Norwegian Forest and

Landscape InstituteChemical suppliers and the wood treating industry - Innovation in

buyer-supplier relationships

Erlend Nybakk, Eric Hansen, Andreas Treu, Tore Aase. Zvolen, 23.06.2014

skogoglandskap.no

Wood Treating Industry Characteristics

• Impacted by increasing global competition and the recent financial

crisis (Hansen 2013)

• A mature and traditional industry (Peltoniemi, 2013; Toppinen et al., 2013)

• A low-tech community (Laestadius, 2000)

• A low priority for research and development (Diaz-Balteiro et al., 2006).

• Fails to adapt to rapid technological advances and new product

development (Leavengood and Bull, 2013)

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Chemical Industry Background

• Chemical industry = companies that provide chemical solutions to

wood treating companies.

• The European industry trade association, 21 members registered as

suppliers of wood preservative chemicals in Europe (see WEI, 2014)

• The Treated Wood Council has registered 10 preservative chemical

manufacturers in the US (see TWC, 2014)

• The chemical industry is one of the key suppliers for the wood

treating industry

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Incremental innovation

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E.g. Color, (additives for impregnation solution),

Process optimization, Improvement of fixation

of preservatives

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Radical innovation

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New chemical for treating wood

E.g. non-toxic solutions: wood modification, furfuryl alcohol (Kebony)

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Synthesis of Forest Sector Innovation in NA

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Research Gap and Objectives

Research gap; given the important role that suppliers play in forest

sector innovation, there is little research characterising the

relationship between forest sector firms and their suppliers and how

that relationship influences innovation.

Objectives; determine how chemical suppliers view the state of

innovation in the wood treating industry and how they see themselves

impacting innovation in the wood treating industry.

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Methods

• Three case studies of chemical supplier companies and key

customer

• Semi-structured interviews and secondary data

• Interviews with the sales manager, R&D manager and marketing

manager and managers of a key customer

• Recorded and later transcribed

• Text was analysed using qualitative method analyses techniques

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Qualitative case studies

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Results

• “… the industry is quite conservative, so it is not so easy to bring in

new technologies into this market.” – European Manager, chemicals

• “…this industry is quite conservative, so customers like to do

business as they have done it for the past twenty years.” – US

Manager, chemicals

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1. Views from Suppliers

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Results

• “So I would say when you are talking about a customer innovation

standpoint, you got 85% of them, they are just waiting on us to bring

them something. Then about 15% of them, there is good

communication and they are trying to think ahead of the game.” –

US Manager, chemicals

• “You build trust obviously when you are developing these

relationships and they are more willing to be our guinea pig when

we have a new product.” – US Manager, chemicals

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2. Key costumers

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Results

• “Color is the product innovation. The new generation will maybe

have something else than green. We are screening the market, so

we try to adapt by adding colors. But the technology today is not

good enough” - Scandinavian Manager, wood treater

• “With wood preservative products it is quite rare to have new

products for the market, but once in a while we achieve that with our

color paste product range.” – European Manager, chemicals

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3. The impact of suppliers

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Results

• “…I think the sawmilling industry has a huge problem… retail with

lots of negotiation power.” – European Manager, chemicals

• “I will tell you that big boxes always want something for nothing.

They want everything, but they don’t necessarily want to pay for it.”

– US Manager, chemicals

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4. Big box retailers have an important impact

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Results

• “So we help them solving this problem by chemical means, giving

technical support, maybe also marketing and regulatory support.” –

European Manager, chemicals

• "So we are definitely not just a chemical company that sells

chemicals. We definitely have a full package. There are some

chemicals we offer, plus a service package.” European Manager,

chemicals

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5. Chemical industry as problem solvers

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Conclusion

• Chemical company managers saw the wood treating industry as

conservative and rather non-innovative – but there are exceptions

• Suppliers to forest products manufacturers play an important role in

the innovation that takes place in their customer companies

• It was a present focus on developing new colors on impregnated

wood and more incremental process innovation.

• Big box retailers - intense low-cost focus - villain in the marketplace

– makes it hard for wood treating companies to innovate

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Conclusion

In a future competitive wood industry, a stronger

buyer-supplier relationship and close cooperation in a

marked driven innovation process is needed!

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Thank you!

Erlend Nybakk, Eric Hansen, Andreas Treu, Tore Aase. Zvolen, 23.06.2014