Category: Marketing

By Joseph Pomponi. Email: jpp5251@vt.edu

The methodology of the survey followed the procedures listed. There were 2 waves of surveys that were mailed; 500 companies per state involved in the study for a total of 3,000 copies of the survey. An online version was available as well. The survey questions were divided into specific sections: business information, wood materials used in the company, wood products supplier selection, and wood products supplier evaluation. Companies were randomly drawn from a 3^rd party website generating SIC codes based upon the following categories: general contractors, home builders, construction companies, building contractors, and home improvements. The 1^st wave was sent out the week of March 2^nd, 2020 then a reminder to fill out the survey was sent out the week of April 1^st, 2020. Due to COVID-19, a decision was made to wait to send out the second wave of surveys until the week of May 25^th, 2020 since it was not known if companies were doing business during that time period. The survey was closed July 6^th, 2020 and no further responses were recorded. 59 responses were received over the course of the 2 waves of surveys and the online version. There was an issue of nonresponse bias due to lower response rate, however since the 2^nd wave had similar numbers of responses to the 1^st wave, it can be inferred the 2^nd wave is representative of the population. Due to this low response rate, phone calls were made to companies based off of the list of companies generated from the 3^rd party website. 46 companies were contacted for a total of 105 responses combined with the survey. Selected questions were asked from the survey on the phone calls to gain further information. Results from the combined phone call and survey responses were analyzed.

The results gathered from the survey mainly lined up to what was seen in literature. Many of the companies responding had 1-50 employees indicating that they were not a big company. Also, many companies responded that they worked more on single-family projects as opposed to multi-family and commercial projects; the number of projects most companies reported they worked on was less than 5. Most companies do not work in multiple states, and a lot of them responded that they weren’t aware if the products they purchased were manufactured in their own state, as well as not knowing if they purchased in-state.

Figure 1. Number of Responses for if the Company Mainly Purchased in or out of State

The majority of the responses indicated that the company was not sure where they purchased their wood products. This indicated that there was a lack of knowledge regarding where the majority of wood products came from. While there were a decent number of responses regarding in-state purchases, the out of state purchases combined with the unknowns meant that the majority of companies were unsure of where their products came from or just outsourced their purchases. The issue is the fact that construction companies could purchase from a location that is closer to them, thus reducing costs such as transportation and handling costs so they could improve their bottom line, but if the companies did not know where their products came from, then it would be hard to reduce these costs.

Figure 2. Number of Responses for if the Company is Aware if the Products they Purchased are Manufactured In-State

There is a difference between knowing if a product is manufactured within the state and knowing if the product was purchased within the state. However, companies were also not aware if the products they purchased were manufactured within their own state. The results show the need of knowledge of where wood products are coming from as well as where products are purchased in order for local supplier to have an impact in the market.

Figure 3. Means of Supplier Factor Ranking (1 Lowest; 9 Highest)

The factors listed in figure 3 were asked to be ranked from 1 to 9 in terms of importance to the company with 1 being the lowest priority factor and 9 being the highest priority factor. The most important factors were: price, quality, lead time, and customer service. Relationship was another important factor but it wasn’t as important as the other factors listed. These were the things that construction companies were looking for in their suppliers. The top factors were also seen in literature often. While it would be hard for suppliers to focus on all of these factors, they could differentiate themselves using 1 or 2 factors in order to appeal more to the construction company. For example: a supplier could have a very high-quality product that has a lead time that is flexible with the construction company, this would probably be at a higher cost than other products but it would be worth that cost to the company if it arrives on their schedule and is a good product. It would be better for suppliers to focus their efforts on improving 1 or 2 of these factors, so that their products and services could appeal to more construction companies.

By Juan Gonzalez. MS candidate, email jjgoco02@vt.edu

The current market of Thermally Modified (TM) is still affected by the lack of performance information and clear specification of advantages and limitations of the material over competing products. Such information is needed so new potential users like architects can make informed decisions regarding material selection. The objective of this article is to know the level of awareness of TM wood and if there are differences between the size of architectural businesses and awareness on TM wood.  Espinoza (2015), where he studied marketing strategies from the perception of TM wood producers. His results showed that the awareness of TM wood across the United States (US) is very low.

