Economic Feasibility of Red Oak Press-Lam for Upholstered Furniture Frame Stock

Press-Lam composed of four plies of 0.25-inch parallel laminated red oak veneer appears to have adequate bending strength, stiffness, and fastener holding strength to replace solid lumber in upholstered furniture frames. The price at which Press-Lam would be competitive with solid lumber was estimated from cost studies of three major upholstered furniture manufacturers, who used standard cost data to estimate the cost to produce the individual parts for one lot of tuxedo style frames from green lumber and Press-Lam. Adding a drying cost of $50 per thousand board feet to a green lumber cost of $180 per thousand board feet expanding for a 55 percent yield, and adding labor savings of $70 per thousand board feet of lumber handled, gave an allowable purchase price of $488 per thousand board feet of Press-Lam, 1977 basis, which was representative of the firms studied. A list price of $450 per thousand board feet, f.o.b. Press-Lam mill, was used to conduct a cash flow analysis for a mill producing 29 thousand board feet of Press-Lam per day and patterned after a conventional plywood plant. The projected internal rate of return for the $2 million investment, 1977 basis, was 18.1 percent, with a 5-year payback. Sensitivity analysis indicated that the rate of return would increase to over 25 percent if the allowable purchase price of $488 was used as the list price. Press-Lam appears to be a feasible product in applications where labor costs are reduced by substituting a panel product for lumber in the manufacture of unexposed furniture parts.

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