3M and Dupont. 

Both companies have experience and expertise in the areas 

of synthetic fibers and adhesives. Given this fact, it would be 

prudent to determine whether either or both of these companies can or do offer a product that is similar to what we 

propose. If so, unless airtight patent protection for our product can be secured, it may be wiser to cut losses and abandon 

this market, rather than engage in a lengthy and expensive 

marketing battle with huge corporations. If not, however, 

exploring relationships with these firms could produce a 

manufacturing or raw materials sourcing agreement. Which 

of these options would be the better choice is an issue that

needs further analysis.

DistributionóOnce the issues of testing, raw material 

sourcing, and manufacturing are addressed, the next step in

commercialization will be to determine how best to distribute an engineered lumber reinforcing patch to the target 

market. We see three main choices for distribution of this

product: mechanical systems distributors, lumber 

yards/distributors, and engineered lumber manufacturers. 

Each of these choices has its advantages and disadvantages, 

as discussed below. 

Mechanical systems distributorsóThese firms are in the 

business of supplying contractors and tradesmen with the 

supplies they need to complete their jobs. Their inventory 

mainly consists of various types of pipe and pipefittings, 

electrical wire and fixtures, and complementary tools and 

supplies. The advantage of distributing through such firms is

that they have the closest relationship to the end users of the 

engineered lumber reinforcing patch, i.e., mechanical system

contractors and tradesmen. This relationship can be valuable

when we try to market our product and educate the end users 

about its benefits. However, the disadvantage of working 

with large mechanical systems distributors is that engineered 

lumber reinforcing patches would be just one among thousands of products carried by these businesses. Unless they

could reap large margins from their sale they will have little 

incentive to help market the product and educate mechanical

systems contractors. As such, we believe that mechanical 

systems distributors are not the best choice for distribution 

of this product.

Lumber yards/distributorsóThese businesses are principally engaged in serving contractors by delivering large 

loads of construction materials to job sites, including engineered lumber. The advantage of distributing through lumber 

suppliers would be that they carry a variety of engineered 

lumber and would be able to sell reinforcing patches for each 

type. In addition, because they know when an order for 

engineered lumber will be delivered, they could easily sell 

reinforcing patches as a complementary product and deliver 

the two products together. The disadvantages, however, are 

similar to working with mechanical systems distributors. 

Unless lumber distributors can earn high margins, they will 

have little incentive to aggressively market reinforcing

patches. In addition, because they do not generally deal with 

the subcontractors who install mechanical systems, their link 

to end users is somewhat tenuous. Thus, as with mechanical

system distributors, we feel that lumber yards/distributors 

are not the ideal partners for distributing this product.

Engineered lumber manufacturersóThese businesses, 

essentially the members of the APAñThe Engineering Wood 

Association (see Appendix B for full membership list), are in

the business of designing and manufacturing engineered 

lumber products. They may produce a range of engineered 

products as well as more traditional dimensional lumber, 

plywood, and even pulp and paper, or they may specialize in

the manufacture of one type of engineered lumber. The 

advantage of working with these types of organizations is

that they have the incentive to market a reinforcing patch as 

a value-added complement to their products. The ability to 

create larger holes in their products could give them a substantial competitive advantage over other manufacturers. In

addition, this incentive may prompt them to assist with the 

testing and manufacturing phases of commercialization. The 

disadvantage of working directly through manufacturers is

tied to the creation of competitive advantage for their products. Given that we believe a reinforcing patch will add

value to a manufacturers product line, that manufacturer will 

be loath to share this product with other manufacturers. If 

34
the whole industry has access to the technology, then it will 

likely become a standard feature and no one manufacturer 

will be able to extract a price premium for it. Thus, distribution through engineered lumber manufacturers will necessarily be limited to one or two manufacturers. Despite these 

limitations, we believe that partnering with a manufacturer is

the best choice for distribution of a reinforcing patch. Given 

that such a partnership will be limited to one or two companies, we suggest that partnering with a large manufacturer 

makes the most sense. In addition to being in a position to

reap the greatest reward from the successful launch of a 

reinforcing patch, manufacturers such as Georgia Pacific, 

Weyerhaeuser, and BosieñCascade have the resources to 

support commercialization efforts in other ways as well.

Marketing and EducationóThe last piece of the commercialization problem facing a new product is marketing and 

education. It should be noted that we discuss this piece last 

in regards to the engineered lumber reinforcing patch because we believe that the other three parts of this commercialization effort are prerequisites. If the areas of testing, raw 

materials sourcing, and manufacturing and distribution 

cannot be solved, then it is better to discontinue efforts to

commercialize a product that has little chance of success, 

even if a great marketing and education plan is implemented. 