The survey and sample
A survey was recently conducted by a team of Virginia Tech researchers to study the perception of the TM wood U.S market, with focus on east coast architects. Besides marketing perceptions and awareness of TM wood, the survey also included questions related to the mechanical performance (bending, modulus of elasticity, and surface hardness, shrinkage), and visual aspects (color) of TM wood.

The sample frame included companies under NAICS 541310 and 541320 (Architectural Services and Landscape Architectural Services) subscribed to the Commerce of Chamber on the most populated counties in the East Coast of the U.S. The survey was distributed using paper and web versions. The standard managing survey procedures were followed. Once the survey period was closed, all returned questionnaires were revised for accuracy and content reliability.

Preliminary Results
A total of 146 responses were obtained from the surveyed sample  (web and paper). Out of the total responses, 49 came from the paper survey and 107 from the web survey. These 146 responses correspond to 1.825%, from a population of 8,000. Out of the total responses, only 22 of the respondents answered that they have worked with TM wood products and continued the survey. With only 22 respondents indicating they worked with TM wood, the results limit the extrapolation of the conclusions and results toward the entire population. However, this is an indication that still there is little awareness of TM wood among the architectural community in the east coast of the United States.

Table 1 summarizes the results of the awareness of TM wood question by company size. Seventeen of the 22 companies that have worked with TM wood are considered small, 1 medium and 4 large.

Using a contingency analysis, we tested the hypothesis that awareness is dependent on the size of the business.

• Ho: Awareness is dependent of the company size
• H1: Awareness is not dependent on the company size

It was found that there is a statistical difference using a chi-square test (P-value < 0.001). Hence we concluded that smaller businesses are more aware of TM wood than larger ones.

Reference
• Espinoza, O., Buehlmann, U., & Laguarda-Mallo, M. F. (2015). Thermally modified wood: marketing strategies of US producers. BioResources, 10(4), 6942-6952.

By Joseph Pomponi, Email: jpp5251@vt.edu

Sustainability in building materials is a concept of using more biodegradable materials for construction projects. Sustainable development is described as enhancing quality of life and allowing people to live in a healthy environment and improve conditions for present and future generations (Ortiz, Castells, and Sonnemann 2009). “The improving social, economic and environmental indicators of sustainable development are drawing attention to the construction industry, which is a globally emerging sector, and a highly active industry in both developed and developing countries” (Ortiz, Castells, and Sonnemann 2009). To illustrate these concepts, the life cycle assessment helps evaluate the environmental load of products and processes. “The life cycle inventory (LCI) involves collecting data for each unit process regarding all relevant inputs and outputs of energy and mass flow, as well as data on emissions to air, water and land. This phase includes calculating both the material and the energy input and output of a building system. The life cycle impact assessment (LCIA) phase evaluates potential environmental impacts and estimates the resources used in the modeled system” (Ortiz, Castells, and Sonnemann 2009). Essentially, these analyses help with the life cycles of certain building materials and how these materials can impact the environment during their life in use and after they are able to be used for their purpose. The idea is to promote the use of more sustainable building materials such as wood, and engineered wood products as opposed to products such as steel and titanium. The wood materials tend to be more friendly to the environment, and helps towards reducing energy consumption. Carbon emissions are important to consider when deciding the sustainability of a building materials, as well as the life cycle of the certain material.

“Wood has many positive characteristics, including low embodied energy, low carbon impact, and sustainability. These characteristics are important because in the United States, slightly more than half of the wood harvested in the forest is used in construction” (Falk 2009). There is a difference in energy consumption when mining for materials needed to make products such as steel and other metals. Wood is seen to be easier to harvest and takes less energy to construct projects. The energy consumed in the construction of a steel-framed house in Minneapolis was around 17 percent greater than for a wood-framed house (Lippke et al. 2004). Below is a table discussing the designs of houses in Atlanta and Minneapolis and the difference of energy consumption between steel-framed and wooden-framed.

