Market Profile of the Composite Wood Products Indust ry 

# Market Profile for Industries Potentially Affected by the Proposed Formaldehyde Standards for Composite Wood Products Rule

Economic and Policy Analysis Branch Economics, Exposure and Technology Division Office of Pollution Prevention a nd Toxics Office of Chemical Safety and Pollution Prevention U.S. Environmental Protection Agency



# May 2011Market Profile of the Composite Wood Products Indust ry 

# Acknowledgment

EPA acknowledges the analytical and draft preparation support of Abt Associates Inc. of Cambridge, Massachusetts in the prep aration of this report, provided under Contract No. EP

- W

08

- 10.



# Notice

Mention of the names of specific companies, organizations, or entities does not constitute an endorsement by EPA.Market Profile of the Composite Wood Products Indust ry 

# Table of Contents

1 Introduction

................................ ................................ ................................ ................................ ................ 1
2 Hardwood Plywood, Particle board, and Medium Density Fiberboard Manufacturing

................................ . 3
2.1 Production Processes

................................ ................................ ................................ ................................ .......... 3
2.2 Adhesives

................................ ................................ ................................ ................................ .......................... 21
2.3 Product Characteristics, Uses, and Substitutes

................................ ................................ ................................ . 24
2.4 Domestic Production and International Trade

................................ ................................ ................................ . 28
3 Laminated Product Manufacturing

................................ ................................ ................................ ............ 32
4 Hardboard Manufacturers

................................ ................................ ................................ ......................... 42
4.1 Production Process

................................ ................................ ................................ ................................ ........... 42
4.2 Product Uses

................................ ................................ ................................ ................................ ..................... 45
4.3 Domestic Production and International Trade

................................ ................................ ................................ . 45
4.4 Comparisons Bet ween Hardboard and MDF

................................ ................................ ................................ .... 46
5 Reconstituted Wood Products and Hardwood Veneer and Plywood Manufacturing Industry

................... 49
5.1 Value of S hipments

................................ ................................ ................................ ................................ ........... 50
5.2 Production Costs

................................ ................................ ................................ ................................ ............... 51
5.3 International Trade

................................ ................................ ................................ ................................ ........... 53
5 .4 Industry Organization

................................ ................................ ................................ ................................ ....... 57
6 Composite Wood Product Fabricators

................................ ................................ ................................ ....... 66
6.1 Value of Shipments

................................ ................................ ................................ ................................ ........... 67
6.2 Production Costs

................................ ................................ ................................ ................................ ............... 68
6.3 International Trade

................................ ................................ ................................ ................................ ........... 81
6.4 Industry Organization

................................ ................................ ................................ ................................ ..... 100
7 Composite Wood Product Wholesalers and Importers

................................ ................................ ............ 110
7.1 Value of Sales

................................ ................................ ................................ ................................ .................. 110
7.2 Wh olesale Operating Costs

................................ ................................ ................................ ............................. 115
7.3 Industry Organization

................................ ................................ ................................ ................................ ..... 124
8 Composite Wood Product Retailers

................................ ................................ ................................ ......... 132
8.1 Value of Sales

................................ ................................ ................................ ................................ .................. 132
8.2 Retail Payroll and Sales

................................ ................................ ................................ ................................ ... 138
8.3 Industry Organization

................................ ................................ ................................ ................................ ..... 140
9 Third Party Certifiers (TPCs)

................................ ................................ ................................ ..................... 146
10 Composite Wood Products Market Outlook

................................ ................................ ............................ 150
10.1 Outlook for MDF and Particleboard Consumption

................................ ................................ ......................... 150
10.2 Housing Market Summary

................................ ................................ ................................ .............................. 152
10.3 Market for Housing Renovatio n Activities

................................ ................................ ................................ ...... 153
10.4 Market for Furniture Manufacturing

................................ ................................ ................................ .............. 154
11 Number of Affected Entities by Small Business Status

................................ ................................ ............. 156
12 Baseline Formaldehyde Emissions Levels

................................ ................................ ................................ . 158
12.1 Baseline Emissions for Domestically Produced Products

................................ ................................ ............... 158
12.2 Composite Wood Product Consumption by Product Type and Trade Status

................................ ................. 162
12.3 Summary of Baseline Emission Levels

................................ ................................ ................................ ............ 163
13 References

................................ ................................ ................................ ................................ ............... 167Market Profile of the Composite Wood Products Industry 1 

# 1 Introduction

In July 2010, Congress passed the Formaldehyde Standards for Composite Wood Products Act ( Title VI of the Toxic Substances Control Act (TSCA) ). TSCA Title VI directs EPA to promulgate regulations that: set emission standards for composite wood products, ultra low

emitting formaldehyde resins, and no

- added formaldehyde res ins; determine whether laminated products should be included or excluded in the definition of hardwood plywood and therefore subject to the applicable emission requirements; define “hardboard;” establish the number and frequency of tests required to demonstrate compliance with the emission standards; establish labeling requirements, chain of cus tody requirements, third

- party testing and certification requirements, auditing requirements and reporting of third

- party certifiers, recordkeeping requirements, provisions relating to finished goods, requirements for exceptions for products containing de minimis amounts of composite wood products, sell

- through provisions, and requirements to prevent stockp iling of product inventory.

The purpose of this document is to provide an overview of the industries that are potentially directly affected by the propo sed rule to implement TSCA Title VI

. Manufacturers of hardwood plywood, medium density fiberboard (MDF), and particleboard are the entities that

are potentially affected by the applicable emissions requirements of TSCA Title VI under all regulatory option s. TSCA Title VI also requires the agency to determine whether laminated products should be excluded from the definition of hardwood plywood

. 1 

### Thus, laminated product manufactures m ay also be directly affected by the applicable emissions requirements of TSCA Title VI

. In addition, TSCA Title VI requires that hardboard b e defined through the rulemaking process. H ardboard is a composite wood product that is similar to thin MDF and the

recent voluntary industry standard definitions for these two products ov erlap. In addition to the manufacturers of products directly affected by the applicable emissions requirements, manufacturers that use composite wood products as raw materials (hereafter referred to as fabricators), wholesalers or distributers (including importers) of composite wood products, and retailers of composite wood products will be subject to chain of custody and labeling requirements. Third party certifiers (TPCs) will also potentially be affected by the TSCA Title VI TPC rule.

This document begi ns with a profile of hardwood plywood, MDF, and particleboard manufacturers presented in Section 2

. Section 3 profiles the manufacturers of wood veneer laminated products. Section 4 presents a profile of hardboard manufacturers and a discussion of the differences between thin MDF and hardboard

. Section 5 presents an overview of the sectors more broadly defined by U.S. Census as the Reconsti tuted Wood Products industry and the Hardwood Veneer and Plywood industry. These sectors as defined by U.S. Census include hardwood plywood , MDF, particleboard , laminated product, and hardboard manufacturers as well as some manufactures that fabricate com posite wood products. Section s 6

, 7 , and 8 profile composite wood product fabricators, wholesalers (including importers), and retailers,

1 In TSCA Title VI, the term “laminated product” means a pro duct in which a wood veneer is affixed to a composite wood

platform, and that is a component part used in the construction or assembly of a finished good, and is produced by the manufacturer or fabricator of the finished good in which the product is incorp orated. These products are referred to as “wood veneer laminated products” in this report in order to differentiate them from other products (such as high pressure laminates, thermally fused melamine, light weight basis papers, decorative foils, and film overlays) that are often referred to in the industry as laminated products, but that are not included in the statutory term because they do not include wood

veneer.Market Profile of the Composite Wood Products Industry 2 

### respectively. Section 9 profiles TPCs. Section 10 summarizes the market outlook for the new housing and renovation industries which are the key drivers of demand for composite wood products. Section 11 presents an overview of the number of affected entities by type and small business status. Finally, Section 12 presents the estimated baseline emissions levels for composite wood products.Market Profile of the Composite Wood Products Industry 3 

# 2 Hardwood Plywood, Particleboard, a nd Medium Density Fiberboard M anufacturing

This section describes the manufactur ing of hardwood plywood, medium density fiberboard (MDF), and particleboard. L aminated product m anufacturing is described separately
in Section 3

.

This s ection first presents information on the production processes (section 2.1 ) and the adhesives used in production (section 2.2 ). Then product end uses, product characteristics and product su bstitutes are discussed (section 2.3 ). I nformation on domestic production, domestic consumption and int ernational trade are presented in section 2.4

.



## 2.1 Production Processes

This section describes t he production process for composite wood products that have historically been manufactured using urea

- formaldehyde (UF) resins: hardwood plywood

, particleboard

, and MDF

. While the production process es for the manufacture of these products

are similar, the re are several important differences. Hardwood plywood is generally made by applying a hardwood veneer to the face and back of a core of veneer, lumber , MDF, particleboard , or other material

. Particleboard is a composite panel product made by bonding

woo d particles with resin under heat and pressure and molding them into panels. Typically, particleboard is made in three layers

– two external layers and a n internal core. The production process for MDF is similar to that of particleboard . Wood residues a re heated under pressurized

steam
, bonded with resin, and then shaped into panels. Th e remainder of this s ection describes the production of the three types of composite wood products in greater detail

.

2.1.1 Hardwood Plywood Manufacturing

The hardwood plywood industry is very diverse, with a number of large and small manufacturers utilizing a variety of manufacturing processes . Products that fall within the definition of hardwood plywood include industrial stock panels, architectural or custom panels, wall pan eling, engineered flooring, and flush doors. The demand for hardwood plywood is derived from demand for products containing hardwood plywood , including cabinets, furniture, store fixtures, recreational vehicles, and manufactured homes as well as residenti al housing construction and remodeling. Appearance tends to be a major factor for a majority of hardwood plywood products ( U.S. ITC 2008 )

.
In general, hardwood plywood manufacturers use processes sim ilar to those employed by particleboard and MDF manuf acturers: the wood components are prepared, assembled, and bonded together using resin, heat, and pressure. Some smaller architectural panel manufacturers press the components together without heat. The outer layer of hardwood veneers may then be applied to a core of veneer, lumber, particleboard , MDF , a combination of these materials, or other special cores . It is important to note that the majority of plants in the industry typically only make hardwood veneer or hardwood plywood, not both.

This analys is divides hardwood plywood plants into three categories with similar manufacturing characteristics in order to describe how those characteristics may influence a mill’s choice of strategies to comply with formaldehyde emissions requirements. ThoseMarket Profile of the Composite Wood Products Industry 4 

### catego ries are: 1) log

- based mills whose manufacturing process starts with the conversion of logs into veneer and ends w ith the production of hardwood plywood ; 2) purchased veneer

based mills which purchase all the components needed to assemble their products, t end to be simpler to operate since they do not convert logs to veneer, and are usually relatively large, making products targeted for the industrial stock panel market; and 3) 3

- Ply mills which buy

cores and finish them with hardwood face veneers in a 2

- st ep process. It is likely that this third category constitute the largest hardwood plywood manufacturing category based on the overall number of facilities.

The manufacture of hardwood plywood begins with the selection of logs, which are

steam

- heated and t hen d e barked. Once debarked, the logs are cut into veneer lengths in a process known as bucking. The logs, now referred to as “ flitches ” , are heated to improve cutting, and sliced into veneers ranging in thickness from 0.024 to 0.125 inches thick ( EPA 20 00 )

. Sheets of the cut veneer are placed side

- by

- side and glued together in order to make larger panels, in a process known as composing. H ardwood plywood panels are generally fabricated in one of two ways: 1) a line

- by

- line process, which involves coati ng the components with adhesives, laying them into an assembly of inner plys, facings, and backs, and pressing them all at once into a panel; or 2) a 2

- step process, in which inner plys are assembled and pressed into a platform, sanded to the desired thick ness, coated on both sides with an adhesive, mated with face and back veneers, and then pressed into a panel. Most of all hardwood plywood mills, regardless of size, use roll coaters or “spreaders” to apply adhesive, and manually lay

- up their assemblies. 2 

### Finally, t he hardwood plywood panel is conditioned to normalize moisture content, before being trimmed, sanded, and finished to meet final product specifications ( EPA
2000 )

.

Section 2.1.1.1 examines th e hardwood plywood man ufacturing process in greater detail

, Table 2

- 1 outlines the steps involved in manufacturing hardwood plywood

. Figure 2

- 1 provides a diagram of the general steps in volved in hardwood veneer and hardwood plywood manufacturing. Section 2.1.1.2 provides a brief summary of the engineered veneer manufacturing process.

2.1.1.1 Hardwood Plywood Manufacturing

Steaming of Logs (Peeler block preconditioning)



### After wood is selected based on th e desired physical characteristics of the finished product, steam, water spray, or hot water immersion is used to preheat logs. This makes logs easier to peel, reduces breakage and splitting, reduces knife

- wear, reduces glue spread, and gives the veneer g reater strength ( Baldwin 1995 )

.
Veneer cutting



### The logs, now referred to as blocks or flitches, are heated using hot water baths, steam heat, or hot water sprays, to ensure that the blades used to cut them provide the best possible surface finish. Cutting tools generally work in the same way, compressing the wood as the knife cuts the flitches into veneers ranging in thickness from around 0.024 to 0.125 inches thick.

2 This is in contrast with softwood plywood plants that may use extruders or spray system s for adhesive application, and

more automated assembly lines.Market Profile of the Composite Wood Products Industry 5 

### Depending on the type of equipment used, different visual effects in the grain of the woo d can be achieved ( EPA 2000 )

.
Clipping and Stacking



### A veneer clipper cuts the veneer ribbons to specified widths, usually 54 inches to allow for shrinkage resulting from the drying process ( EPA 2000 )

. Depending on the technological basis of the plant, two choices are available for stacking: manual and automatic

. With manually assisted stacking, workers sort veneer by size and type and load it into c lipping and stacking machines. A utomatic stacking machines sort wood using electronic scanners and vacuu ms to move and sort veneers along a conveyor belt. Moisture detectors sort wood into heartwood and sapwood piles. Timers allow automatic clippers to clip wood at proper lengths. Wood is

s orted into bin stackers by type of wood (fishtails, sapwood, and h eartwood) and width (half sheets and full sheets) ( Baldwin 1995 )

.Market Profile of the Composite Wood Products Industry 6 

### Table 2

- 1 : Manufacturing Steps: Hardwood Plywood
Process Step Process Description
Wood Selection Logs are selected based on various phys ical characteristics that determine their ability to be peeled, glued, and used in a finished product.
Preconditioni

ng Logs are heated by steam, hot water spray, or hot water immersion; this makes logs easier to peel, gives greater strength to the vene er, and reduces log splitting, knife

wear, and glue spread.
Veneer Cutting The preconditioned block is positioned on a lathe and cut into veneer sheets, usually by a rotary slicer. Clipping and Stacking Veneers are sorted by size, wood type, and m oisture content and clipped to a predetermined size; sorting can be performed manually or automatically.
Veneer Drying Cut veneer or the entire veneer ribbon (before clipping) is dried in a conditioning chamber to reduce moisture content. Dry Clipp ing After drying, the veneer is clipped to reduce veneer width and remove defects.

Compose
Veneer Veneer panels are attached together, edge to edge, to make larger panels from multiple veneers; in the process, two panels are clipped, glue is applied to the edges, the panels are pressed together and held by tape until the glue is cured. Glue Mixing Glue is prepared in vats and mixed with fillers and extenders to make the resin that will be used in bonding veneer sheets together.
Veneer Assembly a nd Glue Application Veneer sheets are laid up onto an assembly line; glue is applied to each ply by means of roller coater, curtain coater, spray coater, or extrusion; plies are arranged by back plies, face plies, and core plies and layered after glue appl ication.

Pre

- Pressing In some instances, plywood is cold pressed for 3

- 4 minutes prior to hot

- pressing.

Hot

- Pressing Plywood is separated by caul plates and loaded into the hot press; in a two

- step process, pressure of around 200 ppi is applied t o the wood for a short duration, followed by a pressure of 100

- 130 ppi for a longer pressing time; temperature of the press is dependent on the resin used. Conditioning Pressed plywood is stacked to ensure that the moisture content of the wood equaliz es with the surrounding air.

Trimming, Sanding, Finishing Circular saws are used to make plywood rectangular and straight

- edged; filler material is applied to wood to patch chipped areas; belt sanders are used to adjust the final board thickness and p rovide a finished surface.

Sources: Baldwin 1995

, EPA 2000 

### , Washington State Department of Ecology 1998Market Profile of the Composite Wood Products Industry 7 Figure 2

- 1 : General steps in hardwood veneer and plywood manufacturing



### Blocking / Debarking Log steaming or soaking Veneer cutting

Veneer dryingGreen Veneer



### Glue spreading and veneer layupDry Veneer



### Resin

Press Sanding Hardwood PlywoodHardwood plywood and veneer plantHardwood veneer plantHardwood plywood plant



### Core material Logs



### Veneer drying



### Veneer must be dried in order to reduce the wood’s moisture content for glue application. Furthermore, moisture content affects veneer size. There are three types of practices used for veneer drying: 1) open

- air drying, 2) kiln drying, and 3) mechanical drying. Open

- air drying is generally only used in climates that are favorable to drying. Kiln drying is Source: U.S. EPA 2000Market Profile of the Composite Wood Products Industry 8 

### done in a conditioning chamber where multiple stacks of wood are dried by convection

. T he most common dryin g procedure is mechanical drying, a process in which wood is moved longitudinally through a drying chamber by conveyor belt, although veneer transport can occur by conventional transport (cut veneer is transported to separate drying lines) or the in

- line

s ystem (entire veneer ribbon is fed directly from lathe to dryer and then clipped). Steam heat is the most common heat source, as air is heated efficiently at temperatures above 375 degrees ( Baldwin 1995 )

. With steam heat, exchangers warm the air and then apply it to the wood. Gas, direct

- fired oil, and wood

- waste burners are also used ( Washington State Department of Ecology 1998 )

. Other systems preheat veneer on a ceramic surface which speeds drying time. Microwave and radio wave energy are also sometime s used to dry wood from the inside out. The circulation of hot air can be longitudinal (parallel to veneer movement), by cross

- circulation (across the width of the dryer, direction switches from section to section), or by jet dryer (like

cross

- circulation , but is the same direction in all sections and blasts air at the veneer by a jet tube). Jet drying is the most common because it takes away a surface layer of moisture and is efficient at transferring heat to the veneer. ( Baldwin 1995 )

.
Dry Clipping



### Ve neer jointing is the process of attaching veneer panels together by their edges using a resin (sometimes UF resin) to make a larger panel. Veneer sheets that are too small or oddly shaped can be jointed to make a useable veneer panel. In this process, th e jointer clips the leading veneer panel with an angled knife and applies glue and fiberglass string to the angled edge. The trailing veneer panel is also clipped with an angled knife. Both panels are then “crowded” together and continue down the conveyo r line to be clipped to a predetermined size. Tape can be used to hold veneer joints together while in the press. Once the crowded veneer ribbon is cut, it is stacked and ready for veneer assembly.

Veneer Assembly



### Veneer assembly involves taking the prep ared veneer sheets and stacking them into glue

- bonded layers. Veneer assembly can be performed manually or automatically, depending

on the system. In both manual and automatic lines, the layers consist of back plies, face plies, center plies, and core pl ies (also called cross bands, the grain of which runs perpendicular to the grain in the back and face plies). Most hardwood plywood mills manually lay

- up their assemblies. The veneer assembly process begins with a back or face ply moving downstream on

a conveyor. A layer of glue is applied to the ply and a core piece is laid onto the ply. Most all hardwood plywood mills, regardless of their size, use roll coaters or “ spreaders ” to apply the adhesive. The layer then goes to the next glue applicator, and the cycle repeats until the last ply is in place. The bundle then moves to a prepress or hot press pre

- loader ( EPA 2000 )

.

Adhesive Mixing



### Adhesives are substances capable of holding materials together, primarily through use of mechanical interlocking whi ch takes place below the surface of the wood. The most prevalent adhesives in the composite wood industry have historically been resins containing formaldehyde ( California Air Resources Board 2007 )

.

Adhesive is less expensive if bought in bulk and mixed at the facility. Adhesive mixers consist of a mechanical paddle that stirs the mixture. Adhesive is generally mixed on a weightMarket Profile of the Composite Wood Products Industry 9 

### basi s. The working life of the adhesive is taken into consideration (shorter life means mixing in smaller batches ). When sw itching between adhesives , even a small residual of one type of adhesive may adversely affect the physical properties of another ( EPA 2000 )

.

Adhesive Application in the Assembly Process



### Adhesives can be applied to each ply in a number of ways, depending o n the layup line type. In the majority of hardwood plywood mills (regardless of size), roll coaters are used to apply adhesive. Roll coaters are hard or so ft rollers that coat the veneer as it passes; t hey are composed of a roller bar and a doctor roller that can be adjusted to det ermine the amount of
resin applied. Hard rollers are made of Neoprene or Buna rubber in varying thicknesses. “ Soft ” rolls (40

- 45 Durometer) are especially suited to phenolic resins . Sponge rolls also fall in this category and are composed of either Insolate or Neoprene soft closed

- cell sponge. An alternative to roller coaters is curtain coaters, devices that apply a thin film or “ curtain ” of adhesive to the passing veneer. There are two types of curtain coater: pressure head and gravity feed. The pressure head coater uses a pump to feed resin into a V

- shaped reservoir; application is controlled by the pump speed, width of the knife gap, and glue viscosity . Unused glue is trapped and reused. The gravity feed system works li ke the pressure head system but uses gravity (instead of a pump) to move the resin to the applicator; curtain velocity cannot be controlled with gravity feed. Another alternative is spray coaters, devices that apply a dhesive to the veneer as a spray . The glue is either mixed with atomized air or directly atomized using high pressure. Spray is controlled by the speed of the veneer, flow rate of the resin to the spray tip, heig ht of the spray tip, spray pattern , and the glue viscosity (controlled by mix ing and temperature)

. Lastly, extrusion can be used to apply the resin. Here, glue is turned into foam at 5 times its original volume. The foam is laid on the veneer surface in beads or “rods.” During pressing, the rods of glue expand to completely cover the veneer ( Baldwin 1995 )

.

Fillers and Extenders



### Fillers are added to resin to adjust viscosity, reduce the penetration into the wood, and fill small cavities. Filler is added in the mixing stage of the resin. Fillers can come in the form of corn residue , tree bark, wood flour, clay, nutshells, or other. Problems arise because filler material and mix can be variable from shipment to shipment. This is especially a problem with curtain and spray coaters, which require a precise glue viscosity. Fillers ca n also affect moisture content. Filler type can affect the final glue bond.

Extender s are generally cereal flours, which function to minimize the amount of resi n necessary in the mix . They can also affect the viscosity of the mixture, which in turn aff ects the glue spread, penetration, and moisture. Problems also occur with extenders, usually due to using inferior products ( Baldwin 1995 )

.

Pre

- Pressing



### Glued sheets can be put into the cold pre

- press prior to hot pressing , which generally takes three to four minutes ( Young 1996 )

. Pre

- pressing transfers glue between the coated and uncoated veneer surfaces, reducing the panel to its final thickness before entering the hot press. This can reduce the amount of space between platens (called “daylight”) and s lippage between

veneers ( USDA 1964 ) . Since heat transfer requires more time for thicker panels, this mayMarket Profile of the Composite Wood Products Industry 10 

### reduce hot

- pressing times and increase energy efficiency. Pre

- pressing can also help to spread the glue uniformly and protect the panel from warping ( Uniply Industries 2010 )

.

Hot

- Pressing



### Panels are assembled with caul plates (protective metal or wood sheets) between them and loaded into the hot press. The hot press uses steam, hot water, or hot oil to heat the press.
Since w ood becomes stronger as i t dries, the initial moistur e content and glue mix will affect the pressing cycle. W ood also becomes more pliable when heated, so the amount of pressure applied, the pressing cycle duration, and the heat applied need to be adjusted in relation to

eac h oth er. Pressure between 150

- 175 ppi is recommended for average mill conditions ( Baldwin 1995 )

. Press times for hardwood plywood panels range from 1 to 45 minutes, with the average around 6 minutes ( EPA 2000 )

. In a two

- step pressing process, the press appli es 200 ppi for 1

- 2 minutes followed by a reduction to 100

- 130 ppi for the remaind er of the pressing time

. The initial pressure ensures glue contact on all surfaces while the lower pressure allows the glue to cure under less compression. Interior glue mix es (like UF) require heat of no more than 212 degrees F; exterior mixes (like PF) require heat of 220 degrees F for 2 and 1/4 minutes. W ood type and thickness, as well as resin choice, can affect pressure, duration, and heat requirements. If the wood is cold, this will also affect pressing times. It is also possible that UF bonded wood can be exclusively cold

- pressed ( Baldwin 1995 )

.
Conditioning



### Plywood loses moisture during the pressing process. Before processing, the wood is stacked to equalize mois ture content. This can range from one hour to overnight ( EPA 2000 )

.
Trimming, Sanding, Finishing



### Wood panels are passed through two sets of parallel gauged circular saws and trimmed to be rectangular and straight

- edged. Patches can also be applied to app earance

- grade panels, which come in the form of replaced wood areas or synthetic filler material. Belt sanders are used to bring the panel down to final thickness and provide a finished surface ( Baldwin 1995 )

.

2.1.1.2 Engineered Veneer Manufacturing



### Engineered ve neer (also known as reconstituted, composite, or “green” veneer) is a

man

- made product in which more common or inexpensive species of wood are manipulated to look like veneer from exotic or expensive wood species . It tends to be made from light colored

tr ee species, which are conducive to taking on the distinctive colors and patterns of the end product.

Once selected, the logs are trimmed, sawed to length, and then debarked ( World Panel Products 2010 ) . The rotary method slices the prepared logs into cont inuous sheets of veneer, which are then cut into wide strips called leaves, and dried. Once dry, the leaves are sorted into light and dark groups then dyed in a vat under high temperature and pressure. The dyed leaves are unloaded and dried. Glue is the n applied between each leaf to bind the leaves into stacks and to create grain definition. The stacks go through a press, which uses a shaped mold to create reproducible grain

- like patterns on the top and bottom leaves ( Shopnotes 2010 ) . The stacks are pla ced under high pressure to form large rectangular blocks. The blocks are slicedMarket Profile of the Composite Wood Products Industry 11 

### into new leaves; the shape of the block and the angle of the cut control the grain pattern (WPI undated). The resulting leaves are typically 26” wide and 99” long (although c an range to 135” long) and can be backed, or spliced together to make wider sheets ( Shopnotes 2010 )

.

2.1.2 Particleboard Manufacturing

The particleboard industry grew out of a need to dispose of the residual material produced by other members of the wood indust ry ( USDA 1999 ). It is a small and diverse industry with mills using different raw materials (largely dependent on their geography) and equipment configurations, and selling their products to different markets. These markets include, but are not limited t o, cabinets, vanities, furniture, floorboards and underlayment. In applications where the final product’s aesthetics are concerned, particleboard may be overlaid with other materials. Because of many site

- specific factors, a mill’s choice of CARB Phase 2 emissions control technology may not be optimal for, or transferable to, other mills.

In general, particleboard manufacturing includes five steps: 1) The material is mechanically separated into particles (known as furnish); 2) resin and other additiv es are applied; 3) mats are formed; 4) hot pressed; and, 5) finished (i.e., cut to size and sanded) ( California Air Resources Board 2007 ) . Although single layer particleboard can be manufactured, it tends to be made in three or five layers (two face layer s, and one or three core layers, respectively). This layered construction approach increases the efficacy of the curing process ( California Air Resources Board 2007 ) . By altering the properties of the different layers, the characteristics of resulting pr oduct can be changed ( EPA 2000 ) . The reduction of wood materials to particle form (as required in particleboard manufacturing) requires less energy than reducing the same material to fibers (as required in MDF manufacturing). However, because particles d on’t utilize the lignocellulosic bonds of wood materials as well as fibers do, particleboard is generally not as strong as MDF ( USDA 1999 ).

Table 2

- 2 outlines the steps involved in manufacturing particleboard

. Figure 2

- 2 provides a diagram of the general steps in volved in particleboard manufacturing.Market Profile of the Composite Wood Products Industry 12 

### Table 2

- 2 : Manufacturing Steps: Particleboard
Process Step Process Description
Raw material handling Chips, sawdust, planer shavings, and other recycled materials are received, stored, cleaned, mixed and conveyed.
Additive handling Resin, wax, and other additives are received, stored, and prepared for use by mixing, heating, and/or dilution with water

. Milling Raw materials and recycled board trim are processed through mechanical hammermills, flakers, or refiners. All plants have multiple milling machines and prepare Face and Core layer materials separately. This is sometimes done in multiple ste ps, both before and after drying, and may incorporate screening. Drying Milled material is passed through a heated rotary drum or flash tube dryers to evaporate moisture. Drying may be separated into “Green” and “Final” dryer stages. Roughly milled material may be dried in a single Green Dryer, but Final Drying of Face and Core materials is usually done separately. Dry Storage Dry materials are held in separate Face and Core storage bins or silos to create surge capacity in the production process , or supply multiple production lines. Blending Resin and wax is missed with the dry materials. Most mills use single

- stage, water cooled, high

- speed mechanical blenders that distribute the resin through intimate particle to particle contact and high energy input. Some mills employ two

- stage blenders. Separate blending systems are always used for Face and Core materials. Some plants will add recycled sanderdust back into the material at the blender. Forming Line A variety of different technologi es are used to form a continuous fiber mat of the proper Face/Core construction for the desired product. Resinated mat trim and rejected mats are recycled by careful mixing with fresh Core material in the Core forming station. Most modern plants form on a continuous solid belt. Many older plants form on either hard aluminum or soft cloth or wire screen “cauls” that support the mat as it is conveyed to, and possibly through, the press. Most Forming Lines include either single opening pre

presses or conti nuous precompressors to improve mat integrity. Pressing Mats are consolidated into rough boards under heat and pressure. A variety of press types are employed, including multi

- opening platen presses, single opening platen presses, steam injection plat en presses, continuous steel belt presses, and continuous drum (Mende) presses. Trimming Rough boards are sawn around the perimeter.

Cooling Rough boards are held apart to air

- cool before stacking.

Finishing Rough boards are converted to fini shed product dimensions by sawing and sanding. The portion of rough board volume that is converted into saw trim and sanderdust varies with the mill and product, but can range from 8% to 25%.
Residual Management The saw trim and sanderdust are either burned to generate process heat, recycled back into the board, or disposed of elsewhere.

Thermal

energy generation All plants must generate process heat. Presses are heated with either steam or thermal oil. Dryers may be heated indirectly with eith er steam or thermal oil, or by direct firing. Natural gas, oil, and board residuals are all used as fuel in different mills.Market Profile of the Composite Wood Products Industry 13 Figure 2

- 2 : General steps in Particleboard manufacturing

Process Flow Optional Process Slashing Debarking Cutting Milling Shipping

Screening / Classifying

Surface Material Storage Core Material Storage

Drying Drying Onsite particle generation Offsite particle generation

Direct / Indirect Heating Cyclone Cyclone

Surface Material Storage Screening

Blending

Resin
, wax , other additives Core Material Storage

Blending Resin
, wax , other additives Forming

Trimming

Pressing Prepressing

Cooling Sanding Trimming Finishing Steam / hot oil / hot water Heat

, pressure



### Raw Material Handling



### As indicated in Figure 2

- 2 , the raw material used to make particleboard can either be prepared on

- or offsite. The majority of furnish is derived from softwood species; al though, a mix of soft

- and hardwood species can be used. Alternatively, the furnish can be shipped from offsite and stored until needed ( EPA 2000 )

. Source: U.S. EPA 2000Market Profile of the Composite Wood Products Industry 14 

### Additive Handling



### The resin, wax, and other additives are received, stored, and prepared for use by mix ing, heating, and/or dilution with water. Mills transitioning to a new control technology may need to enhance their additive handling ability to incorporate the variety of necessary components in the precise proportions required.

Milling



### If the furnish is prepared onsite, the raw material and recycled board trim is typically milled to size through some combination of the following equipment: hogs, chippers, hammermills, ring flakers, ring mills, and attrition mills ( USDA 1999 ). Alternately, if it is

neces sary, material prepared offsite can be further milled with this equipment ( EPA 2000 )

. Because both undersized and oversized particles can adversely affect the final product, the furnish is screened through use of air streams or, more commonly, vibrating s creens ( USDA
1999 ).

Drying



### In order to ensure that the resin bonds correctly with the particles, which affects both the board’s structural characteristics and final HCHO emissions, it is important that the furnish attain a specific moisture content ( Cali fornia Air Resources Board 2007 ) . The moisture content of furnish arriving at the mill can range from 10% to 200% and generally needs to be dried to levels between of 2% to 7% ( USDA 1999

, EPA 2000 ) . Depending on the mill, rotary dryers, flash tube dryers , or direct wood

- fired dryers can be used to dry the furnish ( EPA 2000 ) . Triple

- pass rotary dryers, in which a series of flights move the material from one end to the other three times, are the most common ( USDA 1999

, EPA 2000 ) . For wet (“green”) furnish , inlet temperatures can be as high as 1600°F, while for dry furnish inlet temperatures are between 500° to 600°F. Because of the discrepancy between inlet temperatures for wet and dry furnish, and the resulting chance of fires, particleboard dryers tend to be assigned to drying either green or dry furnish ( EPA 2000 ) . Drying may be affected at mills transitioning to an alternate resin technology since many of the alternate resins have higher moisture content levels (i.e., enhanced UF, MUF, and soy/polyami de ep i chlorohydr i n (PAE), potentially requiring increased moisture control technology or additional dryer capacity.

Dry Storage



### Dry materials are held in separate storage bins or silos (for Face and Core) to create surge capacity in the production process, or supply multiple production lines.

Blending



### Blending is the process of mixing resin, wax, and other additives to the furnish, by means of spray nozzles, tubes, or atomizers ( EPA 2000 )

. 3 

### While some mills use two

- stage blenders, most use single

- stage wat er cooled, high

- speed mechanical blenders. Mills always use separate blending devices for face and core layers. Depending on the desired properties of the particleboard , the board’s resin content can range from between 4% to 10%, but is more

3 Wax is added to increase water resistance. Other additives include catalysts to increase curing speed, scavengers to

decrease formaldehyde emissions, etc.Market Profile of the Composite Wood Products Industry 15 

### typically be tween 6% and 9%. More resin tends to be used on face than core layers ( USDA
1999 ). Blending may be affected at mills transitioning to an alternate resin technology; for example, uncured polydiphenylmethane diisocyanate (pMDI) and the resulting resinated material are hazardous so facilities adopting pMDI will need to address cleaning and exposure

related issues.

Forming Line



### Once blended, the resinated particles need to be “ formed ” into an even and consistent mat. Most modern plants form on a continuous s olid belt (older plants tend to use either hard aluminum or soft cloth or wire screen “ cauls ” that form the mat through back

- and

- forth movements). Depending on the desired number of layers, multiple formers may be used. Most forming lines include either single opening pre

- presses or continuous pre

- compressors to reduce the mat height and consolidate the material ( USDA 1999 ). Forming may be affected at mills transitioning to an alternate resin technology; for example, PF, pMDI and soy/PAE resins produce m uch less “tack” 4 

### than UF or MUF resins and so can have issues creating the structural integrity to bridge small gaps between forming conveyors and press loaders without fracturing.

Pressing



### Once pre

- pressed, the mat is consolidated into rough boards throug h heat and pressure. This activates the resin and causes the bonds to form. Depending on the mill, a variety of presses may be used, including: multi

- opening platen presses, single opening platen presses, steam injection platen presses, continuous steel belt presses, and continuous drum (Mende) presses. Most plants use multi

- opening batch presses that generate steam

- heat from a boiler burning residual wood. Presses typically reach temperatures ranging from 260° to 450°F, and achieve final particleboard densities ranging from 29 to 72 pounds per cubic foot ( EPA 2000 )

.
Pressing may be affected at mills transitioning to an alternate resin technology. For example, enhanced UF resins have higher moisture content, which can create de

- gassing problems at the e nd of the press cycle for mills with wide (>6’) presses. Similar (albeit potentially less severe) problems may result from mills transitioning to MUF or MF resins. PF requires higher temperature settings and longer press times than UF and so mills with M ende drum presses may not be able to manufacture acceptable quality particleboard panels with PF (or pMDI). pMDI bonds with steel so mills utilizing steel surfaced presses may face challenges unless a release treatment is also adopted. Soy/PAE resins may result in extra moisture added in the production process, causing mills with wider or older presses difficulty in transition.

Trimming



### Rough boards are sawn around the perimeter.

Cooling



### Rough boards are held apart to air

- cool before stacking. Boards are cooled to ensure that the desired physical properties are achieved ( EPA 2000 ) . Cooling may be affected by a mill’s transition to an alternate resin technology; for example, some alternate resins require

4 The property that allows the adh esive to adhere to another surface on immediate contact.Market Profile of the Composite Wood Products Industry 16 

### higher temperatures for activation. The cooling te chnology will need to be adjusted accordingly to prevent thermal degradation.

Finishing



### Once cool, the rough boards are sanded and trimmed to their final dimensions. Depending on the mill and product, the rough board volume that is converted into saw trim and sanderdust varies between 8% and 25%. P articleboard can be overlaid with veneers or other material, lacquered, or painted for decoration ( USDA 1999 ).

Residual Management



### The saw trim and sanderdust are either burned to generate process heat, recycled back into the board, or disposed of elsewhere. Since the recycling of resinated materials has been shown to influence board emissions, a mill’s choice of CARB P hase 2 compliance strategy will be affected accordingly.

Thermal Energy Generation



### All plants must generate process heat. Presses are heated with either steam or thermal oil. Dryers may be heated indirectly with either steam or thermal oil, or by directly firing. Natural gas, oil, and board residuals are all used as fuel in different mills. Dep ending on the adopted resin control technology, mills that do not burn all of their residuals may need to acquire the capability to do so, requiring the modification of their air emissions permits.