In fact, marketing the reinforcing patch and educating end 

users about its benefits may be the most difficult part of 

commercializing this product. The difficulty lies in reaching 

an extremely fragmented base of end users, namely mechanical systems contractors and tradesmen, who are mainly

independent contractors. Since these are the individuals that

will reap the rewards of time and material savings, it is 

imperative that they understand the value of the reinforcing 

patch. We see two possibilities for partnerships that could

overcome this difficult problem. The first is to partner with

trade associations that govern the various mechanical systems trades. Partnering with these associations to disseminate information to their constituent members is the most 

direct path we can discern to educate this fragmented audience. Alternatively, working with building authorities to

amend construction codes to allow for reinforcing patches 

will also inform end-users about the product, albeit in a 

much less direct fashion. If this tactic is used, it is unlikely 

that information beyond purely technical specifications will 

reach end users. While this may create awareness, it will not 

educate these consumers about the benefits of the product

and motivate them to try it. As such, we believe that working

in conjunction with trade associations is the best alternative 

for creating a marketing and education campaign in support

of engineered lumber reinforcing patches. 

Section 2óSustainability 

Assessment 

We assessed both the RWP doors and reinforcement fiberglass patches for their potential to be developed in a wholly

sustainable fashion. This analysis required us to make mostly

qualitative judgments given the early stage of product development and our limited existing knowledge. Once additional 

tests on attributes such as flammability and wear resistance 

are conducted and quantified, and after the actual commercialization is underway, a more rigorous assessment will be 

possible. 

As a supplement to our initial assessment we have pulled 

together various principles from leading literature, principles 

that if incorporated as part of the new product development

and commercialization process should lead to more sustainable RWP products. In fact, if it is FPLís hope to develop its

technologies as sustainable technologies, all of its future 

research directions should integrate these principles of sustainability. We conclude this section with more general 

recommendations for FPL, recommendations that fall outside the scope of its two RWP products but that may help

FPL to become an organization with a sustainable vision and 

strategy. 

Stage 1óSustainable Product 

Development and the Triple 

Bottom Line 

Initially we hypothesized that these two RWP products are 

sustainable, and we then evaluated this hypothesis against

key industrial ecology principles and the triple bottom line 

model. We determined that at the current stage of development, the underlying technologies and resulting products are 

not sustainable in nature. 

Conceptualized by John Elkington, the tenet of the triple

bottom line holds that the most profitable businesses will be

those that focus on not just bottom line profits, but the social

and environmental impacts of a firm or product and their 

contribution to the bottom line. That is, sustainable companies are those that succeed on all three fronts. Fiksel, 

McDaniel, and Spitzley (1998) propose a product performance measurement framework that includes the triple bottom

line, applying it across each stage of the product life cycle. 

Adopting this model, we evaluate RWP doors and patches 

(Fig. 3). 

At first glance RWP has appealing attributes. Clearly, the 

use of renewable wood fibers is more environmentally

friendly than is non-renewable steel. The thought that reinforcing patches can eliminate waste from the material intensive construction industry also makes intuitive sense. However, when stacked up against even this high level qualitative 

review, the challenges of true sustainability become apparent. Assuming product development survives the additional 

safety and durability testing these technologies require, the 

economic prospects of RWP applications are good, particularly for engineered wood reinforcement patches. But considerable uncertainty surrounds the environmental and social

bottom lines. Substantial planning and absolute dedication to

35
Consumption Supply Manufacturing Distribution

? ? Societal 

ï Negative. Recommended 

use of manufacturer as distributor has negative social implications ñ fewer jobs created, must create shared vision with partner. 

ï Neutral. Use of patches or 

doors are low impact. Provide added security or safety in low-income housing. Communication of benefits look challenging. 

ï Unknown. Sourcing decisions depend on partnerships. RWP could present 

business opportunities in rural communities. 

ï Unknown. As a low tech 

product, RWP could present manufacturing opportunities in rural or urban communities where there is less skilled labor. 

Environmental 

ï Neutral. Product promotes 

resource efficiency. Yet production reliant on capabilities and vision of partner. Considerable retooling may be needed. 

ï Negative. Recommended 

use of partner as distributor has negative implications if existing methods energy inefficient. 

ï Positive. Doors and patches 

have low usage impact. May minimize building material wastes. Recycling of patches with fiberglass may

be problematic. 

ï Neutral. Exotic and timber 

fibers are renewable, seen as a design opportunity. Epoxies and fiberglass less enviro friendly. Harvesting energy intensive. 

