COOK- Out of sight, out of mind is an apt descriptor for the former Ainsworth OSB mill about three-and-a-half miles south of Cook, that’s been shuttered now for nearly 15 years.
Visible only for a second or two through a gap in the trees to passing motorists on Hwy. 53, few area residents give it a thought these days, and many have forgotten the hopes raised in 2016, when Louisiana-Pacific bought the former mill for a possible new siding mill.
But it’s not completely out of the minds of top officials at LP Solutions, the current owner, which still has the property in the mix for possible future development, according to comments made Tuesday during the company’s fourth-quarter earnings teleconference.
A key growth segment for LP Solutions has been siding, and to respond to strong demand CEO Brad Southern has expanded production capacity in recent years by focusing on conversions of currently operating mills and acquisitions of others. Bringing the long-idled Cook plant back on line is a more costly and cumbersome project, which has kept the option sidelined for the past several years.
The strategy paid dividends for LP Solutions in 2021, as net sales of the company’s SmartSide Trim & Siding, SmartSide ExpertFinish Trim & Siding, BuilderSeries Lap Siding, and Outdoor Building Solutions products grew by $243 million, a 27-percent increase over the prior year. For the first time in company history, two plant conversions are happening simultaneously in 2022, with scheduled completion of a project in Houlton, Maine, and startup of a conversion in Sagola, Mich. LP Solutions is investing around $400 million in capital expansion this year, about half of which is going into these two conversions, according to chief financial officer Alan Haughie.
Growth projections are strong for the siding segment, and planning for future production expansion is underway, Southern said. While a complex mix of factors is involved, the Cook site is still being analyzed for possible use in a manner different from originally envisioned six years ago.
Southern outlined three possible avenues for expanding production capacity. One option would be to add capacity at an existing siding mill. A second would be to convert one of the company’s two remaining aspen-reliant OSB mills over to siding, he said. A third possibility would be to build an entirely new facility specifically designed for siding production, referred to in the industry as a greenfield project.
“Each of those have different capital efficiency parameters, and then each of them has different ramp-up parameters,” Southern said. “There’s pluses and minuses for each of those three scenarios, and that’s exactly what we’re working through in order to get to a decision on the capacity expansion after Sagola.”
How the Cook site might factor into the deliberations was made clear by Southern when Ketan Mamtora, of BMO Capital Markets Equity Research, asked him specifically about the facility.
“When I speak about possible greenfield, that obviously would include Cook,” Southern said. “The Cook land would be a really ideal place for us to build a greenfield siding mill.”
Adding capacity at an existing siding mill has an advantage from the standpoint of immediate production quality, Southern said, but would depend on wood and land availability. Existing OSB mill conversions benefit from already having labor in place, but the two remaining facilities available to convert are both larger than any previous conversion and would involve greater complexity, he said.
A greenfield facility, possibly at Cook, designed specifically for siding production is something Southern said he is “intrigued by,” but he also noted that such a project would be, “probably the least capital efficient means of securing new siding capacity.”
The company already owns the Cook site, situated for ready access to the raw timber needed for its aspen-based siding products. But the announcement in December of a brand-new siding pre-finishing facility to be built in Bath, New York, is an indication that LP Solutions is open to acquiring new property for development when conditions warrant.
With numerous factors and options to consider and planning at an early stage, Southern was not in a position on Tuesday to indicate what direction the company might go, but he did offer a possible timeline for a decision on next steps.
“I could see us talking publicly about that decision later this year, probably late this year, because we are looking at needing that production ramping up in 2024,” Southern said. “We’re all hands-on-deck working those scenarios and we expect to be able to talk with a little more certainty about what we’ve chosen to do as we get in the second half of this year.”