TALENT SEARCHThe Challenge of Finding

and Keeping High Performance Employees

WHOLE HOUSE TESTINGThe Purpose and Promise of

APA’s Full-Scale, Three-Dimensional Test Program

LEGISLATIVE OUTLOOKChallenges and Opportunities

in the New Congress

Engineered Wood Journal • Fall 2004 1THE OFFICIAL PUBLICATION OF APA – THE ENGINEERED WOOD ASSOCIATION

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Engineered Wood Journal • Spring 2007 5

THE OFFICIAL PUBLICATION OF APA – THE ENGINEERED WOOD ASSOCIATION

J O U R N A LEngineeredWood

VOLUME 10, NO. 1, SPRING 2007

departments7 PRIMELINES

9 INDUSTRYWATCH

14 DATELINE APA

36 UPCOMINGEVENTS

36 READERSERVICES

37 POINT OF VIEW

40 ADVERTISERINDEX

42 FINAL FRAME

features16 TALENT SEARCH

The Challenge of Finding and Keeping High PerformanceEmployees

20 WHOLE HOUSE TESTINGThe Purpose and Promise of APA’sNew Full-Scale,Three-DimensionalTest Program

24 LEGISLATIVE OUTLOOKChallenges and Opportunities in the New Congress

29 AHEAD OF THE PACKWhat Forest Industry Managers ThinkAbout Achieving and MeasuringInnovation

33 STAYING IN CONTROLImproving Flake Blending andMat Forming in Older OSB Mills

Engineered Wood Journal is produced for and distributed free of charge toAPA member and other engineered wood product manufacturers; theirequipment, product and service suppliers; and others with an interestin the industry.

©2007 APA–The Engineered Wood Association. All rights reserved.Reproduction in whole or in part without written permission is prohibited.The views and opinions of contributing authors are not necessarily those ofAPA–The Engineered Wood Association, its members, or advertisers.All editorial and advertising material is subject to the approval ofAPA–The Engineered Wood Association.

Engineered Wood Journal is published for:

APA–The Engineered Wood Association7011 South 19th StreetTacoma, WA 98466Phone: 253-565-6600Fax: 253-565-7265

Editor: Jack MerryEditorial Assistant: Kim Sivertsen

Published by:

Naylor, LLC5950 NW 1st PlaceGainesville, FL 32607Phone: 800-369-6220 or 352-332-1252Fax: 352-331-3525

3204 Ramos CircleSacramento, CA 95827Phone: 800-873-4800 or 916-363-1913Fax: 916-366-6674www.naylor.comPublisher: Gail E. KellyProject Manager: Tracy TompkinsEditor: Dale KuskaMarketing Associate: Heather ZimmermanBook Leader: Scott PauquetteAdvertising Representatives: Janet Corbe, Ryan Griffin,Erik Henson, Shirley Lustan, Albert Quintero, Rick Sauers,Jamie Williams

Layout and Pagination: Naylor, LLCAdvertising Art: Sharlene MacCoy

page 16

page 20

page 24

About the Cover:APA Technical Services Director Borjen Yeh

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Engineered Wood Journal • Spring 2007 7

BOARD OF TRUSTEESJonathan Martin

Chairman of the BoardRoy O. Martin Lumber Company, L.L.C.

Tom TempleVice Chairman of the Board

Canfor Corporation

Dennis HardmanPresident

APA–The Engineered Wood Association

Michael AinsworthAinsworth Lumber Co. Ltd.

Lindsay CrawfordRoseburg Forest Products Co.

James EnrightRosboro

Don GrimmHood Industries, Inc.

Richard HuffTolko Industries Ltd.

Steve KillgoreMcKenzie Forest Products

Peter LynchGrant Forest Products Inc.

John MurphyMurphy Plywood

Mary Jo NybladBoise Cascade Company

Mike RehwinkelGeorgia-Pacific Corporation

Henry RicklefsPlum Creek

Mike St. JohnPacific Woodtech Corporation

Jeff WagnerLouisiana-Pacific Corporation

Peter WijnbergenNorbord Inc.

THE OFFICIAL PUBLICATION OF APA— THE ENGINEERED WOOD ASSOCIATION

J O U R N A LEngineeredWood Prime Lines

The CSR CrusadeNow that trans fats are to be outlawed in New York City restaurants, what should we expect

next from the regulatory juggernaut? Well, in the UK recently, it already has brought into law a requirement that companies report

everything they do that might affect their employees, community and environment. It is the latest and perhaps most significant advance yet of the Corporate Social

Responsibility (CSR) movement, which seeks to make business more accountable to society. Onthe face of it, expecting companies to be socially responsible sounds reasonable enough. Andthe more transparency the better.

The problem, however, comes in defining “social responsibility.” Not surprisingly, many ofthose most passionate about corporate social responsibility also are among those mostdisdainful of corporations, business in general and even capitalism itself. And their definitionsof social responsibility are not necessarily those most of us would want imposed.

One is reminded of the preservationist movement, a CSR subset that in many of its leadingquarters has been motivated less by love of the “common good” than by hatred of the free market.

There are, of course, all kinds of laws on the books, not to mention marketplace forces, thatalready constrain companies from doing anti-social things. And despite occasional high profilecases of wrongdoing, it can reasonably be argued that most public companies today—andprivate ones too—have a fairly enlightened appreciation of their accountability to a broadrange of stakeholders. That’s commendable. It’s also just good business practice.

In the end, however, those who risk their own money in business ventures, whethershareholders or private entrepreneurs, ought to have the final say on how to run thecompany—within the law, of course. Then, let the market decide, not the government, and notself-appointed guardians of the commonweal.

The late Milton Friedman, our era’s foremost champion of the free market, wrote some 35years ago that “there is one and only one social responsibility of business—to use its resources andengage in activities designed to increase its profits so long as it stays within the rules of the game,which is to say, engages in open and free competition without deception or fraud.”

The Nobel laureate in economics was especially dismayed by business people who take upthe CSR crusade mantra, calling them “unwitting puppets of the intellectual forces that havebeen undermining the basis of a free society these past decades.”

The UK’s adoption of compulsory CSR reporting could well be a harbinger event. We shouldnot be surprised to see look-alike laws showing up eventually in legislative bodies on this sideof the Atlantic. And depending on who’s defining “social responsibility,” that could make transfats very small potatoes.

Help WantedIt’s no secret that the wood products industry is struggling to find and keep high quality

employees well trained in the myriad tasks of operating a successful manufacturing business. We’re not alone. As noted in the article beginning on page 16, virtually all North American

manufacturing sectors have the same problem. To help bring the challenge into focus, and more importantly, to begin finding solutions, the

Engineered Wood Technology Association (EWTA) is sponsoring a seminar on the subject onJune 21. The half-day event will be held as part of the conference schedule at the ForestProducts Machinery & Equipment Exposition (EXPO 2007) at the Georgia World CongressCenter in Atlanta. EXPO is sponsored by the Southern Forest Products Association incooperation with APA and others.

If you’re planning to attend EXPO, you should plan to attend the workshop. And if you’re notplanning to attend EXPO, you might want to reconsider. The event will be a good one. Moreinformation on the workshop can be found on EWTA’s web site at www.engineeredwood.org.For more about EXPO, log on to www.sfpaexpo.com. ●

Jack Merry

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Engineered Wood Journal • Spring 2007 9

2006 Panel Production Down1.8 Percent from 2005U.S. and Canadian production of structuralwood panels declined 755 million squarefeet, or 1.8 percent, compared to 2005,according to yearend data released recentlyby APA–The Engineered Wood Association.

Although housing starts, which consumeapproximately half of industry production,declined 12 percent for the year, paneldemand was buoyed by reasonably gooddemand in the nonresidential, industrial andrepair and remodeling markets. Panelimports, according to preliminary data, alsoappear to have declined in 2006 by morethan 30 percent. Excluding U.S.-Canadiantrading, panel exports rose slightly last yearto 532 million square feet.

Among other engineered wood products,glulam production declined less than 1percent, wood I-joist output dropped 7percent, and laminated veneer lumbervolume fell about 4 percent.

