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Market
"The Southwest combines in a unique way the highest OSB market growth, a total
absence of local OSB manufacturing, and the largest contiguous
forest of Ponderosa pine in the world in urgent need of
restoration. This is a natural green product opportunity to
manufacture locally from local
renewable resources a product to be used locally."
The AZFRP
Team
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OSB
growth drivers
OSB growth
is fueled by the housing market demand and the substitution for plywood
which is
more expensive to manufacture and requires large diameter trees.
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American OSB production
deficit
The U.S.
produced 14.96 billion s.f. (3/8” basis) of OSB in 2006 (57% of
North American production), and is expected to produce around 13
billion s.f. in 2013 with the restart of the housing
market (59% of North American production).
Yet, the
U.S. market consumed 25.3 billion s.f. (3/8” basis) of OSB in
2006 (97% of North American production), and is expected to
consume around 21 billion s.f. in 2013 with the restart of the
housing market (95% of North American production), resulting in
a huge production deficit.
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High growth demand
Demographic marketing
research indicates that the Southwest will experience almost a
quarter of the entire projected U.S. household growth. It is
expected that one out of every four new houses built over the
next thirty years in the U.S. will be located in Arizona or one of its
neighboring states.
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No regional supply
Due to the historical
closure of the Southwest public forests to industry, the
Southwest is an OSB production vacuum. The closest plant is
located 1,200 miles away.
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Sustained market
The economic concerns about the housing market
contraction hide the fact that even at its lowest level the
housing market continues to sustain a demand for half a million
new houses annually with a quarter of this demand in the
Southwest.
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Pent-up demand
Since the beginning of the housing market
correction in 2007, new housing construction has fallen well
below the level required by the growth of the U.S. population.
The pent-up demographic demand already exceeds the excess
inventory and will sustain demand for the next wave of housing
growth.
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Green product regional
marketing strategy
In order to minimize
shipping costs, AZFRP marketing strategy is purely regional and
aims at serving the Southwest’s markets of the greater Phoenix
area, Las Vegas, and southern California.
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Small market footprint
AZFRP production will
represent only a fraction of the Southwest market and is not
expected to destabilize its supply and demand dynamics.
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