Economic 

ï Neutral. Inputs are commodities and cheap. Choice 

of suppliers affects cost. Compare recycled versus virgin fibers. Exotic fibers more costly? 

ï Positive. Use of existing 

mfg allows production to scale and leverages existing

know-how. RWP low cost to produce but some retooling might be needed. 

ï Positive. Use of existing 

manufacturerís distribution gives broad market access. Patches complement engineered wood and can be bundled accordingly. 

ï Neutral. Entering door 

market as substitute isstrike against. Adoption of patches with engineered wood presents unique positive opportunity. 

Figure 3óRWP products should cater equally to the requirements of economic, societal, and environmental profitability. Attributes should be assessed 

along the entire value chain, broken down here as four separate functions. At the current stage of development, significant gaps in knowledge exist. Future planning with this framework facilitates evaluation of RWP product sustainability. Development of indicators or measures would assist with

tracking progress in these functional areas. 

36
Environment Society 

Profit

Sustainability

Revenues

Ecoefficiency Transparency

Nature

Clean

technology

Equity

Stakeholder

involvement

Ecosystem

services

Raise the

bottom

Figure 4óThe sustainability triangle, adopted from the works of William McDonough 

(www.mcdonough.com), presents another method for assessing the relative sustainability

of a product or an organization. 

a sustainable vision will be required to create sustainable 

RWP applications. 

As Figure 5 shows, RWP doors have more perceived value 

along the environmental and social axis, but entering as a 

substitute product in a well-developed security door market 

presents substantial economic challenges. Profitability may 

only be marginal unless true differentiating attributes can be 

identified and valued by consumers. However, steel security

doors are likely to be only marginally profitable over the 

long term in this apparently fragmented industry. Environmental quality issues (e.g., resource intensive use) may drive 

economic value backwards over the long term, but steel

recycling may prevent this downward migration. 

Taking another view of the triple bottom line, William

McDonough proposes a sustainability triangle, which assesses degrees (fractals) of sustainability (Fig. 4). This 

model exploits the notion of interactions between the social, 

environmental, and economic. Typically, the most sustainable products preserve ecosystem services while using clean 

technologies, uplift the disenfranchised, and encourage 

multiple stakeholder involvement, while generating profits 

through an organization that maintains a high level of transparency and a trusting culture. Those are at the center of the 

triangle. Historically, most products have operated at the 

extremes or ìtipsî of the triangle, prioritizing shareholder 

value and doing well by upholding a more basic social and 

environmental philanthropic credo. Figure 5 is a twodimensional map that shows where RWP currently exists. 

Ideally, as the products develop, initiatives will push RWP 

into the upper right quadrant.

The RWP patches appear to have greater potential, particularly if development complements engineered wood. A 

proactive partner that identifies sustainability as a key value 

driver could build the market for the patches and engineered 

wood. The home building industry remains resource intensive, and only now are the notions of green buildings starting 

to take root (reference the works of William McDonough 

and the U.S. Green Building Council). The FPL could also 

establish itself as a technological driver of sustainable 

change in this industry, as discussed in Section 3. 

37
Future direction 

for FPL 

technologies 

Perceived environmental and social value 

Negative 

Negative 

Perceived economic value 

Positive 

Positive

RWP patches 

Steel doors 

Zero 

Zero 

RWP

 doors 

Todayís FPL 

technologies 

Engineered 

lumber 

Figure 5óMapping the current position of RWP applications and future

development direction. Note that the FPL as an organization has an opportunity to 

focus future research on more sustainable uses of forest products and to build 

creative partnerships that could take potentially disruptive technologies to market. 

38
Stage 2óThe Sustainable Corporation 

and the Natural Resource Based View 

Next we hypothesize that while these products appear limited in sustainability terms, that through effective planning 

and creative governance these and future FPL products can 

be sustainable. In addition to the more technical ìgreenerî 

design aspects, organizational structure and stakeholder 

management issues are central to this second hypothesis. We

look at the systematic changes and resulting governance 

structure required for the FPL to promote sustainable product development.

Figure 5 highlights the current position of FPL. Its central

strength is technology development. Many of these technologies have stemmed out of the belief that forest products

are superior and are overlooked in the market. According to

Dr. Robert Ross, wood is stronger on a per weight basis than 

concrete or steel. Dr. Ross concedes that in recent times 

wood has lost market share to steel, even though it is renewable and more environmentally friendly. This passion for 

and understanding about the advantages of wood has driven 

many FPL patents. But we have found that no framework 

has been established that will allow sustainable technologies 

to be developed in a manner that leverages both the material

superiority and renewable attributes of wood, yielding revolutionary products. Sustainable forest products are designed 

from the outset, not presumed so because of the inherent 

properties of wood. 

