Conversion to overlay production creates potential for new markets.

• Position: Norbord Industries Inc. - Forestry Report

In a search for new, stable markets, Norbord Industries Inc. is converting its Cochrane facility to produce half-inch and three-quarter inch hardwood veneer overlay.

The start-up phase at the plywood mill was scheduled to begin at the end of last month. The initial phase will bring hardwood overlay production to about 25 per cent of capacity.

At full production, which company officials expect will be reached before the end of the year, hardwood overlays will account for half of the mill's total production.

"Within the next three years we hope to turn the mill entirely over to hardwood overlays," said Bob Lessels, Norbord's manager for hardwood plywood sales. "We'll be converting as fast as the market develops."

The move to value-added products has been touted by industry officials as the only way forestry companies will be able to survive on-going changes in the marketplace.

"This will provide us with a larger market than we had with just plywood," said Lessels. "We expect to market the hardwood overlays in Eastern and Western Canada, the Northeastern and Midwest United States."

It will also provide the company and mill with a more stable product base.

"This particular product enjoys a better degree of stability than do structural boards, which experience tremendous highs and lows," the Norbord executive said. "The product is more stable because there is still a certain degree of renovation work going on even if housing starts are down."

The conversion was relatively inexpensive for the company. According to Lessels, the only major capital expenditure was the purchase of a sander.

"The sander we had was not compatible for use on veneers," he said. "We managed to pick one up at a reasonable price."

Prior to the conversion...