The next (and best) plywood mill

December 17, 2021. – If you got today an idea to build a plywood mill, where would you put it? 100 million dollars are burning your pockets, and you want to pick the best plywood production location in the world. Your success will be measured by the return on investment (ROI) over a 30 year period. What is the place to maximise earnings sustainably?

China? Canada? Uruguay? Russia? Nigeria? Luxembourg?

Usually, the investor has chosen the country and product (wood species) from the start. Companies erect new mills in areas where they know the operational environment. Most often that is the home country or the neighboring country. Overseas operations seem riskier and need wider resources, both in human and money. 

But what if the best opportunities are located further away from home? What do you take into account? Perhaps you start with the availability of wood and labor. Log prices. Labor prices. Logistics. Distance to customers. Energy. Overall infrastructure. Predictability of the regime. Product (wood species) life cycle. Environmental regulation. Customs policies. Low risk of natural disasters. The list gets long.

Choosing a mill location takes more than 5 minutes. An easy conclusion is that there is no location that is above all others. Pros and cons exist in every place. But it is interesting to consider what are the critical factors which define long-term profitability in plywood production. A good thing is, that companies can be good in their business, whatever the location or conditions are.