Taking pieces from some of the existing literature (see Appendix C for an abbreviated list of suggested references), we 

restate here several key concepts and provide recommendations that FPL should consider as it goes forward. 

The natural resource based view proposes that ìa sustainable-development strategy facilitates and accelerates capability development in pollution prevention and product stewardship and vice-versaî (Hart 1995). Pollution prevention 

and product stewardship are only precursors to sustainable 

development. From our perspective, FPL understands well

how waste minimization and product life-cycle (cradle-tocradle) management add value to the product development

process. To truly benefit society, FPL needs to go beyond its

research-based mission to develop a shared vision of sustainability with its partners. In this manner, FPL can help its 

partners minimize their environmental footprints while

providing valued services to their stakeholders. While necessary to sustainable development, life-cycle assessments and 

pollution prevention are reduced to planning tools for 

achieving the ultimate vision (Hart 1995). 

In striving to create these partnerships and this shared vision, 

FPL should adopt the commonly held view of sustainability 

as a journey. Hart acknowledges that implementing sustainability requires a ìleap of faith,î but he provides a basic 

diagnostic tool that helps organizations measure how consistent its strategies are with the concept of a sustainable vision. 

Progress involves balancing internal and external competencies. The move to a vision of sustainability logically follows 

from initiatives such as pollution prevention, product stewardship, and clean technologies. FPLís view of sustainability 

expands beyond internal technology development competencies, outward to external relationships with the public, to end

users of its technologies, to timber, pulp, and other raw 

material suppliers, to partner companies, and to government

agencies. 

Hawken, Lovins, and Lovins (1999) outline four strategies 

of Natural Capitalism essential for helping FPL envision its 

future. Radical resource productivity, biomimicry, service 

and flow economy, and natural capital investment strategies 

all support a sustainable vision. While detailed discussion of 

these strategies is beyond the scope of this paper, referencing 

them provides FPL another avenue for learning about how a 

renewable resource driven industry can begin to shape a 

more sustainable vision. 

With its wealth of scientists and its affiliation with the U.S. 

Department of Agriculture and the Forest Service, FPL 

possesses capacity in understanding radical resource productivity, biomimicry, and natural capital investment. The strategy of optimizing a service and flow economy will be more 

difficult to implement and will require innovative partnership and shared vision building. 

Section 3óComparison of RWP 

and Spaceboard Products 

In our discussion comparing the potential for commercial

success of RWP and Spaceboard, we consider several aspects of each product. Table 1 summarizes these issues and 

their impacts on potential commercialization.

Table 1óComparison of commercialization potential for 

RWP and Spaceboard 

Feature RWP

Spaceboard Notes

Key product attributes ✔ Product versatility

Product and material 

costs 

✔ Simplicity and

familiarity

Product feasibility

Product testing ✔ Familiarity

IPR ✔ Patent life

Incremental/Disruptive ? Depends 

Sustainability

Recyclability ✔

Energy consumption ✔

Social benefit ?

39
We first consider the key product attributes and potential

applications for each product. The key product attributes of 

RWP are its increased strength over non-reinforced wood 

and its aesthetic appeal over steel or other metal substitutes. 

The key product attributes of Spaceboard are its high 

strength-to-weight ratio and flexibility in formation (Spaceboard can be made into many shapes and sizes). These differences in product attributes lead to differences in potential

applications. RWP product applications include reinforced 

doors and reinforcing patches for engineered lumber. Spaceboard product applications are quite varied and include 

construction applications, furniture, pallets, corrugated 

containers, and recreational vehicles. RWP is very similar to

an existing product (reinforced wood), and thus the potential

applications are easy to elucidate. Spaceboard is a radically 

new product, however, and the applications have yet to be 

fully discovered. In this respect, we feel that Spaceboard has 

an advantage in terms of commercialization success, since 

the product has such versatility of application. 

Next we consider production and material costs. Spaceboard 

has many unknowns with regard to production and material

costs since it such a new product, whereas the familiarity and 

relative simplicity of RWP allows us to roughly estimate its

production process and associated costs. These factors are 

critical in determining commercial success. Spaceboard

might offer a perfect solution to current unmet consumer 

needs, but if the product is prohibitively expensive, commercial success will be elusive. 