2.1.3 Medium

- Density Fiberboard Manufacturing

Medium density fi berboard (MDF) is a c omposite panel manufactured from cellulosic fibers that have been combined with a synthetic resin or other suitable binder and joined under heat and pressure . MDF panels have a surface that is flat, smooth, of uniform density and free of knots and grain patterns, and thus do not require veneers or laminates. Further, this quality allows for intricate and precise equipment to be used to more easily produce high

- quality finishes. MDF is used in the production of furniture, cabinets, mo ulding and shelving ( CPA
2009a

, EPA 2000 )

.
The MDF manufacturing industry is small and diverse with manufacturing processes at various mills differentiated by their supply of raw materials, equipment set

- up, and target market. In general, MDF manufacturin g includes the mechanical pulping of raw material (chips, sawdust, shavings, etc.) into fibers, drying, fiber blending (where resin and wax are added, typically through the use of a blowline), forming of material into a continuous fibrous mat, pressing int o consolidated boards, trimming and finally finishing. In general, MDF manufacturing is very similar to particleboard manufacturing, but with several key differences. For example, prior to refining, the raw material is “ cooked ” in a stream pressurized re finer (digester), a process that makes the lignin soften and the resulting material less brittle. Also, unlike particleboard production where the raw material is mechanically separated into particles, during the MDF refining process, the raw material is “ rubbed ” apart into fiber strands. Since the resulting fibrous material is of roughly the same size, no further screening is necessary ( CPA
2001 )

.Market Profile of the Composite Wood Products Industry 17 

### The remainder of this subsection examines this process in greater detail. Where possible, the text highl ights issues that may potentially arise depending on a mill’s choice of adhesive system. Table 2

- 3 outlines the steps involved in manufacturing MDF. Figure 2

- 3 provides a diagram of the general steps in volved in MDF manufacturing.

Table 2

- 3 : Manufacturing Steps: Medium Density Fiberboard (MDF)
Process Step Process Description
Raw material handling Chips, sawdust, planer shavings, and other recycled mat erials are received, stored, cleaned, mixed, and conveyed.
Additive handling Resin, wax, and other additives are received, stored, and prepared for use by mixing, heating, and/or dilution with water. Refining Raw material is processed through a str eam pressurized refiner and converted into fiber. Some mills have multiple refiners and prepare Face and Core layer fibers separately, others have only one refiner and don’t differentiate between Face and
Core. Blending Resin and wax is mixed with the fibers. Most mills use the blowline blending technique where the additives are mixed with the fiber prior to drying. Some mills use mechanical blending that applies the additives to the dry fiber. Drying Wet fiber is passed through a heated flash tube dryer to evaporate moisture. Layered board mills dry Face and Core fibers separately. Fiber Storage Dry resinated fibers are held in surge bins, and mixed with recycled fiber. These systems are more complicated in layered board mills than in those that make homogenous board. Forming line A variety of different technologies are used to form a continuous fiber mate of the proper construction for the desired product. Mat trim and rejected mats are mixed with fresh fiber and recycled through the fiber s torage area. Pressing Mats are consolidated into rough boards under heat and pressure. A variety of press types are employed, including multi

- opening platen presses, single opening platen presses, steam injection platen presses, continuous steel belt p resses, and continuous drum (Mende) presses. Trimming Rough boards are sawn around the perimeter.

Cooling Rough boards are held

- apart to air

- cool before stacking.

Finishing Rough boards are converted to finished product dimensions by sawing a nd sanding. The portion of rough board volume that is converted into saw trim and sanderdust varies with the mill and product, but can range from 8% to 25%.
Residual Management The saw trim and sanderdust are either burned to generate process heat, re cycled back into the board, or disposed elsewhere.

Thermal

energy generation All plants must generate steam for refining. Presses are heated with either steam or thermal oil. Dryers may be heated indirectly with either steam or thermal oil, or by dire ct firing. Natural gas, oil, and board residuals are all used as fuel in different mills.Market Profile of the Composite Wood Products Industry 18 Figure 2

- 3 : Process Flow D iagram for a Typical Medium Density F iberboard (MDF) Manufacturing Facility



### Wood chips Chip storage Chip washing ( optional )

Digester

RefinerPressurized Refiner



### Dryer Blowpipe

Dryer Fiber Recovery Cyclone Blender

Fiber Recovery Cyclone Dry fiber storageResin,Wax,Additives



### Drying and Blending Area

Forming Prepressing Mat trimming Hot pressing

Board cooling Wood Recycle

Trimming

, sanding

, sawing Painting / laminating ( optional ) Packaging /

shipping

Wood Recycle 

## ORResin,Wax,Additives



### Raw Material Handling



### Generally, the raw material used in MDF production is hardwood or softwood chips. However, MDF can also use sawdust, planer shavings and other recycled material ( CPA 2009a

,Market Profile of the Composite Wood Products Industry 19 

### EPA 2000 ) . The wood chips may come from off

- site locations as byproducts of other processes (sawmills, plywood plants, etc.) or as final products from satellite chip mills, tree chipping operations, etc. The chips can also be prepared on

- site through use of a tree debarker and disk chipper ( EPA 2000 ) . The resulting chipper output is screened to ensure the chips meet size requirements; overly large chips are re

- chipped and smaller chips may be used as fuel. Since chips generated on

- site may contain the dirt and grit that prevents optimum proces sing, the chips may be cleaned ( Suchsland and Woodson 1991 )

.
Additive Handling



### Resin, wax, and other additives are received, stored, and prepared for use by mixing, heating, and/or dilution with water. Mills transitioning to a new control technology ma y need to enhance their ability to receive, store, meter, and blend the variety of necessary components in the precise proportions required.

Refining



### Wood chips are passed through a steam pressurized refiner, consisting of two separate stages: 1) a digeste r which uses steam to soften the r aw material and weaken the lign i n bonds that connect the chips; and 2), a disk refiner, a machine using one or two revolving disks to mechanically pulp (refine) the chips into fibers ( EPA 2000

, Suchsland and Woodson 1991 )

. Mills that prepare face and core fibers separately may have more than one refiner, while others may not. Most of the chip breakdown occurs in the primary refiner, with secondary refiners requiring a tenth or less of the total pulping energy ( Suchsland a nd Woodson 1991 )

.
Blending



### As indicated in Figure 2

- 3 , the sequence of drying and blending operations depends on the MDF plant. However, most mills blend the fibers with resin, wax, and other additives prior to the drying proces s. Certain mills do use a mechanical blending process that applies the additives to the dry fiber. Problems can arise in the latter process if the binder has enough tack to cause the fibers to lump together, making uniform furnish distribution difficult ( Suchsland and Woodson 1991 )

.
Most MDF plants use a blowline system to apply the adhesive, although some inject resins into a short

- retention blender ( EPA 2000 ) . While the principles of blowline mechanics are straightforward (resin and additives are pum ped into a refiner’s discharge pipe, using the steam turbulence to coat the wet fiber before the material is dried), blowline systems can be configured in numerous ways. As reported in a 1998 survey of U.S. and Canadian MDF plants conducted by Evergreen E ngineering, most blowlines were between 60’ and 100’ long, and more than half were described as “ crooked ” (i.e., composed of more than one ninety degree curve). Additionally, over 60 percent of the mills applied the resin through one nozzle, while the

rem ainder used multiple addition points. There was no consensus on nozzle orifice size either, ranging from under 1/8” to over 1” ( Smith 1998 ) . Depending on the adopted resin control technology, mills that use blowline systems may need to modify their confi gurations to reduce issues associated with blockage and increase resin performance.Market Profile of the Composite Wood Products Industry 20 

### Drying



### MDF plants use either single

- stage or multiple stage tube dryers, and these are typically used to reduce the moisture content from around 47 percent to 9 percent. T he tube dryers may be fueled with wood residuals from the raw handling process. The fibers are separated from the dryer exhaust in fiber recovery cyclones and then passed into dry storage bins ( EPA 2000 )

.
Since additives typically are applied to the wet fiber before drying, potential changes in the resin used may increase the water load on the fiber dryer and could potentially decrease throughput.

Fiber Storage



### Dry resinated fibers are held in surge bins and mixed with recycled fiber. These systems

are m ore complicated in layered board mills than in those that manufacture homogenous board. Depending on the adopted control technology, precautions may need to be adopted to reduce or prevent worker’s exposure to potentially hazardous resinated fiber (pMDI, for example).

Forming Line



### MDF is dry

- formed, using air to distribute the fibers onto a continuously moving screen in the form of a mat ( Suchsland and Woodson 1991 ) . Methods of depositing furnish can vary between gravity, mid

- air fiber filtration syste m, and some combination thereof. Currently, the standard dry

- forming device is a vacuum former. To improve the uniformity of mat thickness, furnish may be applied in excess quantity and shaved off later ( Suchsland and Woodson 1991 )

.
Layered board mills shifting to an alternate control technology may be detrimentally affected when slower

- curing low

- emitting f ace formulations are mixed into the core layer through mat and trim recycling, decreasing throughput.

Pressing



### Mats coming off the forming line need to be pressed to increase their density. Before being loaded into the main press, the hot press, mats may be pre

- pressed on band presses, doubling or tripling their density. A variety of press types may be employed, including multi

opening platen presse s, single

- opening platen presses, steam injection platen presses, continuous steel belt presses, and continuous drum (Mende) presses. The heat (ranging from 240° to 450°F) and pressure generated by these devices activate the resin, bonding the fibers
into a continuous mat (U.S. EPA 2000). Press cycles are important since many applications require MDF with a specific density profile; short closing times heat only the surface layer and result in higher face compressions, while longer press times allow for m ore uniform final densities. Depending on the initial moisture content, single

- or multi

- phase presses can be used ( Suchsland and Woodson 1991 )

.
Since throughput is limited by the press’s ability to transfer heat and cure the resin, output may be affect ed in situations with slower curing alternate control technologies. Further, should a mill adopt pMDI as part of its formaldehyde

- control technology, provisions will need to be adopted to ensure proper application since this material bonds with steel.Market Profile of the Composite Wood Products Industry 21 

### Tri mming



### After they are pre

- pressed, mats are trimmed around the perimeter and the waste material is recycled to the forming line ( EPA 2000 )

.
Cooling



### Rough boards are held apart to air

- cool before stacking. Depending on the adopted adhesive system, different methods of cooling may have to be adopted; the increased press heat required by some resins results in hotter MDF panels and increased cooling times.

Finishing



### The cooled boards are made into finished products by sawing and sanding. Depending on the mill and choice of final product, between 8% and 25% of the rough board volume is converted into saw trim and sanderdust. Trademarks, grade stamps, and flame retardants are applied before the boards are packaged for shipping ( EPA 2000 )

.
Residual Management



### Th e saw trim and sanderdust can be burned to generate heat, recycled back into the board

- making process, or disposed of elsewhere. Since the recycling of resinated materials has been shown to influence board emissions, a mill’s choice of CARB phase 2 compli ance strategy will be affected accordingly.

Thermal Energy Generation



### All MDF mills need to generate steam as part of the refining process. Presses are heated with either steam or thermal oil. Dryers may be heated indirectly with either steam or thermal

o il, or by direct firing. Natural gas, oil, and board residuals are all used as fuel in different mills. Depending on the adopted resin control technology, mills that do not burn all their residuals may need to acquire the capability to do so, requiring th e modification of their air emissions permits.



## 2.2 Adhesives

This section discusses the advantages and disadvantages of the adhesives currently used in the manufacture of composite wood products, particularly the newer resin formulations that are being used to lower formaldehyde emission levels of composite wood products. Factors influencing an adhesive’s use include the materials to be bonded together, moisture content at the time of bonding, mechanical property and durability requirements of the composite

pr oducts, anticipated end

- use of the product, and resin system costs (USDA 2010). Adhesives currently being used in the manufacture of composite wood products include traditional and enhanced urea

- formaldehyde (UF) resins, phenol

- formaldehyde (PF) resins, m elamine

containing formaldehyde resins (MUF and MF), polydiphenylmethane diisocyanate (pMDI) resins, polyvinyl acetate (PVA) resins, emulsion polymeric isocyanate (EPI), soy

- , and tannin

based resins.Market Profile of the Composite Wood Products Industry 22 

### Urea

- Formaldehyde (UF) Resins



### H ardwood plywood

, part icleboard , and MDF have historically been manufactured with UF resins. They are made by adding urea to formaldehyde under basic conditions, followed by condensation reactions in an acidic environment, and polymerization as the pH is raised and the tempera ture is lowered ( California Air Resources Board 2007 ) . UF resins are easy to use, inexpensive, fast curing, tolerant of process variability, and have a neutral color after curing. They are not water resistant, so they are only used for interior applicati ons. In addition, traditional UF resins emit large r amounts of formaldehyde when used in composite wood.

Most plants transitioning to meet CARB Phase 1 emission limits have been able to do so by using enhanced UF resins such as lower formaldehyde to urea mole ratio formulations; 5 

### external and internal scavengers that bind to free formaldehyde, such as a urea in water solution; and/or two

- part systems, where a base resin and scavenger resin are blended just prior to the point of application. This variety o f options has allowed manufacturers to tailor their emissions reduction strategies to their plant’s particular capabilities and requirements. These enhanced UF resins are also less forgiving to process variation, require higher press temperatures and/or l onger press times to cure, which can lead to higher reject rates, decreased plant productivity, and can require equipment upgrades and/or procedural changes compared with traditional UF resins . Enhanced UF resins are currently being used to meet CARB Phas e 2 emission requirements. According to Hexion Specialty Chemicals (as reported in PanelWorld 2010b ), although the latest enhanced UF resins make it more critical to make adjustments for mill to mill variations in wood furnish and manufacturing parameters , with the continued optimization of the new resin systems the final costs of using the new lower emitting enhanced UF resins are only slightly higher than historical manufacturing costs.

Phenol

- Formaldehyde (PF) Resins



### Because of their water resistance, PF resins are primarily used in oriented strandboard (OSB) and softwood plywood designed for exterior applications ( California Air Resources Board
2007 ) . PF resins have several performance disadvantages, including slow curing times and higher press tempe ratures (which can reduce throughput) and dark color, which makes them less suitable for some aesthetic applications. Their bonds are sometimes referred to as “boil

proof” because of their ability to maintain composite dimensional and mechanical propertie s under wet conditions ( Stark et al. 2010 ) . However, they also produce more brittle and less dimensionally stable particleboard

.
Some companies make both hardwood plywood and softwood plywood on the same site or even in the same facility, so are already familiar with PF resin. It is also not uncommon for hardwood plywood mills to use softwood veneers for inner plys, so these mills can also use PF resin to build their cores . Overall hardwood plywood panel emissions can be reduced significantly by replac ing the multiple inner

- ply glue lines with low

- emitting PF resin. Several companies are already marketing Phase 2 compliant products made by the 2

- step process, where veneer or composite platforms with PF glue lines are pressed before receiving decorative face and back veneers bonded with PVA. These products are significantly more costly than products currently made with enhanced UF resins

.

5 Although if the formaldehyde to urea mole ratio becomes less than one, the resin loses some of its physical

characteristics and must undergo further modification.Market Profile of the Composite Wood Products Industry 23 

### Melamine

- containing Formaldehyde Resins



### Melamine

- formaldehyde (MF) and melamine

- urea

- formaldehyde (MUF) resins are

t ypically used for decorative laminat ing , paper treating, and paper coating ( Stark et al. 2010 )

. However, because of their strength, durability, and water

- resistance, they can be used in bonding composite wood products (historically exterior and semi

- exte rior plywood and particleboard ). MUF resins are less expensive and less durable than MF resins. Both are lighter in color than PF resins ( California Air Resources Board 2007 ) . MUF and MF resins exhibit handling and cure characteristics similar to UF. M F resins can be used in combination with UF to attain greater water resistance than UF alone ( Stark et al. 2010 )

.
Polydiphenylmethane diisocyanate (pMDI) Resins



### pMDI resins have been used since the 1970s and although they are commercially available for MDF and particleboard , their primary current use is in OSB and strawboard manufacturing ( California Air Resources Board 2007 ) . pMDI resins are strong, 6 

### fast curing, moisture tolerant, have long storage lives, and are formaldehyde free. However, pMDI has a

s trong affinity for bonding to steel pressing surfaces, so must be used in conjunction with a release agent treatment. Uncured pMDI is toxic, so special precautions must be taken to control worker exposure to uncured resin. Cured pMDI resin poses no reco gnized health

concerns ( Stark et al. 2010 ) . In addition, because most particleboard forming lines are “caul

less,” they rely on resin tack to provide the mat with enough integrity to bridge small gaps between forming conveyors and press loaders without fr acturing. There has been some concern among these plants that pMDI resins fail to develop the tack needed to hold the mat together during this process. Similarly, there is concern in MDF plants employing blowline blending technology about build

- up and bl ocking problems from pMDI resins.

Polyvinyl Acetate (PVA) Resins



### PVA, also known as “white glue,” is a self

- polymerizing resin that is initiated under free radical conditions of the monomer vinyl acetate. While PVA sets quickly at room temperature, has a high dry strength, and is formaldehyde free, it is susceptible to moisture, humidity and high temperatures. As a result, PVA is used mainly for interior applications such as hardwood plywood veneers and wood bonding in furniture. However, cross

- linking a gents can be added to the resin to increase its ability to withstand higher moisture contents and temperature ( California Air Resources Board 2007 )

.

Most hardwood plywood mills transitioning to PVA resins as a result of CARB are smaller operations that ma ke high er

- value specialty or custom products for which resin costs have a less significant impact on the total than for stock panel products. While PVA resins are more expensive to purchase than UF resins, they are equally easy to use. They are supplied either as ready

- to

- use formulations, or with a catalyst. The viscosity of PVA and UF is similar, so the same pumps and glue spreads can be used. Tack development (the property that allows an adhesive to adhere to another surface on contact) , and cure spe eds are similar, so assembly procedures and press times are not impacted.

6 The chemical bonds in pMDI are s tronger and more stable than the chemical bonds of UF or PF (CARB 2007).Market Profile of the Composite Wood Products Industry 24 

### Soy

- based Resins



### While soy has been used in resins since the 1900s, it has only recently begun to undergo extensive development due to concerns about formaldehyde ( California Air R esources Board
2007 ) . Soy resins are formaldehyde free, so are capable of meeting Phase 2 emission limits and claim to be cost and performance competitive with current UF products.

Tannin

- based Resins



### Tannins are naturally occurring compounds derived fr om plants, particularly the bark of mangroves, mimosa, quebracho, hemlock, and sumac ( California Air Resources Board 2007 )

. They can be reacted with formaldehyde to form a durable low

- emitting plywood adhesive similar to PF. Although they make excellent adhesives, their high cost, limited availability, dark color, and special processing requirements make them an unlikely choice for composite wood product manufacturers.

Emulsion Polymeric Isocyanate (EPI)



### EPI is formulated by emulsifying diphenylmethane di isocyanate (MDI) resin with water

based PVA. EPI is waterproof, has a fast cure rate, and forms strong bonds with wood, so it is primarily used in marine and other applications where high strength and exterior durability are required. It is a very expens ive formulation, and unlikely to be selected solely for CARB compliance reasons.



## 2.3 Product Characteristics, Uses, and Substitutes

This section of the market profile describes the physical characteristics of hardwood plywood, particleboard, and MDF (Section 2.3.1 ), the uses for these products (Section 2.3.2 ), and the potential substitutes for these products (Section 2.3.3 ).

2.3.1 Product Physical Characteristics

A major benefit of composite wood over solid wood is that products composed of these materials tend to be manufactured more uniformly, reducing the natural variations that arise amongst wood species, trees of the same species, and even wood from the same tree. Unlike

so lid wood

, which is evaluated at a cellular level, composite wood is evaluated at the level of fiber s , particle s , flake s , or veneer s

- these elements are the building blocks used to produce composite wood prod ucts with predetermined properties ; end product s can be changed by combining, reorganizing, o r stratifying them ( Stark et al. 2010 )

.
Strength is a crucial factor in determining the applicability of composite wood p roducts for manufacturing uses. The strength of a wood product depend s primarily on its constituents

. The basic wood elements can be made in a great variety of sizes and shapes, and may utilize any number of wood species. As a result, t he choices available for composite wood products are almost unlimited. The t ypes of a dhesives and bonding

- agents used in the manufacture of a composite wood product play an important role in its stren gth properties ( Stark et al. 2010 )

. The most commonly used resin has historically been urea

- formaldehyde (UF). UF is easy to use, inexpensive, fast curing, tol erant of process variability, and is neutral colored post

- curing.Market Profile of the Composite Wood Products Industry 25 

### Durability is a factor for composite wood products. Panels use d for exterior applications

must have a fully waterproof bond and be designed for permanent exposure to weather. Interior pa nels do not require waterproof bond s and can be manufactured with adhesives designed for interior use.

Depending on the composite wood product, a ra nge of sizes and thicknesses is available. The range of applications for which these products are used requ ires production of several standardized sizes as well as custom

- made pieces. Sizes and thicknesses will depend on the type of composite wood product and the market for which it is primarily produced.

Composite wood products structures are subject to perfo rmance

- type standards as outlined by various industry organizations. 7 

### A number of organizations including Composite Panel Association (CPA) and the Hardwood Plywood and Veneer Association (HPVA) monitor products produced by their member firms to assure hi gh

- quality production and industry conformity with testing and performance standards ( Stark et al. 2010 )

.

2.3.2 Product Uses

This section presents data on the quantity and value of the particleboard and MDF annually sold in the United States, by product end use. The major end uses for hardwood plywood are discussed since sufficient end

- use data are not available. The data for particleboard and MDF end uses are from a Composite Panel Association (CPA) document entitled “2005 North American Shipments and Downstre am Market Report,” which provides information on particleboard and MDF panel shipments from both CPA members and non members ( CPA 2006a ) . The report, however, does not include data on the manufacture and sales of hardwood plywood products.

Table 2

- 4 presents the quantities of composite wood shipped in 2005 by product category and composite wood type. CPA reports that non

- reporting mills represented only eight percent of the total particleboard volume, and less than two percent of the total MDF volume.

7 The standards for hardwood plywood , MDF, and particleboard are respectively numbered (1) ANSI/HPVA HP

– 1

– 2009,

(2) ANSI A208.2

– 2009 , and (3) ANSI A208.1

– 2009

.Market Profile of the Composite Wood Products Industry 26 

### Table 2

- 4 : Quantity of Composite Wood Product Shipments by North American Producers in 2005, by Product Category and Composite Wood Type

Product Category Medium Density Fiberboard (M DF) Particleboard

MSF % MSF %

Door Components 155,
044 6
% 311,28
9 6
%

Electronic Cabinets 14,4
07 1
% 13,748 0.
2
%

Laminate Flooring 341,
175 1
3
% <64,73
9 <1
.2
%

Mobile Home Decking <6,3
95 < 0

. 2
% <64,73
9 <1
.2
%

Underlayment <6,3
95 < 0

. 2
% 142,61
5 3
%

Household Furniture 442,
428 1
7 % 1,189,
364 21
%

Office Furniture 63,2
59 2 % 545,49
5 10 %

Kitchen Cabinets and
Vanities 381,
812 1
4 % 1,716,
936 31 %

Counter Tops 18,2
72 1
% 268,76
3 5 %

Millwork 265,
385 1
0
% 63,538 1
%

Moulding 346,
348 1
3
% <64,73
9 <1
.2
%

Prefinished Paneli ng 97,7
58 4 % 115,32
3 2
%

Retail 70,7
46 3 % 32,618 1 %

Shelving 19,3
00 1
% 244,90
9 4 %

Store Fixtures 117,
880 4 % 226,48
2 4 %

Other 307,
365 1
2 % 690,26
1 12 %

Total 2,64 7,57
4 5,626,
080Market Profile of the Composite Wood Products Industry 27 Sources : CPA 2006a



### As indicated in Table 2

- 4

, household furniture was the largest end use for MDF (17%) followed by kitchen cabinets and vanities (14%) and Moulding (13%). Kitchen cabinets and vanities were the largest end use for particleboard (31%) with household and office furniture combined also accounting for about 31 percent of particleboard end uses.

According to a November 2010 personal communication with HPVA, e ngineered wood flooring accounts for about one third of total hardwood plywood production in North America, while hardwood plywood panels account for the other two thirds. According to the U.S. ITC (2008), cabinet manufacturers were the largest market for U.S. direct manufacturer sales of hardwood plywood panels (16% of total sales), followed by retail building materials dealers (6%

o f total sales), furniture manufacturers (4% of total sales), and fixture manufacturers (2% of total sales). About 70 percent of total sales by U.S. plywood manufacturers are to wholesale distributers.

2.3.3 Substitute Products

In addition to switching to prod ucts made with lower formaldehyde emitting resins, consumers of composite wood products may instead choose to use different products entirely. There are several products that are capable of filling some of the roles of MDF, particleboard

, and hardwood plyw ood in furniture and construction.

2.3.3.1 Solid Wood



### Solid wood could replace some composite wood products in some applications

. However, solid wood can have imperfections on its surface and is more expensive than many composite wood products ( CPA 2007 ). In add ition, it is more susceptible to warping than composite wood ( CPA
1997 ). 2.3.3.2 Oriented Strand

- Board (OSB)



### Oriented strand

- board (OSB) is currently widely used in flooring, wall paneling, and roofing underlayment and sheathing, as well as for furniture in a more limited capacity

. OSB is made out of wood chips or flakes that are manufactured into panels in a similar method to that of other wood composites

. PF and pMDI are the most common resins used in the manufacture of OSB ( APA 2009 )

. However, OSB is only a sui table substitute for some composite wood products because of its rough surface ( APA 2009 )

. OSB is also waterproof, has a similar strength to other composite wood products, and is cost

- competitive with other composite wood products ( APA 2009 )

.

2.3.3.3 Hardboard



### Har dboard is a composite wood product made from wood fibers held together with resin. Hardboard is used in furniture, wall paneling, and flooring, and mostly for aesthetic purposes due to its uniform thickness and density. It is also easy to work with ( CPA 2 009b ). However, its lack of strength and appearance make it unsuitable for some applications.Market Profile of the Composite Wood Products Industry 28 

### 2.3.3.4 Softwood Plywood



### Softwood plywood is mostly used for structural purposes in residential and industrial situations. It has strong structural integrity and is wa ter

- resistant; however its rough surface and dark color renders it unsuitable for some aesthetic end uses. It is also more expensive to manufacture than other composite wood products due to its use of raw timber as a starting material.

2.3.3.5 Gypsum Board



### Gypsum board, also known as drywall or plasterboard, is made of a core of gypsum surrounded by paper on the surface and edges. Gypsum, a mineral found in sedimentary rock, is mined, combined with water and additives to make gypsum plaster, and bonded with the c ore to form a board ( Gypsum Association 2009 ). The manufacturing of gypsum is inexpensive but has high installation costs. It cannot substitute for all end products of manufactured wood but rather works best in construction and paneling in residential bu ildings.

2.3.3.6 Alternative Composites



### T here is a small industry that produces composite boards made from recycled paper and agricultural wastes such as straw or wheat. These products vary in their characteristics, but they have been used in some furniture, surf ace, and cabinet applications. These alternatives are produced in a way similar to wood composites; however

, the straw or wheat can adhere to itself under heat and pressure so only a limited amount of resin s are necessary

. These composites are generally mo re expensive and not as widely available compared to traditional wood composite products.



## 2.4 Domestic Production and International Trade

Table 2

- 5 presents the domestic production, international trade, and domestic consumption for c omposite wood products. Data from 2005 were used in Table 2

- 5 since that

was the most recent data available for all categories when the table was prepared . According to PanelWorld 2010b , citing a 2009 Composite Panel Association report, U.S. particleboard and MDF shipments have experienced substantial declines since 2009, and were about 2.5 and 3.9 million cubic meters for MDF and particleboard in 2009, respectively. Domestic hardwood plywood production has likely experienced sim ilar declines, but data are not available. While imports of hardwood plywood and particleboard have also declined substantially, MDF imports have increased over 40 percent since 2005. These figures do not include imports of composite wood as part of fabr icated goods such as furniture.Market Profile of the Composite Wood Products Industry 29 

### Table 2

- 5 : 2005 U.S. Production, Trade, and Consumption of Composite Wood Panels (Cubic Meters) ; does not include imports as part of fabricated goods

Product Type Dom estic
Pro d
uctio

n E

x
p

o
rt

s Domestic Consumption Percen t of
Consu mption from Import

s Im

por ted D

o

m

es tic T

ot al

Hardwood Plywood 1,84 4,00
0 2
4
3

, 7
6
3 4,0 20,
331 1,
60 0,
23

7 5,
6
2 0,
5
6
8 72%

Medium Density Fiberboard 3,25 6,91
2 1
6
3

, 8
8
9 966 ,96

7 3,
09 3,
02

3 4,
0
5 9,
9
9
0 24%

Partic leboard 7,27 5,39
9 2
5
8

, 8
2
7 1,3 46,
903 7,
01 6,
57

2 8,
3
6 3,
4
7
5 16%

Notes: MDF and particleboard production are f r om CPA (2005) data. H ardwood plywood production is f r om Table 2.2 from U.S. ITC 2008. Imports and Exports data are from U.S. ITC 2010 and include t he following HTS codes: (1) hardwood plywood : 4412.13, 4412.14, 4412.22, 4412.23, 4412.29; (2) MDF: 4411.21, (3) particleboard : 4410.31, 4410.32, 4410.33, 4410.39.



### Table 2

- 6

, Table 2

- 7 , and Table 2

- 8 present the quantity and value of U.S. imports and exports of hardwood plywood, medium density fiberboard, and particleboard panels respectively. Imports and export amounts are provided for the four largest trading countries of

eac h product. Again, these figures do not include imports of composite wood as part of fabricated goods such as furniture.

Over half of the country’s imports of hardwood plywood come from China, with Canada and Indonesia also supplying a significant quantity of the product. The majority of exports from the U.S. are sent to Canada, although the quantity of exports is minor in comparison to imports. International trade data for hardwood plywood is illustrated in Table 2

- 6 below.Market Profile of the Composite Wood Products Industry 30 

### Tabl e 2

- 6 : Hardwood Plywood Panels : Quantity and Value of International Trade by Country of Origin, 2009 ; does not include imports as part of fabricated goods

Country Quantity (Cubic Meters) Percent of Total Quan tity Customs Value ($1,000) Percent of Total Value

Imports China 1,120,385 54.98% 596,423 53.95%
Canada 181,619 8.91% 143,555 12.98% Indonesia 171,867 8.43% 92,964 8.41%
Russia 173,714 8.53% 65,977 5.97%
All Others 390,098 19.14% 206,673 18.69%
Tota l 2,037,683 100.00% 1,105,592 100.00% Exports Canada 72,974 35.27% 44,543 39.61%
Mexico 20,579 9.95% 11,489 10.22% Sweden 2,420 1.17% 1,268 1.13%
Bahamas 2,314 1.12% 1,161 1.03%
All Others 108,639 52.50% 53,980 48.01% Total 206,926 100.00% 112,442 1 00.00%
Source: U.S. ITC 2010



### Medium density fiberboard likewise has an uneven trade balance, with much greater imports (1.38 million m 3 

### ) than exports (0.4 million m 3 

### ). China and Canada are the primary MDF providers, while a majority of exports are to e ither Canada or Mexico. Table 2

- 7 below gives summary information about U.S. international trade of MDF.

Table 2

- 7 : Medium Density Fiberboard Panels : Quantity and Val ue of International Trade by Country of Origin, 2009 ; does not include imports as part of fabricated goods

Country Quantity (Cubic Meters) Percent of Total Quantity Customs Value ($1,000) Percent of Total Value

Imports China 551,254 40.07% 157,200 34.55 %
Canada 422,862 30.74% 119,863 26.35%
Chile 171,597 12.47% 68,564 15.07% Germany 76,575 5.57% 23,608 5.19%
All Others 153,403 11.15% 85,714 18.84%
Total 1,375,691 100.00% 454,949 100.00% Exports Canada 208,269 58.02% 53,918 53.81%
Mexico 130,794 3 6.43% 40,697 40.62%
Russia 2,597 0.72% 672 0.67% Belgium 1,972 0.55% 490 0.49%
All Others 15,354 4.28% 4,422 4.41%
Total 358,986 100.00% 100,199 100.00%
Source: U.S. ITC 2010



### Table 2

- 7 on the next page prese nts imports and exports data for particleboard in both actual quantity and customs value. Canada is responsible for over 90 percent of particleboardMarket Profile of the Composite Wood Products Industry 31 

### imports into the U.S. as well as receiving over half of particleboard exports. Compared to the other two major composite wood products listed above, particleboard has relatively low volume of trade with only 592,618 m 3 

### imports and 174,790 m 3 

### exports.

Table 2

- 8 : Particleboard Panels : Quantity and Value of Interna tional Trade by Country of Origin, 2009 ; does not include imports as part of fabricated goods

Country Quantity (Cubic Meters) Percent of Total Quantity Customs Value ($1,000) Percent of Total Value

Imports Canada 544,392 91.86% 129,168 90.29%
Mexico 29 ,211 4.93% 8,030 5.61%
Switzerland 4,223 0.71% 2,911 2.04%
China 4,522 0.76% 1,576 1.10% All Others 10,270 1.73% 1,366 0.96%
Total 592,618 100.00% 143,051 100.00% Exports Canada 99,320 56.82% 31,092 57.30%
Mexico 58,730 33.60% 16,768 30.90%
Russia 4,122 2.36% 1,597 2.94%
United Kingdom 1,660 0.95% 811 1.50%
All Others 10,958 6.27% 3,994 7.36%
Total 174,790 100.00% 54,262 100.00%
Source: U.S. ITC 2010Market Profile of the Composite Wood Products Industry 32 

# 3 Laminated Product Manufactur ing

Wood veneer laminated product producers are considered composit e wood product fabricators rather than hardwood plywood producers under the CARB ATCM, and they are not required to meet the ATCM’s emissions standards. TSCA Title VI includes laminated products in the definition of hardwood plywood, and directs EPA to co nduct a rulemaking process to determine whether to exempt any of these products from the definition. If EPA does not exempt laminated products from the definition of hardwood plywood, then laminated products will have to meet TSCA Title VI’s emissions sta ndards (in addition to being ma de with certified platforms).

The estimated number of wood veneer laminated product producers is based on discussions with industry associations and a series of interviews with hardwood veneer manufacturers and wholesalers. The information gathered from discussions with industry associations indicated that there are relatively few wood veneer laminated product producers, with the exception of business and household furniture manufacturing. To gather more information EPA co nducted interviews with veneer manufacturers and wholesalers in order to learn more about their customers that are wood veneer laminated product producers.

The firms that were interviewed were selected from a Hardwood Veneer and Plywood Association (HPVA ) list 8 

### and the companies listed as “Face Veneer Suppliers” at www.veneernet.com. Based on information gathered from company and third party websites, firms on this list were categorized into four types: (1) specialized in hardwood veneer manufacture, (2) specialized in hardwood veneer and plywood manufacture, (3) specialized in hardwood veneer wholesale, and (4) wholesalers of hardwood veneer and other wood products. Firms on each of these four lists were sorted in random order and phone calls were place d until two entities in each category participated in an interview. 9 

### One additional set of calls was placed until one additional entity on the hardwood veneer wholesale list participated in an interview. This group was selected for the extra interview be cause the prior interviews indicated that this group appeared to have more small customers, a group where li ttle information was available.

There was wide disagreement over the number of businesses in the U.S. that are wood veneer laminated product produce rs. Three respondents thought this number was less than 1,000; two estimated that it was between 1,000 and 10,000; and three estimated it was tens of thousands. One respondent did not provide an estimate. Of those respondents that put the number in the tens of thousands, one suggested that it was more than 50,000, and another suggested t his number was about 100,000.

Based on the interviews, the number of potential wood veneer laminated product producers is likely to be between 7,000 and 14,000. The re spondents that estimated that there

8 HPVA Veneer Manufactu rer/Sales Members. Available at: http://www.hpva.org/sites/default/files/HPVAVeneer.pdf

(Accessed April 18, 2011)

9 Note that one of the respondents on the veneer manufacturer list identified themselves as a re

- manufacturer of

veneer and was categorized as the second veneer manufacturer for the purpose of selecting the sample. A respondent on the veneer and plywood manufacturer list identified themselves as a manufacturer of hardwood veneer and other wood products and was categorized as the second veneer a nd plywood manufacturer for the purpose of selecting the sample.Market Profile of the Composite Wood Products Industry 33 

### were fewer businesses may not be aware of these smaller operations because they do not cater to these smaller customers. Part of the reason that some respondents estimated that there were more wood veneer laminated prod uct producers may be because these respondents were thinking of businesses that would be exempt from the rule’s requirements (e.g., veneering something to create a product that would not be considered a composite panel 10 

### , veneering to substrates (such as me tal) that do not qualify as composite wood products, using veneer to make products that are statutorily exempt from the rule (such as boats, autos, products not intended for interior use, etc.). Nevertheless, publically available data and other information that EPA has obtained from industry associations is not consistent with more than about 14,000 businesses making wood veneer laminated products.

