An analysis of competition and distribution in the Tennessee structural composite market

The Tennessee hardwood timber resource has opportunity for increased use. Establishment of a structural composite panel plant in Tennessee would provide new markets for Tennessee hardwoods. The purpose of this study is to begin a Market Opportunity Analysis (MOA) to assess the opportunity of success for a structural composite panel plant in Tennessee. A channel and competition analysis were the two parts of a MOA completed for this study. The market share of structural composite panels at the retail and intermediary level of the Tennessee market is approximately 31 percent. A majority of the panels produced and distributed to the Tennessee market were in the 7/16" thickness category. Nineteen manufacturers sold panels in Tennessee markets. Of the structural composite panels produced 75.9 percent were Oriented Strandboard (OSB) and the remainder (24.1 percent) waferboard. Rail is the major mode of transport manufacturers use to ship structural composite panels (58.2 percent), and a majority of panels (63.1 percent) are shipped to intermediaries via the same mode. However 94.3% of retailers receive their panels via truck. As the go-between for manufacturers and retailers, intermediaries perform two important functions in the channel: 1) facilitate the transport of structural composite panels and 2) reduce bulk loads from manufacturers into smaller shipment for distribution to retailers (break-bulk). It is concluded that the marketing scheme of a potential Tennessee manufacturer should target intermediaries. Very few panels are shipped directly from manufacturers to consumers. Most panels (89.9%) are shipped to intermediaries for distribution.