With regards to product feasibility, we examine both testing 

issues and intellectual property rights (IPR). Again, because 

of RWPís familiarity, we have a better idea of the physical 

product characteristics associated with this product. While

we do not know the exact tensile strength of RWP, we do 

understand its ability to withstand rain, since we know the 

properties of the lacquered wood that composes the exterior 

of RWP. We do not have this same understanding of Spaceboard. For example, can Spaceboard be used as refugee 

housing in a country with monsoon rains? We cannot answer 

this until we know how Spaceboard resists water damage. 

Both products require further testing to obtain a clear idea of 

the commercialization potential, but we expect that RWP 

will require less extensive testing. With regards to IPR, 

Spaceboard is again at a disadvantage. While Spaceboard 

does have an exclusive license with Sonoco, patents on 

Spaceboard will expire in less than 2 years. Furthermore, 

Sonocoís prolonged delay in producing Spaceboard must be 

indicative of prohibitive production costs or another barrieróotherwise this company would have already leveraged 

its access to this new technology. 

As mentioned before, RWP is an incremental technology, 

and product applications are for existing markets. In contrast, Spaceboard is a radically new technology with great

potential to yield disruptive products. This difference could 

affect commercialization in different ways. RWP offers 

familiarityófamiliarity of markets, consumer needs, distribution channels, competitive landscape, and economies of 

scale. This familiarity will most likely result in easier commercialization in the short term, since specific product applications can be applied immediately. However, RWP does 

face stiff competition from traditional products. On the other 

hand, Spaceboard is radically new. The potential applications of this new product are still unexplored and markets 

will be created as a result. If a disruptive technology is introduced to the consumer through the appropriate channels, 

then this technology could be a commercial success, eclipsing any success gained from an incremental good. In essence, the effects of an incremental good versus a radically

new good on commercialization could be positive or 

negative. 

A final consideration for commercial success is product

sustainability. Spaceboard is superior to RWP in its ability to 

be recycled, as well its capacity to be manufactured from

recycled materials. From an energy consumption perspective, the production of RWP is less energy-intensive and 

thus RWP has the advantage in this regard. Finally, it is 

unclear which product provides greater social benefit. Depending on the applications, both products could bring enhanced social welfare, RWP through building stronger structures to withstand disasters, or Spaceboard through 

providing refugee housing. 

In conclusion, Spaceboard has a myriad of applications, but

right now too many unknowns exist to guarantee commercial

success. With radically new products, we are unsure of 

market segmentation and assessment, customer characteristics, and competitive landscapeóall aspects of new product 

commercialization, which we must understand to successfully introduce a product. We believe that with more research into potential applications and costs, Spaceboard 

could offer great potential for commercial success. RWP, 

which has many less unknowns, also has commercialization 

potential. With the appropriate development of key partnerships, RWP should also offer commercialization success. 

Section 4óConclusion and 

Recommendations 

We reviewed potential commercialization applications of

reinforced wood products. These RWP applications 

stemmed from four U.S. patents (5,501,054; 5,575,117;

5,720,143; and 5,852,909). For our review we focused on 

two applications, wooden security doors and engineered 

wood reinforcing patches. We conclude that the market

opportunity for reinforcing patches is the better of the two. 

Given the expected increase in demand for engineered wood 

products, we believe that a significant market for reinforcing 

patches will exist, if proper testing, certification, and education can be completed. The ultimate success of this product 

will depend on FPLís ability to find partners with the manu40
Literature Cited facturing and commercialization capacity and requisite

technical know-how. Suggested partners include 3M and 

DuPont for materials and manufacturing capacity and Weyerhauser or another engineered lumber manufacturer for 

marketing and commercialization. Further research on the 

best potential partners should be conducted. 

Fiksel, J.; McDaniel. J.; Spitzley, D. 1998. Measuring 

product sustainability. Journal of Sustainable Product Design. 

Hart, S. 1995. A natural-resource-based view of the firm. 

W Academy of Management Review. 20(4): 986ñ1014. hile both security doors and reinforcing patches have 

sustainable attributes (increased safety, more efficient materials usage, and reduced waste), true sustainability measures 

go beyond pollution prevention and better life-cycle management. If these and future FPL products are to be sustainable, vision building and collaboration must occur with

stakeholders to ensure a holistic approach to managing for 

the triple bottom line. This approach is not out of reach; FPL 

has the potential for leading a sustainable forest products

revolution. 

Hart, S. 1997. Beyond greening: Strategies for a sustainable 

world. Harvard Business Review. JanuaryñFebruary: 66ñ76. 

Hawken, P.; Lovins, A.; Lovins, L.H. 1999. Natural capitalism: Creating the next industrial revolution. New York, 

NY: Little, Brown and Company, 396 p. 

National Glass Association. 2002. Window & Door. February 2002.