Table 1. Environmental Performance Indices for Above-Grade Wall Designs in Residential Construction (Lippke et al. 2004)

	Wood frame	Steel frame	Difference	Change (%)b
Minneapolis Design
Embodied design (GJ)	250	296	46	+18
Global warming potential (CO2 kg)	13,009	17,262	4,253	+33
Air emission index (index scale)	3,820	4,222	402	+11
Water emission index (index scale)	3	29	26	+867
Solid waste (total kg)	3,496	3,181	-315	-0.9
Atlanta Design
Embodied design (GJ)	168	231	63	+38
Global warming potential (CO2 kg)	8,345	14,982	6,637	+80
Air emission index (index scale)	2,313	3,373	1,060	+46
Water emission index (index scale)	2	2	0	0
Solid waste (total kg)	2,325	6,152	3,827	+164

^b % change = [(Steel frame – Wood frame)/(Wood frame)] X 100

Carbon plays a huge role in the earth’s ecosystem and in climate change as well. It is viewed as a negative impact on ecosystem sustainability. Forests play a huge role in balancing the Earth’s carbon cycle. Essentially, forests and other vegetation removes the carbon in the atmosphere through the carbon cycle. The process converts carbon dioxide and water into sugars for needed for the tree growth as well as releasing oxygen into the atmosphere. Approximately 26 billion metric tonnes of carbon is sequestered within standing trees, forest litter, and other woody debris in domestic forests and another 28.7 billion tonnes in forest soils (Birdsey and Lewis 2002). Different materials have different carbon emissions, table two shows carbon emissions of common building materials and materials used in construction.

Table 2. Net Carbon Emissions in Producing a Tonne of Various Materials (Falk 2009)

Material	Net carbon emissions (kg C/t)a,b	Near-term net carbon emissions including carbon storage within material (kg C/t)c,d
Framing material	33	-457
Medium-density fiberboard (virgin fiber)	60	-382
Brick	88	88
Glass	154	154
Recycled steel (100% from scrap)	220	330
Concrete	265	265
Concretee	291	291
Recycled aluminum (100% recycled content)	309	309
Steel (virgin)	694	694
Plastic	2,502	2,502
Aluminum (virgin)	4,532	4,532

^a Values are based on life-cycle assessment and include gathering and processing of raw materials, primary and secondary processing, and transportation. ^b Source: EPA 2006. ^c From Bowyer et al. 2008; a carbon content of 49% is assumed for wood. ^d The carbon stored within wood will eventually be emitted back to the atmosphere at the end of the useful life of the wood product. ^e Derived based on EPA value for concrete and consideration of additional steps involved in making blocks.

From the table it can be seen that the carbon emissions of traditional building materials such as concrete, steel, and aluminum are greater than wooden framing material and medium-density fiberboard. The wooden materials also have a negative value of the near-term carbon emissions meaning the materials are more beneficial to the environment in terms of carbon emissions. Wood products have a low level of embodied energy compared to other building products and because wood is one-half carbon by weight, wood products can be carbon negative (Bowyer et al. 2008). Wooden building materials have a place for use in the construction industry. Wood materials in the end help with issues such as “green-building” and being more sustainable. These materials also have lower carbon emissions and in turn can potentially help reduce energy consumption of a building. Of course, fossil fuel-based products and metals are not renewable whereas in the forest resource is renewable. It is important for the wood products and forestry industry to have proper management of the forests to have sustainable harvesting for materials needed in the construction industry.

