The Irish forest products industry celebrated a rather special anniversary this year. One hundred years ago the state acquired Avondale House and estate along with 3,000 acres of land and began the not inconsiderable task of increasing the country’s 1% forest cover.
The new breed of growers needed new markets in order to realise the forests’ potential and, 14 years later the Irish Timber Council (ITC) was founded.
Today there are around 100 sawmills in Ireland, 13 of which are represented by ITC. Its membership includes all the larger mills, a handful of which dominate the sector. It is estimated that today more than 95% of logs are processed by 10 sawmills and over 70% are processed by the top five – Balcas Timber Ltd, ECC Teo, Glennon Bros Ltd, Grainger Sawmills Ltd and Murray Timber Products Ltd. In representing the Irish sawmilling sector, the ITC is behind a €259m a year industry which provides more than 2,000 jobs and which plays a fundamental role in supporting the wider €500m forest products industry.
It’s during the industry’s more recent history that the most impressive growth rates have been witnessed. Less than 20 years ago the total volume of timber offered for sale in Ireland was around 1.1 million m3. Last year the figure for timber successfully harvested, processed and sold reached 3.4 million m3, of which 2.5 million m3 was sawlog material processed and marketed by ITC sawmills. In fact, output has increased by 60% in the past five years and doubled in the last 10 as the sawmills have plugged into Ireland’s buoyant economy.
Major volume production increases are set to begin after 2010 and, over the last five years or so, the major sawmills have invested heavily in new and replacement equipment and technology to ensure they’re ready. Investment by ITC mills in the last five years amounts to €113m and efforts have been made not just to increase output by optimising yields, but to add value – by installing planing and grading lines and kiln drying and treatment facilities for example.
For some sawmills, adding value has taken a lateral turn. Concern had been growing over the increasing volume of sawmill residues generated as a result of higher production levels. Back in 2001 the Timber Industry Development Group (TIDG) calculated that residues totalled around 50% of the volume of the timber processed in the sawmills. The residues comprised 70% chips (87% of which was sold to panel board mills), 14% sawdust (50% of which was similarly destined) and 16% bark (sold for horticultural use). The TIDG estimated that the onward sale of the bulk of residues to the board mills accounted for around 12% of the sawmills’ total sales.
New markets for residues are now being sought and, along with using them for their own heat and energy requirements, some sawmills are entering the biomass sector.
According to Sustainable Energy Ireland, biomass has the potential to supply 10% of Ireland’s energy needs, up from 1%.
Grainger, in Enniskeane, Co Cork is so far advanced down this road that its combined heat and power (CHP) plant has already been commissioned and is generating green electricity which is being sold to the national grid.
In Northern Ireland, Balcas in Enniskillen, Co Fermanagh has started construction work on what is to be the UK’s largest biofuel pellet production facility. Together with a CHP facility, this represents an £8m investment. The pellet facility, which will be operational in about a year, will produce 50,000 tonnes of fuel annually – enough to meet all the company’s electricity requirements and the energy needs of 10,000 homes. The CHP facility should be ready in around six months.
Ultimately this move has implications for the five panel board mills – Weyerhaeuser, SmartPly, Masonite, Spanboard and Finsa – which have a considerable presence within the Irish forest products industry despite, with the exception of SmartPly, being owned by multi-national companies. In the last decade they have invested more than €300m between them and are market leaders in the products they produce – MDF, OSB, doorskins and chipboard respectively. They also have a strong track record in research and development.
As with the sawmill sector, the board mills are experiencing a buoyant domestic market. However, they are much more geared towards overseas markets and around 75% of their output is exported, predominantly to Britain. Prices and demand in Britain are deemed to be slightly better than in 2003, but it remains a very competitive market for Irish panel products.
Most of the board mills are close to full capacity, enabling them to maximise economies of scale and, while their combined annual consumption of around 2 million m3 of pulpwood and residues may mean they will encounter some raw material supply problems as more CHP facilities come on stream, it is believed that an increased output of pulpwood from the private sector may alleviate the problem.
Overcapacity in Europe has been the bugbear of board manufacturers but, of late, the business climate has improved. According to Weyerhaeuser’s Medite MDF plant in Clonmel, Co Tipperary, “there’s a period of greater calm, the kind of situation that allows an organisation to make positive plans without any immediate prospect of being blown off course”.
Room for growth
Weyerhaeuser’s two modern continuous press lines produce 400,00m3 of Medite MDF a year, of which 85% is exported to the UK and Europe. In the UK and Ireland, market growth for MDF remains at around 8%, reflecting worldwide figures. And, as a comparatively young product, and with new applications being developed, MDF still has a sizeable market of potential customers to target. “There has been an insistence that new press lines should incorporate a high level of versatility, enabling a quick response to market conditions,” said the company. “For example, the latest line, installed two years ago at a cost of US$39m, has a press that is 42m long and 2.75m wide, enabling very large panels to be produced.”
In Coleraine, Co Derry, Sonae-owned manufacturer Spanboard now has a £16m turnover and an annual capacity of 105,000m3 of raw board and 200,000m3 of added value board. Its current strategy is to build on the Irish market, concentrate on added-value sales and expand its product range. The latter includes industrial and domestic flooring, MFC, melamine-faced MDF, wood veneered MDF, hardboard and OSB.
OSB has enjoyed better fortunes of late and margins are improving, which is good news for its major Irish producer SmartPly Europe in Bellview, Co Waterford. The plant has been running at its capacity of 350,000m3 per year for a couple of years and, according to marketing and sales director Andrew Macdonald, confidence is high. “The OSB market is reaching equilibrium in Europe, but we’re confident the market will grow,” he said. “We’re going to increase capacity at the plant through engineering works and higher efficiency.”
Mr Macdonald expects SmartPly OSB to make inroads into all aspects of the construction sector, both in Ireland and in export markets. “OSB holds a small volume of the panel products market at the moment, so we can see significant growth there,” he said.
“Our export market is relatively strong. The UK is the second largest OSB market in Europe and we will continue to serve that market.”