The following NAICS have been identified as the primary consumers of hardwood veneer (i.e., they consume enoug h veneer such that the value of raw veneer material is

rep orted in Economic Census data):

• 321211 Hardwood veneer and plywood manufacturing

• 321911 Wood window and door manufacturing

• 337211 Wood office furniture manufacturing

• 337110 Wood kitchen cabinet and countertop manufacturing

• 337121 Upholstered household furniture manufacturing

• 337122 Nonupholstered wood household furniture manufacturing

• 337127 Institutional furniture manufacturing

• 337129 Wood television, radio, and sewing machine cabinet manufacturing

• 337212 Custom architectural woodwork and millwork manufacturing

• 337215 Showcase, partition, she lving, and locker manufacturing

In addition, businesses in the following industries may also do their own veneering (although many of them

– indicated with a “ *”

– would be statutorily exempt from the TSCA Title VI rule even if they do their own veneering 11 

### :

• 321920 Wood container and pallet manufacturing*

• 336111 Automobile manufacturing*

• 336411 Aircraft manufacturing*

• 336611 Ship building and repairing*

• 33661 2 Boat building*

• 321999 All other miscellaneous wood product manufacturing

• 339920 Sporting and athletic goods manufacturing

• 339932 Game, toy, and children's vehicle manufacturing

• 339992 Musical instrument manufacturing

• 811420 Reu pholstery and furnit ure repair

10 Where a p anel means a flat or raised rectangular piece of composite wood product.

11 Section 601(a)(3)(i) of TSCA limits the term “hardwood plywood” to panels that are intended for interior use. Section

601(c)(9) exempts packaging products. And Section 601(c)(10) exempts certain vehicles (other than recreational vehicles), rail cars, boats, aerospace craft, and aircraft.Market Profile of the Composite Wood Products Industry 34 

### There are 35,846 employer establishments and 46,704 nonemployer establishments in these industries. Thus, it is estimated that the total number of establishments, including nonemployers, in these industries is 82,550.



## 3.1 Assumptions for High End a nd Low End Estimates of Wood Ven eer Laminated Product Producers

Two sets of estimates, a high end estimate and a low end estimate, were made for the number of entities that make wood veneer laminated products and thus are potentially subject to the TSCA Ti tle VI rule as hardwood plywood producers. Table 3

- 1 presents the underlying data, assumptions and resulting estimates for the high end estimate of the number of wood veneer laminated product producers. These ass umptions are described in more detail below.

Windows and Doors . There are about 1,500 employer establishments and 2,200 nonemployer establishments in this industry (NAICS 321911). Because no information was available about how many companies making wood windows or doors affix veneer to platforms themselves (as opposed to buying veneered components from suppliers), the economic analysis assumes all producers affix veneer. This assumption may overestimate the number of entities potentially subject to the r ule as panel producers. 12



### Furniture . There are about 6,300 employer establishments in the furniture industry (NAICS 337211, 337121, 337122, and 337127) and about 5,000 nonemployer establishments. Note that the Census does not report the number of nonemp loyer establishment s at the 6

- digit NAICS level, so the number of establishments reported here is estimated by applying the proportions of the 6

- digit NAICS as a share of the broader NAICS for employer establishments to the number of nonem ployers in the br oader NAICS.

The furniture industry is the only sector where trade associations reported that it is common for companies to affix veneer to their products. The Business and Institutional Furniture Manufacturing Association (BIFMA) indicated that “many i f not most” business and institutional furniture producers would make products that were made with wood veneer and about 75 percent of those would affix the veneer themselves (BIFMA 2010). The American Home Furnishing Alliance (AHFA) indicated that most d omestic furniture producers would affix wood veneer themselves, but estimated that there were about 250 firms that do this (AHFA 2010). To develop a high end estimate for the number of wood furniture producers that affix veneer and thus make wood veneer l aminated products, the economic analysis assumed that 50 percent of establishments in these industries manufacture products that contain veneer and 75 percent of those establishments do the laminating themselves.

Kitchen Cabinets . There are about 9,700 employer establishments and 7,800 nonemployer establishments in this industry (NAICS 337110). It is worth noting that NAICS 337110, and thus these establishment counts, includes both cabinet manufacturers (who may laminate hardwood veneer) and countertop manufacturers (who do not use hardwood veneer). The Cabinet Makers Association, which generally represents smaller custom cabinet

12 Note that depending on the process for laminating the hardwood v eneer, window manufacturers in particular may

not be producing what the rule defines as a “panel,” in which case they would only be subject to the requirements for fabricators. However, windows containing less than 5% by volume of composite wood product a nd exterior doors containing less than 3% by volume of composite wood product are statutorily exempt from the rule’s requirements.Market Profile of the Composite Wood Products Industry 35 

### manufacturers, said “very, very few” would do their own veneering (CMA 2010). The Kitchen Cabinet Manufacturers Association (KCMA), which generally represents larger stock cabinet manufacturers, said 5 percent or less of cabinet manufacturers would do their own veneering (KCMA 2010). The Architectural Woodwork Institute (AWI) did not think any of its members would do their own veneering. 13 

### Thus, the economic analysis assumes that 5 percent of these establishments affix veneers and thus make wo od veneer laminated products.

Other Products . Because the other manufacturing sectors that may include establishments that laminate th eir own hardwood veneers consist of a very diverse group of manufacturers, including establishments that do not even use composite wood products let alone laminate their own hardwood veneer, the economic analysis assumes that 5 percent of these establishme nts lamin ate their own hardwood veneers.

High End Estimate . The assumptions about the percentages of establishments in different industries that are laminating their own hardwood veneer results in a high end estimate that as many as 14,000 establishments might laminate hardwood veneer, as shown in Table 3

- 1 . However, this estimate conflicts with information provided in the interviews with nine companies that sell hardwood veneer, described earlier. That informati on indicated that no more than 30 percent of businesses laminating their own hardwood veneer are nonemployer operations. However, the estimate of 14,000 businesses that do their own veneering is based on about 7,000 nonemployer operations (50% of the tota l). Therefore, the high end estimate of 14,000 establishments may overestimate the number of wood veneer lam inated product manufacturers.

Low End Estimate . To derive a low end estimate for the number of domestic entities that laminate hardwood veneer, the economic analysis extrapolated to the total number of wood veneer laminated product establishments from the employer establishments by assuming that 30 percent of the total are nonemployer establishments, based with information provided in the intervie ws with nine companies that sell hardwood veneer, described earlier. In addition, it was assumed that 1 percent of manufacturers in the miscellaneous manufacturing sectors laminate their own veneer as compared to the 5 percent that was assumed for the upp er bound estimate. Other assumptions were the same as for the upper bound estimate. Table 3

- 2 presents the underlying data, assumptions and resulting estimates for the lower bound estimate of domestic entities tha t laminate hardwood veneer.

13 Note that participants in the veneer sales interviews did think this was common for architectural woodwork and

millwork ma nufacturers, but there are only about 4,000 entities in this sector

.Market Profile of the Composite Wood Products Industry 36 

### Table 3

- 1 : High End Estimate for Entities that Laminate Hardwood Veneer

Employer NAICS None mploy

er NAICS Establishments in Affected

NAICS Entities Doing Own Veneering Description of Assumptions

Emp loye

rs N

o

n
e

m pl

o
y

e

rs E

m pl

oy

er

s N

o

n
e

m pl

o
y

er

s A ll
E

n ti ti

e

s

321211: Hardwood veneer and plywood manufacturing

321: Wood produ

ct manuf
acturi

ng 3
0
3 4
5
6 6
8 - 6
8 50 Custom panel producers and 18 engineered wood flooring producers.

321911: Wood window and door manufacturing 1

, 4
9
3 2

, 2
4
6 1

, 4
9
3 2

, 2
4
6 3

, 7
3
9 Assume all wood window and door producers do their own veneering.

321920: Wood container and pallet manufacturing 2

, 9
1
8 4

, 3
9
0 - - - Assume statutorily exempt.

321999: All other miscella neous wood product manufacturing 1

, 9
7
1 2

, 9
6
5 7
3
9 1

, 1
1
2 1

, 8
5
1 Assume 50 percent use veneer and 75 percent of those laminate the veneer themselves.

337110: Wood kitchen cabinet and countertop manufacturing 337:
Furnit

ure and relate d produ

ct manuf 9

, 7
0
1 7

, 7
6
9 4
8
5 3
8
8 8
7
3 Assume 5 percent do their own veneering.

337211: Wood office furniture manufacturing 4
5
7 3
6
6 1
7
1 1
3
7 3
0
8 Assume 50 percent use veneer and 75 percent of those laminate the veneer themselves. 337121: Upholstered household furniture 1 1 6 4 1Market Profile of the Composite Wood Products Industry 37 manufacturing acturi

ng , 6
4
1 , 3
1
4 1
5 9
3 , 1
0
8

337122 Nonupholstered wood household furniture manufacturing 3

, 4
1
4 2

, 7
3
4 1

, 2
8
0 1

, 0
2
5 2

, 3
0
5

337127: Institutional furniture manufacturing 7
7
6 6
2
1 2
9
1 2
3
3 5
2
4

337129: Wood television, radio, and sewing machin e cabinet manufacturing 2
6
5 2
1
2 9
9 8
0 1
7
9

337212: Custom architectural woodwork and millwork manufacturing 2

, 2
3
5 1

, 7
9
0 8
3
8 6
7
1 1

, 5
0
9

337215: Showcase, partition, shelving, and locker manufacturing 1

, 3
7
5 1

, 1
0
1 5
1
6 4
1
3 9
2
9

336111: Automobile manufac turing

336: Transp
ortatio

n equip

ment manuf
acturi

ng 1
8
8 9
8 - - - Assume statutorily exempt.

336411: Aircraft manufacturing 2
6
5 1
3
8 - - - Assume statutorily exempt.

336611: Ship building and repairing 6
7
4 3
5
0 - - - Assume statutorily exempt.

336612: Boa t building 1

, 1
1
7 5
8
0 - - - Assume statutorily exempt.

339920: Sporting and athletic goods manufacturing 339: Miscel laneou 1

, 8 3

, 9 9
4 1
9
6 2
9
0 Assume 5% do their own veneering.Market Profile of the Composite Wood Products Industry 38 s manuf
acturi

ng 8
1 2
5 339932: Game, toy, and children's vehicle manufacturing 6
3
9 1

, 3
3
3 3
2 6
7 9
9 Assume 5% do their own veneering.

339992: Musical instrument manufacturing
6
0
0 1

, 2
5
2 3
0 6
3 9
3 Assume 5% do their own veneering.

811420: Reupholstery and furniture repair 4

, 6
9
3 2
2

, 5
4
9 - - - Assume statutorily exempt.

Total 3
6

, 6
0
6 5
6

, 1
8
9 6

, 7
5
1 7

, 1
2
4 1
3

, 8
7
5Market Profile of the Composite Wood Products Industry 39 

### Table 3

- 2 : Low End Estimate for Entities that Laminate Hardwood Veneer

NAICS None mploy

er NAICS Establishments in Affected

NAICS Entities Doing Own Veneering Description of Assumptions

Emp loye

rs N

o

n
e

m pl

o
y

e

rs E

m pl

oy

er

s N

o

n
e

m pl

o
y

er

s A ll
E

n ti ti

e

s

321211: Hardwood veneer and plywood manufacturing

321: Wood produ

ct manuf
acturi

ng 3
0
3 4
5
6 6
8 6
8 50 Custom panel producers and 18 engineered wood flooring producers.

321911: Wood window an d door manufacturing 1

, 4
9
3 2

, 2
4
6 1

, 4
9
3 6
4
0 2

, 1
3
3 Assume all wood window and door producers do their own veneering.

321920: Wood container and pallet manufacturing 2

, 9
1
8 4

, 3
9
0 Assume statutorily exempt.

321999: All other miscellaneous wood product manufacturing 1

, 9
7
1 2

, 9
6
5 9
9 4
2 1
4
1 Assume 50 percent use veneer and 75 percent of those laminate the veneer themselves.

337110: Wood kitchen cabinet and countertop manufacturing 337:
Furnit

ure and relate d produ

ct manuf 9

, 7
0
1 7

, 7
6
9 4
8
5 2
0
8 6
9
3 Assume 5 percent do their own veneering.

337211: Wood office furniture manufacturing 4
5
7 3
6
6 1
7
1 7
3 2
4
4 Assume 50 percent use veneer and 75 percent of those laminate the veneer themselves. 337121: Upholstered household furniture 1 1 6 2 8Market Profile of the Composite Wood Products Industry 40 manufacturing acturi

ng , 6
4
1 , 3
1
4 1
5 6
4 7
9

337122 Nonupholstered wood household furniture manufacturing 3

, 4
1
4 2

, 7
3
4 1
2
8
0 5
4
9 1

, 8
2
9

337127: Institutional furniture manufacturing 7
7
6 6
2
1 2
9
1 1
2
5 4
1
6

337129: Wood television, radio, and sewing machine cabinet manufacturing 2
6
5 2
1
2 9
9 4
2 1
4
1

337212: Custom architectural woodwork and millwork manufacturing 2

, 2
3
5 1

, 7
9
0 1
1
2 4
8 1
6
0

337215: Showcase, partition, shelving, and locker manufacturing 1

, 3
7
5 1

, 1
0
1 5
1
6 2
2
1 7
3
7

336111: Automobile manufacturing

336: Transp
ortatio

n equip

m ent manuf
acturi

ng 1
8
8 9
8 0

- Assume statutorily exempt.

336411: Aircraft manufacturing 2
6
5 1
3
8 0

- Assume statutorily exempt.

336611: Ship building and repairing 6
7
4 3
5
0 0

- Assume statutorily exempt.

336612: Boat building 1

, 1
1
7 5
8
0 0

- Assum e statutorily exempt.

339920: Sporting and athletic goods manufacturing 339: Miscel laneou 1

, 8 3

, 9 1
9 8 2
7 Assume 1% do their own veneering.Market Profile of the Composite Wood Products Industry 41 s manuf
acturi

ng 8
1 2
5 339932: Game, toy, and children's vehicle manufacturing 6
3
9 1

, 3
3
3 6 3 9 Assume 1% do their ow n veneering.

339992: Musical instrument manufacturing
6
0
0 1

, 2
5
2 6 3 9 Assume 1% do their own veneering.

811420: Reupholstery and furniture repair 4

, 6
9
3 2
2

, 5
4
9 - - - Assume exempt.

Total 3
6

, 6
0
6 5
6

, 1
8
9 5

, 2
6
0 2

, 2
2
6 7

, 4
8
6Market Profile of the Composite Wood Products Industry 42 

# 4 Hardboard Manufacturers

This se ction presents a summary of the h ardboard manufacturing industry. Section 4.1 presents information on the hardboard production process. Section 4.2 describes the end uses for hardboard . Section 4.3 presents information on domestic production and international trade.



## 4.1 Production Process

Both MDF and hardboard fall into a broader category classified as “fiberboard” products , sharing many common elements of the production process. In hardboard manufacturing, as in MDF manufacturing, wood chips are softened in pressurized steam vessels, refined into wood fibers, generally mixed with a resin (and other additives), formed into mats, and pressed into panels. What differentiates hardboard from MDF manufacturing are the additional steps of heat treatment and humidification, to improve the physical characteristics of the board. Furthermore, unlike MDF, which is only manufactured u sing dry processing, hardboard can be manufactured by dry processing, wet processing, or wet/dry processing ( EPA
2000 ) . This section discusses dry process manufacturing and then wet process manufacturing; because wet/dry processing does not use resin it i s not discussed here. 14



### Figure 4

- 2 provides a diagram of the general steps in volved in dry process hardboard manufacturing ( EPA 2002 )

.

14 Wet

- process boards are made under much higher heats and pressures than dry

- process boards. The higher pressures

result in higher density panels. The higher temperatures are extreme enough to re

- polymerize the lignin resins found in the wood. It is the woods own lignin resins which bond the fibers of wet

- process boards together. "Wet

- process" boards are smooth on one side, textured on the other. A large majority of hardboard is manufactured using the wet process ( Suchsland and Woodson 1991 ).Market Profile of the Composite Wood Products Industry 43 

### The primary raw material used in the manufacture of hardboa rd is hardwood or softwood chips. 15 

### Chips can be prepared on site through the use of tree

- debarkers and wood chippers, or they can be purchased from off

- site and shipped to the facility. The chips are screened for size, re

- chipped if necessary, and then s tored. After they ha ve been cleaned, the wood chips are sent to a pressurized refiner or are softened in a digester and then sent to an atmospheric refiner, a device which uses revolving disks to mechanically pulp the fibers. 16 

### At this stage, resin (gener ally PF), wax, and other additives are mixed with the fibers. 17 

### Like MDF,

most hardboard manufacturing facilities use a blowline system to apply the adhesive, using steam turbulence from the refiner’s discharge pipe to coat the wet fiber before the materia l is dried. Most mills use single

- or multiple

- stage tube dryers to dry the resinated wood fibers. Primary tube dryers dry the fibers from around 51 percent moisture to around 20 percent moisture at temperatures ranging between 145° to 475°F; secondary t ube dryers are used to reduce the moisture to around 6 percent. Rotary dryers may also be used, but are less common. Dryers may be heated indirectly with either steam or thermal oil, or by direct firing. Having passed through the dryers, the fibers are stored in a cyclonic collector. From here they are deposited onto a continuously moving conveyor belt to be formed into mats. The mats are pre

pressed, trimmed, and loaded into the hot press, where the average press temperature is about

15 Although some plants use shaving s and sawdust as well ( EPA 2000 ).

16 Atmospheric refiners are different from pressurized refiners in that in the former steam pressure is not maintained throughout the entire refining process, while in the latter it is.

17 Wax is used to make the board more water resistant. Figure 4

- 1 : Process Flow Diagram for a Hardboard manufacturing f acility

On

- site chip preparation

Chip Washer ( optional )

Off

- site chip preparation Digester / RefinerWax

Blowline Resin
, Additives

Primary tube dryer Secondary tube dryer ( optional ) Dry fiber storage bin

Dry former Hot press Cooler ( optional )

Baking / Tempering

Oven Humidification kiln FinishingMarket Profile of the Composite Wood Products Industry 44 

### 410°F, for about 4 minutes to activate the resin and bond the fibers. Most hardboard mills use a multi

- opening batch press. The main difference between dry process MDF and dry process hardboard occurs here, as hardboard is heat treated (at temperatures up to 340°F) and h umidified, with the former used to improve the board’s dimensional stability and mechanical properties, and the latter necessary to bring the board moisture content back to equilibrium ( EPA 2000 ) . Humidification kilns are often integrated with the hardboa rd ovens ( EPA 2002 )

. Finally, the hardboard is finished and packaged for shipping ( EPA 2000 )

.

Wet Process Hardboard



### Figure 4

- 2 provides a diagram of the general steps in volved in wet process hardboard manufacturing ( EPA 2002 )

.

Like the dry process, wet process hardboard uses wood chips (hardwood or softwood) generated on site or purchased off

- site ( EPA 2000 ) . The wood chips are cleaned and steam cooked in digesters to soften the chips and release th e wood sugars. The chips are ground into fibers using a single

- or double

- disc atmospheric refiner. The fibers pass through stock washers to wash away the wood sugars, which may otherwise detrimentally affect the board’s final quality. Secondary refiner s may be used. Water, alum, resin (generally PF) and other additives are mixed with the fibers in a mixing chest. Alum is used to control the pH levels and help precipitate the bond between the resin and the fibers. The resulting slurry passes through a wet forming machine, a moving wire screen where the water drains first by gravity and then suction. Figure 4

- 2 : Process Flow Diagram for a Hardboard manufacturing facility



### On

- site chip preparation
Steam digester ( optional )
Off

- site chip preparation Refiner

Washer ( optional ) Mixing chest

Wet former Water
, additives

Fiberboard Board Dryer

FinishingMarket Profile of the Composite Wood Products Industry 45 

### At some plants the forming machine separates the material into a top layer (overlay) and bottom layer (substrate); the overlay is further refined to ensur e a smoother finish. The fiber mats are transported to a hot press, typically a multi

- opening, steam

- heated batch press. The mats are pressed at around 390°F for about 8 minutes. As with the dry process, at this stage the wet process hardboard may be he at treated and humidified. Finally, the hardboard is finished and packaged for shipping ( EPA 2000 )

.



## 4.2 Product Uses

Approximately 94 percent of all reported basic hardboard shipments were value

- added. Door skins (moulded and flush) comprised the greatest sh are and coated panels comprised the smallest share of these shipments. Specifically, 57.6 percent of shipments were door skins, 18.0 percent pre

- finished paneling, 16.1 percent coated panels, and the remaining 8.3 percent not specified ( CPA 2006a )

.

The mo st significant downstream application of hardboard during 2005 was textured siding, with 35 percent o r 282 million square feet (3/4” basis) of total North American
hardboard shipments dedicated to this application. The second most frequently applied use o f hardboard was door components, capturing 28 percent or 220 million square feet of total hardboard shipments. Exterior trim accounted for a significant 18 percent of shipments, followed by prefinished paneling at 9 percent of shipments. The remaining ap plications (smooth siding and retail) each accounted for less than 3 percent of shipments ( CPA 2006a )

.



## 4.3 Domestic Production and International Trade

4.3.1 Domestic Production

North American hardboard shipments totaled 4.79 billion square feet (1/8” basis) in
200 5, an increase of 3.8 percent from 2004. However, hardboard shipments have declined steeply since 2005, and were reported to be only 2.5 billion square feet (1/8” basis) in 200 9 according to a n article in PanelWorld 2010b citing a CPA report.

4.3.2 Internation al Trade

Trade data specific to hardboard were not available, so Table 4

- 1 presents the quantities and values of fiberboard imports and exports, excluding MDF, by the country of origin or destination. Canada is the largest tradin g partner by a wide margin, but China, Germany, and Brazil are also significant sources of imports.Market Profile of the Composite Wood Products Industry 46 

### Table 4

- 1 : Hardboard and High Density Fiberboard: Quantity and Value of International Trade by Country of Origin or Destination, 2009

Country Quantity (Cubic Meters) Percent of Total Quantity Customs Value ( thousands,

2009$ ) Percent of Total Value
Imports

Canada 137,435 27.10% $ 117,903 43.59%

China 137,191 27.05% $ 46,253 17.10%
Germany 91,392 18.02% $ 34,2 05 12.65%

Brazil 74,965 14.78% $ 21,174 7.83%

All Others 66,244 13.06% $ 50,954 18.84%
Total 507,227 100.00% $ 270,491 100.00%

Exports
Canada 295,629 82.66% $ 80,041 79.33%

Mexico 13,834 3.87% $ 4,356 4.32%

France 6,632 1.85% $ 3,040 3.01%

Australia 3,18 1 0.89% $ 2,251 2.23%

All Others 38,360 10.73% $ 11,207 11.11%
Total 357,636 100.00% $ 100,895 100.00%

Source: U.S. ITC 2010 (HTS Codes: 4411.92, 4411.93 )



## 4.4 Comparisons Between Hardboard and MDF

The ANSI standards for hardboard are : “Basic Hardboard” (ANS I A135.4

- 2004), “Prefinished Hardboard Paneling” (ANSI A135.5

- 2004), or “Hardboard Siding” (ANSI A135.6

- 2006). Basic hardboard is a panel manufactured primarily from inter

- felted lignocellulosic fibers which are consolidated under heat and pressure in a h ot

- press to a density of 500 kg/m3 (31 lbs/ft3) or greater. Other materials may be added to improve certain board properties, and these panels are available with either one or two smooth sides ( CPA 2004a ) . Prefinished hardboard paneling is paneling manuf actured meeting certain requirements for the finishing of the product and using a hardboard substrate meeting the described standards of basic hardboard ( CPA 2004b )

. H ardboard siding is a wood

- based product used for exterior wall covering. It is manufact ured as panel or lap sidings in smooth and textured surfaces, unfinished, factory primed for painting, or prefinished ( CPA 2006b )

.

The ANSI standard for MDF is ANSI A208.2

- 2009. MDF density is typically between 500 kg/m3 (31 lbs/ft3) and 1000 kg/m3 (62 lb s/ft3) ( CPA 2002 )

. Fiberboards are categorized into three main categories by density: medium density fiberboard (MDF), high density fiberboard (HDF or thin MDF), and hardboard . As can be seen from the ANSI standards given above, board density does not pro vide a clear distinction between MDF and hardboard

. Furthermore, different sources report different density thresholds for MDF and hardboard, although this information may not represent products produced in the U.S

. 18

18 Kües 2007 reports that MDF typically has density between 600 kg/m3 and 900 kg/m3, that thin MDF is expected to

have a density on the higher end of this range, and that hardboard typically has a higher density of between 900

.Market Profile of the Composite Wood Products Industry 47 

### Fiberboard can be manufactured using a wet process, a dry process, or a wet/dry

process. Wet

- and dry

- formed fiberboard processes differ drastically from one another, although many of the initial processing steps are common to both. Although there are significant differences between wet and dry fiberboard processing in practically all steps, beginning with cooking and refining, a more visible and fundamental differentiation begins with the forming and carries through the pressing operation ( Suchsland and Woodson 1991 )

.

4.4.1.1 Wet

- Process Boards



### The term "wet

- process" refers to one of the two methods used to make wooden fiberboards. (The other is the "dry

- process".) Wet

- process hardboard uses large amounts of water in the process, similar to the manufacture of insulating board. Fiberized wood and wa ter are made into a slurry. The slurry is formed into sheets on belts or screens, much as in the process of paper

- making. After some of the water is removed, the wet sheets are put into presses where, under extreme heat and pressure, the remainder of the w ater is removed and the fibers are compressed into boards. Wet

- process boards are made under much higher heats and pressures than dry

- process boards. The higher pressures result in higher density panels. The higher temperatures are extreme enough to re

- pol ymerize the lignin resins found in the wood. It is the wood ’ s own lignin resins which bond the fibers of wet

- process boards together. "Wet

process" boards are smooth on one side, textured on the other. A large majority of hardboard is

manu factured using t he wet process ( Maloney 1996 )

.

4.4.1.2 Dry

- Process Boards



### The term "dry

- process" refers to the second method of producing wooden fiberboards

. Dry wood fibers are mixed with strong and stable synthetic resins. Piles, or "mats", of this mixture, usually several fee t thick, are placed in massive presses. The mats are compressed under high heat and pressure. The resins melt, binding the fibers together into hard, dense panels. The fibers in the panels are tightly interlocked and oriented randomly in three dimensions. The panels are prized for their internal bond strength, dimensional stability, and resistance to warping, as well as their long

- term durability. All MDF and HDF production utilizes the "dry

- process", as does a small percentage of hardboard production

. Dry

- process hardboard can be confused with thin MDF because the processes used for each are quite similar. The board usually has poorer properties under wet conditions than does wet

- process hardboard because hemicelluloses 19 

### are retained in the furnish rather than partially washed away ( Maloney 1996 )

.

4.4.1.3 Wet/Dry

- Process Boards



### Production of wet/dry process hardboard includes pulping of softwood or hardwood chips, wet forming, drying, pressing, heat treatment, humidification and finishing. Wet/dry

process hardboa rd production is similar to fiberboard production until the pressing step of the process is reached. The pressing, heat treatment, and humidification steps in wet/dry

kg/m3 and 1,200 kg/m3 English et al. 1994 state that MDF typically has densities ranging from 600

– 800 kg/m3, and hardboard density ranges from 500

- 1,450 kg/m3. Gardziella et al. 2000 has an MDF range of 600

- 800 kg/m3 and hardboard range of 900

- 1200 kg/m3. Hudso n Highland 2004 defines MDF as less than roughly 960 kg/m3, thin MDF
as 960

- 1,100 kg/m3, and hardboard as greater than 1,100 kg/m3.

19 A constituent of woods that is, like cellulose, a polysaccharide, but less complex and easily hydrated.Market Profile of the Composite Wood Products Industry 48 

### hardboard production are similar to the same steps in wet hardboard production. No resi n is used in the production of wet/dry hardboard ( EPA 2002 )

.

As described above, hardboard products can be manufactured through dry processing, wet processing, or wet/dry processing. Resin usage in hardboard and other fiberboard products varies by manufac turing process. Phenol

- formaldehyde (PF) resins are typically used in both

wet

- process and dry

- process hardboard manufacturing; they are added to the wood fiber during or immed iately following refining. No resin is used in the production of wet/dry hard board ( EPA 2002 )

.Market Profile of the Composite Wood Products Industry 49 

# 5 Reconstituted Wood Products and Hardwood Veneer and Plywood Manufacturing Industry

This section presents information on the value of shipments, international trade, industry organization, and market outlook for the broader Reconstituted W ood Products Manufacturing and Hardwood Plywood and Veneer Manufacturing industries as defined by the North American Industry Classification System (NAICS). These broader industry categories include some manufacturers that are not subject to any requiremen ts under the proposed TSCA Title VI rule. North American Industry Classification System (NAICS) codes for the potentially affected manufacturing industries were indentified through a review of information reported by the United States Census Bureau

. Table 5

- 1 provides a list of the relevant NAICS codes, their descriptions, and cross

- referenced product categories.

In addition to hardwood plywood, the Hardwood Plywood and Veneer Manufacturing industry (NAICS 321211) includes manufa cturers of the hardwood veneers. These veneers are typically not manufactured at the same facilities that manufacture hardwood plywood. Facilities that only manufacture veneer would not be subject to the proposed TSCA Title VI rule.

The Reconstituted Woo d Product Manufacturing industry (NAICS 32121 9 ) includes manufacturers of structural composite panels which are not regulated under the TSCA Title VI rule (including chipboard, flakeboard, insulation board, oriented strandboard, and waferboard)

. This indu stry category also includes manufacturers that produce finished panels from regulated stock panels (e.g., manufacturers that apply high pressure laminates, thermally fused melamine, light weight basis papers, decorative foils, film overlays, etc. ). Such m anufacturers would be regulated as fabricators under the proposed TSCA Title VI rule, and thus subject to the recordkeeping and labeling requirements , but the finished panels are not subject as such to the emissions standards in TSCA Title VI

.Market Profile of the Composite Wood Products Industry 50 

### Table 5

- 1 : NAICS Codes, Descriptions, and Cross

- Referenced Product Categories

Product Description NAICS Cross

- Referenced Product Categories

Hardwood Veneer and Plywood Manufacturing 321211 Hardwood plywood composites m anufacturing Hardwood veneer or plywood manufacturing Panels, hardwood plywood, manufacturing Plywood, faced with nonwood materials, hardwood, manufacturing Plywood, hardwood faced, manufacturing Plywood, hardwood, manufacturing
Prefinish ed hardwood plywood manufacturing Veneer mills, hardwood

Reconstituted Wood Products 321219 Board, bagasse, manufacturing Board, particle, manufacturing Chipboard (i.e., particle core, wood chip face), manufacturing Compression modified wood m anufacturing Densified wood manufacturing Fiberboard manufacturing Flakeboard manufacturing Hardboard manufacturing Insulation board, cellular fiber, manufacturing Lath, fiber, manufacturing MDF (medium density fiberboard) manufacturin g Oriented strandboard (OSB) manufacturing OSB (oriented strandboard) manufacturing Particleboard manufacturing Reconstituted wood panels manufacturing Reconstituted wood sheets and boards manufacturing Strandboard, oriented, manufacturin g Waferboard manufacturing

Sources: U.S. Census 2008



## 5.1 Value of Shipments

This section presents information on the value of shipments by domestic manufacturers. Over 90 percent of the $3.4 billion in shipments for the Hardwood Veneer and Plywood
Manuf acturing industry is associated with hardwood veneer and plywood (see Table 5

- 2 ). These shipments include both hardwood veneers and the hardwood plywood products produced using the hardwood veneers, whereas only the hardwood plyw ood manufacturing operations would be directly affected by the proposed rule. Particleboard shipments accounted for about 22 percent of the $6.7 billion in shipments for the Reconstituted Wood Product Manufacturing industry (see T able 5

- 2 ). The value of MDF shipments was not available from the U.S. Census data.Market Profile of the Composite Wood Products Industry 51 

### Table 5

- 2 : Value of Shipments by Domestic Manufacturers

NAICS Description NAICS Shipment Type Value of Shipments (thousan ds, 2007$)

Hardwood Veneer and Plywood Manufacturing 321211 Hardwood veneer and plywood manufacturing $3,155,728
Softwood veneer and plywood manufacturing $97,722 Wood Chips $12,548 Other secondary products $12,963
Resales

- Sales of products bought/sold without further mfg $71,634
Contract work

- Receipts for work done for others on their materials $27,831 Miscellaneous receipts, including receipts for repair work, and scrap/refuse sales $12,670
Total Value of Shipments $3,391,096

Re constituted Wood Products Manufacturing 321219 Particleboard $1,453,310
Cellulosic fiberboard (insulating board) $182,459 Hardboard products $643,322
Other reconstituted wood products $4,267,338
Resales

- Sales of products bought/sold
without further mfg $84,243 Other secondary products and other secondary receipts $88,435
Total Value of Shipments $6,719,107

Sources: U.S. Census 2010f



## 5.2 Production Costs

This section discusses the costs of production associated with the manufacture of

com posite wood products. Data from the 2007 Economic Census are used to estimate an average cost

- to

- shipment ratio for the potentially affected NAICS groups.

Table 5

- 3 uses data drawn from the 2007 Economic Census to summarize ann ual costs and shipments by NAICS code in 2007

. From these data , it is possible to estimate an industry

wide ratio of production costs (an aggregation of the cost of materials, capital expenditures, and payroll costs) to the o verall value of shipments (VOS ), which provide s an approximate measure of how much cash, at a gross level, the industries are generating to cover all operating expenses,Market Profile of the Composite Wood Products Industry 52 

### use for capital investment, and provide a return to owners. 20 

### A higher ratio of costs to shipments could indicate a greater vulnerability to regulatory impacts

. As indicated in Table 5

- 3

, the cost to shipment ratio is about 83 percent for these industries

.

Table 5

- 3 : Summary of Annual Costs and Sh ipments, 2007 (thousands, 2007$)

NAICS NAICS Description Industry Shipments Cost of Materials Capital Expenditure Payroll Ratio
Costs t Shipme

321211 Hardwood Veneer and Plywood Manufacturing $3,425,676 $2,205,161 $71,100 $594,847 8

321219 Reco nstituted Wood Products $6,896,468 $4,445,566 $327,970 $890,935 8

Sources: U.S. Census 2009c



### Table 5

- 4 presents the material costs by material type for the Hardwood Veneer and Plywood Manufacturing and Reconstituted Wood Prod uct Manufacturing industries. Veneers account for the largest share of the materials costs for the Hardwood Veneer and Plywood Manufacturing industry. Note that glues and adhesives appear to account for only a very small percentage of the Hardwood Veneer and Plywood Manufacturing material costs, but these costs are likely to make up a higher percentage of the materials cost for hardwood plywood manufacturers because hardwood veneer manufacturers do not use glues or adhesives in their manufacturing process.

Wood materials account for the largest share (33 percent) of the material costs for the Reconstituted Wood Product Manufacturing industry. Resins and wax material costs account for about 25 percent of the total materials costs for the industry.

20 While the costs to shipment ratio does indicate the proportion of revenues received for the goods produced that are

associated with production expenses (materials, capi tal expenditures, and payroll), it does not reflect other operating expenses such as electrical costs, e mployment expenses, taxes, interest, or depreciation. Nor does it indi cate whether the expenses are variable or fixed

.Market Profile of the Composite Wood Products Industry 53 

### Table 5

- 4 : Material Costs by Materials Type (thousands, 2007$)

Material Type Materials
Cost Percent of Materials

Cost Hardwood Veneer and Plywood Manufacturing Hardwood logs and bolts $331,471 16.1% Stumpage and Softwood logs and bolts $41,804 2.0% Logs and Bolts Subtotal $373,275 18.1%
Hardwood veneer $626,244 30.3%
Softwood veneer $187,062 9.1%
Veneer Subtotal $813,306 39.4%
Glues and adhesives $49,565 2.4% Hardwood plywood $158,002 7.7% Particleboard (wo od) $69,367 3.4% Medium density fiberboard (MDF) $67,892 3.3%
Panel Subtotals $295,261 14.3%
Other Materials $532,502 25.8%
Total $2,063,909 Reconstituted Wood Product Manufacturing Logs and bolts $446,597 11.8% Pulpwood $376,893 9.9% Chips, slabs , edgings, sawdust, and other wood waste $316,508 8.4% Planer shavings $125,569 3.3%
Wood Materials Subtotal $1,265,567 33.4%
Urethane adhesives $120,261 3.2%
Urea and melamine resins $390,526 10.3%
Phenolic and other tar acid resins $183,297 4.8%

Pe troleum wax $99,648 2.6% All other plastics resins consumed in the form of granules,

etc. $173,912 4.6%
Resins and Wax Subtotal $967,644 25.5% Paints, varnishes, stains, lacquers, shellacs, japans, etc. $41,633 1.1% Overlays, vinyl and paper $148,232 3 .9%
Finishes Subtotals $189,865 5.0%
Hardboard $160,646 4.2% Medium density fiberboard (MDF) $146,384 3.9% Particleboard (wood) $211,734 5.6%
Panel Subtotals $518,764 13.7%
Other Materials $846,295 22.3%
Total $3,788,135

Sources: U.S. Census 2009d



## 5.3 International Trade

Table 5

- 5 presents data on the U.S. imports and exports of hardwood veneer and plywood and reconstituted wood products for the 2009 top five trading partners in each category. Again, this data does not inclu de composite wood imported or exported as part ofMarket Profile of the Composite Wood Products Industry 54 

### fabricated goods such as furniture. Canada is the top 2009 trading partner for exports of both products and for imports of Reconstituted Wood Products. China has been the largest source of Hardwood Veneer and Plywood imports since 2005 and the second largest source of reconstituted wood product imports since 2007.