 Works Cited

• Birdsey, R. and G. Lewis. 2002. Carbon in U.S. Forests and Wood Products, 1987–1997: State    by State Estimates. USDA Forest Service, General Technical Report GTR-NE-310
• Bowyer, J., S. Bratkovich, A. Lindberg, and K. Fernholz. 2008. Wood Products and Carbon  Protocols: Carbon Storage and Low Energy Intensity Should be Considered. Report of    the Dovetail Partners, Inc. www.dovetailinc.org.
• Falk, B. 2009. Wood as a sustainable building material. For. Prod. J., 59(9), 6–12.
• Lippke, B., J. Wilson, J. Perez-Garcia, J. Bowyer, and J. Meil. 2004. CORRIM: Life-Cycle Environmental Performance of Renewable Building Materials. Forest Prod. J. 54(6): 8-19
• Ortiz, O., Castells, F., Sonnemann, G., 2009a. Sustainability in the construction industry: a          review of recent developments based on LCA. Construction and Building Materials 23          (1), 28–39

By Juan Gonzalez, email jjgoco02@vt.edu

Thermally modified wood (TM) wood products have been available in the United States since Westwood Corp started exhibiting thermal-treated wood products at fairs, and companies such as Jartek Inc. and Stellac Inc, started to produce TM wood products (Sandberg et al., 2016). Initially, the production of TM wood products was intended as an alternative to substitute chromate copper arsenate treatments. Since the United States started creating restrictions regarding the use of toxic substances on their wood products many companies have begun to incorporate the production of TM wood products. According to Sandberg (2016) by 2012 there were already ten manufacturers across the US working producing thermally modified lumber.

The goal of this study was to evaluate the variability of the physical and mechanical properties of two thermally treated species currently manufactured in North America. One of the limitations that TM wood is facing is the lack of domestic manufacturers currently producing this product and the use of different equipment and treatments (schedules) which may create variability in final product performance.

TW treated yellow poplar (Liriodendron tulipifera) and red maple (Acer rubrum) were acquired from three different commercial sources in North America to conduct bending and strength (MOE/MOR) tests by following the ASTM D143 standard. Each company provided 14 samples from each species. Samples were conditioned at 20°C and relative humidity of 65% until they reached an equilibrium of moisture content before testing.  ANOVA was then used to determine and compare the variability within and between each companies’ processes.

Figure 1. Yellow Poplar MOE/MOR Difference

Figure 1 shows a graph with the results obtained for both MOE and MOR for yellow poplar. The chart shows how similar the results from the three companies were. After running an ANOVA, the results displayed with 95% confidence intervals have they have equal means with a P-Values of 0.089 and 0.655 respectively.

Table 1. Red Maple MOE/MOR results.

Factor	N	Mean (MPa)	Standard Deviation	Group
MOE A	14	18,282	3,198	A
MOE B	14	17,352	1,075	A B
MOE C	14	16,310	1,100	B

The MOE/MOR values across the three companies share the mean with 95% confidence intervals and P-Values of 0.089 and 0.05. But Tukey’s comparison method displays that the MOE values from company B and C are different, and A shares the values between them. Statistically they might be different, but percentage-wise for the industry the difference is not that big.

Bibliography

• Sandberg, D., & Kutnar, A. (2016). Thermally modified timber: recent developments in Europe and North America. Wood and Fiber Science, 48(1), 28-39.
• UNECE/FAO. (2013). UNECE/FAO Forest Products Annual Market Review, United Nations Economic Commission for Europe, Food and Agriculture Organization of the United Nations, New York, and Geneva.

By Joseph Pomponi. Email jpp5251@vt.edu

            Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers (Racher 2010). There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration (Racher 2010). Vertical integration within a company can help improve its processes by having all of the steps involved of producing a product under the control of that company. For an example of balanced vertical integration, a wood products company using vertical integration would have control of harvesting the raw material from the forest, converting the logs using technologies such as debarkers, saws, presses, sanders, etc. to produce the product they are specialized for, storing said product, and eventually marketing/retailing it out. If the company just had access to the harvesting and the inputs that would be backward (upstream) vertical integration, while if it just had control of retail and distribution centers that would be considered forward (downstream) vertical integration.

