Standstill is progress

Whether the glulam production has grown, fallen or has retained its level last year, cannot be said with certainty. In a Timber-online survey, the manufacturers reported a production increase of 0.4% in 2012 compared to 2011, and it will inch up by another 1.6% in 2013. The scale of these changes is, however, clearly within the boundaries of statistical uncertainty and does not allow any assumption other than: It remains about the same.
The figures that have been reported by the manufacturers together with the estimated production volumes of the companies that did not announce any figures, add up to 2.82 million m³ of glulam for 2012. This year, this amount is anticipated to slightly increase to 2.86 million m³. The future will show whether this target is feasible. Last year the manufacturers were asked how much they were planning on selling by year end. Compared with newest figures now available, they fall short by only 0.6%. Thus, the estimate seems to have been quite realistic.

One half pushes into Italy

It is remarkable that the bulk of glulam capacity is located in Austria and southern Germany. Both in terms of number of companies as well as of output, half of the glulam industry lies within a distance of 200 km as the bird flies to Italy. In absolute figures, 1.4 million m³ of glulam was produced in that region in 2012. The large Austrian productions along Mura, Drava River and Lavant cower at the Canal Valley and hence around the entrance gate to Italy. The present crisis there is forcing many to find new markets. Germany is within the delivery radius. This is all the more true for the western Austrian operations that could be supplying north to Germany over the valleys of Rhine and the Inn just as well as they could be southbound to Italy over the Brenner pass.

Two large and two small newcomers

There is a clear trend for commissions. With Bullinger, Neuruppin/DE, and the Pfeifer Group, Imst/AT, two heavyweights of the industry have invested millions of euros. Although this will certainly bring a capacity expansion, the main focus there is on higher flexibility. This also applies for Josef Ziegler, who will start-up an adaptable, combined line for producing glulam and structural finger-jointed timber (KVH) in Plößberg-Stein/DE in the 4Q 2013. Schaffitzel Holzindustrie, Schwäbisch-Hall/DE, wraps it all up as he is commissioning a new facility for up to 45 m long engineered glue-laminated timber.

Talking about timber engineering: This is definitely a difficult business. Once well-known producers such as Mohr, Trier/DE, Buchacher, Hermagor/AT, and recently Gröber Holzbau, Füramoos/DE, have left the market – partially by way of take over, as in the case of Buchacher who was acquired by Hasslacher group. What will happen to Gröber, is not yet clear. The company has applied for insolvency proceedings without self-administration. Operation is assured until year's end. Rumor has it that several competitors have shown interest in a takeover and continuation.

Closures in northeastern Germany

The final blow befell two productions in East Germany. PHB mothballed their Redekin mill in Saxony-Anhalt in early May. Yet production continues at their mill in Burgbernheim/DE. Franz Bayerl shut down his glulam manufacture in Rossau, Saxony. The plants generated about 30,000 m³/yr each. Given a total production capacity of about 3 million m³/yr in Austria and Germany, this does not really represent a shakeout.

Reserve capacity means future risk

There is not a significant increase in production, but in capacity. Comparing the numbers of companies that responded this and last year, capacities increased by 4.4%. Combined with stagnant output this inevitably leads to a poorer efficiency. And sure enough, average utilization rate currently is at 2.06 shifts, in 2012 the mills still ran an average of 2.11 shifts. Extrapolating that into the future, this free capacity (many call it over-capacity) poses a growing risk. When the crisis in Italy will be over, then market experts anticipate a mild recovery to kick in. If the demand from Italy grew by 50,000 m³ per year, these surplus quantities could be covered by the few largest mills in Austria. Meanwhile, the hoped-for recovery must be found elsewhere: In 2013, Japan was a good market (for lumber more than for glulam), which overheated in the end. Substitute markets are high in demand, but hardly found. Glulam is a purely European and Japanese product. One must just wait and see – and hope that the euro-/debt-/subprime-crisis comes to an end before equity does. In such a situation, (production) standstill must be considered (market) progress.