We believe FPL maintains an advantage over the private 

sector in its ability to engineer new forest products. Because 

FPL exists to serve public welfare, the Laboratory is not

subject to the same quarterly criticism that corporations face 

from shareholders. FPL can adopt longer-term investment

horizons in its technologies and more patiently pursue sustainable disruptive technologies. The business of FPL is

innovation, and FPL should focus on molding a sustainable 

perspective around innovation. New technologies must be 

pursued with criteria in mind for solving environmental

problems or creating social benefits. 

However, FPL must also adopt an economic outlook within

its product portfolio. While the potential to do so exists, FPL 

currently does not create much economic value with its

patents (Fig. 3). This project attempted to address the problem by analyzing market potentials of a few patents, but

more robust organizational changes need to be implemented. 

We recommend that FPL continue collaborative efforts with

business schools. In addition, consideration should be given 

to hiring a new product development manager. Hiring a 

summer associate from an MBA program would be a reasonable first step for finding a qualified manager. Ideally the 

manager would have forest products experience. His/her 

primary responsibility would be to build partnerships and 

review patents for commercialization potential. This manager should also manage the portfolio of patents to ensure 

that FPL is obtaining fair market value for the technologies it

licenses; this valuation should include the value of the patents as real options for its licensees. 

From our communications with FPL, we see a willingness to 

change. FPL leaders understand the advantage of sustainable 

development strategies, and the leap of faith has already

been made. Now FPL needs to follow through and begin 

institutionalizing that understanding. 

41
Appendix AóRWP Product 

Application Research Contacts 

Appendix B óNew Housing 

Completions and 

Characteristics

Year

Total

houses 

completed

(×103

)

Full or 

partial

basement

(%)

Two or 

more

stories 

(%)

1987 1,123 39 46

1988 1,085 39 49

1989 1,026 37 49

1990 966 38 49

1991 838 40 47

1992 964 42 47

1993 1,039 40 48

1994 1,160 39 47

1995 1,065 39 48

1996 1,129 37 47

1997 1,116 37 49

1998 1,160 37 50

1999 1,270 36 51

2000 1,242 37 52

2001 1,123 NA NA

2002 1,085 NA NA

2003 1,026 NA NA

Blue Sky Foundation 

Don Markle: telephone (919) 424ñ4555 

email: don-markle@bluesky-foundation.com

Clemson University 

Tim Reinhold: telephone (864) 656ñ5941 

email: timoth@ces.clemson.edu

Permanent Housing Replacement Program

Libby Smith: telephone (919) 733ñ5338 

National Association of Homebuilders 

Tom Kenny: telephone (301) 249ñ4000 ext. 6246 

42
43

Appendix CóMembership List of APAñThe Engineered 

Wood Association 

Ainsworth Lumber Company Ltd. NexforñNorbord Incorporated

Alamco Wood Products, Incorporated Pacific Woodtech Corporation 

American Laminators, Incorporated Pinnacle Wood Products Ltd. 

AnthonyñDomtar Incorporated Plum Creek 

Aserraderos Mininco S.A. Potlatch Corporation 

Boise Cascade Corporation Romaro 2000 Ltd. 

Brochmann Polis Industrial E Florestal Rosboro Lumber Company 

Calvert Company, Incorporated Rosenburg Forest Products Company 

Compwood Products Ltd. S.D.S. Lumber Company 

DF Joists Scotch Plywood Company of Alabama 

Duco Lam Shelton Lam and Deck 

Eagle Veneer, Incorporated Simpson Timber Company 

Eastern Pacific International, LLC Slocan Forest Products 

Fletcher Challenge Forests Ltd. Standard Structures Incorporated 

Floragon Forest Products, Incorporated Stark Truss Company, Incorporated 

Footner Forest Products Ltd. Stimson LumberñShelton 

Fourply, Incorporated Stimson Lumber Company 

GeorgiañPacific Corporation Structurlam Products Ltd. 

Goodlam, Division of Goodfellow Incorporated Superior Lumber Company 

Grant Forest Products Incorporated Textured Forest Products, Incorporated 

Hardel Mutual Plywood Corporation The G. R. Plume Company 

Hood Industries, Incorporated The Geertsen Group Ltd. 

International Beams Incorporated Timber Products Company 

International Paper Company Tolko Industries Ltd. 

K Ply, Incorporated Weldwood Engineered Wood Products 

Les Chantiers de Chibougamau Ltee. Western Archrib 

LouisianañPacific Canada Ltd. Western Structures, LLC 

LP Weyerhaeuser Canada Ltd. 