Table 5

- 5 : International Trade in Hardwood Veneer and Plywood and Reconstituted Wood Panel P does not include trade as part of fabricated goods
Country 2000 2001 2002 2003 2004 2005 Hardwood Veneer and Plywood Imports
China $34 $50 $105 $168 $429 $613
Canada $382 $354 $377 $349 $407 $422
Indonesia $232 $193 $212 $189 $213 $194
Russia $86 $101 $127 $113 $166 $162 Malaysia $108 $94 $129 $118 $207 $174
Other
countries $300 $265 $315 $326 $431 $370
Total $1,143 $1,057 $1,265 $1,262 $1,853 $1,935
Hardwood Venee r and Plywood Exports
Canada $151 $147 $168 $184 $191 $188

Mexico $26 $19 $28 $23 $35 $38 Germany $72 $54 $49 $65 $63 $59 Spain $43 $41 $46 $41 $43 $ 45 Italy $18 $23 $24 $25 $24 $27
Other
countries $157 $142 $159 $146 $184 $157
Total $467 $425 $474 $485 $539 $514
Reconstitu ted Wood Products Imports
Canada $1,714 $1,488 $1,560 $2,488 $3,450 $3,210
China $1 $2 $1 $3 $13 $56
Chile $47 $51 $59 $89 $134 $143 Germany $84 $130 $125 $97 $187 $201 Spain $11 $9 $42 $45 $102 $119
Other
countries $200 $201 $255 $382 $508 $614
Total $2,057 $1,882 $2,042 $3,104 $4,395 $ 4,343 Reconstituted Wood Products Exports
Canada $169 $137 $152 $146 $189 $201

Mexico $78 $94 $99 $84 $79 $82

Russia $0 $0 $1 $1 $1 $1

France $6 $7 $5 $4 $4 $4
United Kingdom $38 $33 $12 $9 $9 $9
Other
countries $68 $50 $42 $32 $37 $35
Total $360 $322 $311 $275 $318 $331 * 2010 data is for January through September

. Sources: U.S. ITC 2010



### The value of imports of Hardwood Veneer and Plywood was equal to nearly 75 percent of the value of shipments by domestic manufacturers in 2007 (see Table 5

- 3 and Table 5

- 5 ). TheMarket Profile of the Composite Wood Products Industry 55 

### value of imports of reconstituted wood products was equal to about 35 percent of the value of shipments by domestic manufacturers in 2007 (see Table 5

- 3 and Table 5

- 5 ). The values of Hardwood Veneer and Plywood and Reconstituted Wood Product exports were about 17 percent and 6 percent, respectively, of the value of shipments by domestic manufacturers in 2007 (see Table 5

- 3 and Table 5

- 5 ). Figure 5

- 1 presents the trends in the imports for consumption of reconstituted wood products and hardwood veneer and plywood ov er time, by top 2009 trading partners.Market Profile of the Composite Wood Products Industry 56 

### Figure 5

- 1 : Imports of Panel products for Consumption 2000

- 2010, by Country ; does not include imports as part of fabricated goods Hardwood Veneer and Plywood

$0 $200 $400 $600 $800 $1,000 $1,200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) China

Canada

Indones

Russia Malaysi

Other co



### Reco nstituted Wood Products

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) Canada

China

Chile

German Spain

Other c

Source: 

### U.S. ITC 2010Market Profile of the Composite Wood Products Industry 57 

## 5.4 Industry Organization

The following section describes the org anization of the Hardwood Veneer and Plywood Manufacturing and Reconstituted Wood Products Manufacturing industries. Information is presented o n:

• The industry structure

• The characteristics of the manufacturing facilities

• The characteristics of the firms that own the manufacturing facilities

In addition, this section provides detailed information about facilities and firms that are key inputs to t he economic analysis.

5.4.1 U.S. Census Data on Industry Structure

5.4.1.1 Specialization and Market Concentration



### To determine the extent to which Census data on the Hardwood Veneer and Plywood Manufacturing and Reconstituted Wood Products Manufacturing industries adeq uately describe the manufacturers of composite wood products , industry

- wide specialization and coverage ratios are examined. Products shipped from one establishment to another with in the sa me industry are co nsidered “primary”, while all other products shi pped by the establishment are considered “secondary”. T he primary products specialization ratio is the ratio of total primary product shipments to total product shipments (primary and secondary) for all establishments classified in the industry. The cove rage ratio indicates the extent to which the primary industry products are manufactured by establishments classified in that industry. The coverage ratio is the ratio of primary products shipped by the establishments classified in the industry to the tota l shipments of these products shipped by all establishments classified in all industries. Table 5

- 6 provides specializ ation and coverage ratios for the two potentially affected NAICS industries.

Table 5

- 6 : Primary Products Specialization and Coverage Ratio, by NAICS, 2007

NAICS Description Primary Product Specialization

Ratio (max value 100) Coverage Ratio (max value 100)

321211 Hardwood Veneer and Plywood Manufacturing 96 99

3 21219 Reconstituted Wood Products 99 99

Source: U.S. Census 2009c



### As indicated in Table 5

- 6 , both NAICS codes have specialization and c overage ratios above 95. Ratios this high imply that most establishments with in these NAICS codes are h ighly specialized, and that product shipments tend to originate in establishments with in these NAICSMarket Profile of the Composite Wood Products Industry 58 

### codes. Therefore, the Census data on these NAICS provide information on the primary production of facilities engaged in plywood and wood compo site manufacturing.

Table 5

- 7 presents market co ncentration ratios and Herfindahl

- Hirschman (HH) index values for the potentially affected NAICS codes in 2002. M

- firm concentration ratios are equal to the sum of the market share s for the largest m number of firms in the industry; the higher the ratio the more concentrated the industry. HH index values equal to the sum of the squares of the market shares for the 50 largest firms in the industry ; t he higher the HH index, the more concentrated the indus try

.

Table 5

- 7 : Concentration Ratios by NAICS Code, 2002

Number of Companies in Industry Percent of value of industry shipments shipped by the largest (in terms of shipment value) Herf indahl

Hirschman Index for 50

largest companies 4 Companies 8 Companies 20 Companies 50 Companies

321211

- Hardwood Veneer and Plywood Manufacturing
304 33.1 % 44.8 % 61.5 % 77.4 % 468.2
321219

- Reconstituted Wood Product Manufacturing
180 35.2 % 50.5 % 73.1 % 90.6 % 497.9 Note: A market is generally considered highly concentrated if the 4

- firm concentration ratio is greater than 50 percent. The United States Department of Justice use an HH value of 1,000 as a ceiling for market competitiveness; an HH be tween 1,000 and 1,800 is considered to be moderately concentrated; and anything above 1,800 is considered to be highly concentrated (U.S. DOJ 1997).
Source: U.S. Census 2006



### Table 5

- 7 indicates that neither the hardwood veneer a nd plywood manufacturing industry (NAICS 321211) or the reconstituted wood products industry (NAICS 321219) had 4

- firm ratios above 50 (33.1 and 35.2 respectively) or HH index values over 1000 (468.2 and 497.9 respectively) and so cannot be considered unco mpetitive by these standards (U.S. Census Bureau 2006).

5.4.1.2 Vertical and Horizontal Integration



### The high specialization and coverage ratios presented in the preceding section indicate that the Hardwood Veneer and Plywood Manufacturing and Reconstituted Wood Pr oducts Manufacturing industries do not have a high degree of vertical integration. Vertical integration is when companies maintain operations at multiple levels of the supply chain. For example, a company that harvests logs, manufactures veneers, adhesiv es, hardwood plywood panels, and hardwood plywood cabinets would be vertically integrated. A vertically integrated industry would tend to have lower specialization and coverage ratios since vertical integration implies less specialization in a single produ ct type.

Horizontal integration is when a company expands in the same industry and stage of the production line. Thus, a horizontally integrated industry is characterized by fewer firms and less competition. The HH index values presented in the preceding s ection indicate that the Hardwood Veneer and Plywood Manufacturing and Reconstituted Wood Product Manufacturing industries are not uncompetitive and therefore are not highly horizontally integrated.Market Profile of the Composite Wood Products Industry 59 

### 5.4.1.3 Production Capacity and Utilization



### Capacity utilization rates are the ratio of observed output to maximum potential output. Table 5

- 8 p rovides capacity utilization rates for the potentially affected NAICS codes, all wood products manufacturing (NAICS 321), and all manufacturing industr ies (NAICS 31

- 33) between
200 0 and 20 09

.

Table 5

- 8 : Full Production Capacity Utilization Rates by NAICS Codes, Fourth Quarters, 2000

- 20

NAICS Description 2000 2001 2002 2003 2004 20

3212 Veneer, Plywood, and Engineered Wood Product Manufacturing 75 % 66 % 66 % 76 % 78 % 80

321 Wood Product Manufacturing 69 % 66 % 67 % 70 % 73 % 70

31

- 33 All Manufacturing Industries 71 % 64 % 63 % 64 % 70 % 71

Note: A capacity utilization rate under 100 indicates that, for a given existing capital stock, a firm or industry has the po tential for greater output without in Sources: U.S. Census 20 02

- 2010



### As indicated in Table 5

- 8

, the 2009 capacity utilization rate for the Veneer, Plywood, and Engineered Wood Product Manufacturing industry was 4 2 percent . The average was 49 percent for all wood product manufacturing (NAI CS 321) and 6 4 percent for all manufacturing industries (NAICS 31

- 33). The veneer and plywood manufacturing industry (NAICS 3212) experienced a capacity utilization rate decrease of 44 percent between 2000 and 2009. Over the same period, the wood product manufacturing industry (NAICS 321) and the manufacturing industry overall (NAICS 31

- 33) saw decreases in capacity utilization rates of 29 percent and 10 percent, respectively.

Figure 5

- 2 presents a graphical representation of prod uction capacity utilization rates between 2007 and 2010 for the potentially affected NAICS groups, as well as all wood product manufacturing and all manufacturing industries.Market Profile of the Composite Wood Products Industry 60 Figure 5

- 2 : Full Production C apacity Utilization Rates, Quarterly, 2007

- 2010

0 10 20 30 40 50 60 70 80 90

2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 

### QuarterCapacity Utilization % Veneer, plywood, and engineered wood product mfg.

Wood Product Manufacturing

All manufacturing

Source : U.S. Census 2002

- 2010



### Table 5

- 9 provides a breakdown of capital expenditures for the potentially affected
NAICS in 2008

. The data are broken down into total capital expe nditures for permanent additions and major alterations to establishments, as well as new and used machinery and equipment for replacement or addition to a plant’s capacity, which is divided into 1) automobiles, trucks, etc. for highway use; 2) computer and data processing equipment; and, 3) all other machinery and equipment.

ary of Capital Expenditures (New and Used) ( t housands
, 2007 $ )

NAICS scription Buildings and Other
Structures Ma chinery and Equipment

Autos, Trucks, etc. for Highway Use Computer and Data Processing Equipment All Other Machiner Equipment

Value Percent Value Percent Value Percent Value

dwood eer and wood nufacturing $11,549 16.24% $3,913 5.50% $1,935 2.72% $53,703

onstituted od Product nufacturing $22,778 6.95% $6,478 1.98% $6,673 2.03% $292,041

9c



### As indicated in Table 5

- 9 , total capital expenditures in 2008 ranged from about $ 71 million in the hardwood veneer and plywood manufacturing industry to about $ 328 million dollars in the reconstituted wood products industry. Expenditures for other mac hinery and equipment accounted for the largest proportion of these totals, ranging from 76 percent in theMarket Profile of the Composite Wood Products Industry 61 

### hardwood veneer and plywood manufacturing industry to 89 percent in the reconstituted wood product manufacturing industry ( U.S. Census 2002

- 2010 ).

Emp loyment



### Table 5

- 10 summarizes the employment statistics for the potentially affected NAICS in
2007 . As indicated in Table 5

- 10 , the potentially affected NAICS groups were composed of 566 establishments, e mployed nearly 39 thousand people (or about 69 employees per establishment), and had total payroll amounting to approximately 1. 5 billion dollars in 2007

. The hardwood veneer and plywood manufacturing industry had the most establishments ( 304 ), while the reconstituted wood product manufacturing industry employed the most people ( 20,426 ) and had the highest payroll ( about $ 891 million) ( U.S. Census 2009c )

. Note that these NAICS groups include establishments (such as veneer manufacturers and oriented strand board manufacturers) that do not manufacture hardwood plywood, MDF or particleboard, and that would not be defined as panel producers under the proposed TSCA Title VI rule.

Table 5

- 10 : Summary of Employment Statistics, By NAICS ( 2007 )

NAICS NAICS Description Total Establishments Total Employees Average Employees
Per Establishment Total Payroll ( thousands,

2008$ )

321211 Hardwood Veneer and Plywood Manufacturing 304 18,501 60.9 $59 4,847

321219 Reconstituted Wood Product Manufacturing 262 20,426 78 $890,935

Total 566 38,927 68.8 $1,485,782

Note that these NAICS codes include establishments that do not manufacture hardwood plywood , MDF, or particleboard, and that would not be defined as panel producers under the proposed TSCA Title VI rule.
Source: U.S. Census 2009c



### 5.4.2 U.S. Census Data on Firm Characteristics

Several factors will likely be of importance in determining the distribut ion of impacts on companies generated by the proposed regulation. Size may play a role in a company’s ability to absorb an increase in compliance costs. Ownership is a second factor that may play a role. Because firms have different legal and financial g uidelines based on ownership, their approaches to complying with the proposed regulation may vary. Lastly, the overall financial condition of the various composite wood industries of concern is assessed, attempting to determine the industry’s ability to w ithstand adverse conditions.

5.4.2.1 Size Distribution

United States Census Bureau



### Table 5

- 11 summarizes establishments in the composite wood product manufacturing industries by the number of employees.Market Profile of the Composite Wood Products Industry 62 

### Table 5

- 11 : Number of Establishments by Employee Size Category, 2007

NAICS Description Establishment Employee Size Category T Estab 1 to 19 20 to 99 100+ Value % Value % Value %

321211 Hardwood Veneer and Plywood Manufa cturing 136 45% 114 38% 54 18%

321219 Reconstituted Wood Product Manufacturing 79 30% 90 34% 93 35%

Note that these NAICS codes include establishments that do not manufacture hardwood plywood, MDF, or particleboard, and that would not be defined as panel produ under the proposed TSCA Title VI rule.

Source: U.S. Census 2009c



### 5.4.2.2 Ownership for Wood Products Manufacturing Industry



### Different forms of firm ownership are associated with different set s of legal and financial characteristics that may i nfluence a firm’s re gulatory compliance strategy . The legal form of ownership impacts the cost of capital, availability of capital, and effective tax rate faced by the firm. Debt

- equity issues for these firm types will play a role in financing capital

- in tensive controls. Firm ownership is generally one of three types:

• Sole proprietorships (companies with a private single

- owner)

• Partnerships (non

- corporate firms with more than one owner)

• Corporations (publically or privately owned companies formed through incorporation)

Table 5

- 12 provides summary information on manufacturers in the wood product manufacturing industry, by type of firm ownership. While data aren’t available at the 5

- or 6

- digit NAICS code level , the tab le provides a general sense of the distribution of ownership types

, assuming that the ownership structure for the two industries profiled is similar to that of the overall wood product manufacturing industry.Market Profile of the Composite Wood Products Industry 63 

### Table 5

- 12 : Summary Information for Wood Product Manufacturing (NAICS 321) by Type of Firm Ownership, 200 7

Legal Form of Organization Companies All Establishments Number of employees Total Value of Shipments ( thousands,

2007$ ) Corporate Ownership Subtotal, Corpora te 10,670 12,574 464,685 $ 90,998,636 Noncorporate Ownership
Individual Proprietorship 2,337 2,343 10,000

- 24,999 Withheld Partnership 1,809 1,950 43,706 $ 8,505,000 Other noncorporate and unknown 1 1 0

- 19 Withheld Subtotal, Noncorporate 4,147 4,294 59,214 $ 10,713,281 Total 14,817 16,868 523,899 $ 101,711,917
Sources: U.S. Census 2010i



### As indicated in Table 5

- 12 the majority (around 72 percent ) of the companies in the wood product manufacturing industry are organized as co rporations ; the remainder are non

corporate, of which 16 percent are individua l proprietorships, 12 percent are partnership s , and the remaining companies are classified as “ other non

- corporate and unknown ”

.

5.4.3 Industry

- Wide Indicators of Financial Condition

T he financial condition of an industry’s firms will affect the incidence of cost impacts associated with complying with the proposed regulation. While information necessary to determine which specific firms might experience adverse impacts is not available , one can examine industry

- wide indicators of financial condition.

5.4.3.1 Profitability Ratios



### The return on sales ratio, also known as the net profit margin, is an indicator of a firm’s ability to withstand adverse conditions such as falling prices, rising cost s, and declining sales . It is calculated by dividing net operating profit before interest and taxes by annual net sales.

Return on assets is calculated by dividing a firm’s net profit before taxes by its total assets. This ratio is a key indicator of both profitability and operating efficiency , as it compar es operating profits to the assets available to earn a return. C ompanies that use their assets efficiently will have a relatively higher return on assets than those firms that do not use their assets effi ciently.

The return on equity shows the profitability of the company’s operations as a percentage of stockholders’ equity

, before income taxes, and is calculated by dividing net profit for the year, before taxes
, by stockholders’ equity at the end of the p eriod

.Market Profile of the Composite Wood Products Industry 64 

### 5.4.3.2 Solvency Ratios



### The current ratio is calculated by dividing a firm’s current assets by its current liabilities. This is a measure of liquidity that gauges the ability of a company to cover its short

- term liabilities. The standard guideline for fina ncial health is two ( Dun & Bradstreet n.d. ) . The quick ratio is slightly different than the current ratio, because it does not include inventories, advances on inventories, marketable securities, or notes receivable. The quick ratio measures the protection afforded creditors in cash or near

- cash assets. Any time this ratio is one or greater, the firm is said to be in a liquid condition ( Dun & Bradstreet n.d. )

. The quick ratio shown in Table 5

- 13 compares total cash , government sec urities, and other liquid securities to total current liabilities.

Table 5

- 13 shows various measures of the financial condition of the wood products industry.

Table 5

- 13 : Indicators of Financial Condition for the Wood Product Industry, Quarterly 2009

- 2010

2
0
0
9 Q
1 2
0
0
9 Q
2 2
0
0
9 Q
3 2
0
0
9 Q
4 2
0
1
0 Q
1 2
0
1
0 Q
2

Return on Sales - 1

. 7
3 % 2

. 2
1 % 4

. 5
0 % 2

. 0
4 % 2

. 3
3 % 5

. 5
2 %

Return on
Assets - 4

. 5
9
% - 1

. 0
5 % 1

. 0
0
% - 3

. 7
8
% - 0

. 2
7 % 2

. 6
7 %

Return on Equity - 1
3

. 1
3
% - 3

. 2
5 % 2

. 9
2
% - 1
1

. 5
8
% - 0

. 8
5 % 8

. 1
4
%

Current
Ratio 3

. 2
0 3

. 3
0 3

. 3
0 3

. 4
7 3

. 3
9 3

. 2
8

Quick
Ratio 1

. 6
8 1

. 7
6 1

. 7
6 1

. 8
4 1

. 8
0 1

. 7
0

Sources: U.S. Census 2009aMarket Profile of the Composite Wood Products Industry 65 

### The data shown in Table 5

- 13 indicate tha t, with the exception of the t hird quarter of
2009 and the second quarter of 2010 , the wood product manufacturing industry has experienced negative returns on assets and equity. This is the result of losses of income in the three other quarters of 2009 and the first quarter of 2010. Th ese values, ranging from

- 1.73 to 5.52 percent for return on sales,

- 4.59 to 2.67 percent for return on assets, and

- 13.13 to 2.67 percent for return on equity, demonstrate a struggling industry. The data for the current and quick ratios are more promising , with numbers suggesting financial health and liquidity in all quarters.Market Profile of the Composite Wood Products Industry 66 

# 6 Composite Wood Product Fabricators

This section presents information on the value of shipments, international trade, industry organization, and market outlook for the manufacturing i ndustries that use composite wood products as raw materials. The industry categories defined by NAICS are likely to include some manufacturers that are not subject to any requirements under the proposed TSCA Title VI rule.

NAICS codes for the potentially affected manufacturing industries were indentified through a review of information reported by the United States Census Bureau

. Table 6

- 1 provides a list of the relevant NAICS codes and their descriptions. As indicated in Table 6

- 1

, the fabricators using these wood products include seventeen NAICS codes: 321211/321219 (decorative and custom panel producers), 321911 (windows and doors), 321918 (other millwork), 321991 (mobile homes)

, 321992 (prefabricate d wood building manufacturing), 321999 (other miscellaneous products), 336213 (motor homes), 336214 (trailers and campers), 337110 (kitchen cabinetry), 337121 (upholstered household furniture), 337122 ( non

upholstered household furniture), 337124 (metal fu rniture), 337127 (institutional furniture), 337129 (television, radio, and sewing machine cabinetry), 337211 (wood office furniture), 337212 (custom architectural woodwork), 337215 (non

- wood office furniture), 337215 (showcases, partitions, shelving, and l ockers), and 339950 (signs). These industries comprise the manufacturing sectors that use hardwood veneer and plywood and reconstituted wood products as raw materials according to U.S. Economic Census data ( U.S. Census 2008 ).

Table 6

- 1 : NAICS Codes and Descriptions
Product Description NAICS

Decorative and custom panel producers 321211 /
321219 Wood window and door manufacturing 321911 Other millwork including flooring manufacturing 321918 Manufactured hom e (mobile home) manufacturing 321991 Prefabricated wood building manufacturing 321992 Other miscellaneous wood product manufacturing 321999 Motor home manufacturing 336213 Travel Trailer and Campers manufacturing 336214 Wood kitchen cabinets and count ertop manufacturing 337110 Upholstered household furniture manufacturing 337121 Nonupholstered wood household furniture manufacturing 337122 Metal household furniture manufacturing 337124 Institutional furniture manufacturing 337127 Wood television, r adio, and sewing machine cabinet manufacturing 337129 Wood office furniture manufacturing 337211 Custom architectural woodwork and millwork manufacturing 337212 Office furniture (non

- wood) manufacturing 337214 Showcase, partition, shelving, and locker manufacturing 337215 Sign manufacturing 339950



### Section 6.1 presents information on the value of shipments by industry and product type. Section 6.2 describes industry production costs. Section 6.3 describes international trade by industry and section 6.4 summarizes the industry organization for the composite wood product fabricators.Market Profile of the Composite Wood Products Industry 67 

## 6.1 Value of Shipments

This section presents information on the value of shipments by domestic manufacturers. Table 6

- 2 provides the value of shipments data for each NAICS code. The Wood Kitchen Cabinets and Countertops industry has the largest value of shipments, about $18 billion or app roximately 13.4% of the total value of shipments across all related industries. The smallest sector in terms of value of shipments is the wood television, radio and sewing machine cabinet manufacturing industry, with $460 million in total shipments, or abo ut 0.3% of total value of shipments. The average value of shipments for the remaining 15 industries is approximately $8 billion.

Table 6

- 2 : Value of Shipments by Domestic Manufacturers

NAICS Description NAI
CS Value of Shipments (thousands

, 2007$)

Wood Window and Door Manufacturing 321
911 $14,398,17
6

Other Millwork (including Flooring) 321
918 $7,435,665

Manufactured Home (Mobile Home) Manufacturing 321
991 $6,052,691

All Other Miscellaneous Wood Products Manufacturing 321
999 $6,077,231

Motor Home Manufacturing 336
213 $5,782,329

Travel Trailer and Camper Manufacturing 336
214 $10,594,61
8

Wood Kitchen Cabinet and Countertop Manufacturing 337
110 $18,225,26
3

Upholstered Household Furniture Manufacturing 337
121 $11,060,66
8

Non

- Upholstered Wood Household Furniture Manufacturing 337
122 $8,652,637

Metal Household Furniture Manufacturing 337
124 $2,275,581

Institutional Furniture Manufacturing 337
127 $6,467,361 Wood Television, Radio, and Sewing Machin e Cabinet Manufacturing 337
129 $234,028

Wood Office Furniture Manufacturing 337
211 $2,978,968

Custom Architectural Woodwork and Millwork 337
212 $6,730,164

Office Furniture (except wood) Manufacturing 337
214 $8,756,670

Showcase, Partition, Shelving, and Locker Manufacturing 337
215 $8,014,645

Sign Manufacturing 336
650 $13,021,90
3

Overall Total Value of Shipments $ 136,758,5
98
Source: U.S. Census 2 009cMarket Profile of the Composite Wood Products Industry 68 

## 6.2 Production Costs

This section discusses the costs of production associated with the manufactur e of goods using pressed wood products. Data from the 2007 Economic Census are used to estimate an average cost

- to

- shipment ratio for the potentially affected NAICS groups.

Table 6

- 3 uses data drawn from the 2007 Economic Censu s to summarize annual costs and shipments by NAICS code in 2007

. From these data , it is possible to estimate an industry

wide ratio of production costs (an aggregation of the cost of materials, capital expenditures, and payroll costs) to the o verall value of shipments (VOS), which provide s an approximate measure of how much cash, at a gross level, the industries are generating to cover all operating expenses, use for capital investment, and provide a return to owners. 21 

### A higher ratio of costs to shipments could indicate a greater vulnerability to regulatory impacts

. As indicated in Table 6

- 3 , the cost to shipment ratio ranges from 54 to 82 percent for these industries

.

21 While the costs to shipment ratio does indicate the proportion of the revenues received for the goods produced that

are associated w ith production expenses (materials, capi tal expenditures, and payroll), it does not reflect other operating expenses such as electrical costs, employment expenses, taxes, interest, or depreciation. Nor does it indi cate whether the expenses are variable or fixed

.Market Profile of the Composite Wood Products Industry 69 

### Table 6

- 3 : Summ ary of Annual Costs and Shipments, 2007 (thousands, 2007$)

NAICS a NAICS Description a Industry Shipments a Cost of Materials a Capital Expenditure a Payroll b Rati
Cost Shipm

321911 Wood Window and Door Manufacturing $14,398,176 $7,453,938 $349,4 92 $2,786,366

321918 Other Millwork (including Flooring) $7,435,665 $4,060,826 $161,205 $1,436,648

321991 Manufactured Home (Mobile Home) Manufacturing $6,052,691 $3,454,812 $85,855 $1,300,118

321999 Other Miscellaneous Wood Product Manufact uring $6,077,231 $2,954,048 $209,812 $1,105,084

336213 Motor Home Manufacturing $5,782,329 $3,894,164 $41,371 $725,478

336214 Travel Trailer and Camper $10,594,618 $6,716,570 $113,735 $1,824,130

337110 Wood Kitchen Cabinet and Countertop
Man ufacturing $18,225,263 $7,250,204 $424,770 $4,479,039

337121 Upholstered Household Furniture Manufacturing $11,060,668 $5,836,840 $107,483 $2,265,630

337122 Non

- upholstered Wood Household Furniture Manufacturing $8,652,637 $4,397,734 $130,961 $1, 769,657

337124 Metal Household Furniture Manufacturing $2,275,581 $1,136,757 $20,967 $387,230

337127 Institutional Furniture Manufacturing $6,467,361 $2,792,105 $122,831 $1,313,375

337129 Wood Television, Radio, and Sewing Machine Cabinet Ma nufacturing $234,028 $108,969 $7,879 $85,719

337211 Wood Office Furniture Manufacturing $2,978,968 $1,215,929 $55,898 $669,959

337212 Custom Architectural Woodwork and Millwork $6,730,164 $2,559,114 $162,820 $2,001,015

337214 Office Furnitur e (except Wood) Manufacturing $8,756,670 $3,231,627 $137,939 $1,348,739

337215 Showcase, Partition, Shelving, and Locker Manufacturing $8,014,645 $3,980,215 $166,564 $1,606,858

339950 Sign Manufacturing $13,021,903 $5,096,327 $361,034 $3,480,360



### Note: Value of shipments data differs between each table for all NAICS codes except 336213 due to delays in census updates.

Sources: (a) U.S. Census 2009c ; (b) U.S. Census 2010j



### Table 6

- 4 through T able 6

- 20 present the material costs by material type for each of the industries. The materials are grouped, and the costs are demonstrated for each subcategory along with the individual material and the overall materials total.Market Profile of the Composite Wood Products Industry 70 

### Table 6

- 4 : Material Costs by Materials Type for the Wood Window and Door Manufacturing Industry (NAICS Code 321911)

Material Type Materials
Cost (thousands,

2007$) Percent of Materials

Cost Total logs and bolts $30,975 0.46%
Total rough lumber $376,081 5.57%
Total dressed lumber $244,876 3.63%
Total cut stock $1,041,074 15.42% Hardwood plywood $34,687 0.51% Softwood plywood $32,015 0.47% Total plywood $66,702 0.99%
Hardwood Veneer $91,989 1.36%

Par ticleboard (wood) $64,509 0.96%
Hardboard $130,526 1.93% Medium Density Fiberboard (MDF) $60,981 0.90% Total other wood types $348,005 5.16%
Total miscellaneous $4,642,182 68.77%
Total Material Cost $6,749,895 100%
Sources: U.S. Censu s 2009d



### Table 6

- 4 displays cost information for the Wood Window and Door industry. Miscellaneous parts account for the largest share of the cost, followed by cut stock. Wood products are represented in the subcategories: logs an d bolts, rough lumber, dressed lumber, cut stock, plywood, and other wood types. The sum of these subcategories represents about 31 percent of the total material costs for the industry. Hardwood plywood, particleboard and MDF account for 0.51%, 0.96%, and 0.90% of materials costs, respectively, for the entire NAICS code. Hardwood veneer (which is not a regulated product but which could be used to manufacture a laminated product that may be subject to regulation) represents 1.3% of total materials costs.Market Profile of the Composite Wood Products Industry 71 

### Table 6

- 5 : Material Costs by Materials Type for the Other Millwork (including Flooring) Industry (NAICS Code 321918)

Material Type Material
Cost (thousands,

2007$) Percent of Materials

Cost Total logs and bo lts $56,083 1.56% Total rough lumber $700,136 19.43%
Total dressed lumber $210,849 5.85%
Total cut stock $163,556 4.54% Hardwood plywood $63,941 1.77% Softwood plywood withheld

- Total plywood $63,941 1.77%
Hardwood Veneer $86, 130 2.39% Particleboard (wood) $37,033 1.03%
Hardboard $38,549 1.07% Medium Density Fiberboard (MDF) $158,510 4.40% Total other wood types $320,222 8.89%
Total miscellaneous $2,064,133 57.29%

To t al Withheld $24,087 0.67%
Total Material Cost $3,603,007 100%

Sources: U.S. Census 2009d



### Table 6

- 5 displays the material costs for the Other Millwork (including Flooring) industry.
T he miscellaneous group represents the largest material cost for the industry because it encompasses all non

- wood materials. For this industry, the non

- wood materials cost over $2 billion, or about 57 percent of the total material costs. The wood materials are comprised of: logs and bolts, rough lumber, dressed lumber, cut stock, p lywood, and other wood types. These subcategories sum to a material cost of about $1.5 billion, or about 42 percent of the total material costs for the industry. Hardwood plywood, particleboard and MDF account for 1.77%, 1.03%, and 4.40% of materials cost s, respectively, for the entire NAICS code. Hardwood veneer (which is not a regulated product but which could be used to manufacture a laminated product that may be subject to regulation) represents 2.39% of total materials costs.Market Profile of the Composite Wood Products Industry 72 

### Table 6

- 6 : Material Costs by Materials Type for the Manufactured Home (Mobile Home) Manufacturing Industry (NAICS Code 321991)

Material Type Material
Cost (thousands,

2007$) Percent of Materials

Cost Total metal parts (including vinyl siding) $407,952 12.16% Plywood $99,462 2.96% Particleboard (wood) $26,899 0.80% Oriented strandboard (OSB) and waferboard $60,064 1.79% Gypsum building board: 5/16 inches thick $59,527 1.77% Gypsum building board: great er than 5/16 inches thick $42,689 1.27% Lumber, dressed $435,945 12.99% Wood millwork, including molding, doors and windows $54,489 1.62% Kitchen cabinets, wood $71,509 2.13% Total Wood parts $850,584 25.35%
Total Household Items $146,1 21 4.35%
Total miscellaneous $1,950,594 58.14%
Total Material Cost $3,355,251 100%
Sources: U.S. Census 2009d



### Table 6

- 6 shows the material cost distribution for the Mobile Home industry
M iscellaneous parts account for the lar gest share of material costs. Wood parts for the mobile home industry cost $85 1 million, or 25 percent of all material costs.

Table 6

- 7 : Material Costs by Materials Type for All Other Miscellaneous Wood Produc t Manufacturing Industry (NAICS Code 321999)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost Total logs and bolts $293,578 11.54% Total rough lumber $608,172 23.91%
Total dressed lumber $140,435 5.52% Hardwood plywood $7 2,630 2.85% Softwood plywood $21,144 0.83% Total plywood $93,774 3.69% Hardwood cut stock and dimension, excluding furniture frames $37,716 1.48%

Chips, Slabs, Edgings, Shavings, Sawdust and Other Wood
Waste $100,783 $2,544,107

Reconstituted Wood Products (particleboard, hardboard, etc) $30,703 1.21% Total other wood types $169,202 6.65%
Total miscellaneous $1,238,946 48.70%
Total Material Cost $2,544,107 100%
Sources: U.S. Census 2009d



### Table 6

- 7 describes the Miscellaneous Wood Product Manufacturing industry. The products produced by this industry are displayed in Table 6

- 1 . The material cost for the industry lies primary in wood products, at about 51 percent of all material costs.Market Profile of the Composite Wood Products Industry 73 

### Table 6

- 8 : Material Costs by Materials Type for the Motor Home Manufacturing Industry (NAICS Code 336213)

Material Type Materials
Cost (thousands,

2007$) Percent of Materials

Cost
Total met al parts $329,278 8.87% Plywood, lumber (dressed), and millwork wood $143,254 3.86% Total wood parts $143,254 3.86%
Total miscellaneous $3,241,318 87.28%
Total Material Cost $3,713,850 100%

Sources: U.S. Census 2009d



### Table 6

- 8 discusses the Motor Home manufacturing industry. Wood parts comprise the smallest subcategories for this industry, at just 4 percent of all material costs. The wood parts are made up of plywood, dressed lumber, and millwork wood. These materi als cost $143,254.

Table 6

- 9 : Material Costs by Materials Type for the Travel Trailer and Camper Manufacturing Industry (NAICS Code 336214)

Material Type Materials
Cost (thousands,

2007$) Percent of Materials

Cost Total metal parts $1,700,116 26.66% Plywood, lumber (dressed), and millwork wood $255,055 4.00% Total wood parts $255,055 4.00%
Total miscellaneous $4,421,614 69.34%
Total Material Cost $6,376,785 100%
Sources: U.S. Census 2009d



### Table 6

- 9 breaks down the Travel Trailer and Camper manufacturing industry by material cost. W ood parts comprise only 4 percent of the overall material costs for this industry. The cost of the parts is $255,055.Market Profile of the Composite Wood Products Industry 74 

### Table 6

- 10 : Material Costs by Materials Type for the Wood Kitchen Cabinet and Countertop Manufacturing Industry (NAICS Code 337110)

Material Type Material
Cost (thousands,

2007$) Percent of Materials

Cost Hardwood plywood $492,995 7.55%
Hardwood veneer $95,058 1.46% Total hardwood plywood and veneer $588,053 9.01% Particleboard (wood) $791,312 12.12% Medium density fiberboard (MDF) $117,262 1.80%
Hardboard $75,654 1.16%
Total reconstituted wo od products $984,228 15.07% Total other wood products $1,560,275 23.90%
Total miscellaneous $3,396,481 52.02%
Total Material Cost $6,529,037 100%
Sources: U.S. Census 2009d



### Table 6

- 10 shows the material cost distribution of the Wood Kitchen Cabinet and Countertop manufacturing industry. Hardwood plywood and veneer materials for the industry cost just under $600 million (9%) and reconstituted wood products cost nearly $1 billion (15.1%). The remaining wood products consist of lumber, cut stock, and furniture frames. These

mate rials sum to $1.6 billion or 24 percent of total material cost.

Table 6

- 11 : Material Costs by Materials Type for Upholstered Household Furniture Manufactu ring Industry (NAICS Code 337121)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $86,550 1.74% Plywood, hardwood and softwood $141,589 2.84%
Hardwood veneer $11,737 0.24% Total plywood and veneer $153, 326 3.08% Particleboard (wood) $5,889 0.12% Medium density fiberboard (MDF) $6,377 0.13%
Hardboard $17,492 0.35% Total reconstituted wood products $29,758 0.60% Total other wood products $757,264 15.20%
Total fabrics and fillers $2,287,221 45.91% Total plastics parts $37,868 0.76% Total metal parts $167,312 3.36%
Total miscellaneous $1,449,581 29.09%
Total Withheld $13,524 0.27%
Total Material Cost $4,982,404 100%
Sources: U.S. Census 2009d



### T able 6

- 11 presents the material costs for the Upholstered Household Furniture manufacturing industry. Plywood and veneer make up 3.1% of total cost, while reconstituted wood products make up less than one percent

.Market Profile of the Composite Wood Products Industry 75 

### Table 6

- 12 : Material Costs by Materials Type for Non

- upholstered Wood Household Furniture Manufacturing Industry (NAICS Code 337122)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $406,066 14.72% Plywood , hardwood and softwood $104,337 3.78%
Hardwood veneer $69,525 2.52% Total plywood and veneer $173,862 6.30% Particleboard (wood) $186,818 6.77% Medium density fiberboard (MDF) $146,405 5.31%
Hardboard $30,305 1.10%
Total re constituted wood products $363,528 13.18% Total other wood products $246,895 8.95%
Total fabrics and fillers $192,822 6.99% Total plastics parts $46,441 1.68% Total metal parts $36,765 1.33%
Total miscellaneous $1,286,543 46.63%
Total Withheld $5,968 0.22%
Total Material Cost $2,758,890 100%
Sources: U.S. Census 2009d



### Table 6

- 12 presents production costs for the Non

- upholstered Wood Household Furniture manufacturing industry. Plywood and veneer acc ount for 6 percent of material cost s , or $173,862. Reconstituted wood products make up 13 percent , or $363,528 of costs

.

Table 6

- 13 : Material Costs by Materials Type for Metal Household Furniture Manufacturin g Industry (NAICS Code 337124)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $5,091 0.52% Plywood, hardwood and softwood $2,512 0.26% Total plywood and veneer $2,512 0.26% Particleboard (wood) $1,909 0.20% Medium density fiberboard (MDF) withheld

- Total reconstituted wood products $1,909 0.20% Total other wood products $7,127 0.73%
Total fabrics and fillers $98,450 10.12% Total plastics parts $12,520 1.29% Total metal parts $593,385 6 0.98%
Total miscellaneous $222,644 22.88%
Total Withheld $29,472 3.03%
Total Material Cost $973,110 100%
Sources: U.S. Census 2009dMarket Profile of the Composite Wood Products Industry 76 

### Table 6

- 13 presents material costs for Metal Household Furniture. Plywood/veneer and

reco nstituted wood products comprise 0.3 percent and 0.2 percent of the total materials cost s , respectively.