Wood Products Council Incorporates as NonprofitAfter more than 20 years of operation as anad-hoc vehicle to develop and coordinatewood industry market, education andpromotion programs in North America, theWood Products Council (WPC) officiallyincorporated as a U.S. nonprofit organizationlate last year.

The primary purpose of incorporatingwas to facilitate an industry-wide initiative to

increase wood product demand in thenonresidential construction market.However, opportunities for bettercoordination of industry programs related toresidential construction, Gulf Coastrebuilding and green building also werefactors in the decision to incorporate.

The council is governed by a board ofdirectors comprised of 15 senior industryexecutives representing the organization’sfive charter members—APA–The EngineeredWood Association, American Wood Council,Canadian Wood Council, Southern ForestProducts Association and Western WoodProducts Association.

Jim Enright, general sales manager atRosboro, Springfield, Oregon, and RickFranko, vice president, export lumber salesand market development, West FraserTimber Co. Ltd., were appointed co-chairmen. APA President Dennis Hardman isthe current WPC president and CanadianWood Council Vice President EtienneLaLonde is vice president/secretary.

U.S. Product Standard PS 1 Revisions Nearly CompletedA multi-year review and revision of U.S.Product Standard PS 1-95 for Constructionand Industrial Plywood is nearingcompletion under the coordination of theNational Institute of Standards andTechnology (NIST). A public commentperiod ended January 31 and the revisedstandard is due to be published shortly.

The revision process, which isundertaken approximately every 10 years tokeep pace with market needs,manufacturing practices, changes inresource supplies and other trends, isconducted by a standing committeecomprised of manufacturers, dealers,distributors, consumers, academia,government agencies and others. APA–TheEngineered Wood Association serves as thesecretariat but is not on the committee.

Most notable among the changes is thestandard’s new name: U.S. ProductStandard PS-06 for Structural Plywood.Other revisions include harmonizingsheathing grades with Product Standard PS2, updating of the overlay sections, andclarification of growing regions for speciesgroupings.

Copies of the revised standard will beavailable soon from APA and NIST.

Four More Eco-TerrorDefendants Plead GuiltyFour more individuals charged withengaging in eco-terrorist acts over severalyears took plea deals in federal court inEugene late last year.

Three of the defendants face eight-yearprison terms under the plea deals, while thefourth could get five years in prison.

Six other defendants in the string ofarsons pleaded guilty earlier last year andwere given prison sentences ranging fromnearly 16 years to just over three years.

• TEACHERS’ PRIVATE CAPITAL, the private investment arm of the Ontario Teachers’Pension Plan, announced an agreement to acquire DYNEA NORTH AMERICA from DyneaChemicals Oy of Finland. Headquartered in Mississauga and with operations across Canada,the U.S. and Mexico, Dynea North America has annual sales of more than $550 million. • HEXION SPECIALTY CHEMICALS, Columbus, Ohio, reported it has purchased propertyadjacent to its Edmonton, Alberta plant in order to improve the rail and logisticsinfrastructure at the site. The cost of the improvements are estimated at $4-5 million. More than 900 million pounds of UF and PF resins are produced annually at the facility. • VALSPAR CORPORATION, a leading global coatings company, announced completion ofits acquisition of the powder coatings business of H.B. FULLER COMPANY.

News and information about members of the Engineered Wood TechnologyAssociation (EWTA), the related supplier organization of APA–The Engineered WoodAssociation. Send news items to Jack Merry, jack.merry@apawood.org.

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Engineered Wood Journal • Spring 2007 11

Three others in the case remain at large andare believed to have fled the country.

The series of arsons caused an estimated$30 million damage in six states.Responsibility for most of the crimes wasclaimed by the Environmental Liberation Front(ELF) and Animal Liberation Front (ALF).

“We believe we have basicallydisassembled the Northwest cell of ELF/ALFarsonists,” said Assistant U.S. Attorney KirkEngdall. He added, however, that morearrests are possible.

Katrina Timber LossesPegged at $630 MillionIn Louisiana AloneHurricane Katrina caused an estimated $630million in losses to the Louisiana timberindustry, according to the Louisiana Pulp andPaper Association (LPPA).

The hurricane damaged 1.5 million acresin the state and downed or damaged threebillion board feet of timber, said LPPAExecutive Director Gary O’Rielly.

Timber, the number one agricultural cropin the state, was valued at more than $956million in 2003, the last year for whichfigures are available, O’Rielly said. The 2003timber crop accounted for 22 percent of thegross farm income of the state, nearlymatching the combined value of cotton, rice,soybean and sugarcane.

Trus Joist Co-founder Harold Thomas ReceivesBronson Lewis Award

Harold Thomas,co-founder ofTrus JoistCorporation, waspresented thesecond annualBronson J. LewisAward forleadership andoutstandingindustry

contribution during APA’s annual meeting inSan Antonio late last year.

“Few people have had as big an impacton the evolution of the wood productsindustry over the past half century as Harold

Thomas,” said APA Vice Chairman HaroldStanton in presenting the award during themeeting’s general session. “Together with(Trus Joist) co-founder Art Troutner, helaunched the wood I-joist industry … andcontributed to a whole new way of thinkingabout the manufacture of engineered woodframing products that eventually transformedour industry.”

Thomas retired from Trus Joist in 2000,capping a 40-year career with the company.The award is dedicated to Bronson J. Lewis,whose 24 years of service as secretary andthen executive vice president of APAspanned both the introduction of southernpine plywood and the advent of orientedstrand board.

Panel World MagazineAnnounces Plans for 2008 Conference and ExpoPanel World magazine has announced itplans to launch a new biennial Panel andEngineered Lumber International Conference& Expo in Atlanta beginning in February2008.

The event, to be held Feb. 7-9 at theOmni International Conference Center, is co-chaired by Rich Donnell, editor of PanelWorld, and industry consultant Fred Kurpiel.

The conference will feature presentationsby industry leaders, experts and consultantson issues, trends and technologies relevant tothe worldwide panel sectors, includingindustrial panels, engineered lumber,laminate panels, laminate flooring, value-added products, composites and structuralpanels, according to the magazine.

The event also will feature industryproducer, supplier and educational exhibits.

Green Building InitiativeLaunches Pilot Programfor Existing BuildingsThe Green Building Initiative (GBI), thenonprofit organization created to promotepractical and affordable green buildingapproaches, has begun pilot testing a newmodule to complement the Green Globesenvironmental assessment and rating systemfor new construction.

Called Green Globes for ContinualImprovement of Existing Buildings, the newweb-based system is designed to givebuilding owners, facility managers andothers a practical and cost-effective way toassess and improve the performance ofcommercial and institutional buildings.

GBI was originally established as a way tobring green building into the mainstream byhelping local home builder associationsdevelop green building programs modeledafter the National Association of HomeBuilders (NAHB) Model Green HomeBuilding Guidelines. It later finalized anagreement to bring Green Globes, anenvironmental assessment and rating tooldeveloped in Canada, to commercialbuilders in the United States.

More information about the pilotprogram can be found at www.thegbi.org.

BC Technology Institute Expands Wood Processing and Management ProgramsThe British Columbia Institute of Technology(BCIT) is now accepting applications for itsnewest programs in Industrial WoodProcessing and Management (IWPM).Students can earn a certificate in WoodProduct Sales and Distribution or acertificate or diploma in Technology inIndustrial Wood Processing Management.

“The shift to mill automation andindustry consolidation has created a greatdemand for employees with both technicaland managerial skills,” said JohnMcDonald, the Institute’s newly appointedhead of the IWPM programs. “Theprograms are designed to provide the skillsand knowledge required to satisfy therecruitment needs of employers in theindustrial wood processing sector,including suppliers, primary producers,subsequent processors and end users.”

In addition to overseeing the IWPMprograms, McDonald also teaches severalengineered wood products courses.

The IWPM courses are delivered primarilyonline through the use of a presentationconcept called WebCT, which allowsparticipants to work toward their credentialsvia their home or work computers.

Industry Watch

Harold Thomas

12 Engineered Wood Journal • Spring 2007

New Study ConcludesForests Are Expandingin Many CountriesA new formula to measure forest cover,developed by researchers at The RockefellerUniversity and the University of Helsinki, incollaboration with scientists in China, Scotlandand the U.S., suggests that an increasingnumber of countries and regions aretransitioning from deforestation toafforestation.

