Economic Feasibility Study: Composite Panel Complex in Georgia

The Economic Development Laboratory, Engineering Experiment Station, Georgia Institute of Technology, conducted a study program to consider the feasibility of utilizing the rich timber resources in a 25-county area in northern Georgia. The study investigated timber resources in the region, provided a model of investments and production, and analyzed the marketing of a structural panel with a flake core and veneer face used in place of softwood plywood for sheathing and underlayment in housing construction. The construction in northern Georgia of a composite panel plant with an annual capacity of 126,720,000 square feet, 1/2-inch thickness, appears feasible. Annual log requirements would be 6,309,000 cubic feet, which is equivalent to 21,549,000 board feet of southern pine (International 1/4-inch rule) plus 14,217,000 board feet of hardwoods (Doyle rule). Capital investment would be $27,929,000, of which $21,199,000 would be for fixed investments and $6,330,000 for working capital. Projected production costs for the model plant would be $19,870,501 in a full-scale production year or $156.81 per thousand square feet (1/2 inch thick). Projected annual returns would be $29,399,040, based on annual gross sales, on the basis of producing 20 percent AB grade and 80 percent CD grade panels, 1/2-inch thickness, or $232 per thousand square feet. The ratios of profitability are: after-tax internal rate of return, 32.9 percent; profit margin 13.27 percent; return on total assets, 13.47 percent; and a rate of return on common equity, 58.54 percent.

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