When SmartPly Europe Ltd won TTJ’s Excellence in Marketing Award in September last year its American chief executive said that “when you cut the apron strings with the parent and go it on your own, it’s nice to have an indication that you are on the right path”.
Lou Hess was referring, of course, to the company’s change of ownership in the spring of 2002 when Louisiana-Pacific sold its majority 65% shareholding in the Waterford OSB plant – then called Louisiana-Pacific Europe – to Coillte, which already owned the balance of shares.
Changes in ownership often cause major disruption and anxiety, but not so in the case of SmartPly and Lou Hess exudes an easy air of confidence. So much so that he has already invited Siempelkamp in with a view to expansion mid-2004. A new continuous press alongside the existing daylight press would add another 250,000m3 per year to its current 350,000m3 nameplate capacity.
Strategic location
One factor that remains constantly in SmartPly’s favour is its location, smack dab in Belview port, just downstream from Waterford. And for a company that exports most of its product, with its biggest market being the UK, its portside spot is of paramount importance. Shipments leave for the Port of Bristol in the UK and for Rotterdam three times a week. Vessels are also scheduled into Scandinavia and there are occasional exports to the US.
The facility is based on 60 acres of land, leased from the port, with 8.5 acres under cover. The log yard holds 40-45,000m3 of timber which consists of lodgepole pine and sitka spruce in fairly equal measure.
There are 154 employees working a four-day, 12-hour shift pattern, enabling the plant to operate round the clock, seven days a week with regular breaks for preventive maintenance.
An additional 14 people are employed in marketing in Ireland, the UK marketing office in Dartford and the Continental marketing office in Soest in The Netherlands. The company employs tactics which Mr Hess believes are unlike what other producers are doing to develop the OSB market.
“As a manufacturer we see it as our role to help develop the market for what is still, in Europe, a relatively new product. We support our distributors with technical and brand marketing. Yes, there are the traditional marketing tools utilised, but working in the field or at the plant with their customers, the end users, serves to support distributors in a more dynamic way. An end user will only specify what they know.”
Strong message
There is no doubt that SmartPly has a strong marketing message based both on the strength of its product and of its brand – factors recognised by the aforementioned TTJ award. When the new business officially came into being on May 1, the decision was made to adopt the ‘Smart’ product prefix as the company name.
SmartPly customers cover the whole gamut of industries from agriculture to furniture to DIY and highlights of the product range include SmartPly 3 for roof decking, roof sarking and flat roofing systems, and SmartPly T&G for tongue and groove flooring. The latter has shown good growth in markets “where the superior strength of OSB compared with particleboard represents a good value proposition for the end user”.
SmartFrame, described by Mr Hess as “a nifty product”, is a panel specifically designed for timber frame construction. The panel is made with a unique resin, an extremely aggressive adhesive – it’s the main ingredient in aircraft paint – that bonds with the wood cellulose at a molecular level. SmartPly came up with some chemistry preventing the panel bonding with the press and ended up with “a panel that is very moisture resistant and that has better swell resisting properties than one with formaldehyde resins”.
“We felt we needed something very robust and strong. We’re delighted with SmartFrame and the market is rewarding us with substantial sales growth.”
Green bonus
An additional bonus is SmartFrame’s zero-added formaldehyde status, another key element in SmartPly’s environmental credentials. The company has a whole raft of environmental protection measures in place, perhaps the most significant of which is its wet electrostatic precipitator which controls wood smoke emissions. The wood smoke itself derives from woodwaste, bark and fines which are used as fuel to dry the wafers and heat the oil for the press. No fossil fuels or natural gas are used on the site and Mr Hess has aspirations for a combined heat and power plant enabling SmartPly to generate its own electricity.
FSC certification
The environmental message extends from the process to the product too, thanks to Coillte whose forests are Forest Stewardship Council certified. “Being partnered with a single environmentally aware supplier means you end up with a very high percentage of sustainable forest content in your product,” said Mr Hess. “We’re FSC certified to a level of 90% and, to the best of our know-ledge, it’s far and away the highest in the world for OSB manufacture”.
The FSC logo provides useful leverage now that governments are starting to tighten up their procurement policies. “The environmental appeal is one factor accounting for OSB being the fastest growing timber panel in Europe,” said Mr Hess.
But there’s no need to take just his word for it. The 2002 European Panel Federation statistics for OSB sales growth in the EU are showing rates of 31%, 36% and 37%, respectively for each of the first three quarters, compared to the corresponding periods in 2001. And 2001 figures showed a 29% increase over 2000, so the growth is consistent. Demand in Europe is put at around 1.2 million m3 a year.
“That is still a fairly small number despite the excellent rate of growth,” said Mr Hess. “There are still many end users that need to be familiarised with the value proposition of OSB and its technical attributes before this market can absorb additional capacity.”
The main threat – or opportunity – he sees for OSB now is that “Europe is a world of particleboard”. Recent figures released by the German weekly, Euwid, reveal that of the 53.5 million m3 total panel production in Europe, 69%, or 37 million m3, is particleboard while OSB accounts for a paltry 3%.
“OSB is still a fairly new product in Europe and the market needs a significant amount of education as to what OSB is and what it can do for them,” said Mr Hess. “Once they try it they generally stick with it, but until they understand that, there’s a hell of a bias there. This is why reaching the end user with a coherent message is so critical now. As an industry we must have the mission of expanding our market, not fighting each other.”