Table 6

- 14 : Material Costs by Materials Type for Institutional Furniture Manufacturing Industry (NAICS Code 337127)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $75,225 3.30% Plywood, hardwood and softwood $52,040 2.28%
Hardwood veneer $24,948 1.10% Total plywood and veneer $76,988 3.38%
Partic leboard (wood) $48,999 2.15% Medium density fiberboard (MDF) $10,351 0.45%
Hardboard $5,206 0.23% Total reconstituted wood products $64,556 2.83% Total other wood products $80,481 3.53%
Total fabrics and fillers $113,363 4.98% Total p lastics parts $218,033 9.57% Total metal parts $445,576 19.56%
Total miscellaneous $1,203,364 52.84%
Total Material Cost $2,277,586 100%
Sources: U.S. Census 2009d



### Institutional furniture, as shown in Table 6

- 14 , ha s mat erial costs of $2,277,586, 3.4 percent of this is plywood and veneer and 2.8 percent is reconstituted wood products.

Table 6

- 15 : Material Costs by Materials Type for Wood Television, Radio, and Sewing Machine Cabinet Manufacturing Industry (NAICS Code 337129)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $2,685 3.29% Plywood, hardwood and softwood $2,000 2.45%
Hardwood veneer $1,262 1.55% Total plywood an d veneer $3,262 4.00% Particleboard (wood) $8,036 9.85% Medium density fiberboard (MDF) $12,411 15.21%
Hardboard $3,822 4.68% Total reconstituted wood products $24,269 29.74% Total other wood products $13,696 16.78%
Total fabrics and fillers $132 0.16% Total plastics parts $2,067 2.53%
Total miscellaneous $35,410 43.40%
Total Withheld $208 0.25%
Total Material Cost $81,597 100%
Sources: U.S. Census 2009dMarket Profile of the Composite Wood Products Industry 77 

### Table 6

- 15 shows tha t plywood and venee r comprise 4 percent of the Wood Television, Radio, and Sewing Machine Cabinet manufacturing industry material cost. About 30 percent of the material cost comes from reconstituted wood products. The total material costs for this industry is just over $81 m illion

.

Table 6

- 16 : Material Costs by Materials Type for Wood Office Furniture Manufacturing Industry (NAICS Code 337211)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $ 37,529 3.37% Plywood, hardwood and softwood $87,345 7.84%
Hardwood veneer $37,840 3.40% Total plywood and veneer $125,185 11.23% Particleboard (wood) $34,451 3.09% Medium density fiberboard (MDF) $18,931 1.70%
Hardboard $6,089 0.55% Total reconstituted wood products $59,471 5.34% Total other wood products $150,282 13.48%
Total fabrics and fillers $104,804 9.40% Total plastics parts $58,902 5.28% Total metal parts $45,682 4.10%
Total miscellaneous $532,692 47 .79%
Total Material Cost $1,114,547 100%
Sources: U.S. Census 2009d



### Miscellaneous products are the greatest material cost for the Wood Office Furniture industry, as shown in Table 6

- 16 . However, p lywood and veneer comprise 11 percent of the over $1 billion dollars of material cost. Reconstituted wood products account for about 5 percent of the material cost s

.Market Profile of the Composite Wood Products Industry 78 

### Table 6

- 17 : Material Costs by Materials Type for the Custom Architectur al Woodwork and Millwork Industry (NAICS Code 337212)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $167,507 8.86% Plywood, hardwood and softwood $144,303 7.63%
Hardwood veneer $53,149 2.81% Total ply wood and veneer $197,452 10.45% Particleboard (wood) $125,121 6.62% Medium density fiberboard (MDF) $91,613 4.85%
Hardboard $12,722 0.67% Total reconstituted wood products $229,456 12.14% Total other wood products $28,452 1.51%

T otal fabrics and fillers $4,247 0.22% Total plastics parts $135,655 7.18% Total metal parts $86,554 4.58%
Total miscellaneous $1,035,326 54.78%
Total Withheld $5,442 0.29%
Total Material Cost $1,890,091 100%
Sources: U.S. Census 2009d



### Miscell aneous parts form the greatest share of the material cost for the Custom Architecture Woodwork and Millwork industry. As Table 6

- 17 shows, plywood and veneer and reconstituted wood products comprise 11 percent and 12 percent of th e total material costs, respectively.

Table 6

- 18 : Material Costs by Materials Type for Office Furniture (except Wood) Manufacturing Industry (NAICS Code 337214)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber withheld

- Plywood, hardwood and softwood $38,305 1.40%
Hardwood veneer withheld

- Total plywood and veneer $38,305 1.40% Particleboard (wood) $92,248 3.38% Medium density fiberboard (MDF) $8,965 0.33%
Hardboard $1,963 0.07% Total reconstituted wood products $103,176 3.78% Total other wood products $27,547 1.01%
Total fabrics and fillers $287,343 10.53% Total plastics parts $520,526 19.08% Total metal parts $764,306 28.01%
Total miscellaneous $713,685 26.16%
Total Withheld $273,753 10.03%
Total Material Cost $2,728,641 100%
Sources: U.S. Census 2009dMarket Profile of the Composite Wood Products Industry 79 

### The Non

- Wood Office Furniture industry naturally has lower material costs for wood products, as shown in Table 6

- 18 . Plywood and veneer are 1.4 percent of the total material cost, while reconstituted wood products are 3.8 percent

.

Table 6

- 19 : Material Costs by Materials Type for the Showcase, Parti tion, Shelving, and Locker Manufacturing Industry (NAICS Code 337215)

Material Type Material
Cost (thousands,

2007$) Percent Materials

Cost
Total lumber $92,665 2.78% Plywood, hardwood and softwood $49,262 1.48%
Hardwood veneer $10,626 0. 32% Total plywood and veneer $59,888 1.79% Particleboard (wood) $49,381 1.48% Medium density fiberboard (MDF) $74,087 2.22%
Hardboard $37,989 1.14% Total reconstituted wood products $161,457 4.84% Total other wood products $21,749 0.65%
Total fabrics and fillers $9,537 0.29% Total plastics parts $126,138 3.78% Total metal parts $1,300,698 38.96%
Total miscellaneous $1,525,930 45.70%
Total Withheld $40,595 1.22%
Total Material Cost $3,338,657 100%
Sources: U.S. Census 2009d



### Showcase, Partition, Shelving, and Locker manufacturing rely very little on wood products as well, with total wood products equaling just over 10 percent of total material costs. Wood costs are broken down to 1.8 percent for plywood and veneer, and 4.8 percent for reconstituted wood products

.

Table 6

- 20 : Material Costs by Materials Type for the Sign Manufacturing Industry (NAICS Code 339950)

Material Type Materials
Cost (thousands,

2007$) Percent of
M aterials

Cost Veneer and plywood $57,055 1.50% Wood other than veneer and plywood $36,759 0.97% Total wood products $93,814 2.47% Total plastics products $356,010 9.36% Total metal products $614,953 16.17%
Total miscellaneous $2,737,5 29 72.00%
Total Material Cost $3,802,306 100%
Sources: U.S. Census 2009d



### A s shown in Table 6

- 20 , a ll wood materials comprise 2.5 percent of the total $3.8 billion
in total material costs for the sign manufacturing industry

.Market Profile of the Composite Wood Products Industry 80 

### Figure 6

- 1 : Reconstituted Veneer, Hardwood Veneer and Plywood, and Wood Products as a Percent of Total Material Costs by Industry

0% 10% 20% 30% 40% 50% 60%Wood TV, Radio, &Sewing Machine CabinetWood Kitchen Cabinet &Counter TopsCustom ArchitecturalWoodwork & MillworkNon-upholsteredFurnitureWood Office FurnitureOther Millwork &FlooringMobile HomesShowcase, Partition,Shelving & LockerInstitutional FurnitureWood Window & DoorOffice FurnitureAll Other MiscellaneousWood ProductUpholstered HouseholdFurnitureSignMetal HouseholdFurnitureMotor HomesTravel Trailer & Camper

337129 337110 337212 337122 337211 321918 321991 337215 337127 321911 337214 321999 337121 339950 337124 336213 336214 NAICS Codes and DescriptionsPercentage Other Wood Products

Reconstitute d Wood Products & Hardwood Plywood and Veneer



### As shown in Figure 6

- 1 , reconstituted woo d produc ts play a much larger role in industries such as wood kitchen cabinet and counter tops manufacturing, non

- upholstered furniture manufacturing, wood TV, radio and sewing machine cabinet manufacturing, wood office furniture manufacturing, and custom architec tural woodwork. Reconstituted wood products represent a minor cost for industries such as metal household furniture manufacturing and sign manufacturing. There is no reconstituted wood product cost displayed for motor home and travel trailer and camper man ufacturing because the material cost data grouped all wood products into one category rather than distinguishing which products were reconstituted wood products or hardwood veneer or plywood.

Figure 6

- 2 shows how industries compar e to one another in their use of plywood, veneer, and reconstituted wood products. Industries with a larger fraction of the graph use a higher total dollar value of these products in their production process.Market Profile of the Composite Wood Products Industry 81 

### Figure 6

- 2 : Percent of all Reconstituted Veneer and Hardwood Veneer and Plywood Material Costs Consumed, by NAICS

2%

11% 32%

9% 9% 8% 7% 5%

4% 4% 3% 3% 3%

337110 Wood Kitchen Cabinet and Counter Tops

337122 Non-upholstered Household Furniture

337212 Custom Architectural Woodwork and Millwork

321911 Wood Window and Door Manufacturing
321918 Other Millwork (incl. flooring)

321991 Manufactured (mobile) Homes

337215 Showcase, Partition, Shelving & Locker

337211 Wood Office Furniture

337121 Upholstered Household Furniture

337127 Institutional Furniture

337214 Office Furniture

321999 All Other Miscellaneous Wood Product Manufacturing

337124, 337129, 339950 <2% Combined



### As shown in Figure 6

- 2 , the wood kitchen cabinet and counter top manufacturing industry consumes the greatest amount of composite wood products, 32 percent of the composite wood products consumed across all industries. Non

- upholstered household furniture consumes about 11 percent of the composite wood products. As shown in Figure 6

- 1

, com posite wood products represent a significant amount of the total material cost in many of these industries. Though reconstituted wood products are a large percentage (34%) of the material

cost s within the wood television, radio, and sewing machine cabinet manufacturing industry, because it is a small industry it accounts for a very small percentage of the total composite wood products consumed by composite wood product fabricators

.



## 6.3 International Trade

In recent years, the U.S. has been involved in a signifi cant amount of international trade of products manufactured using composite wood products, with variation among the level of trade activity for different fabricator industries. Table 6

- 21 summarizes domestic production, domestic consumption, and imports and exports for all NAICS industries considered to be fabricators of composite wood products.Market Profile of the Composite Wood Products Industry 82 

### Table 6

- 21 : Summary of Domestic Consumption and International Trade for all Fabricator Ind ustries ( 2007 $)

NAICS Dom estic Prod
uctio

n E

x
p

o
rt

s Domestic Consumption Percen t of
Consu mption from Import

s Im

por ted D

o

m

es tic T

ot al

Wood Windows and
Doors (321911), $14,
398 $
2
2
2 $91

4 $1 4,
17

6 $

1 5,
0
9
0 6.06%

Other Millwork including Flooring (3219 18) $7,4
36 $
2
6
6 $1,
121 $7 ,1
70 $ 8,
2
9
1 13.52%

Manufactured
Homes (Mobile Homes) (321991) $6,0
53 $
3
3 $20 $6 ,0
20 $ 6,
0
4
0 0.33%

Motor Homes (336213) $5,7
82 $

5
2
5 $19
3 $5 ,2
57 $ 5,
4
5
0 3.54%

Travel Trailers and Campers (336214) $10,
595 $
2

, 1
0
4 $55
5 $8 ,4
91 $ 9,
0
4
6 6.14%

Wood Kitchen Cabinets and Countertops (337110) $18,
225 $
1
1
2 $82

7 $1 8,
11

3 $

1 8,
9
4
0 4.37%

Upholstered Household
Furniture (337121) $11,
061 $

4
1
4 $2,
842 $1 0,
64

7 $
1 3,
4
8
9 21.07%

Metal Household
Furniture (337124) $2,2
76 $

7
6 $2,
623 $2 ,2
00 $ 4,
8
2
3 54.39%

Institutional
Furniture (337127) $6,4
67 $
1

, 3 $14 ,13

5 $5 ,1
00 $
1 9,
2 73.48%Market Profile of the Composite Wood Products Industry 83 6
7 3
5 Wood Television, Radio, and Sewing Machine Cabinets (321911) $14,
398 $
2
2
2 $91

4 $1 4,
17

6 $

1 5,
0
9
0 6.06%

Wood Office
Furniture (337211) $2, 9
79 $

1
0
7 $96

7 $2 ,8
72 $ 3,
8
3
9 25.19%

Office
Furniture (except Wood) (337214) $8,7
57 $
2
2
6 $46
3 $8 ,5
31 $ 8,
9
9
4 5.15%

Showcases, Partitions, Shelving, and Lockers (337215) $8,0
15 $

1

, 0
3
2 $4,
603 $6 ,9
83 $

1 1,
5
8
6 39.73%

Signs (339950) $13,
022 $
9
6 $20
9 $1 2,
92

6 $
1 3,
1
3
5 1.59%

Sources: U.S. Census 2009c; U.S. ITC 2010



### The products of some industries, such as Manufactured Homes (321991), Motor Homes (336213), and Wood Kitchen Cabinets and Countertops, are produced almost entirely domestically, as can be seen from the percent of consumption from imports in Table 6

- 21

. Domestic consumption within other industries such as Institutional Furniture (337127) and Metal Household Furniture (337124) relies very heavily on imports f rom other countries. In Figure 6

- 3 below, percent of consumption from imports is shown by NAICS industry.Market Profile of the Composite Wood Products Industry 84 Figure 6

- 3 : 

### Percent of Consumption from Imports, by Industry

0% 10% 20% 30% 40% 50% 60% 70% 80%

321911 321918 321991 336213 336214 337110 337121 337124 337127 321911 337211 337214 337215 339950

NAICS Code

Source s : CPA 2006a , U.S. ITC 2010



### There have been notable shifts in the trade balance for fabricator industries in the past decade, as well as shifts in the U.S.’s significant trade players. Table 6

- 22 through Table 6

- 36 present data on the U.S. imports and exports of products manufactured using composite wood products for the 2009 top five trading partners in each category.

Table 6

- 22 : International Trade Wood Wi ndows and Doors (321911), by top 2009 trading partners

Country 2000 2001 2002 2003 2004 2005 2006 Millwork (including Flooring) Imports
Canada $295 $321 $342 $361 $429 $478 $493
China $2 $3 $8 $14 $33 $59 $101
Brazil $34 $48 $55 $48 $64 $85 $90
Chile $21 $32 $39 $38 $50 $44 $51

Mexico $47 $43 $41 $41 $44 $41 $43
Other
countries $118 $125 $141 $152 $171 $190 $184

Total $517 $571 $626 $653 $790 $898 $963
Note: Number may not add due to rounding, 2010 is for January through August Sources: U.S. ITC 2010Market Profile of the Composite Wood Products Industry 85 Figure 6

- 4 : Imports for Consumption in Wood Windows and Doors (321911), by top 2009 trading partners (millions, current$)

$0 $100 $200 $300 $400 $500 $600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) Canada

China

Brazil

Chile

Mexico

Other countries

Source : U.S. ITC 2010



### As shown in Table 6

- 22 , Wood Windows and Doors are traded with Canada in the highest volume

. Imports experienced a gr eat deal of fluctuation over the period, rising to $963 million in value in 2006 and then dropping again to $484 million in 2008 (See Table 6

- 22 ).

Table 6

- 23 : International Trade in O ther Millwork including Flooring (321918), by top 2009 trading

Country 2000 2001 2002 2003 2004 2005 2006 Millwork (including Flooring) Imports
China $44 $53 $74 $117 $222 $309 $30
Brazil $107 $130 $171 $184 $361 $344 $40
Chile $140 $176 $193 $177 $302 $270 $33
Canada $139 $119 $122 $133 $131 $126 $12

Mexico $90 $68 $62 $55 $90 $78 $8
Other
countries $2 89 $227 $256 $266 $317 $353 $33

Total $810 $773 $879 $931 $1,423 $1,479 $1,58 Note: Number may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010Market Profile of the Composite Wood Products Industry 86 Figure 6

- 5 : Imports for Consumption in Other Millwork including Flooring (321918), by top 2009 trading partners (millions, current$)

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) China

Brazil

Chile

Canada

Mexico

Other countries

Source : U.S. ITC 2010



### For Other Millwork (including Flooring), Brazil, Chile, and China were the greatest source of imports, as displayed in Table 6

- 23 . From 2000 through 2006 total trade volume grew regularly; in 2007 through the present, imports of these products experienced a substantial decline (s ee Table 6

- 23 ).

Table 6

- 24 : International Trade in Manufactured Homes (Mobile Homes) (321991), by top 2009 trad

Country 2000 2001 2002 2003 2004 2005 2006 Mobile Home Imports
Canada $5 $9 $18 $14 $12 $18 $14
China $0 $0 $0 $0 $0 $0 $0
United Kingdom $0 $0 $0 $0 $0 $0 $0

Germany $0 $0 $0 $0 $0 $0 $0 Italy $0 $0 $0 $0 $0 $0 $0
Other
countries $0 $0 $0 $0 $0 $0 $1

Total $5 $9 $18 $14 $12 $19 $15 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010Market Profile of the Composite Wood Products Industry 87 Figure 6

- 6 : Imports for Consumption in Manufactured Homes (Mobile Homes) (321991), by top 2009 trading partners (millions, current$)

$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) Canada

China United Kingdom Germany Italy

Other countries

Source : U.S. ITC 2010



### Table 6

- 24 shows that Canada is the greatest trading partner for the Mobi le Home manufacturing industry; the next four largest sources of mobile home imports have import values below 1 million dollars (see Table 6

- 24 )

. Imports and exports overall represent a small portion of the manufactured homes ind ustry

.Market Profile of the Composite Wood Products Industry 88 

### Table 6

- 25 : International Trade in Miscellaneous Wood Products (321999), by top 2009 trading pa

Country 2000 2001 2002 2003 2004 2005 Miscellaneou s Wood Products Imports
China $634 $655 $757 $797 $846 $909
Canada $417 $401 $435 $513 $570 $613 Portugal $136 $148 $152 $159 $166 $169
Indonesia $80 $81 $81 $69 $72 $74

Mexico $27 $21 $27 $37 $41 $59
Other
countries $472 $431 $442 $454 $457 $448

Total $1,765 $1,737 $1,895 $2,030 $2,151 $2,272
Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 7 : Imports for Consumption in Miscellaneous Wood Products (321999), by top 2009 trading partners (millions, current$)

$0 $200 $400 $600 $800 $1,000 $1,200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) China

Canada Portugal

Indonesia

Mexico

Other countries

Sou rce : U.S. ITC 2010Market Profile of the Composite Wood Products Industry 89 

### A s shown in Table 6

- 25 ,China and Canada are major sources of imports to the United States, making up over half of total imports to the U.S. T here was steady growth of trade activity until the 2008 recession (s ee Table 6

- 25 ).

Table 6

- 26 : International Trade in Motor Homes (336213) by top 2009 trading partners ( millions, current$ )
Country 2000 2001 2002 2003 2004 2005 2006 Motor Home Imports Canada $90 $74 $97 $104 $105 $104 $118 Germany $27 $36 $39 $18 $17 $41 $60 Japan $0 $0 $0 $0 $0 $0 $0

Korea $0 $0 $0 $0 $0 $0 $0
China $0 $0 $0 $0 $0 $0 $0
Other
countries $1 $1 $0 $0 $0 $0 $0

Total $118 $111 $137 $123 $122 $146 $178 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 8 : Imports for Consumption in Motor Homes (336213), by top 2009 trading partners (millions, current$)

$0 $20 $40 $60 $80 $100 $120 $140 $160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) Canada Germany Japan

Korea

China

Other countries

Source : U.S. ITC 2010



### Table 6

- 26 shows that Canada is the largest trading partner of sales in Motor Homes. Canada and Germany are the only two countries supplying motor home imports with a value equal to or exceeding $1 million.Market Profile of the Composite Wood Products Industry 90 

### Table 6

- 27 : International Trade in Travel Trailers and Campers (336214), by top 2009 trading partn

Country 2000 2001 2002 2003 2004 2005 2006 Travel Trailer and Camper Imports
China $548 $77 $79 $105 $134 $185 $192
Canada $195 $234 $220 $230 $274 $247 $236 Japan $67 $73 $68 $33 $60 $80 $85
Mexico $3 $2 $3 $3 $8 $11 $14

Taiwan $146 $25 $15 $17 $12 $10 $9
Other
countries $33 $24 $23 $25 $27 $25 $31

Total $991 $435 $408 $412 $516 $558 $568 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 9 : Imports for Consumption in Travel Trailers and Campers (336214), by top 2009 trading partners (millions, current$)

$0 $100 $200 $300 $400 $500 $600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) China

Canada Japan

Mexico

Taiwan

Other countries

Source : U.S. ITC 2010



### For Travel Trailers and Campers, China has been the greatest source of imports, followed Canada (see Table 6

- 27 ).Market Profile of the Composite Wood Products Industry 91 

### Table 6

- 28 : International Trade in Wood Kitchen Cabinets and Countertops (337110), by top 2009

Country 2000 2001 2002 2003 2004 2005 2006 Wood Kitchen Cabinet and Countertop Imports
China $11 $16 $38 $56 $89 $145 $195
Canada $422 $459 $494 $531 $584 $543 $538 Italy $5 $8 $15 $20 $30 $38 $43 Germany $14 $18 $12 $11 $13 $17 $18

Mexico $10 $13 $9 $9 $13 $13 $19
Other
countries $12 $11 $11 $18 $25 $40 $38

Total $474 $526 $579 $644 $754 $796 $850 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 10 : Imports for Consumption in Wood Kitchen Cabinets and Countertops (337110), by top 2009 trading partners (millions, current$)

$0 $100 $200 $300 $400 $500 $600 $700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) China

Canada Italy Germany

Mexico

Other countries

Source : U.S. ITC 2010



### In recent years, as shown by Table 6

- 28 , China has been the largest source of Wood Kitchen Cabinets and Countertops, although prior to 2008 Canada had been the largest supplier. Imports rose between 2000 and 2006 and then fell between 2007 and 2009

.Market Profile of the Composite Wood Products Industry 92 

### Table 6

- 29 : International Trade in Upholstered Household Furniture (337121), by top 2009 trading

Country 2000 2001 2002 2003 2004 2005 Upholstered Household Furniture Imports
China $141 $201 $3 78 $573 $850 $1,225

Mexico $182 $182 $218 $253 $332 $338 Italy $563 $533 $536 $565 $472 $335
Vietnam $1 $1 $7 $13 $20 $31 Malaysia $28 $20 $29 $37 $52 $60
Other
countries $337 $332 $371 $436 $461 $460

Total $1,251 $1,269 $1,539 $1,878 $2,187 $2,449 Note: Numbers may not add due to rounding, 2010 data is for January thr ough August Sources: U.S. ITC 2010

Figure 6

- 11 : Imports for Consumption in Upholstered Household Furniture (337121), by top 2009 trading partners (millions, current$)

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

YearImports (millions $) China

Mexico Italy

Vietnam Malaysia

Other countries

Source : U.S. ITC 2010



### Table 6

- 29 shows that China, followed by Mexico, is the largest source of imports for Upholstered Household Furniture. The value of the imports from China has been increasing considerably over the past decade

.Market Profile of the Composite Wood Products Industry 93 

### Table 6

- 30 : International Trade in Metal Household Furniture (337124), by top 2009 trading partne

Country 2000 2001 2002 2003 2004 2005 Metal Household Furniture Imports
China $869 $950 $1, 140 $1,502 $1,666 $1,859

Taiwan $246 $143 $143 $170 $158 $125

Mexico $140 $105 $94 $85 $87 $60 Italy $72 $74 $69 $71 $62 $68

Korea $1 $2 $2 $1 $0 $0
Other
countries $214 $207 $218 $203 $209 $213

Total $1,542 $1,480 $1,666 $2,032 $2,182 $2,325 Note: Numbers may not add due to rounding, 2010 data is for January through August Sou rces: U.S. ITC 2010

Figure 6

- 12 : Imports for Consumption in Metal Household Furniture (337124), by top 2009 trading partners (millions, current$)



### $0 $500 $1,000 $1,500 $2,000 $2,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### China

Taiwan

Mexico Italy

Korea
Other countries

Source : U.S. ITC 2010



### China has been the largest source o f imported Metal Household Furniture for the past decade, as shown in Table 6

- 30

. I mports rose each year except 2008

- 2009 (see Table 6

- 30 ).Market Profile of the Composite Wood Products Industry 94 

### Table 6

- 31 : Inte rnational Trade in Institutional Furniture (337127), by top 2009 trading partners ( m
Country 2000 2001 2002 2003 2004 2005 Institutional Furniture Imports
China $2,550 $2,869 $4,006 $4,688 $5,570 $6,492

Vietnam $8 $11 $64 $146 $324 $604
Canada $1,761 $1,616 $1,604 $1,606 $1,647 $1,651 Malaysia $389 $341 $389 $419 $500 $602
Indonesia $4 21 $440 $475 $467 $483 $547
Other
countries $3,177 $2,979 $3,117 $3,106 $3,313 $3,283

Total $8,306 $8,255 $9,653 $10,433 $11,837 $13,180 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 13 : Imports for Consumption in Institutional Furniture (337127), by top 2009 trading partners (millions, cur rent$)



### $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### China

Vietnam
Canada Malaysia

Indonesia
Other countries

Source : U.S. ITC 2010



### Table 6

- 31 illustrates that China is the largest source of imports of Institutional Furniture. Recently Vietnam has been the second largest source, but prior to 2008, the value of imports from Canad a was much greater than from Vietnam.Market Profile of the Composite Wood Products Industry 95 

### Table 6

- 32 : International Trade in Wood Television, Radio, and Sewing Machine Cabinets (321911 current$)

Country 2000 2001 200 2 2003 2004 2005 2006 Wood Television, Radio, and Sewing Machine Cabinet Imports
Canada $4 $4 $4 $4 $4 $3 $3
China $0 $0 $0 $0 $0 $0 $1
Taiwan $0 $0 $0 $0 $0 $0 $1 Japan $0 $0 $0 $0 $0 $0 $0 Germany $1 $0 $0 $0 $0 $0 $0
Other
countries $3 $4 $3 $3 $3 $3 $3

Total $8 $9 $7 $8 $7 $7 $7 Note: Numbers may not add due to rounding, 2010 data is for January through August

Sources: U.S. ITC 2010

Figure 6

- 14 : Imports for Consumption in Wood Television, Radio, and Sewing Machine Cabinets (321911), by top 2009 trading partners (millions, current$)



### $0 $1 $1 $2 $2 $3 $3 $4 $4 $5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### Canada
China

Taiwan Japan Germany
Other countries

Source : U.S. ITC 2010



### The Wood Television, Radio, and Sewin g Machine Cabinet industry is much smaller than the other industries, both in value of shipments and in trade values, as shown in Table 6

- 2 and Table 6

- 32 . Canada is the largest source of imports for the industry.Market Profile of the Composite Wood Products Industry 96 

### Table 6

- 33 : International Trade in Wood Office Furniture (337211), by top 2009 trading partners ( m
Country 2000 2001 2002 2003 2004 2005 2006 Wood Office Fu rniture Imports
Canada $443 $384 $367 $395 $403 $419 $454
China $71 $44 $91 $138 $160 $243 $308

Mexico $28 $19 $21 $15 $21 $26 $25
Indonesia $2 $3 $3 $6 $4 $4 $3 Italy $7 $10 $10 $ 10 $11 $13 $14
Other
countries $127 $95 $114 $130 $134 $146 $162

Total $677 $555 $606 $694 $733 $850 $967 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U. S. ITC 2010

Figure 6

- 15 : Imports for Consumption in Wood Office Furniture (337211), by top 2009 trading partners (millions, current$)



### $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### Canada
China

Mexico

Indonesia Italy
Other countries

Source : U.S. ITC 2010



### Wood Office Furniture is primarily traded with Canada, as shown in Table 6

- 33 . In recent years, values of imports from China have nearly reached the level of imports coming from Canada.Market Profile of the Composite Wood Products Industry 97 

### Table 6

- 34 : International Trade in Office F urniture (except Wood) (337214), by top 2009 trading pa

Country 2000 2001 2002 2003 2004 2005 2006
Non

- wood Office Furniture Imports
Canada $489 $387 $273 $241 $217 $232 $243
China $37 $34 $42 $47 $72 $86 $104

Mexico $16 $15 $16 $25 $29 $34 $34

Taiwan $32 $28 $30 $44 $39 $24 $26 Italy $7 $7 $4 $10 $14 $9 $12
Other
countries $55 $45 $36 $40 $47 $53 $44

T otal $636 $516 $402 $407 $419 $438 $462 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 16 : Imports for Consumption in Office Furniture (except Wood) (337214), by top 2009 trading partners (millions, current$)



### $0 $100 $200 $300 $400 $500 $600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### Canada
China

Mexico

Taiwan Italy
Other countries

Source : U.S. ITC 2010



### The main trading partner for the Non

- Wood Office Furniture industry is Canada as well, as can be seen in Table 6

- 3 4 . Imports from Canada have diminished over the past decade, while the value of imports from China has risen.Market Profile of the Composite Wood Products Industry 98 

### Table 6

- 35 : International Trade in Showcases, Partitions, Shelving, and Lockers (337215), by top

Country 2000 2001 2002 2003 2004 2005 Showcase, Partition, Shelving, and Locker Imports
China $406 $502 $700 $1,014 $1,432 $1,787
Canada $764 $659 $ 674 $660 $776 $809

Mexico $179 $186 $223 $246 $291 $326
Taiwan $198 $158 $192 $179 $195 $201

Vietnam $0 $1 $4 $10 $17 $33
Other
countries $626 $579 $585 $64 1 $758 $765

Total $2,174 $2,084 $2,378 $2,751 $3,468 $3,921 Note: Numbers may not add due to rounding, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 17 : Imports for Consumption in Showcases, Partitions, Shelving, and Lockers (337215) , by top 2009 trading partners (millions, current$)



### $0 $500 $1,000 $1,500 $2,000 $2,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### China
Canada

Mexico

Taiwan

Vietnam
Other countries

Source : U.S. ITC 2010



### Table 6

- 35 shows that imports of Show cases, Partitions, Shelving, and Lockers come largely from China. Import values from China have been increasing rapidly over the past ten

yearsMarket Profile of the Composite Wood Products Industry 99 

### Table 6

- 36 : International Trade in Signs (339950), by top 2009 tr ading partners ( millions, current$

Country 2000 2001 2002 2003 2004 2005 2006 Sign Imports
China $19 $23 $31 $56 $55 $65 $79
Canada $29 $37 $33 $36 $50 $50 $55

Mexico $5 $7 $14 $13 $12 $12 $13 Germany $2 $2 $3 $4 $7 $7 $8

Korea $2 $2 $2 $2 $3 $3 $3
Other
countries $27 $28 $30 $32 $40 $41 $39

Total $84 $99 $113 $143 $167 $177 $197 Note: Numbers may not add due to roundin g, 2010 data is for January through August Sources: U.S. ITC 2010

Figure 6

- 18 : Imports for Consumption in Signs (339950), by top 2009 trading partners (millions, current$)



### $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*



### YearImports (millions $) 

### China
Canada

Mexico Germany

Korea
Other countries

Source : U.S. ITC 2010



### Internat ional trade in signs has been fairly small relative to most of the other industries,
as seen in Table 6

- 36 . The largest source of imports has been China, followed by Canada and Mexico. Trade data was not available for the Non

- Upho lstered Wood Household Furniture manufacturing industry (337122) and the Custom Architectural Woodwork and Millwork manufacturing industry (337212).Market Profile of the Composite Wood Products Industry 100 

## 6.4 Industry Organization

The following section describes the org anization of the industries that use hardwood plywood, medium density fiberboard, and particleboard panels as raw materials in their manufacturing process. Information is presented on:

• The industry structure

• The characteristics of the manufacturing facilities

• The size distribution of the firms that ow n the manufacturing facilities

In addition, this section provides detailed information about facilities and firms that are key inputs to the economic analysis.

6.4.1 U.S. Census Data on Industry Structure

6.4.1.1 Specialization and Market Concentration



### To determine the extent to which Census data on the w ood p roducts m anufacturing industries adequately describe the manufacturers of composite wood products , industry

- wide specialization and coverage ratios are examined. Products shipped from one establishment to another w ith in the sa me industry are co nsidered “primary”, while all other products shipped by the establishment are considered “secondary”. T he primary products specialization ratio is the ratio of total primary product shipments to total product shipments (prima ry and secondary) for all establishments classified in the industry. The coverage ratio indicates the extent to which the primary industry products are manufactured by establishments classified in that industry. The coverage ratio is the ratio of primary products shipped by the establishments classified in the industry to the total shipments of these products shipped by all establishments classified in all industries. Table 6

- 37 provides specializ ation and coverage ratios for th e four potentially affected NAICS industries.Market Profile of the Composite Wood Products Industry 101 

### Table 6

- 37 : Primary Products Specialization and Coverage Ratios, by NAICS, 2007

NAICS Code Description Primary Products Specialization
Ratio (maximum value 10 0) Coverage Ratio (maximum value 100)

321911 Wood Window and
Door Manufacturing 97 96

321918 Other Millwork (including Flooring) 96 93

321991 Manufactured
Homes (Mobile Homes) Manufacturing Withheld Withheld

321999 Other Miscellaneous Wood Product
Manu facturing 99 95

336213 Motor Homes 95 95

336214 Travel Trailer and Camper Manufacturing 97 96

337110 Kitchen Cabinets and Countertops Manufacturing 97 98

337121 Upholstered
House
Furniture Manufacturing 92 95

337122 Non

upholstered Wood Household
Furn iture Manufacturing 90 90

337124 Metal Household
Furniture Manufacturing 88 85

337127 Institutional
Furniture Manufacturing 93 92

337129 Wood Television, Radio, and Sewing Machine Cabinet Manufacturing 93 61Market Profile of the Composite Wood Products Industry 102 337211 Wood Office
Furniture 91 80

337212 C ustom Architectural Woodwork and Millwork Manufacturing 92 92

337214 Office
Furniture (except Wood) 91 97

337215 Showcase, Partition, Shelving, and Locker Manufacturing 95 92

339950 Sign Manufacturing 95 95

Sources: U.S. Census 2009c



### As indicated in Table 6

- 37 , half the NAICS codes have specialization and c overage ratios above 95. Ratios this high imply that most establishments with in these NAICS codes are h ighly specialized, and that product shipments tend to originate in es tablishments with in these NAICS codes. Therefore, the Census data on these NAICS industries provide information on the primary production of facilities engaged in plywood and wood composite manufacturing.

Table 6

- 38 presents mar ket co ncentration ratios and Herfindahl

- Hirschman (HH) index values for the potentially affected NAICS codes in 2002. M

- firm concentration ratios are equal to the sum of the market shares for the largest m number of firms in the industry; the higher the

r atio the more concentrated the industry. HH index values equal to the sum of the squares of the market shares for the 50 largest firms in the industry ; t he higher the HH index, the more concentrated the indus try

.Market Profile of the Composite Wood Products Industry 103 

### Table 6

- 38 : Concentration Ratios by NAICS Code, 2002

NAICS Code Description Number of Companies in Industry Percent of value of industry shipments shipped by the largest (in terms of shipment value) Herfin Hirsch Inde 50 la

comp 4 Companies 8 Companies 20 Companies 50 Companies

321911 Wood Window and
Door Manufacturing 1,328 34.9 % 44.7 % 57.4 % 70.2 %

321918 Other Millwork (including Flooring) Manufacturing 2,020 17.7 % 24.3 % 33.7 % 46.8 %

321991 Manufactured
Home (Mobile Home) Manufacturing 241 44.6 % 63.7 % 81.1 % 92.5 %

321999 All Other Miscellaneous Wood Product Manufacturing 2,031 17.6 % 22.4 % 31.3 % 44.5 %

336213 Motor Home Manufacturing 83 57.7 % 77.6 % 95.3 % 99.6 % 1,

336214 Travel Trailer and Camp er Manufacturing 733 38.0 % 45.8 % 58.4 % 72.1 %

337110 Wood Kitchen Cabinet and Countertop Manufacturing 9,452 29.2 % 35.1 % 43.0 % 50.0 %

337121 Upholstered Household
Furniture Manufacturing 1,679 34.7 % 42.2 % 53.6 % 66.9 %

337122 Non

upholster ed Wood Household
Furniture Manufacturing 3,975 23.9 % 34.5 % 49.9 % 62 %

337124 Metal Household
Furniture Manufacturing 353 27.6 % 41.6 % 64.2 % 83.8 %

337127 Institutional
Furniture 693 20.9 % 28.7 % 43.1 % 63.7 %

337129 Wood Television, Radio, and Sewing Machine Cabinet Manufacturing 201 64.4 % 75.4 % 84.6 % 93.1 % 1,Market Profile of the Composite Wood Products Industry 104 337211 Wood Office
Furniture Manufacturing 546 34.1 % 43.3 % 55.8 % 71.6 %

337212 Custom Architectural Woodwork and Millwork Manufacturing 1,552 10.1 % 14.9 % 23 % 35.6 %

33 7214 Office
Furniture (except Wood) Manufacturing 261 61.8 % 80.0 % 88.4 % 94.8 % 1,

337215 Showcase, Partition, Shelving, and Locker Manufacturing 1,800 13.7 % 20.5 % 31.5 % 44.7 %

339950 Sign Manufacturing 6,125 5.2 % 8.9 % 16.4 % 27.3 %

Note: A ma rket is generally considered highly concentrated if the 4

- firm concentration ratio is greater than 50 percent. The United States Department of Justice use an HH value of 1,000 as a ceiling for market competitiveness; an HH between 1,000 and 1,800 is cons idered to be moderately concentrated anything above 1,800 is considered to be highly concentrated (U.S. DOJ 1997).
Source: U.S. Census 2006



### Table 6

- 38 indicates that the motor home industry, the wood television, radio, and sewing machine cabinet industry, and non

- wood office furniture manufacturing industry all have
4

- firm ratios above 50 (57.7, 64.4, and 61.8 respectively). This suggests that these industries, of the 17 noted above, are considered uncompetitive. The remaini ng industries have 4

- firm ratios below 50, and are considered competitive industries.

