How to get ready for the next downturn

Friday 29 September 2023. – The plywood market today is gloomy. While business hasn’t collapsed entirely, volumes have dipped far below what we were accustomed to not so long ago. Even birch plywood faces the challenge of declining demand. Fortunately, there are pockets of resilience within the market, but overall, we find ourselves navigating the shadowy side of the economic cycle.

Plywood producers have unsealed their survival kits, and every department is busy. Sales teams are on a mission to reconnect with every customer, including those they once had to turn away during the booming market. Management and HR are reducing fixed costs through layoffs, while production teams recalibrate their operations for reduced output.

Ups and downs appear to be an integral part of the economy. Plywood will, once again, find itself in high demand, only to face an oversaturated market shortly thereafter. The fluctuations are certain, yet the timing and intensity remain unpredictable.

So, how can we stay ahead of the curve and optimize profits over the cycle? Here’s my list of three core themes for preparing for the next plywood downturn:

  1. Cultivate a diverse but balanced core customer program: Tier-one customers provide stability, while tier-two customers offer flexibility.
  2. Maintain a diversified product portfolio: Never rely too heavily on single products.
  3. Strike a balance between production efficiency and agility to adjust production output.

As we confront the challenges of today’s plywood market, it’s essential to keep our eyes on the horizon. New signs are emerging; the market is moving on.