Martco PartnershipóPlywood Weyerhaeuser Company 

McKenzie Forest Products Willamette Industries, Incorporated 

Murphy Plywood Company 
Appendix IóCourse Description 

and Syllabus 

New Product Developmentó 

Sustainable Forest Products, 

Winter Term 2002 

Course Description 

Background 

This course will focus on the process of New Product Development and will assess the commercialization potential of

new products patented by the USDA Forest Service, Forest

Products Laboratory (FPL) in Madison, Wisconsin. The FPL 

has a distinguished history of conducting research and development focused on the effective and efficient utilization

of the nationís forest resources. The course will focus on two

specific products (Spaceboard and Reinforced Wood Panels) 

that have been developed and patented by FPL. This course 

will review the process of new product development and will 

evaluate the viability of successful commercialization of the 

two patents. Particular attention will address the potential of

developing a sustainable enterprise based upon products

such as Spaceboard and Reinforced Wood Panels. 

Course Design 

The course will include a seminar on New Product Development and a team project. The seminar portion will focus 

on the literature of New Product Development and the concept of Sustainability. The team project portion will focus on

evaluating the business potential of the two patented products. The class will meet approximately 5 to 6 times during

the semester. A kick-off session will be held with the patent

attorney for the FPL and the lead researchers holding the 

patents. A final session will include a presentation of findings to representatives of the Forest Service from Washington, DC. 

Course Requirements 

The course will require active participation in the seminar 

portion, based upon a review of the literature of New Product Development and Sustainability, and active participation

in the team-based workshop portion. The workshop will 

focus on developing a business plan to commercialize the 

product. The course will require that participants assess the 

potential of the products from multiple perspectives: market 

potential, economic viability, engineering feasibility, sustainability, and social implications. 

Instructor and Participants

The course will be designed and conducted by Dr. Gordon 

A. Enk, an active member of the Advisory Board of the 

Center for Sustainable Enterprise. He is President of the 

Research and Decision Center and Principle of Partners for 

Strategic Change. His experience includes serving as Director of New Product Development for International Paper 

Company. The lead patent attorney from FPL, Janet Stockhausen, will participate in the initial and final course meetings and will be available for consultation.

Course Syllabus 

Course Purposes 

1.To analyze the commercial potential of two patented

products developed by the USDA Forest Service, Forest

Products Laboratory. 

2. To explore the potential of the two patented products to be 

sustainable products. 

3. To review the process of New Product Development.

4. To define an optimal process of New Product 

Development.

5. To develop and test an Analytical Model to assess 

the ìcommercialization potentialî of New Product 

Opportunities. 

Course Model 

Course participants will be organized to simulate New Product Commercialization Teams for a private corporation 

(Packaging, Building Supply, and Wood Products) interested 

in commercializing value-added products. 

Course Ground Rules 

• Active participation in all class meetings is expected and

required. 

• Active participation as a team member is expected and 

required. 

• Dr. Enk is available to respond to questions by e-mail at

gaenk@aol.com throughout the course. 

• Dr. Enk is available to meet with the team(s) or individual 

on any Friday of the week in which classes are scheduled. 

Session 1óCourse Overview

A. Why new product development?

B. New product development as part of corporate strategy

C. The two faces of new product development: 

1. The Forest Products Laboratory (FPL) and the USDA 

Forest Service: Develop and license

2. Forest products industry: Commercialize

D. Review of patents for RWP and Spaceboard 

Assignment 

• Review patents 

• Review the life cycle analysis for RWP 

• Develop list of key questions for Janet Stockhausen 

44
Session 2óThe Developerís 

Perspective on New Products 

Session 4óAn Experienced Based 

Model of Successful 

New Product Development 

and Commercialization Guest Instructor 

Janet Stockhausen, Esq., Patent Advisor 

USDA Forest Service 

Patent and Licensing Program

Madison, WI

A. The relay race or the Rugby Scrum

B. The product development spectrum

C. The taste of OJ! 

A. Overview of the FPL: History, mission, and approach 

B Team Assignment . The perspective of the FS Patent and Licensing Program

Prepare list of key questions on new product development

and commercialization for session with Richard Guldin and 

Janet Stockhausen 

C. Why RWP, why Spaceboard?

D. Patents and licensesóHow they work 

E. Need for the analysis of commercialization potential Session 5óManaging New Product 

Development in the Public Sector, 

USDA Forest Service 

Assignment 

• Review and Critique: Geoffrey A. Moore, Crossing the 

Chasm, Harper Business (Harper Collins), 1991

Guest Attendees

• Review and Critique: A. W. Ulwick, ìTurn Customer 

Input Into Innovation,î Harvard Business Review, January

2002 (pp. 91ñ97)

Rich Guldin, Ph.D. 