As shown in Table 6

- 38 , certain industries are much more highly concentrated than others. For instance, the sign manufacturing industry has an H H value at just over 19, the lowest of the group. Still, industries such as those making motor homes; television, radio, and sewing machine cabinets; and office furniture all have HH values over 1,000. This indicates that these three industries are “modera tely concentrated,” and television, radio, and sewing machine cabinet manufacturing approaches the “highly concentrated” marker.

6.4.1.2 Vertical and Horizontal Integration



### The high specialization and coverage ratios presented in the preceding section indicate tha t half the fabricator industries are not highly integrated vertically. Vertical integration is when companies maintain operations in multiple levels of the supply chain. For example, a company that harvested logs, manufactured veneers, adhesives, hardwoo d plywood panels, and hardwood plywood cabinets would be vertically integrated. A vertically integrated industry would tend to have lower specialization and coverage ratios since vertical integration implies less specialization in a single product type.

Ho rizontal integration is when a company expands in the same industry and stage of the production line. Thus, a horizontally integrated industry is characterized by fewer firms and less competition. The HH index values presented in the preceding section indi cate that the majorityMarket Profile of the Composite Wood Products Industry 105 

### of industries using composite wood products as raw materials are not uncompetitive and therefore are not highly horizontally integrated.

6.4.1.3 Production Capacity and Utilization



### Capacity utilization rates are the ratio of observed output to maximum potential output. Table 6

- 39 p rovides capacity utilization rates for the general industries using composite wood products as inputs between 2000 and 2009.

Table 6

- 39 : Full Production Capacity Utilization Rates by NAICS Codes, Fourth Quarters, 2000

– 2009

N
A
I
C
S Description Per

ce
nta
ge Ch

an
ge

3
2
1
9 Other Wood Product Manufact u ring (
1
8 % )

3
3
6
2 Motor Vehicle and Motor Body Manufacturing (
3
2 % )

3
3
7
1 Household and Institutional Furniture and Kitchen Cabinet Manufacturing (
8
% )

3
3
7
2 Office
Furniture (including
Fixtu res) Manufacturing (
2
0 % )
3
3
9
9
5
0 Office Supplies (except Paper) and Sign Manufacturing (
7 % )

Note: A capacity utilization rate under 100 indicates that, for a given existing ca pital stock, a firm or industry has the potential for greater output without incurring major expenditures (FAO 1999). Note: 2007 values for NAICS Codes 3371 and 3372 were combined, along with 3379, in the census data and are represented above in italics
No te: 2007 value for NAICS Code 3362 were combined in the census data with 3361 and 3363
Note: 2007 v a lue for 33950 is simply 3399 and the 2008 and 2009 values are 3394

- 5 Sources: U.S. Census 2002

- 2010Market Profile of the Composite Wood Products Industry 106 

### As indicated in Table 6

- 39

, capacity utilization rates in the f ourth quarter of 20 09 ranged from 41 to 68 percent

. The industries using composite wood product raw materials experienced a capacity utilization rate decrease of between 7 and 32 percent between the fourth quarter of
2000 and the fourth quarter of 2009. The greatest decrease was in the Motor Vehicle and Motor Body Manufacturing industry.

Figure 6

- 19 presents a graphical representation of quarterly production capacity utilization rates between 200 7 and 2010 for the related NAICS groups

.
Figure 6

- 19 : Full Production Capacity Utilization Rates, Quarterly, 2007

- 2010

0 10 20 30 40 50 60 70 80 90

2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 

### QuarterCapacity Utilization % Other wood product manufacturing

Motor Vehicle and Motor Body Mfg

Household and
instututional
furniture and
kitchen cabinet mfg Office Furniture (including fixtures) mfg

Office supplies (except paper) and sign mfg

Source: U.S. Census 2002

- 2010



### Table 6

- 40 provides a breakdow n of capital expenditures for the related NAICS in 2008

. The data are broken down into total capital expenditures for permanent additions and major alterations to establishments, as well as new and used machinery and equipment for replacement or addition to a plant’s capacity, which is divided into 1) automobiles, trucks, etc. for highway use; 2) computer and data processing equipment; and, 3) all other machinery and equipment.Market Profile of the Composite Wood Products Industry 107 

### mary of Capita l Expenditures (New and Used) ( t housands , 2008$ )

NAICS escription Buildings and Other

structures Machinery and Equipment Autos, Trucks, etc. for Highway Use Computer and Data Processing Equipment A ll Other Machine Equipment
Value Percent Value Percent Value Percent Value
ood ndow and

or nufacturing $67,653 18.94% $16,457 4.61% $42,840 12.00% $230,180
her lwork (incl. oring) $ 19,810 12.03% $10,519 6.39% $8,420 5.11% $125,979
nufactured me (Mobile me) Mfg. $55,227 39.67% $12,127 8.71% $6,359 4.57% $65,487
Other scellaneous ood Product

g. $23,596 11.51% $12 ,979 6.33% $10,388 5.07% $158,083

otor Home

g. $4,324 17.21% $1,080 4.30% $4,477 17.82% $15,248
vel Trailer d Camper

g. $7,328 5.63% $9,316 7.16% $9,507 7.31% $103,974
ood Kitchen binet and untertop
g. $39,028 15.38% $16,216 6.39% $19,576 7.71% $178,935
holstered usehold rniture Mfg. $30,100 21.98% $27,375 19.99% $12,891 9.41% $66,583

n

hol stered ood usehold rniture Mfg. $11,963 13.91% $5,494 6.39% $9,303 10.82% $59,214
etal usehold rniture Mfg. $3,483 16.26% $1,476 6.89% $1,370 6.40% $15,096
titutional rniture Mfg $13,91 3 15.36% $3,897 4.30% $13,326 14.71% $59,444
ood evision, dio, and wing chine binet Mfg. $1,790 22.24% $695 8.63% $773 9.60% $4,794
fice
rniture cluding ures) Mfg. $11,187 19.59% $1,768 3.09% $4,433 7.76% $39,732

stom chitectural oodwork d Millwork

g. $21,673 13.78% $13,942 8.86% $16,389 10.42% $105,276
fice $19,194 13.62% $1,229 0.87 % $15,183 10.77% $105,347Market Profile of the Composite Wood Products Industry 108 rniture cept Wood)

g.
owcase, rtition, elving, and cker Mfg. $12,187 11.57% $2,054 1.95% $8,097 7.69% $82,958 n Mfg. $62,868 24.17% $26,509 10.19% $35,255 13.55% $135,492 sent values that were not represented in the 2008 survey and have been replaced by 2007 figures (in 2008$). 0g

, U.S. Census 2009c

, U.S. DOC 2010



### As indicated in Table 6

- 40

, total capital expenditures in 2008 ranged from about $ 8 million in the wood television, radio, and sewing machine cabinet manufacturing industry to about $ 350 million dollars in the wood window and door manufacturing industry. Expenditures for other machi nery and equipment accounted for the largest proportion of these totals, ranging from 47 percent in the manufactured home (mobile home) manufacturing industry to 80 percent in the travel trailer and camper manufacturing industry ( U.S. Census 2010g

, U.S. Ce nsus 2009c ).

Employment



### Table 6

- 41 summarizes the employment statistics for the relevant NAICS in 2007. As indicated in Table 6

- 41 , in 2007 the universe of potentially affected NAICS groups was composed

o f 33,783 establishments and employed about 821 thousand people (or about 24 employees per establishment) and had total payroll amounting to approximately 29 billion dollars. In 2008, the wood kitchen cabinet and countertop manufacturing industry had the m ost establishments ( 9,701 ) and employed the most people ( 140,393 ). Kitchen countertops and cabinetry also had the highest payroll (over $4 billion) ( U.S. Census 2010j )

.Market Profile of the Composite Wood Products Industry 109 

### Table 6

- 41 : Summary of Employment Statis tics, By NAICS (2008)

NAICS NAICS Description Total Establishments Total Employees Average Employees
Per Establishment Total Payroll ( thousands,

2008$ )

321911 Wood Windows and Door Mfg. 1,493 79,101 52.98 $2,786,366

321918 Other Millwork 2,110 43,423 20 .58 $1,436,648

321991 Manufactured Home (Mobile Home) Mfg. 379 40,854 107.79 $1,300,118

321992 Prefabricated wood building manufacturing 818 24,781 30.29 $861,893

321999 All Other Miscellaneous Wood Product Mfg. 1,971 36,582 18.56 $1,105,084

336213 Mot or Home Mfg. 79 17,553 222.19 $725,478

336214 Travel Trailer and Camper Mfg. 862 49,445 57.36 $1,824,130

337110 Wood Kitchen Cabinet and Countertop Mfg. 9,701 140,393 14.47 $4,479,039

337121 Upholstered Household Furniture Mfg. 1,641 77,422 47.18 $2,265 ,630

337122 Non

- upholstered Wood Household Furniture Mfg. 3,414 61,005 17.87 $1,769,657

337124 Metal Household Furniture Mfg. 329 11,740 35.68 $387,230

337127 Institutional Furniture Mfg. 776 34,295 44.19 $1,313,375

337129 Wood Television, Radio, and
S ewing Machine Cabinet Mfg. 265 2,764 10.43 $85,719

337211 Wood Office Furniture Mfg. 457 19,059 41.70 $669,959

337212 Custom Architectural Woodwork and Millwork Mfg. 2,235 47,467 21.24 $2,001,015

337214 Office Furniture (except Wood) Mfg. 290 28,133 97. 01 $1,348,739

337215 Showcase, Partition, Shelving, and Locker Mfg. 1,375 45,048 32.76 $1,606,858

339950 Sign Mfg. 6,406 86,843 13.56 $3,480,360
Total 34,601 845,908 24 $29,447,298

Source: U.S. Census 2010j.Market Profile of the Composite Wood Products Industry 110 

# 7 Composite Wood Product Wholesalers and Importers

This section presents information on the value of sales, operating costs and industry organization for the wholesale trade establishments that sell products containing composite wood. The wholesale trade industry includes both distributers o f domestic and imported composite wood products. Note that the industry categories as defined by NAICS are likely to include some wholesalers that are not subject to any requirements under the proposed TSCA Title VI rule.

NAICS codes for the potentially affected wholesale trade industries were indentified through a review of information reported by the United States Census Bureau

.

Section 7.1 presents information on the value of sales by industry and product type.
Section 7.2 describes industry operating costs. Section 7.3 summarizes the industry organization for the composite wood product wholesalers.



## 7.1 Value of Sales

Table 7

- 1 shows the sale s by NAICS for the products sold in the wholesale industries

, with specific information for products that may contain composite wood

.Market Profile of the Composite Wood Products Industry 111 

### Table 7

- 1 : Value of Sales by Industry for Wholesale, 2007$

NAICS Code NAIC S Description Product Value of Sales

423210 Furniture Merchant Wholesalers Upholstered furniture $3,177,012
Mattresses and beds $2,271,238
Lawn and outdoor furniture $1,531,754
Other furniture $8,010,051 Sleep sofas $267,527
New wooden and metal office furniture $18,954,544
New store and restaurant furniture $276,684 New public furniture $1,088,269
Used office and business furniture $472,750
Other hard

- surface floor coverings and accessories $35,504 Other panel produ cts $4,102
Wood millwork $6,467 Products without Composite Wood Products $2,469,636 Industry Total $38,589,359

423220 Home Furnishing Merchant Wholesalers Upholstered furniture $54,727
Mattresses and beds $22,173
Lawn and outdoor furn iture $116,110
Other furniture $114,116 Sleep sofas $761
New wooden and metal office furniture $45,129
New store and restaurant furniture $19,957 New public furniture $29,401
Used office and business furniture $1,933
Other hard

- surface floor coverings and accessories $13,879,890
Boards $10,205 Other panel products $13,909 Gypsum, waterboard, and other specialty boards $6,187
Wood millwork $21,818 Products without Composite Wood Products $38,028,815
Industr y Total $52,661,904

423310 Lumber, Plywood, Wood Merchant Wholesalers Household and lawn furniture $851
Office and business furniture $5,954 Flooring and floor coverings $356,613
Boards $5,843,155 Softwood plywood and Oriented Strand Boar d (OSB) $7,880,527 Other panel products $8,165,473 Gypsum, waterboard, and other specialty boards $4,155,239
Wood millwork $22,942,407 Products without Composite Wood Products $43,933,415 Industry Total $93,392,394

423320 Brick, Stone & Construction Flooring and floor coverings $40,327Market Profile of the Composite Wood Products Industry 112 

### Table 7

- 1 : Value of Sales by Industry for Wholesale, 2007$

NAICS Code NAIC S Description Product Value of Sales
Materials Merchant Wholesalers Boards $1,371 Softwood plywood and Oriented Strand Board (OSB) $6,443 Other panel products $46,069 Gypsum, waterboard, and other specialty boards $81,566
Wood millwork $40,346

Non

- lumber forest products $4,793 Products without Composite Wood Products $30,103,037 Industry Total $30,364,440

423390 Other Construction Materials Merchant Wholesalers Other hard

- surface floor coverings and accessor ies $61,111
Boards $15,931 Softwood plywood and Oriented Strand Board (OSB) $18,647 Other panel products $16,211 Gypsum, waterboard, and other specialty boards $257,953
Wood millwork $293,355 Products without Composite Wood Products $19,418,441 Industry Total $20,163,229

423450 Medical, Dental, & Hospital Equipment & Supply Merchant Wholesalers Household and lawn furniture $2,675
Office and business furniture $23,185 Products without Composite Wood Products $134,503,782 Industry Total $134,593,534

423490 Other Professional Equipment & Supply Merchant Wholesalers Office and business furniture $37,982 Products without Composite Wood Products $18,162,644 Industry Total $18,289,961

423850 Service Establishmen t Merchant Wholesalers Office and business furniture $179 Flooring and floor coverings $4,119 Products without Composite Wood Products $19,209,574 Industry Total $19,295,937

423330 Roofing, siding, and insulation material merchant wholesalers Flooring and floor coverings $33,296
Untreated lumber $175,167
Treated lumber $77,576
Boards $80,692 Softwood plywood and Oriented Strand Board (OSB) $165,553 Other panel products $65,052 Gypsum, waterboard, and other specialty boa rds $318,189
Wood millwork $606,903 Trusses, wood siding, and wood shingles $111,970 Other construction products and materials $1,412,913 Parts installed in repair work $4,349Market Profile of the Composite Wood Products Industry 113 

### Table 7

- 1 : Value of Sales by Industry for Wholesale, 2007$

NAICS Code NAIC S Description Product Value of Sales Products without Composite Wood Products $22,657,605
Ind ustry Total $25,500,802

423440 Other commercial equipment merchant wholesalers Office and business furniture $13,815 Parts installed in repair work $106,310 Products without Composite Wood Products $20,739,900 Industry Total $20,860,025

423 510 Metal service centers and other metal merchant wholesalers New and used automobiles, motorcycles, and trailers $11,730
Household and lawn furniture $2,233
Office and business furniture $1,333 Flooring and floor coverings $4,047

Untreate d lumber $33,240
Treated lumber $7,612
Boards $16,083 Softwood plywood and Oriented Strand Board (OSB) $29,880 Other panel products $13,003 Gypsum, waterboard, and other specialty boards $86,041
Wood millwork $51,076 Trusses, wo od siding, and wood shingles $5,887 Other construction products and materials $424,260
Other miscellaneous durable goods $5,972 Parts installed in repair work $73,327 Products without Composite Wood Products $204,132,939 Industry Total $204,898,663

423610 Elec. equip. and wiring merchant wholesalers Shades and blinds $7,415 Other construction products and materials $3,200
Other miscellaneous durable goods $10,928 Parts installed in repair work $193,573
Products without Composite Wood Products $119,386,327 Industry Total $119,601,443

423620 Electric appliance merchant wholesalers Household and lawn furniture $26,160 Other panel products $1,813 Gypsum, waterboard, and other specialty boards $10,276
Wood m illwork $41,715 Parts installed in repair work $33,837 Products without Composite Wood Products $86,929,402 Industry Total $87,043,203

423710 Hardware merchant wholesalers Household and lawn furniture $128,620 Flooring and floor coverings $9,347
Untreated lumber $837Market Profile of the Composite Wood Products Industry 114 

### Table 7

- 1 : Value of Sales by Industry for Wholesale, 2007$

NAICS Code NAIC S Description Product Value of Sales
Boards $2,843 Softwood plywood and Oriented Strand Board (OSB) $9,445 Other panel products $399,607 Gypsum, waterboard, and other specialty boards $292,582
Wood millwork $756,963 Trusses, wood sidin g, and wood shingles $1,124 Other construction products and materials $295,637
Other miscellaneous durable goods $5,470 Parts installed in repair work $31,026 Products without Composite Wood Products $41,967,674 Industry Total $43,901,1 75

423720 Plumbing equip. merchant wholesalers New and used automobiles, motorcycles, and trailers $931
Household and lawn furniture $109,378 Flooring and floor coverings $16,290 Softwood plywood and Oriented Strand Board (OSB) $2,233
Oth er panel products $16,095 Gypsum, waterboard, and other specialty boards $3,573
Wood millwork $33,675 Other construction products and materials $28,723 Parts installed in repair work $149,498 Products without Composite Wood Products $49 ,217,005 Industry Total $49,577,401

423730 HVAC equip. merchant wholesalers Household and lawn furniture $1,362 Flooring and floor coverings $4,087 Softwood plywood and Oriented Strand Board (OSB) $275 Other panel products $235 Gypsum , waterboard, and other specialty boards $311
Wood millwork $102,190 Other construction products and materials $55,407 Parts installed in repair work $86,288 Products without Composite Wood Products $32,445,806 Industry Total $32,695,96 1

423740 Refrigeration equipment and supplies merchant wholesalers Parts installed in repair work $51,110 Products without Composite Wood Products $5,745,056 Industry Total $5,796,166

423830 Industrial machinery and equipment merchant New and used automobiles, motorcycles, and trailers $36,592Market Profile of the Composite Wood Products Industry 115 

### Table 7

- 1 : Value of Sales by Industry for Wholesale, 2007$

NAICS Code NAIC S Description Product Value of Sales
wholesale rs Office and business furniture $5,632 Other panel products $8,654
Wood millwork $6,091 Other construction products and materials $39,816
Other miscellaneous durable goods $1, 795 Parts installed in repair work $2,316,539 Products without Composite Wood Products $167,866,593 Industry Total $170,281,712

423910 Sporting and recreational goods and supplies merchant wholesalers Household and lawn furniture $52,617 Other construction products and materials $153,094 Parts installed in repair work $26,834 Products without Composite Wood Products $33,611,700 Industry Total $33,844,245

424610 Plastics materials and basic forms and shapes merchant wholesaler Flooring and floor coverings $3,069 Other home furnishings $3,428
Treated lumber $8,104
Boards $3,895 Softwood plywood and Oriented Strand Board (OSB) $7,478 Other panel products $27,504
Wood millwork $17,244
Other construction products and materials $40,411 Parts installed in repair work $7,451 Products without Composite Wood Products $46,434,124 Industry Total $46,552,708

424950 Paint, varnish, and supplies merchant wholesalers Flooring and floor coverings $187,4 14 Other construction products and materials $904 Products without Composite Wood Products $13,165,172 Industry Total $13,353,490 Value of Sales Total $1,261,257,752

Source: U.S. Census 2009e



## 7.2 Wholesale Operating Costs

The following secti on summarizes operating costs incurred by the potentially affected wholesale trade industries, including the value of annual payroll and operating expenses, and the estimated value of sales, inventories, purchases and gross margins. Where possible, data

a re presented at the six

- digit NAICS level and provided over a range of years. To prevent double

- counting, data in this section do not include manufacturers’ sales branches and offices maintained by companies for the purpose of marketing their products.Market Profile of the Composite Wood Products Industry 116 

### 7.2.1 Payroll and Operating Expenses

Table 7

- 2 provides the value of annual payroll and operating expenses in 2007 for the potentially affected wholesale trade industries.

Table 7

- 2 : Val ue of Annual Payroll and Operating Expenses for Wholesalers, excluding Manufacturers' Sales Branches and Offices, 2007 (thousands, 2007$ ) 1

NAICS NAICS Description Annual Payroll 2 Operating Expenses 3

423210 Furniture merchant wholesalers $3,159,816 $6,236 ,936
423220 Home furnishing merchant wholesalers $4,181,919 $8,899,889

423310 Lumber, plywood, millwork, and wood panel merchant wholesalers $6,265,545 $10,116,270

423320 Brick, stone, and related construction material merchant wholesale $1,512,862 $3,2 27,211

423330 Roofing, siding, and insulation material merchant wholesalers $1,557,069 $3,211,812

423390 Other construction material merchant wholesalers $1,694,939 $3,172,643

423440 Other commercial equipment merchant wholesalers $2,250,869 $4,110,201

423450 Medical equipment merchant wholesalers $10,259,277 $18,783,159

423490 Other professional equipment and supplies merchant wholesalers D D

423510 Metal service centers and other metal merchant wholesalers $7,943,294 $15,659,031

423610 Elec. equip. and wiring merchant wholesalers $9,570,001 $17,201,112

423620 Electric appliance merchant wholesalers $2,561,797 $6,721,857

423710 Hardware merchant wholesalers $3,840,341 $7,488,599

423720 Plumbing equip. merchant wholesalers $4,441,190 $8,115,468

42 3730 HVAC equip. merchant wholesalers $2,547,025 $4,377,315

423740 Refrigeration equipment and supplies merchant wholesalers $531,410 $929,905

423830 Industrial machinery and equipment merchant wholesalers $17,151,437 $29,067,870

423850 Service establis hment equipment and supplies merchant wholesalers D D

423910 Sporting and recreational goods and supplies merchant wholesalers $2,487,901 $5,608,736

424610 Plastics materials and basic forms and shapes merchant wholesaler $1,718,840 $3,336,281

424950 Pa int, varnish, and supplies merchant wholesalers $649,166 $1,153,224 Notes: “1) D” is used to indicate that the data have been withheld to avoid disclosure. 2) Payroll includes all forms of compensation such as salaries, wages, commissions, dismissal pay, bonuses, vacation allowances, sick

leave pay, and employee contributions to qualified pension plans paid during the year to all employees and reported on Intern al Revenue Service (IRS) Form 941 as taxable Medicare Wages and tips (even if not subject t o income or FICA tax). 3) Operating expenses include payroll, employee benefits, interest and rent expenses, payroll taxes, cost of supplies used fo r operation, depreciation expenses, fundraising expenses, contracted or purchased services, and other expens es charged to operations during 2007. Expenses exclude cost of goods sold, income taxes, and interest for wholesale establishments; outlays for the purchase of rea l estate; construction and all other capital improvements; funds invested; assessments or due s paid to the parent or other chapters of the same organization; and, for fundraising organizations, funds transferred to charities and other organizations.
Source: U.S. Census 2010h



### As indicated in Table 7

- 2 , in 2007 the value of the annual payrolls for the potentially affected wholesale trade industries ranged from just over $531 million to nearly $17.2 billion, while operating expenses ranged from about $929 million to about $29.1 billion (NAICS 423740Market Profile of the Composite Wood Products Industry 117 

### and 423830, respectivel y). Values for annual payrolls and operating expenses were withheld for NAICS 423490 and 423850 to avoid disclosure.

7.2.2 Sales and Inventories

Table 7

- 3 and Table 7

- 4 present the estimated annual value of sa les and inventories for potentially affected wholesale trade industries between 2002 and 2008. The data in these tables are from the U.S. Census Bureau’s Annual Wholesale Trade Report, and derive from a mandatory annual survey of companies engaged in whol esale tr ade in the United States. 22 

### Note that data are only available at the 4

- digit NAICS level.

22 The survey’s sample includes approximately 2,100 companies and 5,900 parts of companies (defined by Employer

Identification Numbers, or EINs). Data are collected on annual sales, e

- commerce sales, number of esta blishments

, value of inventories , inventory by valuation, inventory outside of the United States, total purchases of products, and total operating expenses ( U.S. Census 2010a ).Market Profile of the Composite Wood Products Industry 118 

### le 7

- 3 : Estimated Annual Value of Sales for Wholesalers, excluding Manufacturers' Sales Branches and Office s, 2002

- lions, current $) 1

S Description 2002 2003 2004 2005 2006 2007
Furniture and
Home Furnishings $53,484 $55,396 $59,614 $62,825 $68,981 $69,064

Lumber & Other
Construction Materials $95,091 $105,244 $127,671 $139,412 $142,635 $126,651

Professional and Commercial Equipment and Supplies $272,462 $275,922 $302,984 $316,016 $330,740 $353,781

Metals and Minerals, ex. Petroleum $81,746 $81,238 $120,828 $136,091 $158,006 $162,138

Electrical Goods $222,957 $232,433 $264,753 $283,614 $319,555 $346,510

Hardware, and Plumbing and Heating Equipment and Supplies $70,431 $74,427 $84,139 $94,844 $108,397 $111,579

Machinery, Equipment, and Supplies $227 ,758 $230,664 $259,836 $288,216 $312,712 $326,416

Miscellaneous Durable Goods $145,627 $148,037 $181,114 $184,699 $205,411 $226,798

Chemicals and Allied Products $67,721 $70,675 $78,317 $89,829 $92,549 $102,162

Miscellaneous Nondurable Goods $161,091 $160,111 $179,031 $187,024 $190,769 $202,044

: 1) All estimates have been adjusted using the preliminary results of the 2007 Economic Census.

e: U.S. Census 2010bMarket Profile of the Composite Wood Products Industry 119 

### ble 7

- 4 : Estimated Annual Value of Inventories for Wholesalers, excluding Manufacturers' Sales Branches and Offices 08, (millions , current $) 1

CS Description 2002 2003 2004 2005 2006 2007

2 Furniture and
Home Fur nishings $6,340 $6,760 $7,151 $7,737 $8,306 $8,367

3 Lumber & Other
Construction Materials $8,855 $10,410 $13,317 $14,280 $14,583 $13,710

4 Professional and Commercial Equipment and Supplies $24,722 $25,036 $27,291 $27,632 $29,461 $2 9,988

5 Metals and Minerals, ex. Petroleum $12,033 $12,108 $18,938 $19,518 $24,660 $23,049

6 Electrical Goods $25,073 $24,983 $27,849 $30,208 $34,113 $36,434

7 Hardware, and Plumbing and Heating Equipment and Supplies $1 1,106 $11,720 $13,515 $15,279 $17,087 $17,891

8 Machinery, Equipment, and Supplies $46,557 $44,852 $50,067 $55,963 $60,943 $63,718

9 Miscellaneous Durable Goods $17,540 $18,838 $21,046 $23,124 $23,106 $23,808

6 Chemicals and Allied Products $6,588 $6,633 $7,297 $8,182 $8,276 $9,753

9 Miscellaneous Nondurable Goods $16,108 $16,094 $18,270 $18,929 $18,750 $21,021

es: 1) All estimates have been adjusted using the preliminary results of the 2007 Econom ic Census.

rce: U.S. Census 2010b



### As indicated in Table 7

- 3 and Table 7

- 4 , in 2008 the estimated value of sales ranged from just over $64.0 billion (NAICS 4232) to nearly $358.5 billion (NAICS 4234 ), while the estimated value of inventories ranged from just over $8.2 billion (NAICS 4232) to nearly $69.7 billion (NAICS 4238). Between 2002 and 2008, the estimated annual value of sales increased from 18 percent (NAICS 4233) to 109 percent (NAICS 4235) , while the estimated annual value of inventories increased from 24 percent (NAICS 4234) to 120 percent (NAICS 4235).

Figure 7

- 1 presents a graphical representation of monthly inventory/sales ratios for the potentially af fected 4

- digit NAICS groups between January 1993 and September 2008. 23 

### To smooth out short term fluctuations, the ratios have been calculated as a simple moving average of the previous twelve months (i.e. the January 1993 moving average is the average includes th at month and the previous 11 months). Monthly inventory/sales ratios provide an indication of the number of months’ worth of inventory that are on hand in relation to the sales for a month.

23 The data in Figure 7

- 1 are from the United States Census Bureau’s Monthly Wholesale Trade report, and derive from

a voluntary monthly survey of approximately 1,700 companies and 2,700 EINs engaged in wholesale trade in the United States.Market Profile of the Composite Wood Products Industry 120 

### Figure 7

- 1 : Estimated Monthly Inventory/Sales Ratios, Jan. 1993

- Sept. 2010

0.50 1.00 1.50 2.00 2.50 3.00

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YearRatio 4232 Furniture and Home Furnishings

4233 Lumber & Other Construction Materials
4234 Professional and Commerical Equipment and Supplies 4235 Metals and Minerals, ex. Petroleum

4236 Electrical Goods

4237 Hardware, and Plumbing and Heating Equipment and Supplies 4238 Machinery, Equipment, and Supplies
4239 Miscellaneous Durable Goods

4246 Chemicals and Allied Products

4249 Miscellaneous Nondurable Goods

Source: U.S. Census 2010b



### As indicated in Figure 7

- 1 between January 1993 and September 2010, the simple 12

- month moving average for inventory/sales ratios range d from 1.13 (NAICS 4246) to 2.33 (NAICS 4238).

7.2.3 Purchases

Table 7

- 5 presents the estimated value of purchases for potentially af fected 4

- digit NAICS groups between 2002 and 2008 and Figure 7

- 2 presents t his information graphically.Market Profile of the Composite Wood Products Industry 121 

### e 7

- 5 : Estimated Annual Value of Purchases for Wholesalers, excluding Manufacturers' Sales Branches and Offices, 20

ons , current$ ) 1

Description 2002 2003 2004 2005 2006 2007
Furniture and
Home Furnishings $36,919 $38,309 $41,902 $44,676 $48,842 $48,992

Lumber & Other
Construction Materials $76,077 $84,334 $102,930 $110,930 $112,097 $97,152

Professional and
Commer cial Equipment and Supplies $202,784 $205,351 $227,991 $240,599 $255,990 $275,195

Metals and Minerals, ex. Petroleum $66,160 $66,563 $99,644 $112,175 $132,768 $136,765

Electrical Goods $174,135 $182,633 $209,839 $223,660 $248, 371 $268,631
Hardware, and Plumbing and Heating Equipment and Supplies $49,934 $52,396 $60,979 $68,357 $78,020 $79,512

Machinery, Equipment, and Supplies $166,452 $168,109 $191,545 $210,926 $230,785 $236,982

Misc ellaneous Durable Goods $109,731 $110,502 $136,919 $143,276 $160,317 $177,051

Chemicals and Allied Products $50,913 $53,593 $60,794 $70,545 $71,773 $78,663

Miscellaneous Nondurable Goods $127,631 $127,582 $145,524 $152,396 $155 ,234 $161,551

) All estimates have been adjusted using the preliminary results of the 2007 Economic Census.

U.S. Census 2010cMarket Profile of the Composite Wood Products Industry 122 

### Figure 7

- 2 : Estimated Value of Purchases, 2002

- 2008

0 50,000 100,000 150,000 200,000 250,000 300,000

2002 2003 2004 2005 2006 2007 2008

Year$Millions 4232 Furniture and Home Furnishings

4233 Lumber & Other Construction Materials
4234 Professional and Commercial Equipment and Supplies 4235 Metals and Minerals, ex. Petroleum

4236 Electrical Goods

4237 Hardware, and Plumbing and Heating Equipment and Supplies 4238 Machinery, Equipment, and Supplies
4239 Miscellaneous Durable Goods

4246 Chemicals and Allied Products

4249 Miscellaneous Nondurable Goods

Source : U.S. Census 2010c



### As indicated in Table 7

- 5 and Figure 7

- 2 , in 2008 the estimated value of purchases in the potentially affected wholesale trade NAICS ranged from $45.5 billion (NAICS 4232) to $272.7 billion (NAICS 4234). Between 2002 and 2008, the estimated value of purchases increased from between 11 percent (NAICS 4233) to 75 percent (NAICS 4239).

7.2.4 Gross Margins

Gross margins represents total sales less the cost of the good sold. Table 7

- 6 presents the estimated value of gross margins for wholesalers between 2002 and 2008, by 4

- digit NAICS, and Figure 7

- 3 presents this information graphically.Market Profile of the Composite Wood Products Industry 123 

### ble 7

- 6 : Estimated Value of Gross Margins for Wholesalers, excluding Manufacturers' Sales Branches and Offices, 200 llions , current$ ) 1

CS Description 2002 2003 2004 2005 2006 2007

2 Furniture and Home Furnishings $16,897 $17,50 7 $18,103 $18,735 $20,708 $20,133

3 Lumber & Other
Construction Materials $19,466 $22,465 $27,648 $29,445 $30,841 $28,626

4 Professional and Commercial Equipment and Supplies $70,165 $70,885 $77,248 $75,758 $76,579 $79,113

5 Metals and Minerals, ex. Petroleum $15,694 $14,750 $28,014 $24,496 $30,380 $23,762

6 Electrical Goods $47,547 $49,710 $57,780 $62,313 $75,089 $80,200

7 Hardware, and Plumbing and Heating Equipment and Supplies $20,596 $22,645 $ 24,955 $28,251 $32,185 $32,871

8 Machinery, Equipment, and Supplies $58,692 $60,850 $73,506 $83,186 $86,907 $92,209

9 Miscellaneous Durable Goods $35,521 $38,833 $46,403 $43,501 $45,076 $50,449

6 Chemicals and Allied Pr oducts $17,254 $17,127 $18,187 $20,169 $20,870 $24,976

9 Miscellaneous Nondurable Goods $33,127 $32,515 $35,683 $35,287 $35,356 $42,764

s: 1) All estimates have been adjusted using the preliminary results of the 2007 Economic Censu s.

ce: U.S. Census 2010cMarket Profile of the Composite Wood Products Industry 124 

### Figure 7

- 3 : Estimated Value of Gross Margins, 2002

- 2008

0 20,000 40,000 60,000 80,000 100,000 120,000

2002 2003 2004 2005 2006 2007 2008

Year$Millions 4232 Furniture and Home Furnishings

4233 Lumber & Other Construction Materials

4234 Professional and Commercial Equipment and Supplies
4235 Metals and Minerals, ex. Petroleum

4236 Electrical Goods

4237 Hardware, and Plumbing and Heating Equipment and Supplies
4238 Machinery, Equipment, and Supplies

4239 Miscellaneous Durable Goods

4246 Chemicals and Allied Products

4249 Miscellaneous Nondurable Goods

Source: U.S. Census 2010c



### As indicated in Table 7

- 6 and Figure 7

- 3 in 2008 the estimated value of gross margins in the potentially affected wholesale trade NAICS ranged from $18.3 billion (NAICS 4232) to $101.3 billion (NAICS 4238). Between 1998 and 2008, the estimated value of purchases increased from between 8 perc ent (NAICS 4232) to 99 percent (NAICS 4235).



## 7.3 Industry Organization

The following section describes the org anization of the potentially affected wholesale trade industries. Information is presented on:

• The industry structure

• The characteristics of the fac ilities

In addition, this section provides detailed information about facilities and firms that are key inputs to the economic analysis.

7.3.1 U.S. Census Data on Industry Structure

Table 7

- 7 presents m

- firm co ncentration ratios for t he potentially affected wholesale trade industries in 2002. 24 

### M

- firm concentration ratios are equal to the sum of the market shares for the largest m number of firms in the industry; the higher the ratio the more concentrated the industry. A market is gene rally considered highly concentrated if the 4

- firm concentration ratio is greater than 50 percent.

