In certain circles the Irish Republic is as famous for manufacturing and exporting panel products as it is for making Guinness, and the plant that started the board mill juggernaut rolling was a chipboard factory in Scariff, Co Clare.
The mill was acquired by Finsa in 1984 and the Spanish group invested significant sums of money in the Scariff operation. Then, in 1997, it went major league with a €29m investment and replaced the main board line. A finishing line was installed in 1999.
Its aim, said financial and administration manager Michael O’Rourke, was to facilitate the production of a good quality, consistent board of an international standard and to upgrade the value-added facilities. These include two melamine lines, a veneer line, a panel line, a flooring line and a cutting line to cut to customer specification or for cutting components.
Production capacity at the €25m turnover plant is 140,000m3 per year and, in addition to basic board and its own value-added products, the Scariff mill has access to Finsa Group’s vast product portfolio. “We import products such as kitchen components, laminated flooring and MDF in various forms and sell them on to our customers as required,” said Mr O’Rourke. “We also add value to MDF here and process it by overlaying it with veneer and melamine and cutting it to requirements.”
Sawdust consumption
Finsa (Ireland) uses around 200,000 tonnes of wood raw material each year and is the country’s single largest user of sawdust, consuming around 40% of Ireland’s production. This year it also used around 30,000 tonnes of recycled timber, a significant increase on last year. Recycled timber now accounts for around 15% of the raw material consumed and the intention is to increase that to 35-40%.
In fact, during the past three years, said managing director Gonzalo Frey, every effort has been made to increase the use of residues and recycled timber. “We now use 90-92% residues and there is just a compromise with some sawmills to receive a little pulpwood,” he said. A small proportion of pulpwood will always be necessary because the chips need cleaning and this can cause downtime if there is no raw material to take its place.
Twenty-five to 30 lorries of finished product leave the mill each day with around 40% of production destined for the domestic market, and the remaining 60% shipped to the UK via the Dublin ferry. A subsidiary in Birkenhead, Finsa UK, liaises with UK customers and, in many cases, can organise deliveries to them direct from Scariff. It also imports and distributes group company products from Spain.
Like many chipboard manufacturers, Finsa does not mourn the passing of 2002. “The export market is very bad,” said Mr Frey. “The price in the UK has fallen 10-12% and sterling has weakened in relation to the euro [the company sells in sterling]. This is a year for survival.”
“I think demand is stable in Europe,” he continued, “but the 12-15% growth you see with MDF isn’t happening with chipboard – that’s around 2-3% a year. There is not very much difference between production and demand. There is excess production in Europe and this extra capacity is the reason for the price drop. We are losing around 3-4% on prices every year.”
Although it has the potential to increase its own capacity, the state of the market is causing Finsa to hold back on doing so. Instead it is finding other ways to try to keep ahead of the competition.
Its trump card is thinboard. “We are the only plant in the UK and Ireland to produce 3-4mm board and in the last two or three months we’ve increased the sales,” said Mr Frey. “It has better margins than the thicker board and is more stable. The ‘special’ products aren’t under so much pressure from excess stocks and so are easier to push in the market.”
“We’ve also been doing some work on overlaying the 3mm board with melamine,” added Mr O’Rourke. “It’s in its early stages, but we have sold some.”
Competitive advantage
“We have to keep pushing the thin products because that’s where we have an advantage over our competitors who can’t make it,” added Mr Frey. “It is a long and slow process because we have to replace products that have been in the market for 40-50 years, but bit by bit we are increasing the sales.
“The other advantage we have is that we can offer a very large tranche of products to our customers. We get boats into Limerick from Spain at least every six weeks. We re-export some to the UK, but 90% is for the Irish market.”
For the moment other projects remain on the drawing board. Mr Frey would like to install a press with 40% more capacity, one more melamine line and two or three component lines, but instead is playing the waiting game.
“The most important thing is to see what happens in the market over the next few months,” he said. “We have plans on the table to increase our capacity of components, increase our production capacity, installations relating to energy and using different types of fuels to create energy. There are several projects on the table, but we are waiting for what happens next.”
