SOUTHEAST Asian suppliers have long dominated Japan's more than $1.5 billion imported plywood market. But Japanese concerns about the reliability of those supplies, may provide an opening for North American producers.
Japan grows only 25 percent of the wood it consumes, according to the Ministry of Agriculture, Forestry, and Fisheries (MAFF).
So, to produce plywood, Japan needs logs from abroad. Last year, Japan produced almost 6 million cubic meters of plywood, most of it with imported wood.
Japan also purchased 4.8 million cubic meters of finished plywood, mostly from Southeast Asia.
Indonesian suppliers alone account for 84 percent of imports, followed by Malaysia (9 percent), Canada (4 percent), and the United States (1 percent).
Major Japanese trading companies want to diversify their sourcing of logs and plywood.
``We must decrease our Southeast Asian consumption,'' says the manager at one major trading company, who spoke on condition of anonymity. As a percentage of plywood imports, this company still purchases about 80 percent of its plywood from Southeast Asia. Now, he says, the firm is ``looking at North America for its long-term potential.''
Some years ago, Southeast Asian nations began restricting log exports, including the Lauan varieties favored by Japanese plywoodmakers. From Japan's point of view, a 1986 Indonesian ban was the most troublesome. Indonesia used to supply 40 percent of all Japanese log imports. Today, those imports have nearly dropped to zero.
Environmental groups opposed to excessive logging have provided some pressure for change, but it was industrial concerns that really forced the change, says Saparjadi Koes, a trade specialist at the Indonesian Embassy in Tokyo.
Indonesia is restricting log exports in order to increase shipments of finished plywood. The goal is to promote the domestic production of value-added goods and create skilled jobs for Indonesian workers, Mr. Koes says.
Indonesia is a reliable source of finished plywood, Koes says. ``There is very little possibility that Southeast Asian countries will be unwilling to export their [finished] wood products to Japan.''
The Indonesian policy and assurances do not assuage Japanese concerns. Taking advantage of the opening, several US firms are positioning themselves to become log and plywood suppliers.
The challenge, says Charlie Barnes, the Tokyo-based representative of the American Plywood Association (APA), an industry trade group, is to develop the right products for the Japanese market and meet government regulations.
In Japan, lumber, plywood, and other structural wood products must be marked with the Japan Agricultural Standards (JAS) seal of approval, a government-administered quality stamp.
Without JAS stamps, many wood products are not competitive, Barnes explains. ``Construction companies can seldom get government-subsidized loans for their projects if they use these woods. Receiving JAS approval is possible,'' he continues, ``but is painfully time consuming.''
So far, 13 US plywood mills are now authorized to brand their wares with JAS stamps. Georgia-Pacific Corporation, the Atlanta-based US forest products manufacturer, owns three JAS-recognized plywood mills. Two are located in Mississippi, one is in Alabama.
Georgia-Pacific has been selling forest products to Japan for 27 years.
But marketing plywood has not been easy, says Yoshinobu Yamamoto, Georgia-Pacific International Corporation's Marketing Manager in Tokyo. ``We are trying hard ... but North American plywood is unlike either Japanese and Asian products,'' he says.
``Japanese are accustomed to a product with a nice appearance whereas Americans put more stress on structural capability,'' Barnes says. Plywood that is produced from Lauan logs usually contains fewer knots than North American products.
In addition to cosmetic concerns, the Japanese are manufacturing 3-by-6-foot or 3-by-8-foot plywood panels whereas other countries generally produce 4-by-8-foot panels, Barnes explains. One option being considered is to build factories that make plywood to meet Japanese specifications.
However, Yamamoto contends that producing 3-by-6-foot plywood panels would increase costs. ``We would need to buy new equipment for our factories,'' he says. On the other hand, Georgia-Pacific doesn't want to miss out on an opportunity. ``Our strategy is evolving,'' Yamamoto concludes.
Another solution being considered is that Japanese companies set up joint-ventures to construct US-based plywood plants.