Sawmills and Plywood Mills

The lumber and plywood manufacturing industry in the US comprises about 5,000 companies with combined annual revenue of $45 billion. Large companies include divisions of Weyerhaeuser, Louisiana-Pacific, Georgia-Pacific, and Universal Forest Products. The industry is moderately concentrated: the 50 largest companies hold about 50 percent of the market.

COMPETITIVE LANDSCAPE

Demand is closely tied to the level of home construction. The profitability of individual mills depends on efficient operations, because the products are commodities sold based on price. Large companies have big economies of scale in sawmill operations. Large mills can have annual revenue per employee of close to $300,000, while small mills may achieve only half as much. Local mills can often compete successfully with those of large companies because they can efficiently serve a local market. Sawmills can operate with only a modest investment of capital, but plywood mills require expensive equipment and therefore are usually plants with high annual volume.

PRODUCTS, OPERATIONS & TECHNOLOGY

Sawmills process raw logs in a few simple operating steps. Logs are debarked and cut into "cants" that are further cut into finished pieces of lumber, using either circle saws or bandmills. Once lumber is cut to size, it may be sold as "green" lumber or may be stacked and dried to a specific moisture content through air- or kiln-drying. Kiln-drying involves stacking wood in shed-like structures and ventilating with hot air for ten to 30 days. Many sawmills produce a ...