U & M Program


Prospective New Louisiana-Pacific Siding Mill Moves From Hoyt Lakes to Cook

By: Kristen Bergstrand Utilization & Marketing coordinator, Division of Forestry, Minnesota Department of Natural Resources (DNR)

There have been developments in Louisiana-Pacific's (LP) interest to bring new siding capacity to Minnesota. Foremost, LP will not be building a new mill in Hoyt Lakes. Instead, it has purchased the old Ainsworth oriented strand board (OSB) mill in Cook and is currently looking at ways it might locate new siding capacity there.

According to Curt Stevens, LP's chief executive officer Cook will have a detailed evaluation of the site to determine operational feasibility, costs and on site engineering needs. The Cook location is better suited for the new siding capacity then Hoyt Lakes because of its existing infrastructure, including a rail line, wood yard, logistics, potential equipment to purchase, and same great local labor. The Cook site should remain eligible for the same state incentives LP would have received if it decided to build in Hoyt Lakes.

Stevens thanked Minnesota for its great support of LP's efforts to locate siding capacity in the state. He spoke with Governor Dayton, the Iron Range Resource and Rehabilitation Board (IRRRB), and key state politicians before announcing the mill exchange and Cook site purchase.

The Cook site was purchased in September from Laurentian Properties LLC. LP had been leasing the wood yard at the Cook site for the last few years.

The October 28 press release announced not only the purchase of the Cook mill site but that LP had exchanged its ownership of a shuttered oriented strand board (OSB) mill in Chambord, Quebec with Norbord Inc. for their closed OSB mill in Val-d'Or, Quebec. The advantage of the Val-d'Or mill to LP is that it is in the aspen wood basket (Chambord is not). LP's siding product requires a high percentage of aspen wood fiber.

Stevens states it is not preventing Norbord from entering the siding market, by exchanging the facilities. He referenced several other factors besides being able to produce the product that might limit entry into the market such as LP's up-and-down history in siding and the marketing and sales force support behind the product.

The estimated siding production at the Val-d'Or mill would be about 255 million ft² per year (based on its OSB production capacity when it closed in 2012). The Cook facility is estimated to produce 400 million ft² per year (based on LP's OSB equipment available in North America that could be used in the Cook mill). For comparison, LP's existing facility in Two Harbors produces 190 million ft² per year.

LP won't have a plan to move forward at the two facilities until after engineering, asset and site assessments are complete. However, Stevens said that Val-d'Or would likely move forward first because it has:

  1. an existing skeleton crew who has maintained the equipment since 2012
  2. a Canadian tax credit that could reduce start-up costs
  3. an ability to come online in only 12-15 months
  4. existing equipment that may be modified to increase capacity.

LP's siding business continues to be a strong asset to the company portfolio. They are estimating to grow their siding products 14 percent per year for the next few years. While LP is exploring engineering options for the two new facilities, by the end of 2018 they will need to bring new siding capacity online to meet their projected product demand. Stevens said to expect news in February 2017 after they meet with the Quebec government on wood licenses and reengage on the Minnesota incentives.

LP is a manufacturer of engineered wood building products and is traded on the New York Stock Exchange under "LPX." It is located in Nashville, Tennessee.

References:

Press Release, October 28, 2016, "LP Announces Mill Exchange to Increase Siding Capacity."
Q3 2016 Louisiana-Pacific Corporate Earnings Conference call webcast and Q3 2016 Earnings Release Presentation.(Click on "events," then "past events.")

Photo's used with permission from Louisiana-Pacific