The formula, known as “Forest Identity,”considers both area and the density of treesper hectare to determine the volume of acountry’s “growing stock”—trees largeenough to be considered timber. Applying theformula to data collected by the UnitedNations, the researchers found that, despiteconcerns about deforestation, growing stockhas expanded over the past 15 years in 22 ofthe world’s 50 countries with the most forestcover. The results showed that North America

was among the leaders in greatest total gain oftrees and area of forestland.

Forest area and biomass are still being lostin such important countries as Brazil andIndonesia, but an increasing number ofnations show gains, the study found. And in the

world’s two most populous nations, China’sforests are expanding while India’s havereached equilibrium.

The study results were published late lastyear in the Proceedings of the NationalAcademy of Sciences. ●

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14 Engineered Wood Journal • Spring 2007

Dateline APAAPA Annual MeetingScheduled for Nov. 10-13in Palm DesertPlans are proceeding for APA’s 70th annualmeeting scheduled for Nov. 10-13 at theHyatt Grand Champions Resort and Spa inIndian Wells, California.

Located approximately 30 minutes fromPalm Springs International Airport, the480-guest room resort features two golfcourses, several restaurants and lounges,seven pools, a celebrated art collection andgrand views of the surrounding desert andSanta Rosa mountains.

More information about the resort andmeeting will be sent soon to all APAmembers and posted on the APA web site.

Canfor Exec Tom TempleElected APA Vice Chairman

Tom Temple,vice president ofsales andmarketing atCanforCorporation,Vancouver, B.C.,was elected vicechairman of theAPA Board ofTrustees late lastyear. Hesucceeds Harold

Stanton, who recently retired from LP. Also appointed to the Board was Jeff

Wagner, vice president of OSB at LP, whoassumes Stanton’s trustee position.

Annual Productionand Market Outlook Nears CompletionAPA’s annual Regional Production andMarket Outlook for Structural Panels andEngineered Wood Products is nearing

completion and will be sent soon to all APAmembers.

The comprehensive report containseconomic forecast assumptions, marketsegment demand data and analysis,historical production and capacity figuresby product category, regional productionstatistics, export and import data, andother information.

The report is distributed free to APAmembers as a business planning tool and isavailable only to APA members. Membersalso can access the report from themembers-only section of the APA web site.

A Structural Panel & Engineered WoodYearbook containing historical productionand market demand data also will beavailable soon to the general public for$200. The Yearbook can be downloaded asPDF file from the Publications section ofthe Association’s web site atwww.apawood.org.

Panel Producer ForumScheduled for AtlantaThe next in APA’s series of producer forumsfor member-structured wood panel mills willbe held June 20 in Atlanta, Georgia.

The full-day meeting will include a jointsession for both APA plywood and OSBmanufacturers followed by product-specificbreakout sessions—a meeting format thatwas highly successful at the last APA southernregion forum. Agenda topics will includeproduct and performance standards,international market trends, environmentalissues, production technology developments,and other topics of special relevance toproduction personnel.

The forum was scheduled for June 20 inorder to provide attendees an opportunity toalso attend a workshop the following day onemployee recruitment and retention at theForest Products Machinery and EquipmentExposition (EXPO) sponsored by theSouthern Forest Products Association. EXPOwill be held June 21-23 at the Georgia WorldCongress Center.

Five Companies Earn EWTA Supplier AwardsFive companies earned Supplier of the YearAwards in the latest annual awards

competition sponsored by the EngineeredWood Technology Association (EWTA).

The winners were HuntsmanPolyurethanes and Tembec, Inc. ChemicalGroup, which tied in the oriented strandboard category; Dynea Resins andWillamette Valley Company, which sharedtop honors in the plywood category; andHexion Specialty Chemicals, Inc., in theengineered wood category.

The supplier awards programrecognizes the value and importance of thebusiness relationships between APAmember companies and their EWTAmember suppliers. Winners are selected bya vote of the APA membership.

Prescriptive Methodfor SIP Wall SystemsSubmitted to ICCAPA has submitted a code change proposalto the International Code Council forinclusion of a structural insulated panel(SIP) residential wall system Prescriptive

Tom Temple

Engineered Wood Journal • Spring 2007 15

Dateline APA

Method in the International ResidentialCode (IRC).

The Prescriptive Method is based on aperformance standard developed recentlyby the SIP industry under a grant from

Department of Housing and UrbanDevelopment. Completion of thePrescriptive Method, a priority under astrategic alliance between APA and theStructural Insulated Panel Association(SIPA), is viewed as a critical first step inadvancing marketplace acceptance and useof structural insulated panels.

Acceptance of the Prescriptive Methodwill allow SIPs to be specified as part of theconventional practices of the IRC, reducingconstruction costs and delays.

APA tested all of the assemblies thatform the basis for the tables contained inthe standard. A Prescriptive Method for SIProofs also is being explored.

APA Career Center Listings Now FreeWood products industry employers can nowpost job openings on APA’s online CareerCenter free of charge.

Located at www.apawood.org/jobs, thesite is designed to help link industry jobseekers with job openings. APA andEngineered Wood Technology Associationmembers previously paid $45 for a 30-daylisting. Nonmembers paid $95. The feeswere eliminated in order to encouragebroader use of the service and to enhancemember benefits.

Job seekers can search for openings bykey word, location and category, including,for example, machine operators,

technicians, maintenance, sales andmarketing, human resources, informationtechnology, quality assurance and manyothers.

EWTA Advisory CommitteeExpands Membership Several new members were added recentlyto the Engineered Wood TechnologyAssociation (EWTA) Advisory Committee inan effort to broaden the representation ofEWTA supplier and manufacturermembers.

New members from the supplier ranksare Stephen Blackwater, Hunt Guillot &Associates; David Evans, Carmanah Designand Manufacturing Inc.; Dave Gagnon,Samuel Strapping Systems; Cole Martin,Dieffenbacher, Inc.; Lester Pernu, DyneaOverlays, Inc.; and Miki Tokola, CoeNewnes McGehee. APA member additionsare Jim Enright, Rosboro; Brian Luoma, LP;and Dan Price, Tolko Industries Ltd. SteveZylkowski, APA Quality Services Director,also was added. The committee, whosemembership now totals 17, is chaired byDr. Fu-Shou Lin, Georgia-PacificCorporation.

EWTA, a related nonprofit organizationof APA, is comprised of 90 product,equipment and service providers and all ofAPA’s member manufacturers. Thecommittee reports to the APA Board ofTrustees. ●

319954_West.indd 1 2/16/07 4:03:21 PM

16 Engineered Wood Journal • Spring 2007

What’s buggingmanufacturers these days?The usual suspects come tomind: trade issues, taxes,energy costs, government

regulations. But another big problem—growing ever more serious—is the scarcity ofquality employees, both hourly and salaried.

“The vast majority of U.S. manufacturersare experiencing a serious shortage ofqualified employees,” states the key findingof a “Skills Gap” survey conducted jointly byconsulting firm Deloitte & Touche, TheNational Association of Manufacturers(which has 12,000 member companies) andThe Manufacturing Institute, NAM’s nonprofitresearch arm.

This shortage, the report says, is a threatto the country’s ability to compete in a globalmarket. Chinese universities, for instance,will graduate 325,000 engineers this year,compared to the 65,000 that will emergefrom U.S. universities.

The questions for U.S. wood productscompanies are 1. how widespread is thislabor problem?, 2. what is causing it?, and 3. what is being done about it?

by Kathy Price-Robinson

More than 80 percent of the manufacturersin the Deloitte & Touche/NAM study say theyare experiencing a lack of qualified employees.More than 60 percent of companies reporteddifficulty finding scientists and engineers, and90 percent reported difficulty finding skilledproduction employees. When asked what typesof employees companies expect to find inshort supply in the coming few years, 80percent cited skilled production employees.

Several converging trends have broughtabout these shortages. Among them:

Competition: Manufacturing, especially inthe wood products sector, increasinglycompetes with other industries, like high-techin the Northeast and the petrochemical in theSouth. And now there is another southernsuitor for workers: the reconstructionfollowing hurricanes Katrina and Rita.

