Impact of the change in raw material supply on enterprise strategies of the Japanese plywood industry

ABSTRACT

The Japanese plywood industry has been profoundly affected by external factors such as raw material supply from overseas, and has increased the utilization rate of domestic timber in recent years. To analyze an industry influenced by external factors, it is useful to employ a theory of competitive factors to examine the industrial structure and the impact on enterprises. In this article, we analyze the correspondence of each enterprise in the Japanese plywood industry for changes in raw material supply and then discuss the predicted future development. The results describe the three major strategies: 1) Differentiation strategy – production with additional processed plywood, continued utilization of tropical wood, and utilizing only domestic timbers; 2) Focus strategy – obtaining certification and locating mills in low-competition regions; and 3) Diversification strategy – product diversification and export. Hereafter, it is predicted that there will be a decline in domestic demand, and consequently, an increase in enterprises that adopt the diversification strategy.

KEYWORDS:

• Plywood industry
• enterprise strategy
• softwood plywood
• Japan

Acknowledgments

This study was funded by Research grant #201503 of the Forestry and Forest Products Research Institute. We also owe much to the useful advice of the anonymous reviewers.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. This program was implemented by Forest Agency from 2004 to 2006 for the purpose of straightening the foundation of timber distribution and processing, along with the policy of tree thinning management for utilizing small diameter timber in plywood mills. Furthermore, Tada (2012) pointed out that the introduction of machines such as a rotary lathe was promoted by other subsidies from the country and the prefecture governments that was given prior to a new distribution and processing program. These subsidies had effect to solute technical problems for utilizing domestic timber, especially in plywood enterprises of northeastern part (Tohoku) of Japanese main island, the most concentrated area of plywood enterprises.

2. The accurate amount of plywood production was not released to the public; therefore, we defined large-scale plywood enterprises as those that were estimated to have a production of more than 50,000 m³. We targeted these enterprises.

3. This implies the difference of usage application for structural plywood, concrete-form plywood, and baseboard plywood for floors. It is defined as a non-change in production (for example, the utilized tree species changed from hardwood to softwood, but the production of structural plywood remained the same).

4. In the statistics of Ministry of Agriculture, Forestry and Fisheries, plywood mills are divided into four types depending on the products: veneer only, plywood for general use only, plywood for general use and special plywood, and special plywood only. Special plywood is plywood that has undergone additional processing and/or treatment, particle board with incrustation of plywood or veneer, and so forth. Here “the mills that produce plywood for general use” means the combined value of two types of mills that plywood for general use only and plywood for general use and special plywood. The mills of targeted enterprises in this article are also included in these two types of mills.

5. Nedanon is the mutual name of structural plywood that was registered for the Japanese Agricultural Standard (JAS) by accessed enterprise members of the Tokyo Plywood Manufacturers’ Association and Tohoku Plywood Manufacturers’ Association.

6. At this moment, JAS was not given the name “certification” but instead was called “standard.” Draft revision of the Act for JAS was approved in the Cabinet on 28 February 2017 and the plan is to enact it within a year. In this draft revision, it was mentioned to change the name from “standard” to “certification” (Japan Forest Products Journal 2017a March 3).

7. This act was enforced on 20 May 2017. The official name is “the act concerning circulation and utilization of legally logged timber and timber products” and it is commonly called the “Clean Wood Act.” This act aims to promote the circulation and utilization of timber and timber products that are legally logged, respecting the acts of Japan and those of the origin countries of timber. Plywood is included as a timber product (first clause of Article 2). A trader concerning timber and timber products voluntarily applies for registration to be a “registered trader concerned timber and timber products.” In regard to this, there are two classes; the first class is a trader who buys timber directly and the second class is a producer of such laminated timber and paper. A plywood producer is included in the first class. If registered, a trader is required to handle all timber legitimately. This act was not yet translated into the English language, so the authors translated it themselves.

8. Institution aiming to disseminate the meaning and importance of domestic timber utilization among Japanese citizens by promoting consumers to choose and utilize domestic timber production, and to contribute to Japanese forest regeneration through appropriate use of the mark indicated by domestic timber product (Office for Domestic Timber Mark Promotion 2017).

9. Construction method that produces concrete member in a dedicated mill and construction on site.

10. For timber utilized in establishing facilities and furniture of such stadium regarding the Tokyo Olympic and Paralympic Games, five procuring conditions were set; “(i) Timber that is harvested through an appropriate procedure with reference to relevant laws, ordinances, etc. of timber-producing countries or territories, (ii) Timber that derives from forests maintained and managed based on mid- to long-term plans or policies, (iii) Timber that is harvested through logging activity that is considerate toward conservation of the ecosystem, (iv) Timber that is harvested through logging activity that is considerate toward the rights of indigenous people and other local residents, and (v) Timber that is harvested by workers protected through appropriate safety measures,” and “Timber with FSC, PEFC, or SGEC certification is accepted in principle as one that satisfies conditions (i) to (v)” (The Tokyo Organising Committee of the Olympic and Paralympic Games 2017).