Staff Director 

Science Policy, Planning, Inventory, and Information 

USDA Forest Service 

Washington, DC

• Individual Assignment: Write a brief critique (3ñ5 pages) 

of the Moore book and Ulwick article 

• Team Assignment: Develop a draft model to assess the 

commercialization potential of a new product

Janet Stockhausen 

USDA Forest Service 

Session 3óThe Technologistís 

Perspective 

A. The view from Washington, managing NPD 

B. Student presentations on preliminary evaluation of RWP 

Note and Spaceboard : The following session was included in the course at

the University of Michigan, but not at the University of

North Carolina (UNC). The assignment was given to UNC

students at another session. 

Team Assignment 

Develop a business plan that describes your teamís approach 

to pursuing the commercialization of Spaceboard and/or 

RWP. Assess the commercialization potential of Spaceboard

and RWP. Address at least the following issues: 

Guest Instructor 

Robert J. Ross, Project Leader 

Wood Engineering and Drying SystemsóDesign Criteria 

USDA Forest Service, Forest Products Laboratory

Madison, WI

1. What is the potential of the products in both traditional 

and non-traditional markets?

A. The practical aspects of developing a new product 2. What resources would be necessary to commercialize the 

products? B. From the lab to the patent office 

C. From the patent office to the market place 3. Are there any significant engineering or manufacturing 

challenges?

Team Assignment 

4.What is availability and cost of raw materials for the 

products? Develop a PowerPoint presentation that summarizes the 

teamís model process to assess the commercial potential of

new products and the preliminary results of applying that

model to RWP and Spaceboard. 

5. Are the products ìsustainable?î

6. How does RWP compare with Spaceboard in terms of 

potential for commercial success?

45
46

Session 6óWhat Makes a Product 

Sustainable? 

A. Applying the triple bottom line to new products 

B. Summary of an effective approach to new product 

development process 

C. Key elements of a business plan for RWP and 

Spaceboard 

Suggested Course Reading Resources 

Crossing the Chasm, Goeffrey A. Moore, 1991, Harper 

Collins. 

Wellsprings of Knowledge, Dorothy LeonardñBarton, 1995, 

Harvard Business School Press. 

New Product Development, Robert J. Thomas, 1993, John 

Wiley & Sons, Inc. 

Innovation and Entrepreneurship, Practice and Principles, 

Peter F. Drucker, 1985, Harper and Row. 

Product Leadership, Creating and Launching Superior 

New Products, Robert G. Cooper, 1998, Perseus Books. 

ìTurn Customer Input into Innovation,î Anthony Ulwick, 

Harvard Business Review, January 2002. 

Appendix IIóPatents for 

Reinforced Wood Products 

and Spaceboard 

Reinforced Wood Products 

Soltis, L.A.; Ross, R.J. Bolted wood connections. 

U.S. Patent 5,501,054 (March 26, 1996). 

Soltis, L.A.; Ross, R.J.; von Segen, W.W. 

Break-in resistant wood panel door. 

U.S. Patent 5,575,117 (November 19, 1996). 

Soltis, L.A.; Ross, R.J.; Rammer, D.R. 

Localized notch reinforcement for wooden beams. 

U.S. Patent 5,720,143 (February 24, 1998) 

Soltis, L.A.; Ross, R.J.; Rammer, D.R. 

Localized notch reinforcement for wooden beams. 

U.S. Patent 5,852,909 (December 29, 1998) 

Spaceboard 

Hunt, J.F. 

Apparatus for molding three-dimensional objects. 

U.S. Patent 6,190,151 B1 (February 20, 2001) 

Setterholm, V.C.; Hunt, J.F. 

Method and apparatus for forming three dimensional structural components from wood fiber. 

U.S. Patent 4,702,870 (October 27, 1987) 

Gunderson, D.E.; Gleisner, R.L. 

Method for forming structural components from dry wood 

fiber furnish. 

U.S. Patent 5,314,654 (May 24, 1994) 

Gunderson, D.E.; Gleisner, R.L. 

Apparatus for forming structural components from dry wood 

fiber furnish. 

U.S. Patent 5,198,236 (March 30, 1993) 

Hunt, J.F. 

Methods and apparatus for making grids from fibers. 

U.S. Patent 5,277,854 (January 11, 1994) 

Gunderson, D.E. 

Apparatus for forming uniform density structural fiberboard. 

U.S. Patent 4,753,713 (June 28, 1988)