According to Ray Peters, the vice-president of human resources for Louisiana-based Roy O. Martin Lumber Company, thewages in the Southeast are “artificially”inflated on account of the reconstruction. Yetthey are inflated just the same, and promisesof reconstruction riches are such a pull toMartin’s current and potential workforce that

TALENT SEARCH

this threat must be addressed with higherwages and other benefits.

Also, quality workers are surely beingpulled away from local industry to rebuildIraq. There are an estimated 100,000 privatecontractors in Iraq, and many more supportstaff stateside, all funded by the $1.2 trillionthus far channeled toward that cause. Whilemilitary-industrial businesses tend to do quitewell in a war, forest products companies areunlikely to reap much benefit.

A changing demographic: As the BabyBoomers inch toward retirement, they takewith them work ethics that harkens back tothe age of their Depression-era parents andgrandparents. This middle-age generation,born before video games and even televisiontook over leisure time, was exposed daily totheir elders’ early-to-bed and early-to-riselifestyle.

Hard physical work was respected in away it is not today. Young people today growup in a world of laptops, cell phonetelevisions, iPods and electronic games. Whentime comes to think about a career, these kidsdon’t automatically dream of mills, machines,manufacturing or managing work crews.

The Challenge of Finding and Keeping High Performance Employees

© iStockphoto.com/Kit Wai Chan

Engineered Wood Journal • Spring 2007 17Promo.indd 1 3/8/07 2:46:02 PM

Seminar on EmployeeRecruitment and

Retentionto be held at EXPO 2007

While many manufacturing jobs have leftthe country, there are some 20 million stillhere, according to NAM statistics. But whilecompanies moving out of the country get allthe newspaper ink, those who are not movingdo not register a story. Naturally, college ortrade school graduates would hesitate to enteran industry they think is evaporating.

To turn this perception around, the publicmust be educated about manufacturing’sendurance in North America. According toJudd Michael, associate professor at PennState’s School of Forest Resources, theengineered wood industry in particular has astrong future and strong growth here at home.

The forestry stigma: Though wood-is-good campaigns have certainly tempered theperceived connection between environmentaldegradation and the wood products industry,there is still ignorance in the generalpopulation about the benefits andopportunity for advancements that forestproducts careers can offer. When manypeople hear the word forestry, says Michael,“they think they’re going to have to use achainsaw.” Ongoing public relationcampaigns will be necessary to bring thoseoutdated perceptions in line with reality.

A half-day seminar on forest productsindustry employee recruitment andretention issues will be held as part of theForest Products Machinery & EquipmentExposition (EXPO 2007) in Atlanta June 21.

The program is sponsored by theEngineered Wood Technology Association(EWTA) under an agreement with theSouthern Forest Products Association,which sponsors EXPO.

EXPO 2007 will run from June 21-23 at Atlanta’s Georgia WorldCongress Center. More information can be found on the EWTA web site atwww.engineeredwood.org.

Education: Long before the testing-intensive No Child Left Behind initiativecame along to drain funds that couldpotentially go to vocational classes,programs that once channeled students intotechnical schools were already weakenedand gutted. Instead of creating a career pathfor high school students to head straight intothe workforce, schools have focused onpushing every student into a four-yearcollege, where nearly half fail to earn adegree after six years.

Long-term solutions to the labor shortagemust include bringing vocational programsand career counseling back to schools; andeducating teachers, administrators andschool boards about the benefits andappropriateness of manufacturing careersfor at least a portion of the student body.

Manufacturing’s reputation forshifting jobs offshore: Certainly somewould label the issue of North Americanmanufacturing sector labor shortages as atype of oxymoron. After all, haven’t mostmanufacturing jobs gone to China? “That’sdefinitely the perception and that’s not thecase,” says Stacey Wagner, managing directorof NAM’s Center for Workplace Success.

18 Engineered Wood Journal • Spring 2007

The remedy for worker shortages can besummed up in this three-pack: recruit,retrain, retain.

Every manufacturing company recruits tosome extent, both for management staff andfor hourly workers. The successfulcompanies will be the ones who do it best.Jeld-Wen, the door and windowmanufacturer, has taken recruiting to ahigher level by recruiting a star recruiter:Jerry Pettibone, former Oregon StateUniversity head football coach.

Pettibone is one of three Jeld-Wenrecruiters who mine the talent at 43

university programs. At the dozen or souniversities he visits, Pettibone meets withteachers and career counselors to talk up thebenefits of the career path Jeld-Wen has tooffer, including an 18-month managementdevelopment program.

“They’re very interested,” Pettibone says,adding that he has never met a teacher orcounselor who is not intensely interested incareers for their students. He also attendscareer fairs and sets up interviews withstudents. One of his most lucrativeassociations is the OrganizationalLeadership and Supervision program at

Purdue University’s College of Technology. Ata recent job fair at the department, amongthe several dozen companies looking fortalent were Belden, Cisco Systems, Monsantoand U.S. Steel.

At Roy O. Martin Lumber Co., facing thedual competition of the petrochemicalindustry and hurricane rebuilding, thecompany’s three-prong strategy is to retainthe employees it already has, offercompetitive wages and benefits, and elevatethe training of its 70-plus supervisors. As HRchief Peters put it: “People don’t quitcompanies. They quit supervisors. I thinksupervisors are the fulcrum.” The company’ssupervisors are called “team leaders” and“probably get more training than they want,”Peters says.

For Search North America, Inc., a forestproducts recruiting firm, looking for

employees from other industries is key tofilling jobs. The company has begunnetworking with trade organizations outsidethe forest products industry.

In attracting and retaining the bestemployees, wages are important, despitesome studies that have said they aren’t. In aresearch paper co-authored by Penn State’sMichael, “good pay” was stated as thenumber one motivator for all age groups in astudy, followed by having steady employment,and thirdly by pension and other benefits,although the younger the worker, the less apension matters.

According to Michael, forest productscompanies tend to pay less than otherindustries do for the same skill level, but theydo so at their peril. At the lowest levels, fast-food outlets offer workers an attractivepackage to compete with forest productsjobs: up to $10 an hour, a climate controlledenvironment and meals.

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Long-term solutions to the laborshortage must include bringingvocational programs and careercounseling back to schools; andeducating teachers,administrators and school boardsabout the benefits andappropriateness of manufacturingcareers for at least a portion ofthe student body.

Engineered Wood Journal • Spring 2007 19316184_PAL.indd 1 2/8/07 8:25:57 AM

Some companies live and learn. Michaelcites the example of one small southernwood products company that went from thebrink of closure to a model of success, inpart by raising wages to retain higher qualityemployees. Michael said he expects higherwages will emerge as older and tight-fistedDepression-era owners of small woodproducts companies turn over leadership toyounger generations.

In the long-run, school kids ideally wouldbe enthused about seeking careers inmanufacturing. This will benefit them(sparing some a sure-to-fail stint in a four-year college), and will benefit the economyoverall. Working with the sluggishbureaucracy of the school system, however,has proven frustrating to many in business.Two initiatives—one established and theother just emerging—are having somesuccess.

Skills USA: Once known as VICA(Vocational Industrial Clubs of America),Skills USA has grown in recent years into anenormous enterprise that brings togetherhigh school and community college studentsto compete in such real-world tasks aswelding, carpentry and computer-assisteddesign.

According to Tom Holdsworth, Skills USAdirector of communications and governmentrelations, companies actually recruit right atthe show, as students demonstrate theirabilities to communicate, work in a team,lead, and motivate others. Competitions arecrafted by technical committees straight outof industry. Major sponsors include carmanufacturers and tool makers, but no woodproducts companies. USG Corp. brings twodozen teachers a year to its plants for a weekof instruction on how to properly install itsproduct. The Steel Framing Alliance also hasaggressively pursued participation in thecompetitions.

The impact of the competitions reachesback into the schools, where the shopcurriculum is often crafted to mesh withwhat students need to learn in order to win.It’s a backward way of having influence onwhat is taught in school. But as a member ofone technical committee tells potentialsponsors: “Pepsi and Pizza Hut are inschools. Why not you?” There’s even aprogram, funded by the Kellogg Foundation,to create entry-level job certifications so thestudents can move seamlessly from schoolto work.