24 As of November 18 2010, data from the 2007 Economic Census had not been released.Market Profile of the Composite Wood Products Industry 125Market Profile of the Composite Wood Products Industry 126 

### Table 7

- 7 : m - firm Concentration Ratios for Wholesalers, excluding Manufacturers' Sales Branches and Offices, 2002

NAICS Description Number of Establishments

in Industry m
- firm Concentration Ratio (Percent)

4 Firms 8 Firms 20 Firms 50 Firms

423210 Furniture merchant wholesalers 5,995 8.2 % 12.2 % 19.5 % 30.2 %

423220 Home furnishing merchant wholesalers 7,804 6.7 % 10.5 % 17.0 % 27.6 %

423310 Lumber, plywood, millwork, and wood panel merchant wholesalers 8,366 14.4 % 21.7 % 28.8 % 37.9 %

423320 Brick, stone, and related construction material merchant wholesale 3,022 16.0 % 21.3 % 29.0 % 39.6 %

423330 Roofing, siding, an d insulation material merchant wholesalers 2,351 26.3 % 34.5 % 47.6 % 62.9 %

423390 Other construction material merchant wholesalers 2,911 8.6 % 13.7 % 24.2 % 36.1 %

423440 Other commercial equipment merchant wholesalers 4,715 9.8 % 17.1 % 25.6 % 35.9 %

423450 Medi cal equipment merchant wholesalers 7,608 30.9 % 44.3 % 57.7 % 65.6 %

423490 Other professional equipment and supplies merchant wholesalers 2,546 D D D D

423510 Metal service centers and other metal merchant wholesalers 9,741 9.7 % 16.2 % 26.8 % 39.2 %

423610 El ec. equip. and wiring merchant wholesalers 12,482 18.4 % 25.2 % 34.1 % 42.9 %

423620 Electric appliance merchant wholesalers 2,989 29.3 % 41.5 % 59.0 % 71.7 %

423710 Hardware merchant wholesalers 6,659 21.1 % 26.3 % 34.9 % 46.1 %

423720 Plumbing equip. merchant who lesalers 5,281 20.6 % 27.2 % 35.5 % 45.7 %

423730 HVAC equip. merchant wholesalers 5,180 15.5 % 22.4 % 32.4 % 44.1 %

423740 Refrigeration equipment and supplies merchant wholesalers 1,332 24.2 % 34.9 % 49.5 % 63.3 %

423830 Industrial machinery and equipment merchan t wholesalers 29,843 6.0 % 8.3 % 12.9 % 19.2 %

423850 Service establishment equipment and supplies merchant wholesalers 5,527 D D D D

423910 Sporting and recreational goods and supplies merchant wholesalers 5,413 10.3 % 14.5 % 23.4 % 36.1 %

424610 Plastics mate rials and basic forms and shapes merchant wholesaler 3,242 10.5 % 16.4 % 26.7 % 39.1 %

424950 Paint, varnish, and supplies 2,041 14.4 % 21.6 % 34.4 % 50.6 %Market Profile of the Composite Wood Products Industry 127 merchant wholesalers Notes: 1) "D" is used to indicate that the data have been withheld to avoid disclosu re. Source: U.S. Census 2005d



### As indicated in Table 7

- 7 , the 4

- firm concentration ratios of the potentially affected wholesale trade industries ranged from 6.0 percent (NAICS 423830) to 30.9 percent (NAICS 423450) in 2002. No ne of the potentially affected wholesale trade industries had 4

- firm concentration ratios greater than 50 percent ; as a result, none can be classified as highly concentrated. Data were withheld for NAICS 42340 and 423850 to avoid disclosure.

7.3.1.1 Establishment Employment



### Table 7

- 8 summarizes the employment statistics for the potentially affected employer establishments in the whol esale trade industries in 2007. These statistics do not include non

employer establishments.Market Profile of the Composite Wood Products Industry 128 

### Table 7

- 8 : Summary of Employment Statistics for Wholesaler Employer Establishment s, excluding Manufacturers' Sales Branches and Offices, 2007

NAICS Description Total Establishments Total Employees Average Employees
Per
Es tablishment Total Payroll (thousands,

2007 $)

423210 Furniture merchant wholesalers 6,640 69,103 10.4 $3,159,816

423220 Home furnishing merchant wholesalers 7,540 93,060 12.3 $4,181,919

423310 Lumber, plywood, millwork, and wood panel merchant wholesaler s 8,428 138,739 16.5 $6,265,545

423320 Brick, stone, and related construction material merchant wholesale 3,383 35,005 10.3 $1,512,862

423330 Roofing, siding, and insulation material merchant wholesalers 2,587 32,662 12.6 $1,557,069

423390 Other constru ction material merchant wholesalers 3,383 37,920 11.2 $1,694,939

423410 Photographic equipment and supplies merchant wholesalers 1,019 D D D

423420 Office equipment merchant wholesalers 4,837 105,207 21.8 $5,668,065

423430 Computer and software merchant wholesalers 10,668 193,273 18.1 $15,126,360

423440 Other commercial equipment merchant wholesalers 4,352 48,976 11.3 $2,250,869

423450 Medical equipment merchant wholesalers 8,282 141,282 17.1 $10,259,277

423490 Other professional equipment and supplie s merchant wholesalers 2,297 D D D

423510 Metal service centers and other metal merchant wholesalers 10,148 144,954 14.3 $7,943,294

423610 Elec. equip. and wiring merchant wholesalers 13,277 169,355 12.8 $9,570,001

423620 Electric appliance merchant who lesalers 3,110 44,819 14.4 $2,561,797

423690 Other electronic parts and equipment merchant wholesalers 13,223 226,840 17.2 $18,284,664

423710 Hardware merchant wholesalers 6,828 83,542 12.2 $3,840,341

423720 Plumbing equip. merchant wholesalers 6,939 86 ,092 12.4 $4,441,190

423730 HVAC equip. merchant wholesalers 5,071 50,495 10.0 $2,547,025

423740 Refrigeration equipment and supplies merchant wholesalers 1,265 11,024 8.7 $531,410Market Profile of the Composite Wood Products Industry 129 

### Table 7

- 8 : Summary of Employment Statistics for Wholesaler Employer Establishment s, excluding Manufacturers' Sales Branches and Offices, 2007

NAICS Description Total Establishments Total Employees Average Employees
Per
Es tablishment Total Payroll (thousands,

2007 $)

423810 Construction equipment merchant wholesalers 4,694 94,571 20.1 $5, 317,183

423820 Farm and garden machinery and equipment merchant wholesalers 8,320 D D D

423830 Industrial machinery and equipment merchant wholesalers 29,838 319,557 10.7 $17,151,437

423840 Industrial supplies merchant wholesalers 8,361 87,012 10.4 $4,4 20,478

423850 Service establishment equipment and supplies merchant wholesalers 4,576 D D D

423910 Sporting and recreational goods and supplies merchant wholesalers 6,192 55,842 9.0 $2,487,901

423920 Toy and hobby goods and supplies merchant wholesalers 2,497 D D D

423930 Recyclable material merchant wholesalers 7,377 104,671 14.2 $4,451,467

423940 Jewelry merchant wholesalers 7,792 D D D

423990 Other miscellaneous durable goods merchant wholesalers 10,185 94,341 9.3 $4,047,480

424110 Printing and wr iting paper merchant wholesalers 1,174 17,434 14.9 $1,041,390

424120 Stationery and office supplies merchant wholesalers 5,513 65,234 11.8 $2,899,372

424130 Industrial and personal service paper merchant wholesalers 4,679 63,049 13.5 $3,283,911

424210 D rugs and druggists' sundries merchant wholesalers 8,040 159,693 19.9 $9,857,347

424310 Piece goods, notions, and other dry goods merchant wholesalers 3,445 29,877 8.7 $1,349,274

424320 Men's and boys' clothing and furnishings merchant wholesalers 4,204 6 5,295 15.5 $3,046,634

424330 Women's and children's clothing merchant wholesalers 7,650 101,804 13.3 $5,004,734

424340 Footwear merchant wholesalers 1,649 30,387 18.4 $1,916,453Market Profile of the Composite Wood Products Industry 130 

### Table 7

- 8 : Summary of Employment Statistics for Wholesaler Employer Establishment s, excluding Manufacturers' Sales Branches and Offices, 2007

NAICS Description Total Establishments Total Employees Average Employees
Per
Es tablishment Total Payroll (thousands,

2007 $)

424410 General line grocery merchant wholesalers 2,547 128,987 50.6 $6,184, 978

424420 Packaged frozen food merchant wholesalers 3,282 80,289 24.5 $3,568,884

424450 Confectionery merchant wholesalers 1,938 21,576 11.1 $791,092

424460 Fish and seafood merchant wholesalers 2,012 D D D

424480 Fresh fruit and vegetable merchant wh olesalers 5,074 104,749 20.6 $4,155,569

424490 Other grocery and related products merchant wholesalers 10,562 D D D

424510 Grain and field bean merchant wholesalers 4,851 47,574 9.8 $2,082,359

424610 Plastics materials and basic forms and shapes merchan t wholesaler 3,248 32,552 10.0 $1,718,840

424690 Other chemical and allied products merchant wholesalers 8,530 83,959 9.8 $5,010,893

424910 Farm supplies merchant wholesalers 7,432 73,914 9.9 $3,192,537

424920 Book, periodical, and newspaper merchant wh olesalers 2,644 59,604 22.5 $2,044,015

424930 Flower, nursery stock, & florists' supplies merchant wholesalers 4,213 D D D

424940 Tobacco and tobacco product merchant wholesalers 1,305 48,343 37.0 $1,768,529

424950 Paint, varnish, and supplies merchant wholesalers 1,649 14,631 8.9 $649,166

424990 Other miscellaneous nondurable goods merchant wholesalers 12,492 D D D

Total 321,242 3,697,293 11.5 $198,838,366 Notes: 1) "D" is used to indicate that the data have been withheld to avoid disclosure.
Source : U.S. Census 2010h



### As indicated in Table 7

- 8 , the potentially affected wholesale trade industries were composed of 321,242 employer establishments that employed over 3.6 million people (or about 12 employees per establishment) and had total payroll amounting to over 198 billion dollars. 25

25 Data were withheld for the following NAICS to avoid disclosure: 423410, 423490, 423820, 423850, 423920, 423940,

424460, 424490, 424930, 424990.Market Profile of the Composite Wood Products Industry 131 

### Note that these figures reflect all employer establishments in these NAICS codes. Not all of these establishments will be affected by the rule because not all entities in these industries sell composite wood products. Of the potentially affected wholesale trade industries, NAICS 423830 had the most employer establishments (29,838) and employees (319,557 ; NAICS 423690 had the largest payroll (over $18 billion dollars).Market Profile of the Composite Wood Products Industry 132 

# 8 Composite Wood Product R etailers

This section presents information on the value of sales, payroll and industry organization for the retail establishments that sell products containing composite wood. Note that the industry categories as defined by NAICS are likely to include som e retailers that are not subject to any requirements under the proposed TSCA Title VI rule.

NAICS codes for the potentially affected retail trade industries were indentified through a review of information reported by the U.S. Census Bureau

.

Section 8.1 presents information on the value of sales by industry and product type.
Section 8.2 describes industry payroll costs. Section 8.3 summarizes the industry organizati on for the composite wood product wholesalers.



## 8.1 Value of Sales

Table 8

- 1 shows the value of products sold in the potentially affected retail industries by product type.Market Profile of the Composite Wood Products Industry 133 

### Table 8

- 1 : Valu e of Sales by Industry for Retail, 2007$

NAICS Code NAICS Description Product Value of Sales

44121 Recreational Vehicle Dealers New camping trailers, including collapsible $681,131 New travel trailers, including 5th wheel $5,161,319
New motor hom es $5,511,601 New travel trailers, including 5th wheel $5,161,319 Manufactured (mobile) homes, excluding modular homes $43,055 Utility trailers, including horse/livestock trailers $40,366 Products without Composite Wood Products $3,250,372 Industry Total $19,220,735

44221 Floor Covering
Stores Furniture, sleep equipment & outdoor/patio
furniture $71,330
other hard

- surface floor coverings & accessories $3,996,081 Dimensional lumber & oth bldg/structural materials & supplies $201 ,404 Products without Composite Wood Products $16,709,338 Industry Total $20,979,750

44229 All Other
Home Furnishings
Stores Furniture, sleep equipment & outdoor/patio furniture $2,078,067
other hard

- surface floor coverings & accessories $25, 318 Dimensional lumber & oth bldg/structural materials & supplies $325,948 Products without Composite Wood Products $26,404,189 Industry Total $28,834,338

443112 Radio, TV, and Other Electronics Furniture, sleep equipment & outdoor/patio
furn iture $384,993 Flooring & floor coverings $1,351 Products without Composite Wood Products $67,212,492 Industry Total $67,599,235

44312 Computer and Software
Stores Furniture, sleep equipment & outdoor/patio furniture $2,492
Dimensional lu mber & oth bldg/structural materials & supplies $130 Products without Composite Wood Products $20,055,231 Industry Total $20,064,021

44411 Home Centers Furniture, sleep equipment & outdoor/patio furniture $1,420,821
other hard

- surface floor c overings & accessories $4,934,253 Boards, all grades $1,517,400 Engineered wood products, incl glue

- lam, LVL,

etc $270,519 Structural panels, incl softwood plywood, & OSB $1,649,428 Oth panel products, incl hardwood plywood, waferboard, etc $876,187 Doors & moulding $6,567,706 Windows, skylights, & patio doors $2,202,930 Kitchen & bath cabinets & countertops $9,870,715 Products without Composite Wood Products $100,962,572 Industry Total $134,547,396

44413 Hardware
Store s Furniture, sleep equipment & outdoor/patio
furniture $159,539
other hard

- surface floor coverings & accessories $18,302 RVs, incl camping & travel trailers, campers, parts & accessories $1,204Market Profile of the Composite Wood Products Industry 134 

### Table 8

- 1 : Valu e of Sales by Industry for Retail, 2007$

NAICS Code NAICS Description Product Value of Sales Boards, all grades $37,207 Gypsum, specialty b oards, & treatments $46,916 Engineered wood products, incl glue

- lam, LVL,

etc $6,482 Structural panels, incl softwood plywood, & OSB $24,892 Oth panel products, incl hardwood plywood, waferboard, etc $27,066 Doors & moulding $132,510

Wi ndows, skylights, & patio doors $27,340 Kitchen & bath cabinets & countertops $85,680 Products without Composite Wood Products $19,499,466 Industry Total $20,067,407

44419 Other Building Material Dealers Furniture, sleep equipment & outdoor/p atio furniture $102,693
other hard

- surface floor coverings & accessories $3,568,379 Boards, all grades $2,016,542 Gypsum, specialty boards, & treatments $3,139,924 Engineered wood products, incl glue

- lam, LVL,

etc $2,028,242
Structural panels, incl softwood plywood, & OSB $2,958,413 oth panel products, incl hardwood plywood, waferboard, etc $1,868,350 Doors & moulding $7,705,336 Windows, skylights, & patio doors $6,748,045 Kitchen & bath cabinets & countertops $7,422,340 Manufactured (mobile) homes, excluding modular homes $426 Products without Composite Wood Products $80,917,307 Industry Total $118,480,605

452111 Department
Stores excluding
Discount Upholstered furniture $402,408 Sleep equipment, incl ma ttresses, springs, cots, waterbeds, etc $709,657 oth living room, dining room, bedroom furniture, incl headboards $306,888 All oth furniture, incl outdoor, office, computer

related, kitchen $379,922 Flooring & floor coverings $89,361
Produc ts without Composite Wood Products $76,351,557 Industry Total $77,705,181

452112 Discount Department
Stores Upholstered furniture $3,377 Sleep equipment, incl mattresses, springs, cots, waterbeds, etc $76,751 oth living room, dining room, bed room furniture, incl headboards $617,398 All oth furniture, incl outdoor, office, computer

related, kitchen $965,868
other hard

- surface floor coverings & accessories $15,440 Dimensional lumber & oth bldg/structural materials & supplies $39,731 Products without Composite Wood Products $130,718,604 Industry Total $132,437,186

45291 Warehouse Upholstered furniture $204,192Market Profile of the Composite Wood Products Industry 135 

### Table 8

- 1 : Valu e of Sales by Industry for Retail, 2007$

NAICS Code NAICS Description Product Value of Sales
Clubs and Supercenters Sleep sofas, daybeds, futons, & other dual

purpose pieces $3,065 Sleep equipment, incl mattresses, springs, cots, waterbeds, etc $624,768 oth living room, dining room, bedroom furniture, incl headboards $469,083 All oth furniture, incl outdoor, office, computer

related, kitchen $1,466,589
other hard

- surface floor coverings & acc essories $6,577 Products without Composite Wood Products $322,186,345 Industry Total $324,962,891

45299 All Other General Merchandise
Stores Upholstered furniture $523,560 Sleep sofas, daybeds, futons, & other dual

purpose pieces $5,441

S leep equipment, incl mattresses, springs, cots, waterbeds, etc $175,784 oth living room, dining room, bedroom furniture, incl headboards $613,927 All oth furniture, incl outdoor, office, computer

related,kitchen $307,200
other hard

- surface floo r coverings & accessories $82,069 RVs, incl camping & travel trailers, campers, parts & accessories $1,955 Dimensional lumber & oth bldg/structural materials & supplies $63,129 Products without Composite Wood Products $41,129,109 Industry T otal $42,902,440

45321 Office Supply and Stationary
Stores Furniture, sleep equipment & outdoor/patio
furniture $1,861,178 Products without Composite Wood Products $20,863,380 Industry Total $22,725,012

45393 Manufactured (Mobile) Home Dealer F urniture, sleep equipment & outdoor/patio
furniture $2,182 RVs, incl camping & travel trailers, campers, parts & accessories $21,577 Dimensional lumber & oth bldg/structural materials & supplies $6,465 New single

- section manuf (mobile) homes, l ess than 14 ft wide $60,049 New single

- section manuf (mobile) homes, 14 ft wide $221,268 New single

- section manuf (mobile) homes, more than 14 ft wide $1,080,641 New multisection manuf (mobile) homes, two
sections $4,981,852
New multisectio n manuf (mobile) homes, three
or more sections $601,420 Other new manufactured (mobile) homes & parts & accessories $113,477 Used single

- section manufactured (mobile) homes $388,408 Used multisection manufactured (mobile) homes $341,209

Pro ducts without Composite Wood Products $261,354Market Profile of the Composite Wood Products Industry 136 

### Table 8

- 1 : Valu e of Sales by Industry for Retail, 2007$

NAICS Code NAICS Description Product Value of Sales Industry Total $8,081,437

4421 Upholstered furniture $15,442,607 Sleep sofas, daybeds, futons, & other dual

purpose pieces $1,667,339 Oth living room, dining room, bedroom furniture, incl headb oards $16,081,470 Office furniture, including computer

- related furniture $3,119,384 Outdoor/patio furniture $1,113,222 All other furniture, including kitchen, dinette,

etc. $3,953,474 Flooring & floor coverings $742,347
Other hard

- surfa ce floor coverings & accessories $69,936 Kitchenware & home furnishings $1,085,430 Decorative accessories, incl lamps, lampshades, mirrors, etc $1,008,074 All other kitchenware & home furnishings $77,356 Products without Composite Wood Prod ucts $13,629,811 Industry Total $57,990,450

443111 Household appliance

stores Furniture, sleep equipment & outdoor/patio furniture $329,750 Flooring & floor coverings $79,733 Kitchenware & home furnishings $261,881 Products without Compos ite Wood Products $16,775,724 Industry Total $17,447,088

44412 Paint and wallpaper

stores Furniture, sleep equipment & outdoor/patio furniture $2,011 Flooring & floor coverings $112,420 Kitchenware & home furnishings $5,631 Boards, all gr ades $260 Engineered wood products, incl glue

- lam, LVL,

etc $792 Oth panel products, incl hardwood plywood, waferboard, etc $226 Bldg components, incl floor trusses, roof trusses,

etc $34 Doors & moulding $3,135 Windows, skylights, & pa tio doors $6,135 Kitchen & bath cabinets & countertops $1,920 Products without Composite Wood Products $9,922,880 Industry Total $10,055,444

44421 Outdoor

power equipment

stores Furniture, sleep equipment & outdoor/patio furniture $2,597 Kitchenware & home furnishings $2,770 RVs, incl camping & travel trailers, campers, parts & accessories $78,778 Products without Composite Wood Products $5,687,087 Industry Total $5,771,232

44422 Nursery, garden center, and farm supply stores Furniture, sleep equipment & outdoor/patio
furniture $180,733 Kitchenware & home furnishings $226,263 RVs, incl camping & travel trailers, campers, parts & accessories $13,730Market Profile of the Composite Wood Products Industry 137 

### Table 8

- 1 : Valu e of Sales by Industry for Retail, 2007$

NAICS Code NAICS Description Product Value of Sales Products without Composite Wood Products $30,722,502 Industry T otal $31,143,228

44511 Supermarkets and other

grocery (except convenience)

stores Kitchenware & home furnishings $1,319,786 Products without Composite Wood Products $465,044,903

Industry Total $466,364,689

44811 Men's clothing

stores Furniture, sleep equipment & outdoor/patio furniture $173 Kitchenware & home furnishings $16,610 Products without Composite Wood Products $8,634,376 Industry Total $8,651,159

44812 Women's clothing stores Furniture, sleep equipment & outdoor/patio
furn iture $27,058 Kitchenware & home furnishings $234,110 Products without Composite Wood Products $38,952,883 Industry Total $39,214,051

44813 Children's and infants' clothing stores Furniture, sleep equipment & outdoor/patio furniture $507,303 Kitchenware & home furnishings $27,781 Products without Composite Wood Products $8,756,174 Industry Total $9,291,258

44814 Family clothing

stores Furniture, sleep equipment & outdoor/patio furniture $372,295 Flooring & floor coverings $84 0 Kitchenware & home furnishings $1,745,504 Products without Composite Wood Products $81,919,355 Industry Total $84,037,994

44815 Clothing
accessories

stores Furniture, sleep equipment & outdoor/patio
furniture $282
Kitchenware & home fur nishings $17,732 Products without Composite Wood Products $5,629,088 Industry Total $5,647,102

44819 Other clothing

stores Kitchenware & home furnishings $1,340 Products without Composite Wood Products $10,872,300 Industry Total $10,873,6 40

44831 Jewelry stores Furniture, sleep equipment & outdoor/patio furniture $1,757 Kitchenware & home furnishings $454,454 Products without Composite Wood Products $28,826,178 Industry Total $29,282,389

45111 Sporting goods

stores Furnitur e, sleep equipment & outdoor/patio
furniture $33,856 Kitchenware & home furnishings $68,662 Products without Composite Wood Products $34,229,605 Industry Total $34,332,123

45112 Hobby, toy, and game

stores Furniture, sleep equipment & outdoor /patio furniture $194,416 Kitchenware & home furnishings $1,729,314 Products without Composite Wood Products $13,688,176 Industry Total $15,611,906Market Profile of the Composite Wood Products Industry 138 

### Table 8

- 1 : Valu e of Sales by Industry for Retail, 2007$

NAICS Code NAICS Description Product Value of Sales

45113 Sewing, needlework, and piece goods stores Furniture, sleep equipment & outdoor/patio fu rniture $50,080 Kitchenware & home furnishings $77,275 Products without Composite Wood Products $3,901,592 Industry Total $4,028,947

4531 Florists Furniture, sleep equipment & outdoor/patio
furniture $12,802 Kitchenware & home furnishings $221,515 Products without Composite Wood Products $6,040,999 Industry Total $6,275,316

45322 Gift, novelty, and souvenir

stores Furniture, sleep equipment & outdoor/patio furniture $62,718 Flooring & floor coverings $965
Kitchenware & ho me furnishings $1,428,199 Products without Composite Wood Products $14,652,036 Industry Total $16,081,200

45392 Art dealers Furniture, sleep equipment & outdoor/patio furniture $24,802 Kitchenware & home furnishings $35,093
Products witho ut Composite Wood Products $8,376,006 Industry Total $8,435,901

45399 All other miscellaneous store retailers Furniture, sleep equipment & outdoor/patio
furniture $288,841 Kitchenware & home furnishings $785,967 Products without Composite Woo d Products $20,127,095 Industry Total $21,201,903

454113 Mail

- order houses Furniture, sleep equipment & outdoor/patio furniture $2,163,377 Flooring & floor coverings $244,227 Kitchenware & home furnishings $4,452,548 Products without Comp osite Wood Products $124,402,611 Industry Total $131,262,763

45439 Other direct selling establishments Furniture, sleep equipment & outdoor/patio furniture $762,808 Flooring & floor coverings $1,304,226 Kitchenware & home furnishings $1,711,8 07 Products without Composite Wood Products $22,762,443 Industry Total $26,541,284

Source: U.S. Census 2009b



## 8.2 Retail Payroll and Sales

Table 8

- 2 presents the value of annual payroll and sales for the potentially affect ed retail trade industries in 2007.Market Profile of the Composite Wood Products Industry 139 

### Table 8

- 2 : Value of Annual Payroll and Sales for Retailers (thousands, 2007 $)

NAICS NAICS Description Annual Payroll Sales

441210 Recreational vehicle dealers $1,671,075 $19,057,106

442110 Furniture stores $7,975,034 $58,172,947

442210 Floor covering stores $3,219,963 $21,174,151

442291 Window treatment stores $259,954 $1,546,007

442299 All other home furnishings stores $3,427,682 $27,326,976

443111 Household applian ce stores $2,091,185 $17,501,247

443112 Radio, television, and other electronics stores $6,556,328 $67,643,822

443120 Computer and software stores $2,158,114 $19,972,963

444110 Home centers $13,507,517 $134,821,247

444120 Paint and wallpaper stores $1, 262,492 $10,052,960

444130 Hardware stores $3,160,537 $20,130,557

444190 Other building material dealers $15,640,862 $116,866,222

444210 Outdoor power equipment stores $739,473 $5,740,482

444220 Nursery, garden center, and farm supply stores $3,399,110 $30,708,803

445110 Supermarkets and other grocery (except convenience) stores $48,088,532 $466,225,948

448110 Men's clothing stores $1,364,692 $8,538,393

448120 Women's clothing stores $5,100,737 $39,463,349

448130 Children's and infants' clothing sto res $1,049,016 $9,338,186

448140 Family clothing stores $9,444,412 $84,052,604

448150 Clothing accessories stores $716,830 $5,704,796

448190 Other clothing stores $1,590,895 $10,950,930

448310 Jewelry stores $4,167,145 $29,231,749

451110 Sporting good s stores $3,928,257 $34,490,779

451120 Hobby, toy, and game stores $1,802,386 $15,633,187

451130 Sewing, needlework, and piece goods stores $546,437 $4,017,787

452111 Department stores (except discount department stores) $9,502,596 $76,886,578

452112 D iscount department stores $12,710,286 $132,504,850

452910 Warehouse clubs and supercenters $27,855,313 $324,963,224

452990 All other general merchandise stores $4,345,360 $42,743,543

453110 Florists $1,400,307 $6,285,503

453210 Office supplies and stat ionery stores $2,356,843 $22,833,467

453220 Gift, novelty, and souvenir stores $2,543,692 $16,162,156

453920 Art dealers $984,855 $8,564,335

453930 Manufactured (mobile) home dealers $743,954 $8,121,994

453998 All other miscellaneous store retailers (e xcept tobacco stores) $2,194,660 $14,236,428

454113 Mail

- order houses $9,033,008 $137,355,909

454390 Other direct selling establishments $4,115,212 $24,888,550 Notes: 1) Payroll includes all forms of compensation such as salaries, wages, commissions, di smissal pay, bonuses, vacation allowances, sick

leave pay, and employee contributions to qualified pension plans paid during the year to all employees and reported on Intern al Revenue Service (IRS) Form 941 as taxable Medicare Wages and tips (even if not s ubject to income or FICA tax).
Source: U.S. Census 2010d



### As indicated in Table 8

- 2 , in 2007 the value of annual payrolls for the potentially affected retail trade industries ranged from just under $260 million dollars to nearly $48.1 billion, while the value of sales ranged from over $1.5 billion to just over $466.2 billion (NAICS 442291 and 445110, respectively).Market Profile of the Composite Wood Products Industry 140 

## 8.3 Industry Organization

The following section describes the org anization of the potentially affected retail trade ind ustries. Information is presented on:

• The industry structure

• Employment

In addition, this section provides detailed information about facilities and firms that are key inputs to the economic analysis.

8.3.1 U.S. Census Data on Industry Structure

Table 8

- 3 presents m

- firm co ncentration ratios for the potentially affected retail trade industries in 2007. M

- firm concentration ratios are equal to the sum of the market shares for the largest m number of firms in the industry; the higher th e ratio the more concentrated the industry. A market is generally considered highly concentrated if the 4

- firm concentration ratio is greater than 50 percent.Market Profile of the Composite Wood Products Industry 141 

### Table 8

- 3 : m - firm Concentration Ratios for Ret ailers, 2007

NAICS Description Number of Establishments

in Industry m
- firm Concentration Ratio (Percent)

4 Firms 8 Firms 20 Firms 50 Firms
441210 Recreational vehicle dealers 3,100 14.6 % 19.1 % 27.1 % 36.2 %
442110 Furniture stores 28,834 13.7 % 19.0 % 2 8.1 % 37.1 %
442210 Floor covering stores 14,534 2.9 % 4.4 % 7.2 % 11.3 %
442291 Window treatment stores 2,652 16.7 % 20.6 % 25.3 % 33.1 %

442299 All other home furnishings

stores 19,124 48.8 % 60.9 % 72.5 % 76.3 %

443111 Household appliance stores 9,336 21.3 % 27.6 % 32.9 % 39.9 %

443112 Radio, television, and other electronics stores 29,051 70.0 % 74.2 % 78.6 % 81.2 %

443120 Computer and software

stores 10,428 73.1 % 77.2 % 79.1 % 81.4 %

444110 Home centers 6,953 92.7 % 93.0 % 93.7 % 94.5 %
444120 Paint and wallpaper stores 7, 860 59.7 % 69.0 % 73.7 % 77.1 %
444130 Hardware stores 16,454 19.5 % 22.7 % 26.6 % 30.3 %

444190 Other building material dealers 39,551 9.5 % 12.6 % 17.0 % 21.5 %

444210 Outdoor power equipment

stores 4,357 4.7 % 7.1 % 11.6 % 17.9 %

444220 Nursery, garden center, and farm supply stores 15,895 14.5 % 17.5 % 21.5 % 26.8 %

445110 Supermarkets and other grocery (except convenience) stores 64,881 32.0 % 45.6 % 58.8 % 70.2 %

448110 Men's clothing stores 8,321 33.0 % 40.5 % 49.6 % 56.1 %
448120 Women's clothing stores 36,220 23.7 % 37. 8 % 59.0 % 74.9 %

448130 Children's and infants' clothing stores 7,102 62.2 % 80.7 % 85.4 % 88.9 %

448140 Family clothing stores 28,254 45.4 % 58.0 % 75.4 % 88.4 %
448150 Clothing accessories stores 7,494 61.6 % 71.9 % 76.5 % 79.4 %
448190 Other clothing stores 12,03 4 44.1 % 48.9 % 55.0 % 60.2 %
448310 Jewelry stores 27,745 24.5 % 30.9 % 37.5 % 43.5 %
451110 Sporting goods stores 22,254 29.3 % 41.0 % 52.1 % 56.3 %

451120 Hobby, toy, and game

stores 9,357 71.9 % 78.7 % 81.7 % 83.4 %

451130 Sewing, needlework, and piece goods store s 5,663 59.4 % 61.1 % 63.9 % 67.1 %

452111 Department stores (except discount department stores) 3,533 81.4 % 96.9 % D 100.0 %

452112 Discount department stores 5,001 96.9 % 99.9 % 100.0 % 100.0 %

452910 Warehouse clubs and supercenters 4,260 93.9 % 99.9 % 100.0 % 10 0.0 %

452990 All other general merchandise stores 33,061 59.2 % 68.6 % 79.4 % 84.3 %

453110 Florists 19,822 2.1 % 2.9 % 4.5 % 7.1 %

453210 Office supplies and stationery stores 9,558 80.3 % 81.2 % 82.4 % 84.0 %

453220 Gift, novelty, and souvenir

stores 31,391 12.4 % 19.8 % 26.9 % 33.3 %

453920 Art dealers 6,677 13.4 % 18.8 % 28.6 % 39.8 %

453930 Manufactured (mobile) home dealers 3,878 26.1 % 29.2 % 33.1 % 39.2 %Market Profile of the Composite Wood Products Industry 142 453998 All other miscellaneous store retailers (except tobacco stores) 17,270 7.3 % 10.1 % 14.8 % 20.3 %

454113 Mail

- order houses 7,324 33.9 % 46.7 % 59.4 % 71.7 %

454390 Other direct selling establishments 22,077 13.3 % 20.1 % 28.8 % 34.6 %

Notes: 1) "D" is used to indicate that the data have been withheld to avoid disclosure.

Source: 

### U.S. Census 2005c

As indicated in Table 8

- 3 , the 4

- firm concentration ratios of the potentially affected retail trade industries ranged from 2.1 percent (NAICS 453110) to 96.9 percent (NAICS 452112). In fact, 13 of the 37 industries had 4

- firm concentration ratios g reater than 50 percent
, indicating highly concentrated markets.

8.3.2 U.S. Census Data on Employment

Table 8

- 4 summarizes the employment statistics for the potentially affected employer establishments in the retail trade industries in 2007. These statistics do not reflect non

employer establishments.Market Profile of the Composite Wood Products Industry 143 

### Table 8

- 4 : Summary of Employment Statistics for Retailer Employer Establishment s, 2007

NAICS Description Total Establishments Total Employee s Average Employees
Per Establishment Total Payroll (thousands,

2007 $)

441110 New car dealers 24,888 1,138,370 45.7 50,148,097
441210 Recreational vehicle dealers 3,100 42,669 13.8 1,671,075

441221 Motorcycle, ATV, and personal watercraft dealers 6,137 70,561 11.5 2,362,545

441229 All other motor vehicle dealers 2,266 13,414 5.9 457,349

441320 Tire dealers 20,127 173,907 8.6 5,582,498
442110 Furniture stores 28,834 266,374 9.2 7,975,034
442210 Floor covering stores 14,534 89,420 6.2 3,219,963
442291 Window treatment stores 2,652 9,626 3.6 259,954

442299 All other home furnishings

stores 19,124 192,057 10.0 3,427,682

443111 Household appliance stores 9,336 70,045 7.5 2,091,185

443112 Radio, television, and other electronics stores 29,051 309,374 10 .6 6,556,328

443120 Computer and software

stores 10,428 92,777 8.9 2,158,114

443130 Camera and photographic supplies stores 1,988 14,287 7.2 414,039

444110 Home centers 6,953 579,442 83.3 13,507,517
444120 Paint and wallpaper stores 7,860 35,491 4.5 1, 262,492
444130 Hardware stores 16,454 143,738 8.7 3,160,537

444190 Other building material dealers 39,551 405,755 10.3 15,640,862

444210 Outdoor power equipment

stores 4,357 25,882 5.9 739,473

444220 Nursery, garden center, and farm supply stores 15,89 5 141,014 8.9 3,399,110

445110 Supermarkets and other grocery (except convenience)

stores 64,881 2,432,425 37.5 48,088,532

445120 Convenience stores 25,510 118,787 4.7 1,808,358
445210 Meat markets 6,009 38,703 6.4 723,323
445220 Fish and seafood marke ts 2,063 10,012 4.9 196,921
445230 Fruit and vegetable markets 2,938 19,444 6.6 374,732
445291 Baked goods stores 4,290 18,250 4.3 275,927
445292 Confectionery and nut stores 3,404 18,030 5.3 233,252

445299 All other specialty food

stores 5,504 30,256 5.5 362,468

445310 Beer, wine, and liquor stores 31,485 141,255 4.5 2,592,081
446110 Pharmacies and drug stores 42,045 814,836 19.4 22,385,345

446120 Cosmetics, beauty supplies, and perfume stores 13,584 86,278 6.4 1,392,792

446130 Optical goods stores 13,149 70,038 5.3 1,841,751

446191 Food (health) supplement

stores 8,999 40,067 4.5 706,753

446199 All other health and personal

care stores 10,675 56,967 5.3 2,088,296

447110 Gasoline stations with
convenience stores 97,508 719,108 7.4 11,292,510

447 190 Other gasoline stations 21,248 171,721 8.1 3,378,315Market Profile of the Composite Wood Products Industry 144 

### Table 8

- 4 : Summary of Employment Statistics for Retailer Employer Establishment s, 2007

NAICS Description Total Establishments Total Employee s Average Employees
Per Establishment Total Payroll (thousands,

2007 $)

448110 Men's clothing stores 8,321 57,340 6.9 1,364,692
448120 Women's clothing stores 36,220 339,798 9.4 5,100,737

448130 Children's and infants' clothing stores 7,102 98,729 13.9 1,049,016

4481 40 Family clothing stores 28,254 642,117 22.7 9,444,412
448150 Clothing accessories stores 7,494 37,575 5.0 716,830
448190 Other clothing stores 12,034 97,581 8.1 1,590,895
448210 Shoe stores 28,076 207,945 7.4 3,233,039
448310 Jewelry stores 27,745 15 5,492 5.6 4,167,145

448320 Luggage and leather goods

stores 1,222 7,448 6.1 188,515

451110 Sporting goods stores 22,254 221,439 10.0 3,928,257
451120 Hobby, toy, and game stores 9,357 135,688 14.5 1,802,386

451130 Sewing, needlework, and piece goods st ores 5,663 49,450 8.7 546,437

451140 Musical instrument and supplies stores 4,510 33,996 7.5 796,366

451211 Book stores 9,955 141,185 14.2 1,818,814

451212 News dealers and newsstands 1,523 8,301 5.5 138,873

451220 Prerecorded tape, compact disc, and r ecord stores 4,153 29,016 7.0 434,786

452111 Department stores (except discount department stores) 3,533 534,189 151.2 9,502,596

452112 Discount department stores 5,001 690,265 138.0 12,710,286

452910 Warehouse clubs and supercenters 4,260 1,244,237 292 .1 27,855,313

452990 All other general merchandise stores 33,061 294,783 8.9 4,345,360

453110 Florists 19,822 93,967 4.7 1,400,307

453210 Office supplies and stationery stores 9,558 112,734 11.8 2,356,843

453220 Gift, novelty, and souvenir

stores 31,39 1 193,317 6.2 2,543,692

453910 Pet and pet supplies stores 8,782 101,538 11.6 1,597,465
453920 Art dealers 6,677 23,126 3.5 984,855

453930 Manufactured (mobile) home dealers 3,878 21,068 5.4 743,954

453991 Tobacco stores 6,539 26,158 4.0 416,796

45399 8 All other miscellaneous store retailers (except tobacco stores) 17,270 88,296 5.1 2,194,660

454111 Electronic shopping 14,185 0 0.0 0
454113 Mail

- order houses 7,324 220,516 30.1 9,033,008
454210 Vending machine operators 5,194 50,811 9.8 1,361,975
45 4311 Heating oil dealers 4,055 42,663 10.5 1,698,522

454312 Liquefied petroleum gas (bottled gas) dealers 5,980 43,525 7.3 1,486,582

454390 Other direct selling establishments 22,077 131,013 5.9 4,115,212

Total 1,039,297 14,775,686 14.2 342,443,836Market Profile of the Composite Wood Products Industry 145 

### Table 8

- 4 : Summary of Employment Statistics for Retailer Employer Establishment s, 2007

NAICS Description Total Establishments Total Employee s Average Employees
Per Establishment Total Payroll (thousands,

2007 $)

Not es: 1) "D" is used to indicate that the data have been withheld to avoid disclosure.
Source: U.S. Census 2010d



### As indicated in Table 8

- 4 , in 2007 the potentially affected retail trade industries were composed of 1,039,297 emplo yer establishments that employed over 14 million people (or 14 employees per establishment) and had total payroll amounting to over 3 42 billion dollars. Note that these figures reflect all employer establishments in these NAICS codes. Not all of these

es tablishments will be affected by the rule because not all entities in these industries sell composite wood products. Of the potentially affected retail trade industries, NAICS 447110 had the most employer establishments ( 97,508 ) , NAICS 445110 had the most employees ( 2,432,425 ), and NAICS 441110 had the largest payroll (over $ 50 billion dollars).Market Profile of the Composite Wood Products Industry 146 

# 9 Third Party Certifiers (TPCs)

CARB has approved nine TPCs located in the U.S. (although most of these U.S. TPCs provide services internationally). Two of these TP Cs are non

- profit organizations, and the rest are businesses. Table 9

- 1 l ists the domestic TPCs approved by CARB, their NAICS code, the type of organization, the sales volume or expenditures and the number of emplo yees for the TPC or its parent organization, the U.S. Small Business Administration’s size threshold for the NAICS code, and the TPC’s small entity status.

