TJ International, a small forest-products company, hopes to follow in the footsteps of Intel Corporation, whose proprietary chips have become the standard core of most desktop computers. Intel has dominated the computer industry without making computers.
Similarly, TJ International does not own large private forests, but it has a big lead over competitors in making ``engineered lumber'' products, which are winning market share as America's old-growth forests cease to provide a sure supply of structural beams for construction. Builders are turning to engineered lumber as a high-tech substitute offering higher quality at a competitive cost.
The products, made from meshing wood fibers together to create large beams of up to 66 feet, also offer environmental benefits: Where traditional sawn lumber uses about 50 percent of each log, engineered lumber uses as much as 80 percent, and can use tree varieties that are small, fast-growing, and abundant.
``If you haven't heard about us yet, stay tuned,'' says Walt Minnick, chief executive officer of the Boise, Idaho, firm. The company accounts for about 60 percent of the market for engineered lumber, and 100 percent in some newer categories, he recently told investors in Seattle in a conference sponsored by Piper Jaffray, an investment house.
A typical new home in the United States or Canada uses more than $250 of engineered lumber, up from $165 in 1992. But the potential market is much bigger: more than $2,000 a home or a $3.5 billion potential market, says Robert Toomey, an analyst at Piper Jaffray. That does not include the market for commercial/industrial buildings or other applications.
With this opportunity in sight, TJ International will hardly be given a free ride by larger timber companies. Boise Cascade Corporation intends to ``grow the business as rapidly as we can,'' says Vince Hannity, a company spokesman. He estimates Boise Cascade's current market share at 15 percent and No. 2 in the industry. The company's engineered lumber sales have grown from zero in 1990 to $71 million last year. Other competitors include Georgia-Pacific Corporation, the world's largest forest-products company, and Louisiana-Pacific Corporation.
TJ International, though much smaller than these companies, says it has a technological lead of three to seven years and 14 patents protecting one key product. ``Like some of today's large electronics companies at a similar point in their industry's development, we intend to exploit our lead through a preemptive strategy,'' Mr. Minnick says. ``We intend to use the next three to seven years to capture as much of that $3.5 billion residential market as possible.''
The company is adding new plants in West Virginia and Kentucky alongside its 14 existing plants in North America, and more expansion is expected later in the decade. TJ also has a much larger sales force than competitors. Raw materials are supplied through alliances with MacMillan Bloedel Ltd. and Weyerhaeuser Corporation, the largest owners of private forests in Canada and the US, respectively. Macmillan is also providing financial backing, as 49 percent owner of the engineered-lumber operations, which are held in a joint venture called Trus Joist Macmillan.
Engineered lumber sales have grown in recent years, despite declines in home-building and a price disadvantage against traditional lumber. TJ International sees quality as one reason: The company's trademarked Silent Floor product is designed to eliminate warping and shrinking that commonly cause many floors to creak.
Now, as housing starts pick up, demand is expected to grow faster. Moreover, with federal logging restrictions in the Northwest adding to the decline in old-growth timber supply, the price gap is disappearing. ``Big solid-sawn pieces of lumber are hard to come by,'' says Tracy Mumma of the Center for Resourceful Building Technology, in Missoula, Mont.
Mainstream builders and architects are also showing more awareness of environmental issues, Ms. Mumma says, although price is the key factor driving interest in engineered lumber, she says.
Some engineered wood is made from thin veneers peeled from a log, bonded together using precise amounts of heat, adhesive, and pressure. TJ International's Parallam product uses small strands of wood bonded together in a proprietary microwave pressing process to form beams up to 20 inches thick, 11 inches wide, and 66 feet long.