The Dream It! Do It! program is thenewly launched creation of the Center forWorkplace Success of The ManufacturingInstitute. The program, rolled out first inKansas City and then in several other states,aims to steer young people into “cool”manufacturing careers.

Geared toward what young people willrespond to, the initiative’s website,www.dreamit-doit.com, offers a “careercalculator” where students choose whatthey’re good at, then what they like to do,and then are presented with several career options that describe such jobs as

baker or tool and die maker, the potentialsalaries and the educational level needed.

This work-oriented program fills aninformation gap about the very nature ofschool and work. “We want to put it into thesystem so kids understand early on that theygo to school so they can do what they likelater on,” says Stacey Wagner, the center’smanaging director. ●

Kathy Price-Robinson is a freelancewriter who covers the constructionand building products industries.

20 Engineered Wood Journal • Spring 2007

How do wood framed houses built with different sheathingproducts, bracing methods, tie-down techniques and invarious other ways perform under extreme wind andseismic loads?

Engineering design calculations provide guidance, asdoes traditional two-dimensional laboratory testing of wood framedcomponents. Field observation following actual natural disasters is evenbetter because it permits comparison of what theoretically ought tohappen based on engineering calculations to what really does happenunder the harsh conditions of actual events.

But there’s still another way to predict building performance underthe extreme loads of natural disasters, and APA is at the forefront ofemploying it. It’s called “whole house testing”—applying extreme loadsto full-scale, three-dimensional test structures.

The impetus for APA’s whole house test program, which began earlylast year, was a contentious International Residential Code (IRC) codechange hearing in October 2005 at which APA proposed a change to thecode’s narrow wall bracing provisions. The International Code Council(ICC) had earlier approved, with limitations, APA’s Narrow Wall BracingMethod (NWBM). That method was published in the 2004 InternationalResidential Code Supplement and is now in the 2006 IRC. The October2005 proposal, which was meant to address the growing desire byhomeowners and designers for narrower wall segments thataccommodate larger windows and doors in keeping with modern design

Whole House Testing

The Purpose and Promise of APA’s New Full-Scale,

Three-Dimensional Test Program

by Jack Merry

Engineered Wood Journal • Spring 2007 21

trends, would have permitted additional narrow wall bracing designoptions.

The narrow wall segment designs were subject to a structure beingfully sheathed with wood structural panels in order to provide overalllateral load resistance, and were based on extensive two-dimensionalcyclic wall segment testing conducted over many years at APA’s Tacomaheadquarters Research Center.

Competing product interests, however, viewed the proposals as athreat to their own market shares and mounted opposition argumentschallenging the validity of APA’s test data.

Ironically, although APA lost its bid to gain approval of its proposal,the code hearing outcome gave rise to APA’s whole house test program,formation of new wall bracing advisory committees, and initiation ofefforts to revise the American Society for Testing and Materials (ASTM)standard method for cyclic testing of walls—developments that in theend are expected to help vindicate APA’s engineering conclusions andgreatly improve the prospects for gaining code acceptance of a widevariety of new prescriptive wall bracing designs.

More broadly, notes Tom Williamson, APA vice president, Quality andTechnical Services, the test program is advancing “overall understandingof building performance under extreme loads and thereby serves the lifesafety interests and aesthetic preferences of both the design andconstruction community and the home buying public.”

APA’s growing leadership in wall bracing testing is another welcomeresult, which supports an Association strategic goal of being theauthoritative industry voice on matters related to engineered woodproduct market access issues and challenges. APA now operates one ofthe few laboratories in the country capable of full-scale three-dimensional structure testing.

“We’re very excited about this project because of its long-termpotential for supporting the structural wood panel industry’s wallsheathing market goals,” said APA Senior Engineer Tom Skaggs, P.E.,Ph.D. Skaggs designed the test equipment and supervises the day-to-daytests.

The timing for launching the program was fortuitous because APAhad just begun adding 5,000 square feet of Research Center space forstoring member mill product qualification and test samples.Approximately 30 percent of the additional space was set aside for thenew test equipment.

The tests employ a state-of-the-art device that applies a maximum65,000-pound lateral load to a full-scale three-dimensional house. Thetest set-up is designed to record the response of both the wall and overallbuilding with different bracing methods and configurations. For mosttests, maximum wall displacements are limited to 1-1/2 inches in orderto minimize damage and thereby maximize the number of tests that canbe repeated using the same framing. However, the equipment has thecapability of testing the structure to complete collapse.

The results of the ongoing tests are being summarized in progressreports posted at www.wallbracing.org/. To date, seven reports have beenissued.

Although data from whole house testing is expected to carrysubstantial weight in future code change deliberations, the data alonewon’t automatically safeguard or advance scientifically credible treatmentof wood panel bracing designs. An ongoing challenge, notes Williamson,will be to make the data and conclusions understandable to codecommittees and to stay involved in committee-level code debates,discussions and negotiations.

To that end, APA technical staff serve on both an ICC Ad HocCommittee on Residential Bracing and an industry Residential BracingCommittee. The former is an official ICC-affiliated group charged withmediating the nearly 60 code changes that were submitted during the2006-07 code-change cycle. That committee makes recommendations tothe International Residential Code Building and Energy Code Committeeand will continue its work on wall bracing requirements all the way tothe 2012 IRC. APA Senior Engineer Ed Keith is a member.

The second group, called the IRC Bracing Committee, is an unofficialgroup comprised of competing product interests that was formed in anattempt to gain as much consensus as possible on a number of wallbracing issues. That group is chaired by Dr. J. Daniel Dolan, a professorof civil and environmental engineering at Washington State University.Keith and Senior Engineer Zeno Martin are members of that group.

Meanwhile, APA Technical Services Director Borjen Yeh is chair ofthe ASTM committee that is working to revise the standard for cyclictesting. The committee seeks to better define boundary and loadingconditions so that results can be compared from laboratory tolaboratory.

APA also is working with ICC to develop a wall bracing manualdesigned to help code officials, builders and design professionalsconform to wall bracing code requirements. And APA Field Services staffcontinue to promote APA wall bracing designs to local code jurisdictions,which may adopt their own supplements to the International ResidentialCode.

The engineering design issues and code change challenges in whathas been referred to as the “wall bracing wars” can seem hopelesslyarcane, even to those initiated in such matters. “Yes, it’s a tangled web,”admits Williamson. “But we need to be involved because the stakes forour industry are very high.”

Thanks to its whole house test program, APA’s involvement has beenelevated to a substantially higher level. ●

Jack Merry is industry communications director at APA andeditor of Engineered Wood Journal. He can be reached atjack.merry@apawood.org.

For More Information

More information about APA’s whole house test program, wall bracing design issues and recommendations, codedevelopment updates and related topics can be found on APA’swall bracing web site (www.wallbracing.org) and on theAssociation’s blog for design professionals(www.apawood.org/pablog). Among other backgrounders andarticles, the blog site includes “The Evolution of Lateral LoadDesign in Residential Construction,” an overview of lateral loaddesign developments over the past several decades. Its primaryauthor was APA Senior Engineer Ed Keith, P.E. The Associationalso has published several publications on the subject of wallbracing, including Introduction to Lateral Design, Narrow WallsThat Work, Introduction to Wall Bracing, and Whole House WallBracing. All can be downloaded free of charge from thePublications section of the APA web site at www.apawood.org.

314433_Hexion.indd 2-3 1/8/07 10:58:43 AM

314433_Hexion.indd 2-3 1/8/07 10:58:43 AM

Since I took the reins of theAmerican Forest & PaperAssociation in October from mypredecessor Henson Moore, wehave seen some remarkable

developments on the political landscape. Aswe were achieving long-sought major policygoals for our members and the industry as awhole—including increased natural gasexploration to reduce energy costs—Washington politics shifted dramatically onNovember 7 when the American people sent aDemocratic majority to both houses ofCongress for the first time in a dozen years.

Many of the 63 freshman members ofCongress—Democrat and Republican—campaigned on platforms of providing morejobs and pursuing policies that allowAmerican companies to compete fairly in aglobal economy. We know that when the

economic playing field is level, Americanforest products businesses can stand toe totoe with anyone in the world. As with 1994Congressional elections, many new membershave never run for political office before, sothere are fresh faces and new ideas onCapitol Hill.