Th e economic analysis assumes that 9 U.S. entities will act as TPCs under the TSCA Title VI progr am, and uses existing CARB TPCs as a proxy for their size and characteristics, but that does not mean that all of the CARB TPCs will become TPCs under Title VI. In reality, some of the CARB TPCs may choose not to participate in the federal program, and/or new entities may apply that are not part of the CARB program.

Size information was available for four of the nine U.S. TPCs, including the two non

profits. The size of the TPCs ranges from a non

- profit with 10 employees and $1.6 million in expenditures to a business with 2,500 employees in 125 offices with parent company that manages $3.1 billion in assets.

TPCs come from a diverse set of industries

– the six U.S.

- based CARB TPCs for which Dun & Bradstreet listed an industry classification fall into fi ve different NAICS codes. Thus, the firms that are likely to seek TPC accreditation may be very different from each other in terms of size, organization, and financial condition. Table 9

- 2 presents key industry s ummary statistics for these NAICS codes. However, the domestic TPCs approved by CARB represent a very small share of the 142,000 firms in these industries. And comparing Table 9

- 1 and Table 9

- 2

, the CARB TPCs appear to be larger than the average firms in these industries. Thus, these Census statistics may not be representative of current CARB TPCs or potential new TSCA Title VI TPCs.Market Profile of the Composite Wood Products Industry 1 47 

### Table 9

- 1 : CARB

- Approved Third Party Certifiers Based in the U.S.

Company

Name N
A
I
C
S

c

o d

e Org aniz
atio

n Typ

e Annual Sales Volume

or Expend
itures 1 (million

s $) Total Employe

es SBA Size Thres hold:
Reve

nues

($
Milli ons)

or Empl

oyee

s Sma ll
Enti ty Stat

us

Certificatio
n Services
Internation al, LLC U

n k

n

o

w

n Unk

now

n Unkno

wn Unknow

n Unkn

own Unk

now

n

Composite Panel
Association North America, Inc. (CPA) 8
1
3
9
1
0 Non

- Prof
it $3.0 14 $7.0 Sma ll

Forestwoo d Industries,
Inc. U

n k

n

o

w

n Unk

now

n Unkno

wn Unknow

n U nkn

own Unk

now

n

Hardwood Plywood and Veneer
Association (HPVA) 8
1
3
9
1
0 Non

- Prof
it $1.6 10 $7.0 Sma ll

NTA Incorporate d 5
4
1
3
3
0 Priv

ate Co

mp
any $5.4 80 $4.5 Larg

e

PFS Corporatio

n 5
4
1
6
1
1 Priv

ate Co

mp
any Unkno

wn Accordin g to
company website,

more than 100 employe

es $7.0 Unk

now

n

Professiona l Service Industries, Inc. (PSI), U

n k

n Priv

ate Co

mp Unkno wn, but Olympu

s Unknow n, but
PSI website Unkn

own Ass

ume d to

beMarket Profile of the Composite Wood Products Industry 148 owned by Olympus
Partners o

w

n any Partner

s website reports

they

manage $3.1
billion
in

assets. reports they have

more than
2 ,500 employe
es in 125

offices larg

e bec

aus e of

rep
orte d

asse

ts. Scientific Certificatio

n Systems (S CS) 5
4
1
3
8
0 Priv

ate Co

mp
any Unkno

wn SCS web site lists
87 employe

es $12.0 Unk

now

n

TIMBERCO (dba TECO) 5
6
1
9
9
0 Priv

ate Co

mp
any Unk no

wn 31 $7.0 Unk

now

n

1 Annual sales volume is reported for businesses, and annual expenditures are reported for non

- profits Sources: California Air Resources Board 2011 (list of TPCs), Dun & Bradstreet 2011 (sales volume and employees for
businesses and NAICS codes for all entities), Internal Revenue Service 2010 (expenditures and employees for non

- profits), U.S. Small Business Administration 2010 (size standards), and company web sites for PSI, PFS, and SCS for data on their sales volume and employees.



### Table 9

- 2 : Industry Summary Statistics for NAICS Identified for U.S. Third Party Certifiers

NAICS Firms Establish

ments Revenues ($1000) Number of Employees Average
Revenues per Firm ($1000)

541330

- Engineering
services 47,714 58,391 $187,531,866 977,031 $3,930

541380

- Testing laboratories 5,288 6,549 $12,386,831 106,618 $2,342

541611

- Administrative management consulting
services 59,612 61,583 $67,994,053 351,829 $1 ,141
561990

- All other support
services 12,888 14,539 $20,897,346 195,544 $1,621

813910

- Business
associations 16,418 17,028 $22,482,137 116,055 $1,369
Total 141,920 158,090 311,292,233 1,747,077 $2,193 Note that TPCs could potentially be classified in additional NAICS as well; as a result, this list may not be comprehensive. Sources: U.S. Census Bureau 2010a ; U.S. Census Bureau 2010b ; U.S. Census Bureau 2010c ; U.S. Census Bureau 2010dMarket Profile of the Composite Wood Products Industry 149 

### As shown in Table 9

- 3 , there are a total of 27 CARB approved TPCs outside of the U.S., bringing the total number of CARB approved TPCs to 3 6.

Table 9

- 3 : CARB

- Approved Third Party Certifiers by Country

Country Where TPC is Located Number of TPCs
Australia 1
Austria 1 Belgium 1
China 5 Czech Republic 1
Denmark 1
France 1 Germany 4 Hong Kong 3
Indonesia 1 Italy 3
New Zealand 1
Poland 1 Spain 1
Sweden 1
Taiwan 1
Sub

- total for TPCs outside the
U.S. 27
United States 9

Total 36
Source: California Air Resources Board 2011Market Profile of the Composite Wood Products Industry 150 

# 10 Composite Wood Products Market Outlook

This c hapter presents a summary of the market outlook for composite wood products.
Section 10.1 presents a summary of the historical and forecast North American consumption of MDF and particleboard. Section 10.2 presents the housing market outlook and section 10.3 presents the renovation market outlook.



## 10.1 Outlook for MDF and Part icleboard Consumption

Figure 10

- 1 presents historical and forecast North American MDF and particleboard consumption. (Similar information was not identified for hardwood plywood.) Particleboard has experienced steep declines in demand since it peaked in 2000 and is expected to improve, but remain well below peak levels over the next ten years. MDF experienced similar, but slightly more modest declines in demand over the past few years compared to particleboard and is expected to rebound to levels near its 2002 peak by 2023 ( Kennedy 2009 )

.Market Profile of the Composite Wood Products Industry 151 

### Figure 10

- 1 : Historical and Forecast Particleboard and MDF Consumption

Particleboard

MDF

Source: Kennedy 2009Market Profile of the Composite Wood Products Industry 152 

## 10.2 Housing Market Summ ary

10.2.1.1 Mortgage Market



### The financial recession in the second half of this decade has resulted in a high level of turbulence within the housing and mortgage markets. The housing bubble , signaled by inflated prices and excess housing supply, burst in the first half of the decade , leaving the home building industry with a severe slowdown in both sales and production. A surplus inventory of vacant homes is now the largest obstacle to returning to balance in the marketplace

, or to a situation where levels of produ ction are more in line with long

- term trends in demand.

Housing prices have declined from peak levels at the height of the housing boom according to a range of measures. Prices are approaching trend levels from the 1990’s, adjusted for changes in mortgage interest rates and income growth. Stabilization of prices

, along with a reduction of foreclosures, will be a key component in reduction of the number of unsold homes ( NAHB 2008 )

.
The National Association of Realtors releases national and regional existing

- home sales price and volume statistics monthly. They also provide a monthly summary forecast of actual and predicted movement in home sales, home prices, housing starts, and mortgage rates. Although home sales were extremely low in 2009 and 2010, the Nat ional Association of Realtors expects that existing home sales, new sales, and residential construction will begin a steady recovery to regular growth trends within the next three years. These home sale statistics and predicted trends are illustrated alon g with predicted trends in relevant mortgage rates in Table
10

- 1 below.

Table 10

- 1 : Economic Outlook for Housing Statistics and Mortgage Rates

2009 2010 2011 2012 Housing Sales and Starts (thousands of housing units) Existing Home Sales 5,156 4,824 5,166 5,388 New Single

- Family Sales 376 325 420 537

Total Housing Starts 554 617 769 1,013 Construction Expenditures (billions, current$)
Residential Construction (Billion Dollars) $ 359 $ 341 $ 374 $ 441

Mortgage Rates
30

- Year Fixed Rate 5.1 % 4.7 % 5.0 % 5.9 %
1

- Year Adjustable 4.7 % 3.9 % 4.1 % 5.0 %
Source: NAR 2010



### 10.2.1.2 Housing Demand



### There has been a recent dramatic slowdown in household growth

– the net addition of homeowner households. An examination of what has been driving the slowdown reveals that it is attributed largely to a falloff in immigration, and not from a reduction in headship rates.

Demand for new residential units is the sum of three components: 1) demand for additional units to accommodate household growth; 2) demand for additional second homesMarket Profile of the Composite Wood Products Industry 153 

### and vacant units for rent or sale to accommodate the normal turnover of a larger housing stock; and 3) demand for additional units to replace existing units lost on net from the stock. To turn projected new home demand into an estimate of the amount of construction needed to meet demand 2010

- 2019 existing market imbalances must also be accounted for.

Together the projected components of new home demand 2010

- 2020 under the low
i mmigration household growth series is 16.4 million units and under the high immigration household growth series is 18.7 million. The individual components are summarized in Table
10

- 2 below.

Table 10

- 2 : Projected Components of New Home Demand, 2010

- 2020 (thousands)
Low Immigration Projection High Immigration Projection Projected Household Growth 11,802 13,828

Projected Total Vacant Unit Demand 1,361 1,595

Projected Total Estimat ed Net Removals 3,279 3,279

Projected Total Demand for New Units 16,442 18,702

Annual Average 1,644 1,870
Source: Masnick et al. 2010



### The new housing demand projections presented above do not take into account cyclical factors or short

- term market imb alances during the projection period. The period from 2001

- 2010 was near the lowest point for housing construction over the last 27 ten

- year periods. This implies an inventory correction that may have already run its course during the past few years, wi th markets now at or near long

- term balance. However, it is not completely evident yet whether or not market balance has been reached because of depressed household formation and replacement demand that could potentially be made up in coming years ( Masnic k et al.
2010 ).



## 10.3 Market for Housing Renovation Activities

The current remodeling downturn is more severe than others seen in recent decades, largely because of the growing share of expenditures on upper

- end discretionary projects. The decrease in homeown er spending should, however, be less drastic than that in new residential construction spending. One reason is that spending in large segments of the home improvement market

– exterior replacements, system upgrades, and disaster repairs

– has very limited variation from year to year ( Joint Center for Housing Studies 2009 ).

As the housing market stabilizes and the overall U.S. economy begins to recover, remodeling activity is expected to return to a steadier pace of growth. Also, as credit conditions imp rove, owners will find it easier to finance their remodeling and maintenance projects. There will both be a greater number of households to make home improvements, as well as an expected growth in per

- household spending ( Joint Center for Housing Studies 2 009 ).Market Profile of the Composite Wood Products Industry 154 

### Remodeling expenditures are expected to increase on an annual basis by the end of the year, and the Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) indicates growth accelerating to 12.4 percent in the first quarter of 2011. The Leading Indicator of Remodeling Activity is designed to estimate national homeowner spending on improvements, measured as an annual rate

- of

- change of its components. Consumer optimism is allowing for a recovery in home improvement investmen t. Figure 10

- 2 below illustrates the recent trends and future projections for home improvement spending, as well as the annual rate of change through quarter 1 of 2011.

Figure 10

- 2 : Recent and Projected Indicator of Remodeling Activity

Note: Historical data and LIRA weights are revised annually in July.

Source: Joint Center for Housing Studies 2010



## 10.4 Market for Furniture Manufacturing

Before the economic crash of 2008, the office fu rniture market experienced regular growth, with production rising from $10.07 billion in 2005 to $11.42 billion in 2007 and consumption increasing from $11.91 billion to $13.42 billion in the same period. Between 2008 and 2009, the furniture industry was heavily affected by the economic downfall with a nearly 30 percent drop in both production and consumption (See Table 10

- 3 ). In the second quarter of 2010, both orders and shipments came in higher than expected despite a weak lab or market, slower than anticipated growth in consumer spending, and an overall deceleration of the recovery ( BIFMA 2010b ).

In the tabled historical data below, production represents the total shipments value, or sales of office furniture manufacturers lo cated in the U.S. to all locations in the world. Consumption represents the value of all office furniture sold in the U.S. from all sources in the world including those in the U.S. BIFMA’s data on projected industry production andMarket Profile of the Composite Wood Products Industry 155 

### consumption, adjusted fr om the IHS Global Insight industry forecast model, is also included in the table below.

Table 10

- 3 : Economic Trends and Projections for U.S. Office Furniture Market

Year Production (Billions
, current$ ) Pe rcent Change Consumption (Billions
, current$ ) Percent Change

Historical Data
2005 $10.07 12.7% $11.91 12.3%
2006 $10.82 7.4% $12.86 7.9%
2007 $11.42 5.5% $13.42 4.4%
2008 $11.16 (2.3)% $12.99 (3.2)%
2009 $7.84 (29.7)% $9.23 (29.0)% Projected Data
2 010 $ 8.20 + 4.4 % $ 9. 80 + 6.3 %
2011 $ 8. 90 + 8.3 % $ 10. 80 + 10.0 %
Source: BIFMA 2010b

, BIFMA 2010c



### The industry forecast in the 2010 Business and Institutional Furniture Manufacturers Association (BIFMA) International newsletter predicted that pr oduct shipments and orders in 2010 will remain fairly steady; however, financial indicators of the furniture market will experience accelerated growth in 2011 ( BIFMA 2010a ). In particular, as can be seen from the data above, industry production is projec ted to rise 6.7 percent from 2010 to 2011, and consumption is projected to rise 8.7 percent that same year.Market Profile of the Composite Wood Products Industry 156 

# 11 Number of Affected Entities by Small Business Status

This c hapter presents the estimated total number of affected entities and the number of small entities potentially affected by the proposed TSCA Title VI rule.

The proposed rule will affect small businesses, but small non

- profit organizations or small governments are not expected to be affected by the proposed rule because they are not expected to be panel producers, fabricators, wholesalers, or importers. Under the Regulatory Flexibility Act (RFA), a “small business” is determined by the U.S. Small Business Administration’s regulations at 13 CFR 121.201 (which create small business size standards using either a sales or employment threshold, depending on the nature of the industry), unless an agency establishes an alternate definition.

The small business impacts are presented separately according to the types of requirements they are subject to. The number of small firms in the affected NAICS codes was estimated using Census data and SBA’s small business size standards. Table 11

- 1 presents a summary of the number of small firms affected by the rule.Market Profile of the Composite Wood Products Industry 157 

### Table 11

- 1 : Summary of Affected Number of Firms

Employer

Status Firm Type Number of Affected

Firms Number of Affected Small
Firms

Employers Stock Panel Producer 54 31 Wood Veneer Laminated Product 5,26
0 5,260

Fabricator 28,0
14 27,879

Wholesale 34,9
48 34,324

Retail 247,
689 202,630

All Firms 315,
965 270,123

Nonemployers Stock Panel Producer



### - - Wood Veneer Laminated Product 2,22
6 2,226

Fabricator 44,4
78 44,478

Wholesale 50,6
12 50,612

Retail 511,
35 9 511,359

All Firms 608,
675 608,675

All Firms Stock Panel Producer 54 31

Wood Veneer Laminated Product 7,48
6 7,486

Fabricator 72,4
92 72,356

Wholesale 85,5
60 84,936

Retai l 759,
048 713,988

All Firms 924,
640 878,798Market Profile of the Composite Wood Products Industry 158 

# 12 Baseline Formaldehyde Emissions Levels

This section estimates baseline emissions levels for domestic and imported composite wood products. The TSCA Title VI emissions standards take effect on Janua ry 1, 2013. Therefore, baseline emissions are the levels that would occur at that time if TSCA Title VI were not in effect.



## 12.1 Baseline Emissions for Domestically Produced Products

EPA administered a survey between June and October 2010 to domestic manufactu rers of composite wood panels. The survey achieved a response rate of 85% of the 39 hardwood plywood mills that received the survey, 100% of the 20 MDF mills, and 97% of the 31 particleboard mills, respectively. 26 

### The survey asked about current emissions levels and about planned levels. Since many composite wood product mills were in the midst of modifying their production technology and raw materials to achieve compliance with Phase 2 of the CARB ATCM when they completed the survey

, the “ current emission levels ” reported in the 2010 survey would not accurately reflect emissions levels in the 2013 baseline. Instead, baseline emission levels are estimated using responses to a question in the survey about the emissions levels mills planned to achieve within the next three years (from the time of the 2010 survey) . These emissions levels were weighted by the production levels the mills reported in the survey, in order to estimate the average emission levels by certification standard. The survey data were al so used to estimate the share of total production volume represented by products meeting each of the emissions standards. The results are reported in Table 12

- 1 . For comparison purposes, the CARB emission limits (which are ident ical to the TSCA Title VI limits) are shown in Table 12

- 2

.

26 The number of mills for each product type is limited to those that are subject to FCWPA, and does not include mills

that only produce products that are exempted or not otherwise covered by TSCA Title VI (such as curved plywood, wood packaging, and molded products that do not qualify as panels). The response rate includes mills that only responded to a brief phone questionnaire, which collected information about the compliance standards being achieved, but not specific emissions levels.Market Profile of the Composite Wood Products Industry 159 

### Table 12

- 1 : Baseline Emissions Levels (2013) For Domestically Produced Composite Wood Products, by Product Type and Certifi cation Standard

Certification

Standard Hardwood Plywood MDF Particleboard

Weighted Average Emissions (ppm) a

None 0.058

- 0.058

CARB 1 b

- - 0.090

CARB 2 0.032 0.082 0.057

CARB ULEF c 0.024 0.042

CARB NAF 0.013 0.035 0.013

Share of Production

Non e 0.4%

- 0.2%

CARB 1 b

- - 1.8%

CARB 2 60.2% 86.1% 88.5%

CARB ULEF 4.6% 2.8%

CARB NAF 39.4% 9.3% 6.7%

Total 100% 100% 100%

a Emissions are weighted based on the production volume reported by reported by respondents.

b S ome hardwood plywood mills pro ducing product currently certified under CARB Phase 1 reported that they would continue this product line after the CARB Phase 2 effective date.

c Hardwood plywood mills meeting CARB 2 and CARB ULEF were grouped together in the CARB 2 category.
Several har dwood plywood mills appeared to be meeting CARB ULEF standards but did not report this in their response. For example, they listed certification standard as “CARB 2” but resin type as “ULEF” and/or reported maximum emissions that satisfy ULEF requirements . Due to difficulties in distinguishing between CARB 2 and CARB ULEF product lines and the fact that emissions levels appeared similar among mills reporting either CARB 2 or CARB ULEF certification standards, these mills were grouped together.Market Profile of the Composite Wood Products Industry 160 

### Table 12

- 2 : Formaldehyde Certification Standards in the California Air Resources Board ’ s Air Toxic Control Measure for Formaldehyde Emissions from Composite Wood Products a 

### (ppm)

Certification

Standard Hardwood Plywoo d MDF Particleboard

CARB 1 0.08 0.21 0.18

CARB 2 0.05 0.11 b 0.09

CARB ULEF

– less frequent testing 0.05 90% of samples < 0.06 All samples < 0.09

c 90% of samples

< 0.05 All samples < 0.08
CARB ULEF

– exemption from third party certification 90% of sam ples < 0.04 All samples < 0.05 90% of samples < 0.04 All samples < 0.06 90% of samples

< 0.04 All samples < 0.06

CARB NAF 90% of samples < 0.04 All samples < 0.05 90% of samples < 0.04 All samples < 0.06 90% of samples

< 0.04 All samples < 0.06

a The TS CA Title VI emissions limits are the same as the CARB ATCM limits.
b The CARB 2 emissions limit for thin MDF is 0.13 ppm.

c The ULEF limits for thin MDF are 90% of samples < 0.08 ppm, and all samples < 0.11 ppm.



### 12.1.1 Baseline Emissions Levels for Imported Pro ducts

Baseline emissions are estimated separately for imported products from Canada and those from the rest of the world. The known composite wood manufacturers in Canada were compared to the California Air Resources Board list of certified mills, and mos t Canadian mills were found to be CARB certified. As a result, Canadian mills are assumed to achieve the same baseline emissions as U.S. firms (whose emissions were shown in Table 12

- 1 ).

The baseline emissions for non

- Canadian im ported composite wood products were estimated using data from a 2009 presentation by Professional Service Industries (PSI), a CARB Third Party Certifier ( PSI 2009 ). While PSI is located in the U.S., the mills it certifies are mainly located in Asia. 27 

### The mills that PSI certifies are located in countries that are major sources of pressed wood products imported into the U.S. So the data from the PSI presentation is assumed to represent emission levels from all non

- Canadian composite wood products imported into the
U.S.

The PSI presentation included histograms of observed formaldehyde emission levels for hardwood plywood, MDF, and particleboard. The data included emissions levels for 387, 198, and 193 samples of hardwood plywood, MDF, and particleboard, re spectively, and for all three product types combined. After imputing the data underlying these graphs, the average

27 According to CARB’s list of certified mills, as of November 12, 2010

, PSI was the TPC for 95 mills in 9 countries. The

countries, and the number of mills certified by PSI in each country, were as follows: Argentina (1), Chile (1), China (55), Ecuador (2), Indonesia (2), Malaysia (26), Philippines (1), Taiwan (1) , and Thailand (6).Market Profile of the Composite Wood Products Industry 161 

### emissions values reported in the presentation were successfully replicated. 28 

### This information was used to estimate the number of samples at different emissions levels.

The emission levels reported in the PSI presentation ranged from near zero to levels that exceed the CARB 2 emission standards by a substantial margin. The emission levels observed in these data were from a period after CARB 1 took effect but before CARB 2 did. Since many mills that met the CARB 1 standards at the time these samples were taken may subsequently achieve CARB 2 levels, baseline emissions were predicted by assuming that products with emission levels between the CA RB 1 and CARB 2 levels in the PSI data would achieve CARB 2 levels by 2013. Emission levels of 0.06 and 0.05 ppm were used for CARB 2 baseline emissions for MDF and particleboard, respectively , because t hese levels represent the midpoint s of the highest e missions intervals in the PSI data that meet the CARB 2 limits . None of the intervals in the PSI data for hardwood plywood reflected the CARB 1 emission limits

. (The CARB 1 limit of 0.08 ppm is spanned by the interval of 0.075 to 0.125 ppm in the PSI data , and the CARB 2 limit of 0.05 ppm is spanned by the interval of 0.0375 to 0.075 ppm.) Therefore no adjustments were made to hardwood plywood for the shift from CARB 1 to CARB 2 . After this adjustment the average emissions by product type were calculated ( see Table 12

- 3 ).

Although a number of samples in the PSI data had emissions levels close to zero, it was not possible to determine whether the products qualify for certification as ULEF or NAF. The PSI presentat ion did not identify the resin type used for each sample. Also, as shown in Table 12

- 2

, NAF and ULEF have emissions requirements for 90% of the samples from a mill as well a ceiling for all samples, and this distr ibution of emissions could not be determined from the PSI presentation. Thus, baseline emissions levels are not estimated separately for non

- Canadian imports of ULEF and NAF products. Such products are included in the baseline emissions estimates for the CARB

- 2 category.

Table 12

- 3 also includes the share of imports for each product type and emissions standard. This was estimated by assuming that the fraction of samples for each category in the PSI presentation i s equivalent to the share of imports for that category across all non

- Canadian composite wood products imported into the U.S.

28 The emissions levels in the graphs seemed to be labeled according to the interval midpoints (e

. g., a reported value of

0.05 ppm represented an interval of 0.0375 ppm to 0.075 ppm). The maximum values reported in the presentation for
M DF and particleboard were used for the maximum intervals. The median value was used for the median interval for MDF. The data in the hardwood plywood graphic is consistent with an average value of 0.07 ppm rather than the 0.05 ppm value that could be calc ulated from the summary statistics shown in the presentation for all three product types combined. For hardwood plywood, the three highest emission levels (all of which exceeded 1.0 ppm) seemed to be driving this discrepancy so they were dropped from the analysis. After dropping these outliers the imputed average emissions matched the 0.05 ppm value that could be calculated from the other summary statistics shown in the presentation.Market Profile of the Composite Wood Products Industry 162 

### Table 12

- 3 : Baseline Emissions Levels For Non

- Canadian Imported Composite Wood Prod ucts, by Product Type and Certification Standard

Certification

Standard Hardwood Plywood MDF Particleboard

Average Emissions (ppm)

None 0.163 0.502 0.384

CARB 2 0.015 0.047 0.036
Share of Imports

None 26% 11% 38%

CARB 2 74% 89% 62%



### The estimates p resented in Table 12

- 3 rely on several critical assumptions that are a source of uncertainty in this analysis, the most important being:

• The sample is representative of imported non

- Canadian composite wood products.

o It is not know n whether the sample is representative of products destined for the United States. The destination of these products could be other countries or their country of origin. On the one hand, U.S. end users may be more likely to insist on lower emitting produc ts. On the other hand, U.S. end users not shipping to California face less stringent formaldehyde emissions standards than many other potential destinations. (Although many end users prefer to handle a single type of product, rather than one product that meets the California requirements and another type for the other 49 states). The fact that the samples were being tested for formaldehyde emissions by a CARB TPC suggests that many of them were produced by mills whose products ultimately end up in the U.S

.

• The distribution of emission levels will not change for mills that were producing products with emission levels exceeding CARB 1 standards.

o If some of these mills decide to obtain CARB 2 certification, it is not known whether these will be the higher o r lower emitting mills on average. Some additional mills (aside from those below the CARB 1 limits but above the CARB 2 limits) may subsequently decide to lower their emissions levels.

o Conversely, the PSI data may under

- represent imported products with very high emissions levels. Mills making products likely to exceed the CARB levels may not have had their products tested because they intended to sell them in the other 49 states.

• The percentage of samples with current emissions below CARB 1 levels is a reasonable estimate of the percentage of mills that will be achieving CARB 2 levels in the baseline scenario.

o The PSI presentation was given after CARB 1 was in effect but before CARB 2 was. It is not known whether more overseas producers will ultimately meet the Phase 2 emission limits than initially met the Phase 1 limits.



## 12.2 Composite Wood Product Consumption by Product Type and Trade Status

Table 12

- 4 presents the domestic production, international trade, and domestic consumpt ion for composite wood products. Data from 2005 were used in Table 12

- 4 since that

was the most recent data available for all categories shown when the table was prepared , and because 2005 may be more representative of consumptio n after the current economicMarket Profile of the Composite Wood Products Industry 163 

### downturn ends. According to PanelWorld Magazine ( PanelWorld 2010a ) , citing a 2010 Composite Panel Association report, U.S. particleboard and MDF shipments have experienced substantial declines since 2009, and were about 2.5 an d 3.9 million cubic meters for MDF and particleboard in 2009, respectively. Domestic hardwood plywood production has likely experienced similar declines, but published data were not identified. While imports of hardwood plywood and particleboard have als o declined substantially, MDF imports have increased over 40 percent since 2005.

Table 12

- 4 : 2005 U.S. Production, Trade, and Consumption of Composite Wood Product Panels (Cubic Meters)

Product

Type Do

mes
t ic
Pro duct
ion Ex

po
rts Domestic Consumption
Percent of Consump tion from

Non

Canadian Imports Non

- Can adia

n Imp

orts Ca

na di

an Im

po
rts Dome stic Tot al
Hardwoo d Plywood Panels 1,84 4,00
0 24 3,7
63 3,59 8,80
5 42 1,
52

6 1,600 ,237 5,62 0,56
8 64%
Medium Density Fiber boa rd Panels 3,25 7,29
7 16 3,8
89 309,
188 65 7,
77

9 3,093 ,408 4,06 0,37
5 8%
Particleb oard Panels 7,27 6,26
3 25 8,8
27 289,
369 1,
05 7,
53

4 7,017 ,436 8,36 4,33
9 3% Notes: MDF and particleboard production ar e 2005 data from CPA 2006. Hardwood plywood production is 200 5 data from Table 2.2 in U.S. ITC 2008. Imports and Exports data are from U.S. ITC and include the following HTS codes: (1) H ardwood plywood: 4412.13, 4412.14, 4412.22, 4412.23, 4 412.29; (2) MDF: 4411.21, (3) Particleboard : 4410.31, 4410.32, 4410.33, 441 0.39.



## 12.3 Summary of Baseline Emission Levels

Note that baseline emissions data are not available for hardwood plywood defined as laminated products. The CARB 1 standard for hardwood plywood is used to represent the average baseline emissions level for lami nated products made in the U.S. and Canada. The CARB 1 level represented the average emissions level that CARB found prior to promulgating the ATCM. It reflects a mix of products using different resin types, including both UF and NAF resins. This is a r easonable proxy for domestically produced laminated products. These products are thought to generally be made with UF or PVA resin, so their emissions may be similar to those from stock hardwood panel products before the ATCM went into effect.

For lamin ated products made outside the U.S. and Canada, average baseline emissions are assumed to be the same as the levels for imported hardwood plywood that does not meet an emissions standard (estimated from the PSI presentation). Emissions data prior to the C ARB ATCM are not available for non

- Canadian imported hardwood plywood. Since the PSIMarket Profile of the Composite Wood Products Industry 164 

### presentation was given after CARB 1 was in effect, it presumably reflects a reduction in emissions compared to pre

- ATCM levels. Therefore, if baseline laminated product emissions are similar to pre

- ATCM emissions, using the average of all non

- Canadian imported hardwood plywood would underestimate emissions levels for laminated products. Using the estimated average emissions from hardwood plywood that does not meet an emi ssions standard reflects the possibility that many of these imported laminated products are made with UF resins.Market Profile of the Composite Wood Products Industry 165 

### Table 12

- 5 : Baseline Emissions Levels For Composite Wood Products by Product Type, Country of Or igin, and Certification Standard

Certific
ation Standa

rd Hardwood Plywood MDF Particleboard Laminated Products

U
.S ./
C

a

n. N

o

n
U.
S. /
C

a

n. U.
S. /
C

a

n. N

o

n
U.
S. /
C

a

n. U.
S. /
C

a

n. N

o

n
U.
S. /
C

a

n. U.
S. /
C

a

n. N

o

n
U.
S. /
C

a

n. Average Emissions (ppm)

None 0.
0
5
8 0.
1
6
3 - 0.
5
0
2 0.
0
5
8 0.
3
8
4 0.
0
8
0 0.
1
6
3

CARB 1

- - - - 0.
0
9
0 - - -

CARB 2 0.
0
3
2 0.
0
1
5 0.
0
8
2 0.
0
4
7 0.
0
5
7 0.
0
3
6 - -

CARB
ULEF 0.
0
2
4 0.
0
4
2

CARB
NAF 0.
0
1
3 0.
0
3
5 0.
0
1
3 Share of U.S. Consumption

None 0.
1
% 1
6.
6
% - 0.
8
% 0.
2
% 1.
1
% 3
6.
0
% 6
4.
0
%

CARB 1

- - - - 1.
7 % - - -

CARB 2 1
9.
7 % 4
7.
4 % 7
9.
2
% 7.
2 % 8
5.
0
% 1.
9 % - -

CARB
ULEF 4.
2
% 3.
0
%

CARB
NAF 1
6.
2 % 8.
6 % 7.
1 %

Total 100% 100% 100% 100%Market Profile of the Composite Wood Products Industry 166Market Profile of the Composite Wood Products Industry 167 

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——— . 2010b. Table 2. Estimated Sales and Inventories of U.S. Merchant Wholesalers, Except Manufacturers' Sales Branches and Offices: 1998 through 2008. Annual Wholesale Trade Report. http://www2.census.gov/wholesale/pdf/awts/2008_awts_salesinv_noms bo.pdf.

——— . 2010c. Table 4. Estimated Annual Purchases, Gross Margins, and Gross Margins as a Percent of Sales for U.S. Merchant Wholesalers, Except Manufacturers' Sales Branches and Offices: 1998 Through 2008. Annual Wholesale Trade Report. http://www2. census.gov/wholesale/pdf/awts/2008_awts_purchmarg_nomsbo.pdf.

——— . 2010d. Sector 44: EC0744A1: Retail Trade: Geographic Area Series: Summary Statistics for the United States, States, Metro Areas, Counties, and Places: 2007. http://factfinder.census.gov/ser vlet/IBQTable?_bm=y&

- ds_name=EC0744A1&

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- fds_name=EC0700A1.Market Profile of the Composite Wood Products Industry 171 

### ——— . 2010e. Sector 00: NS0800A1: 2008 Nonemployer Statistics: Geographic Area Series: Nonemployer Statistics by Legal Form of Organization: 2 008. http://factfinder.census.gov/servlet/IBQTable?_bm=y&

- filter=LFO;in;001&

- sortkey2=&

- sortkey1=&

- defOrder=Y&

- ds_name=NS0800A1&

- sortkey0=&

- NAICS2007=31

- 33|311|3111|31111|3112|3113|3114|3115|3116|31161|3117|31171|3118|3119|31 2|313|314|315|316|3161|31611|31 62|31621|3169|31699|321|322|323|3231|324| 3241|325|3251|3252|3253|3254|32541|3255|3256|3259|326|327|3271|3272|3272 1|3273|3274|3279|331|332|333|334|335|336|337|339|3391|33911|3399|42|423| 4231|4232|4233|4234|4235|4236|4237|4238|4239|42391|42392|42393|42394|42 3 99|424|4241|4242|42421|4243|4244|4245|4246|4247|4248|4249|42491|42492|42 493|42494|42495|42499|425|4251|42511|42512|44

- 45|441|4411|44112|4412|44121|44122|441221|441222|441229|4413|442|4421|44 211|4422|443|4431|44311|443111|443112|44312|44313|444|4441|44411| 44412|4 4413|44419|4442|445|4451|4452|44521|44522|44523|44529|4453|44531|446|446 1|44611|44612|44613|44619|447|4471|448|4481|44811|44812|44813|44814|4481 5|44819|4482|44821|4483|44831|44832|451|4511|45111|45112|45113|45114|451 2|45121|451211|451212|45122|452|4 53|4531|45311|4532|45321|45322|4533|453 31|4539|45391|45392|45393|45399|454|4541|45411|4542|45421|4543|45431|454
39&

- geo_id=01000US&

- geo_id=04000US06&

- _lang=en.

——— . 2010f. Sector 31: EC0731SX1: Manufacturing: Subject Series: Industry

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- filter=&

- sortkey2=&

- defOrder=N&

- sortkey1=&

- ds_name=EC0731SX11&

- sortkey0=&

- NAICS2007=321211|321219&

- ib_type=NAICS2007&

- NAICS2007sector=*6&

- geo_id=&

- dataitem=N AICS2007|NAICS2007$|PSCODE|PSCODE$|PRODVAL|UNITS$&

- _lang=en&

- fds_name=EC0700A1.

——— . 2010g. Sector 31: Annual Survey of Manufacturers: General Statistics: Statistics for Industry Groups and Industries: 2008 and 2007. March 30. http://factfinder.census.gov/ servlet/IBQTable?_bm=y&

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- dataitem=NAICSASM|NAICSASM$|CEXTOT|CEXBLD|CEXMCH|CEXMCHA|CEXMCHC|CE
XMCHO&

- fds_name=EC0700A1&

- defOrder=Y&

- _industry=321219&

- parsed=true&

- filter=YEAR;in;2008&

- ib_type=NAICSASM&

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- sortkey2=&

- ds_name=AM0 831GS101&

- sortkey1=&

- NAICSASM=32121|321219&

- sortkey0=.

——— . 2010h. Sector 42: EC0742A1: Wholesale Trade: Geographic Area Series: Summary Statistics for the United States, States, Metro Areas, Counties, and Places: 2007. July 23. http://factfinder.census.go v/servlet/IBQTable?_bm=y&

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——— . 2010i. Sector 31: EC0731SG6: Manufacturing: Summary Series: General Summary: Industry Statistics for Subsectors by Legal Form of Organization: 2007. November 16. http://factfinder.census. gov/servlet/IBQTable?_bm=y&

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——— . 2010j. Sector 31: Manufacturing: Summary Series: General Summary: Industry Statistics for Industry Groups and Industries: 2007 . August 1, 2011. http://factfinder2.census.gov/faces/tableservices/ jsf/pages/productview.xhtml?pid=EC N_2007_US_31SG1&prodType=table

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