Economic Aspects of a Particle Board Operation

Economic appraisals of a particle board operation should consider the following facts: l) Raw material supply, which includes, a) the form of the raw material and type of end products; b) period of availability; c) future acquisition; d) whether the raw material is a byproduct of another industry which is subjected to higher or lower production; and e) whether raw materials should be diverted to some other products. 4) Quality of medium density board must have good stability, low water absorption, superior surface, high bending strength in both directions, light weight, good screw- and nail-holding capacity, good glue bonding properties, and good machinability. 3) Initial cost of installation of plant alone is somewhere near 3.5 million dollars for sound economic units, and may require at least 5.5 to 6.0 million dollars for a 250 ton capacity unit. 4) Market price and profit potential. Medium-density board of 3/4-inch can compete with a 3/4-inch Douglas-fir plywood for many end uses in which plywood’s extra strength is not needed. Medium density board can demand a price of 20 cents a foot, which is the price needed for Douglas-fir plywood sound 2 sides to show a fair return on investment. 5) Foreign competition. The components of cost of medium-density board are a) raw materials, b) resin, c) labor, d) utilities, and e) depreciation, insurance, and taxes. There is no indication that good board can be made in a foreign country and shipped into the United States at a cost appreciably lower than our domestic cost. 6) Labor costs. Productivity of good grade 3/8- Douglas-fir plywood is approximately 90 to 100 ft.2 per man hour, whereas it is as low as 10 ft.2 per man hour for a comparable level of self sufficient hardwood plywood operation. Productivity of medium density board can run at about 350 ft.2 per man hour on a 3/8-basis. This implies that labor cost will be only about l/3 of Douglas-fir plywood operation. 7) Marketing. Medium-density boards cannot be properly marketed except with a skilled salesforce properly directed so as to take advantage of its many peculiar qualities. It should not be brought to market in the way lumber and plywood are brought to market.

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