Just as there were Republican memberswho were more receptive to our policy goalsthan others, so too will there be Democratic

Legislative OutlookChallenges and Opportunities in the New Congress

by Juanita D.Duggan

24 Engineered Wood Journal • Spring 2007

Juanita Duggan, President and CEO,American Forest & Paper Association

members now in leadership who understandthe industry better than others. I encourageeveryone with a stake in the forest productsindustry to visit www.growthevote.org andexamine the voting records of your state andfederal legislators on our key issues. We willbe competing with extremists who will attemptto advance their irrational agenda by abusingwell-intentioned laws and we need to be readyto counter them with sound science andeconomic facts.

In addition to the ever present discussionson forest management, we will need to beprepared for continuing battles on taxation,debates on international trade, and theimplementation of sound forestry practicesoverseas. Adverse legislation or setbacks inany one of these areas could, of course, bevery costly to our industry.

At the same time, there are importantopportunities that we can and will make themost of, beginning with a strong centrist bodyof policy makers in both houses thatunderstands our industry’s critical importanceto the U.S. economy and our competitiveposition in global markets.

With sales of over $230 billion annually—some six percent of all U.S. manufacturingsales—the forest products industry employsover a million people and ranks among thetop 10 manufacturing employers in 42 states.As such, we are an integral and vital part ofthe social fabric of communities and electoralconstituencies throughout this land, and we atAF&PA intend to be a loud and persuasivevoice in getting our message heard inWashington.

The fact is that we have an extraordinarystory to tell that appeals across the politicalspectrum. It is the story of an industry thatcombines advanced technology and innovativemanufacturing practices with responsiblestewardship of our precious natural resourcesand highly successful, proactive programs toimprove the environment.

Our positive record demonstrates ourability to achieve, voluntarily and efficiently,environmental goals with programs that aresustainable and effective precisely becausethey take into account market forces. In otherwords, we are walking a path that preservesjobs as well as natural habitat—one thatshould serve as a model for a new Congressconcerned with both.

So there are a host of opportunities as wellas challenges ahead of us and we at AF&PAwill be giving particular attention to the areas

where we believe we can make the differencein bringing about a positive outcome in thisCongress.

Until now, the effects of forestry activitieson water have long been regulated under thestate-initiated best management practice(BMP) program. In fact, since AF&PAestablished the Sustainable Forestry Initiativeprogram in 1995, BMP use has becomecommonplace.

Now, extremists are seeking to abuse theClean Water Act by pushing to extend tosustainable forest management operationsrequirements that are designed formanufacturing facilities and waste water sewersystems. In the event these requirements areimposed on forestry, they would result in anunnecessary expenditure of federal tax dollarsby repeating what are already set out in thestate BMP programs.

A second effort is the attempt by the Corpsof Engineers to remove the statutory “normalsilviculture” exemption and impose a wetlandpermit requirement on harvesting of cypressin Louisiana. Again, a new and burdensomepermitting requirement not supported byscience would be imposed on our industrywhere none existed before.

We will continue to promote the practiceof sustainable forest management in court andwork with Congress to recognize ouraccomplishments.

With respect to our industry’s renewableenergy efforts, climate-related hearings arealready planned in both the House and theSenate and several legislative measures toreduce CO2 emissions already proposed.There is no doubt that this important issuewill be a focus of the 110th Congress. Ourindustry is well positioned in this regard andAF&PA will continue to provide the factsshowing that our members stand at theforefront in addressing this challenge byalready supplying 60 percent of the energyused by wood products facilities withbiomass.

Derived from what were once consideredwaste products—slash, sawdust, pulping

liquors and other residuals—biomass energyis an environmental winner because itcontributes no net new CO2 to theatmosphere. The carbon dioxide that isreleased when biomass is used is the samethat was captured and stored by the plant as itgrew. As new tree growth will once againcapture and “sequester” the CO2, the forest-carbon cycle is universally considered a

“closed loop” with no negative impact onclimate change.

Meanwhile, a new generation oftechnologies is being developed that willenable us to convert existing mills so thatthey can double as bio-refineries, producingnew bio-fuels that can be substituted forliquid transportation fuels such as ethanolor diesel. Such bio-refineries will give ourmills whole new product lines (in additionto their traditional ones) that will improveprofitability and spur the creation of moreand higher-paying jobs—while at the sametime helping to relieve our nation’sdependence on foreign oil and creating anew, environmentally-friendly energyresource.

Value Prior to Pulping, or “VPP,” seeks toextract components from wood beforeprocessing it in a board or pulp mill, toproduce commercially valuable chemicalsand fuels, including ethanol. A recent $1.5million matching grant, administered byCleanTech Partners of Wisconsin inpartnership with the Agenda 2020 TechnologyAlliance, aims to make advancements in thistechnology that would enable a commercial-scale demonstration of VPP ethanolproduction within 2 years. Based on USDAand DOE estimates of the amount of biomassthat could be made available on a sustainablebasis for biofuel conversion, this newtechnology could potentially supply up to 8billion gallons of ethanol annually.

Like the change in the politicallandscape, however, this “biomass future”also presents challenges as well asopportunities for our industry. Because

Engineered Wood Journal • Spring 2007 25

Our positive record demonstrates our ability to achieve, voluntarily andefficiently, environmental goals with programs that are sustainable andeffective precisely because they take into account market forces. Inother words, we are walking a path that preserves jobs as well asnatural habitat—one that should serve as a model for a new Congressconcerned with both.

26 Engineered Wood Journal • Spring 2007

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biomass and other renewables are suchenvironmentally attractive energyalternatives, numerous initiatives have beenadopted or proposed at the federal, stateand regional levels to encourage their use.These measures can be a great boon tomany in our industry, but a potentialproblem for others. Some initiatives—especially those designed to stimulateelectric power generation from biomass—could make raw materials prices fortraditional forest products rise tounaffordable levels.

We all believe that the market should drivechoices. It is critical, therefore, that anyfederal initiatives should be designed to allowmarket forces to determine when and wherewood and wood waste is used in theproduction of energy. We must be careful toavoid subsidies that divert wood-based rawmaterials from their most economicallyproductive use and negatively affect local andregional economies.

In regions where biomass resources areunderutilized, however, or where inadequateeconomic alternatives for biomass exist,

AF&PA will strongly support incentives for theuse of biomass as a renewable energyresource. Where the government has allowedtax credits for renewable energy, we supportthe development of transparent systems andmechanisms to ensure the credits areaccurately employed.

Another facet of our commitment toprotecting the environment includes the healthand safety of employees and the public, and thesustainable management of natural resources.Since 1990, the pulp and paper industry hasspent $4.8 billion to improve water quality and$4.2 billion to ensure clean air. In all, theindustry has invested over $11 billion insignificant environmental improvements.

In 2007, AF&PA will continue thesignificant progress we have made on behalfof the wood products industry with respect tothe Maximum Achievable Control Technology(MACT) rules for plywood and compositewood panel mills. After years of datacollection and advocacy by AF&PA, we are onthe verge of seeing the creation of commonsense rules that realize allowing market forcesto work can also maintain a vibrantenvironment.

As we know all too well, the buildingindustry is today in the midst of a slow cycleand unnecessary regulations will almostcertainly have the effect of shuttering manymills in small towns and wiping out thecritically needed jobs they provide. Commonsense and fair play need to be taken intoconsideration when new regulations and tradepractices are put into force.

Green building with energy efficient andenvironmentally friendly wood products isgaining increased attention by government atlocal, state and federal levels. Many areconsidering legislation to spur its use andAF&PA is working hard to ensure themarketplace for our products is enhanced bygreen building initiatives.

We all believe that the marketshould drive choices. It iscritical, therefore, that anyfederal initiatives should bedesigned to allow market forcesto determine when and wherewood and wood waste is used inthe production of energy.

Engineered Wood Journal • Spring 2007 27

Right now, however, many policy makersassessing green building standards do notknow all the facts about what it means to build“green.” Some “green building” standardsignore the renewable nature of woodproducts and fail to recognize thecommitment to sustainable forestry AF&PAmembers helped to develop. So, we areworking diligently to gain widespreadacceptance of the Green Globes rating systemfor commercial construction and the NationalAssociation of Home Builders’ rating systemfor residential construction.

