The Sensitive Question of Commoditization in the Mass Timber Panel Industry

Abstract

The mass-timber panel industry is an exception in the traditional commodity-oriented forest products industry at large, even if one compares it to other sophisticated engineered wood products (EWP). All structural cross-laminated mass-timber panels discussed are specialty products, by which we understand that all panels are custom produced and fabricated for specific projects. The large dimensions (up to 20 m x 4 m) and mass (up to 5.5 metric tons) as well as the embedded value of individual panels makes finishing and cutting blank panels to needed sizes at the construction site practically impossible. Therefore, prefabrication of structural mass-timber panels with robotized machinery capable of handling massive panels is a necessity, not an option. Mass-timber panel-based construction would not be possible otherwise. However, prefabricated panels may only be produced once the entire construction project is finished to the minute detail from architectural and engineering design, to construction site logistics. This quite naturally provides a high premium on integration of the design, manufacturing and construction aspects of the project and on tight collaboration of all parties from very beginning. The situation provides incentives for vertical integration of companies along the supply chain, and discourages production of commodity blank panels not assigned to any specific project. Currently, the industry is not prepared to carry the cost of intermittent storage of massive panels and of waste generated if panel “blanks” would have to be remanufactured for specific projects. Producing prefabricated panels finished for specific design and on-time delivery to the construction site is, for the time being, the most efficient solution.

While there are companies that offer prefabrication services on “commoditized panels,” it remains to be seen how they will fare. All these circumstances define the mass timber panel industry as a specialty industry, with products delivered to the market not as standardized panels but as building shells or even finished buildings. There are intrinsic barriers preventing commoditization of massive cross-laminated panels, even in most developed markets.

This does not mean that commoditization is not possible in the future. However, we expect commoditization to follow a pathway of highly modular designs rather than blank panels.

The presentation will focus on both sides of the equation: contemporary barriers preventing commoditization of structural mass-timber panels and on potential paths to certain level of commoditization in mass-timber panel industry considered more generally as one in which production of panels is a step in delivering of a building as an end product.