            The concept of vertical integration also brings about the worry of monopolizing the market since all of the process would be under one parent company. However, Richard Mpoyi (2003) suggests “So to support the competitive strength of their companies, managers that intend to change the levels of vertical integration may look at their competitors’ levels, but more importantly they should base their decisions on relevant organizational characteristics.” While certain companies may do better with a vertical integration process, not all companies need to implement it; it all depends on their structure and own company goals. The analysis showed that 50 percent of companies did not change their levels of vertical integration over the period 1980- 1997. This result suggests that once certain levels of vertical integration have been reached, these companies did not see that changing them would improve their ability to compete (Mpoyi 2003). Essentially, once a certain level of competitiveness is reached, it is not worth the time, money, and effort to keep introducing new technologies to try to keep up the vertical integration. 

The main issue that arises with attempting to vertically integrate wood products companies is that land in the United States of America is either public or private. When establishing an integrated wood products industry around, consideration must be given to not only the quantity and quality of the wood supply, but also to the reliability of the supply over time. The best way to reduce the risk to investments associated with feedstock supply is to have a variety of land ownerships. For example, only having federal lands as a wood supply is very risky because that supply will be subject to the politics and bureaucracy associated with federal agencies (Racher 2010). Large private land parcels can lead to either investments in wood products industries not being made or those industries having the wood supply compromised by pricing (Racher 2010). Since in the USA land is split between public and private, wood products companies have issues with attempting to have a balanced vertically integrated process. This leads to most of these companies either having an upstream or downstream process, so they would have to outsource either their supply or their product. Construction companies would then have to contact multiple suppliers to try and search for the product they need for what they are building. An example of a low-scale wood products industry is represented in Figure 1 (Racher 2010).

            This figure would be representative of low-tech wood product industries such as firewood production and post production. As evidenced, the supplier and the utilizer side are separated, thus not using a vertically integrated system. However, since the concern of the monopolization of the market is present, having a diversity of suppliers who harvest the material to provide the raw material needed for the construction industry is ideally the most sustainable system. Figure 2 represents the idea of a balanced supplier and utilizer relationship (Racher 2010). The size of the boxes is supposed to represent the size of the supplier and utilizer.

            As previously discussed, the idea of monopolization in the wood products industry is a concern, and vertical integration could be seen as an enabler of monopolization. The fact of the matter is because of the privatization of land, integrating wood products in the way of vertical integration is quite difficult. Companies either use upstream or downstream vertical integration as a way to sort of compromise this fact. The issues that construction companies face is the same sort of idea; the fact that they don’t have vertical integration in the means of they don’t have their own equipment and land to get the raw material needed to build their projects. They count on suppliers of wood products to get the material they need. Usually the process of determining a supplier is through bidding. Different factors affect the construction company’s decision of what supplier they want to proceed with. Those factors include: cost, quality, location, the relationship, and flexibility of these suppliers. 

            So, why is any form of vertical integration important to these wood products and construction companies? Construction companies know what they are looking for in terms of product, and having to choose a supplier through an extensive process is a burden. Most of these types of companies have downstream vertical integration where they have warehouses and distribution centers full of the material needed for their projects. Through vertical integration a firm by-passes or, more economically speaking, encompasses a market nexus (Adelman 1955). The idea of vertical integration would allow these companies to easily get to the raw material they need in a quicker time. For wood product companies, most of them have market share in the harvesting and production department (so upstream vertical integration where they have control over the production of the products needed for construction companies.). Where the wood products industry falls short, is not having their own distribution centers or retail sites, thus they would have to be a sort of middle man to the construction industry which could lead to them not getting as much of as a profit as they desire. Both of these industries coincide with each other; the wood products industry making products for the construction industry to use. If these industries can work to vertically integrate more of their processes, it would lead to an easier time of producing the product, harvesting the material they need, and selling their product.

Works Cited

• Adelman, M. A. 1955. “ Concept and Statistical Measurement of Vertical Integration.” National Bureau of Economic Research. pp. 281–330.
• Mpoyi,Richard. 2003. “Vertical Integration: Strategic Characteristics and Competitive Implications”. Competitiveness Review: An International Business Journal. 13(1): 44-55
• Racher, Brett. 2010. “Integration of the Wood Products Industry.” Southwest Sustainable Forest Partnership. Jan.