Trade issues will round out AF&PA’slegislative agenda for 2007. Trade PromotionAuthority, under which future internationaltrade agreements are subject to up-or-downvotes, but not amendment by Congress, is setto expire at the end of June. Thereauthorization effort will be an uphill battleas we expect to see efforts by Democraticleadership to pursue more stringent labor andenvironmental policy objectives as part oftrade agreements negotiated by the U.S.

A range of China specific bills areexpected to be introduced to addressChina’s undervalued currency, the tradedeficit and other bilateral trade issues and

we will need to assess carefully whichproposals would address these issues in aresponsible way.

During 2007, AF&PA, through its WoodProducts International group, will alsocontinue to work cooperatively with APA–TheEngineered Wood Association and otherpartners to ensure continued market accessfor U.S. wood product exports through theForeign Agricultural Service export promotionprogram.

One objective will be to ensure that theseprograms are preserved in the Trade Title ofthe Farm Bill as it is renegotiated this year. Wewill utilize opportunities provided by globaltrade policy forums (World TradeOrganization, Free Trade Agreementnegotiations, etc.) to advance the industry’sinterests and ensure that markets remainopen to, and thus do not discriminate against,U.S. wood products.

We will continue to work cooperatively toassist countries in developing new buildingcodes and standards as well as amendingcodes where they are found to be restrictiveso as to facilitate the use of U.S. woodproducts in overseas markets. In addition,foreign government and industry endorsed

trade practices need to be based onenvironmentally sustainable grounds and notimpede fair access for U.S. companies tooverseas wood markets. We will carefullyprospect for new market opportunities forU.S. wood product exports through crediblemarket research.

What does the foreseeable future hold? Ibelieve that for us, the next few years will befamiliar ground. We face potential obstacles,but in each and every case our position restson sound science and a substantial trackrecord. We just need to ensure that when wearticulate our position, we also demonstrateour industry’s commitment to conserve ourcountry’s natural resources, and ourconstant—and highly successful—efforts toimprove the environment. ●

Juanita Duggan is president and chiefexecutive officer of the Washington,D.C.-based American Forest & PaperAssociation. Prior to joining AF&PA,she was president and CEO of Wineand Spirits Wholesalers of America,Inc. She is also a former White Housestaff member in the administrationsof George Bush and Ronald Reagan.

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Engineered Wood Journal • Spring 2007 29

“One of the things I find attractiveabout the wood products business, it isslow moving, it is an old business anddoesn’t take much to mark yourself as aninnovator.”

The explanation above from a NorthAmerican forest industry manager providesinsight into innovativeness in the forest sector.If the industry is to remain a viable competitorwith substitute materials and global rivals,innovation will be instrumental to futuresuccess.

In a recent study sponsored by OregonState University’s College of Forestry, we

explored the concept of innovativenessthrough extensive interviews with forestindustry managers of medium- to large-sizedforest industry companies in Europe, NorthAmerica, and Oceania. Thirty-five managersfrom 16 companies were interviewed.

A better understanding of how theindustry “thinks” of innovativeness mayprovide managers with insight forimprovement, allowing them to compareefforts to peers and better manageinnovation in their own organizations.Analysis of interview transcripts allowed usto identify important themes. The primary

themes discussed below are Attributes ofInnovative Companies, Hurdles toInnovation, and Measuring Innovativeness.

Attributes of Innovative Companies

Several common themes emerged fromthe interviews. These themes can besummarized by 1. new, 2. creating the “right”culture, 3. managing the market/customerlink, 4. being a leader, and 5. a focus on thefuture.

New: New products, new services, newtechnology, etc. are associated with innovative

Ahead of the Pack

What ForestIndustryManagersThink AboutAchieving andMeasuringInnovation

by Eric Hansen,Chris Knowles and Heikki Juslin

© iStockphoto.com/Jim Mires

30 Engineered Wood Journal • Spring 2007

companies. Innovative is synonymous withcreating or adopting something new.

“You just have to keep moving forward,looking for new, either new products ornew ways to do things or new componentsor materials and combining those. So Ithink that’s what it means to me to be aninnovative company.”—North America

Creating the “right” culture: Anappropriate company culture and atmosphereis conducive to innovation.

“I would like to think … that we areslightly better than the competition becausewe have the right mindset, that we mayhave understood some of the connections,some of the links and the importance ofthis activity slightly better or earlier thanthe competition. We might have been cleverenough to do something to encouragepeople and encourage this activity.”

—EuropeManaging the market/customer link:

Despite a traditional production orientation,managers claim close links to themarketplace and customers. Being closelytied to customers is seen as characteristic ofan innovative company. Also, somemanagers are quite critical of the industry asa whole and its over-reliance on traditionand conservativism at the expense ofinnovation.

“To be truly innovative, you need tohave a very, very good link to yourcustomer base and you need to produceproducts based on real requirements.”

—North AmericaBeing a leader: Innovative companies

are leaders that stay ahead of competitors and“lead the pack.”

“If you are a real innovator, you’reahead of the curve. You’re reading the tealeaves. You see where your markets aregoing and what your customers want, andwhere the industry is going.”

—North AmericaA focus on the future: Innovative

companies concern themselves with the futurein order to position themselves well in anever-changing operating environment.

“I need to predict, predict what’s goingto happen in the future, doesn’t matterwhether it’s in marketing or production oranything and implement something beforeit is necessary. I’d say that is my definitionof being innovative, it’s getting ahead ofthe pack and really looking out.”

—Oceania

Hurdles to InnovativenessCulture at the company and industry level

can pose hurdles to innovation. Each of thethree identified themes contains aspects ofculture: 1) tradition/production orientation,2) culture—resistance to change, and 3)ideas from market to innovation.

Tradition/production orientation:Production-oriented companies maintainsignificant decision-making authority at themanufacturing level. A shift to enhancedmarket orientation, focusing on customersand competitors while integrating informationto all parts of the organization, requiressignificant culture change. Managers arehighly customer oriented in their vocabulary,often referring to efforts to shed a productionorientation and focus on customers, but alsoexpressing frustration with failures to shed aproduction mentality. A focus on productionmetrics makes it difficult for an organizationto move away from a production orientation.

“In the plywood industry we havestopped thinking of yield in the sales andmarketing or in the management already10 years ago or 15 years ago and that hasmeant we have moved closer to otherindustries.”—Europe

However, not all managers focus on amarket orientation, but set their sightssquarely on process efficiency.

“The nature of the business is so that ifwe can utilize, for example, raw materialmore efficient than we do today, theincome is much better and faster than bytrying to develop new products and findnew markets for new products.”—Europe

Culture—resistance to change:Culture at the overall manufacturing sector,individual company, and the marketplacelevels can enhance or impede innovation. Forexample:

“… this culture is incrediblyconservative in this industry, so veryresistant to change.”—North America

Some feel that forest industry managementis not sufficiently diverse in background andgenerally lacks sufficient training in newproduct development and innovationmanagement.

“I think a lot of the problem also comesfrom the fact that they haven’t hired fromoutside, they keep promoting fromwithin.”—North America

Ultimately, a critical component of cultureis how employees see their role ininnovativeness.

“I think this whole innovation thing orbeing innovative or not is something thatpeople consider a bit apart from theireveryday work or everyday duties and thisis, of course, not the idea.”—Europe

Resistance to change is not limited tointernal company operations. Themarketplace can also resist attempts tointroduce innovations resulting frominadequate knowledge by key specifiers,conservatism from customers, or thebureaucracy of industry standards.

“People are slow to adopt in thisindustry, lot of times it is a hand-me-downbusiness, my daddy did it this way, my

granddaddy did it that way, he built with2x’s and I am going to build with 2x’s, thisis the way to go.”—North America

Ideas from market to innovation:Forest industry companies traditionally soldproducts via an extensive channel ofdistribution and paid little attention to theremainder of the value chain. This tends tocreate a disconnect in the flow of innovativeideas from consumer to manufacturer.Managers express frustration regarding thedifficulty of moving ideas from themarketplace into company innovationprocesses.

“We don’t have too much understandingof the real processes of our customers andtheir customers.”—Europe

Measuring InnovativenessMeasuring innovativeness is not a topic

with which most interviewed managers areintimately familiar. Return on investment orprofitability, percentage of sales representedby new products, levels of investment requiredfor a given innovation, market share overtime, success in commercialization ofproducts, number of patents received, andtime to market are all methods highlighted by

Given the complex and contingent nature of innovation, we cannot hopeto prescribe cookie-cutter solutions for forest industry companies.There are general points, however, that can be made. As the old adagegoes, “You can’t manage what you don’t measure.”

Engineered Wood Journal • Spring 2007 31

managers. This does not imply, however, thatthese companies actively measure these items.Rather, managers were identifying possiblemeasures of innovativeness.

For most companies there are nosignificant efforts targeting increasedinnovativeness as such. However, managerstypically do not make a connection betweenthe question that was asked regarding“increasing innovativeness” and many of theirongoing efficiency efforts, or incrementalimprovements.

Some managers expound on moves madein their companies to adapt to changingmarket realities or to better facilitateinnovativeness. Moving toward a higher levelof market orientation is common. Severalcompanies have shifted responsibility forresearch and development to the marketingfunction in an effort to make productdevelopment more customer-focused.

“This was a totally commodity-basedcompany. So it needed a completelydifferent strategy. It needed a new businessmodel. It needed a totally newinfrastructure.”—North America

One way of attempting to mold culture isthrough altering organizational structure.

“One of our strategies has been that allnew persons coming to the company are coming to the R&D department to getthat sort of R&D mind and then the nextstep is to go to market or production tolearn real-life things as well.”—Europe

Thoughts on EnhancingOrganizational Innovativeness

Innovation and innovativeness have beenstudied extensively during the last century. Theprocess of innovation is so complex that theknowledge base is often contradictory anddifficult for managers to draw from.Innovation processes have been described as“contingent.” In other words, successfulinnovation depends on a variety of factors.

Given the complex and contingent natureof innovation, we cannot hope to prescribecookie-cutter solutions for forest industrycompanies. There are general points, however,that can be made. As the old adage goes, “Youcan’t manage what you don’t measure.”

None of our firms could be described asimplementing a broad innovationmanagement process with a holistic set ofmetrics. Instead, what exists in most forestindustry companies is a focus on processefficiency with corresponding efficiency

metrics. Ask a North American sawmillmanager how he or she is evaluated, andoverrun will be high on the list, even thoughthe highest overrun may not result in optimalprofitability.

Companies should begin to develop aholistic approach to innovation managementthat incorporates a broad set of metrics thatcover areas beyond process efficiency. We donot discount the importance of processinnovation. Rather, we consider it to be anecessary but insufficient element tomaintaining competitiveness.

Active Innovation Management: Often,managers did not mention innovative activitieswithin their firms that we knew ofindependently. While this may have been aresult of limited time and memory, anotherlikely explanation is that innovation orinnovativeness has not been adequatelydefined by their companies. As a result,innovation may be perceived differently evenwithin the top management team.

This suggests that part of any attempt todevelop innovation management within a firmshould start by defining innovation and thenmoving towards a plan for managing thatinnovation, including a strong set of metrics.An example definition is: “Innovation iscreation and/or adoption of new processes,products/services, or business systemsintended to increase value to our customersand thereby improve our performance.”

With the right leadership and a commonunderstanding of innovativeness, an innovativeculture can be developed. Developing andmaintaining an appropriate company cultureis at the heart of establishing an innovativeorganization. Developing a market-facingculture that is proactively creative is animmense challenge. This is especially true of acompany that has a long history of focusing onproduction and process efficiency.

Making the change requires a significantshake up of culture. When power changeshands in an organization it can be a painfulprocess. Some individuals will be unable tobuy in and make the changes necessary tofacilitate enhanced innovativeness. Therefore,a change in culture may require removingsome individuals that are especially resistantto change.

Some companies that participated in thisresearch employed managers from diversebackgrounds. For example, marketingmanagers may have come from automotive,chemical and software industries. While

diverse backgrounds can enhanceinnovativeness, companies must mold theirculture carefully, or suffer negativeconsequences. Attempting to change tooquickly can derail efforts. It is important toremember that communication is the keyaspect to successfully implementing a changein culture. Employees are more likely to buyinto a change in culture when they areinformed of why and how the organization ischanging.

An Appropriate Business Structure: Inrecent work on the forest industry, Korhonen1

outlined the challenge of maintaining the dualpurposes of exploitation and exploration.Exploitation is akin to increased efficiencywhile exploration refers to finding or creatingnew approaches and new capabilities (e.g.,new products).

These concepts are essentially the same asincremental and radical innovation,respectively. Firms successful insimultaneously pursuing exploration andexploitation have become known asambidextrous organizations2. The mainmechanism for this is structural separation of“exploitation” units that are still integratedinto the management hierarchy2. In otherwords, a top manager is responsible for bothongoing operations in a particular area aswell as an emerging business.

Organizational Learning: Learning andknowledge management are stronglyassociated with successful innovation.Exploration includes activities such asexperimentation, trial and free discovery.Success in this area is built upon acquiringnew knowledge and creating new capabilities.Exploitation is associated with efficiency,implementation, and focused attention.Successful exploitation is built upon sharingand utilization of knowledge that alreadyexists to entrench existing capabilities1.Acquiring, sharing, and effectively utilizingknowledge across the firm is closely tied tocommunication and networking, a topicdiscussed below.

Communication and Networking: Astrong ability to interact with externalpartners as well as effective inter-companynetworking is critical for enhancinginnovativeness. In past research at OSU we

1 Korhonen, S. 2006. A Capability-Based View on OrganizationalRenewal: Maintaining Long- and Short-Term Potential forGrowth in Large, Established Companies. Journal of ForestProducts Business Research. 3(3):21.

2 O’Reilly, C.A., III and M.L. Tushman. 2004. The ambidextrousorganization. Harvard Business Review. 82(4):74-81.

32 Engineered Wood Journal • Spring 2007

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found that forest industry companies relyextensively on their customers andmachinery manufacturers for innovativeideas. Also, as firms become ever larger, thisprinciple is equally applicable within firms.For example, we found nearly no consistent,planned interaction between R&Doperations on the solid wood and pulp andpaper sides of large, integrated companies.This is an area where large, integrated firmsshould capitalize. All employees should begiven opportunities to meet with customers,machinery manufacturers, suppliers and

other business units. These meetings will notonly facilitate communication andnetworking, they could also result in new orimproved products, manufacturing orbusiness systems.

ConclusionsAlthough managers often referred to

market orientation during the interviews,there is clearly more progress to be made inthis area. For example, being market driven isnot enough. Driving markets will be neededfor future success. Companies must strive tofind and create their own future.

It is important to recognize that everythingstarts with leadership and culture. As one ofour interviewees stated,

“There is also a very strong ‘shoot themessenger’ mentality in the industry wherepeople are terminated if a project doesn’tgo well....who in their right mind wouldwant to lead innovation in anenvironment where your first misstep isyour last?”

This sort of culture clearly does notsupport innovativeness. Innovativenessrequires buy-in from all employees.

For employees to support organizationalinnovativeness, they must understand what itmeans in the context of their own operations,and more specifically, in their own jobs.Managers must provide the vision and a planfor innovation management in order toimprove innovativeness and, ultimately,competitiveness.

We see innovation management as anopportunity for the industry, yet there is stillmuch to be learned about practicalimplementation. Accordingly, we are planninga project to investigate current industrypractices. Please contact Eric Hansen if yourcompany wishes to participate. ●

Eric Hansen (Eric.Hansen2@oregonstate.edu) is professor of forestproducts marketing, Department ofWood Science and Engineering, OregonState University. Chris Knowles(Chris.Knowles@oregonstate.edu) is aresearch assistant, Oregon WoodInnovation Center, Department ofWood Science and Engineering, OregonState University. Heikki Juslin(Heikki.Juslin@helsinki.fi) isprofessor of forest productsmarketing, Department of ForestEconomics, University of Helsinki.

For employees to supportorganizational innovativeness,they must understand what itmeans i