Arc: Lumber treatment plant to drive exports

Building material player mulls listing

BY JULIAN RICHARDSON Assistant Business Co-ordinator

Friday, March 15, 2013

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ARC Systems Limited will use its new $400- million lumber treatment plant as a platform to make a foray into the Caribbean export market as well as door manufacturing.

"We have had advanced discussions with suppliers in South America to basically buy the raw plywood there, ship here to Jamaica and use both for our own consumption and export within Caricom (and the Dominican Republic)," Deanall Barnes, Arc Systems vice-president of marketing and international sales, told Caribbean Business Report.

The company launched the state-of-the-art plant on Wednesday at its Bell Road factory in Kingston.

A first of its kind in the Caribbean, the plant is fully automated and has the capacity to treat about 500,000 board feet of lumber per 40 hour week. It occupies approximately 11,000 square feet of space and is equipped with a pressurised cylinder, four holding tanks and a control room. The type of treatment used is a form of micronised copper preservative, which is widely used in the construction industry in the United States.

Lumber treatment is needed to protect wood from damage caused by insects, moisture, and decay. According to Barnes, Jamaica imports approximately 36 million board feet of lumber per year and, of that amount, about 85 per cent is treated lumber.

"There's a lot of plywood that are imported in the country which are basically produced in Chile, Uruguay and Brazil, shipped to the United States and treated, and then sold to us," he noted.

Arc aims to substitute these imports with its own treated lumber and, in the short term, produce the equivalent of about half of domestic volumes for the export market, Barnes said. The marketing and international sales executive noted that competitive labour costs and average freight rates put the company in a strong strategic position.

"What we will be carrying is not the treated lumber, which is basically carrying water; we are carrying more wood now, which would reduce our average freight cost and we want to use that savings to provide a platform where we can export," Barnes said.

"Even in the labour cost going into the treatment of lumber, when comparing it with the US, provides us with a cushion to make a foray into the wider Caribbean," he added.

ARC is one of Jamaica's leading manufacturers and distributors of building materials. The company locally manufactures construction wires and mesh, nails, fencing and roofing products. It also distributes lumber, steel/steel products, and cement.

The company will use the lumber treatment plant to also go fully into door manufacturing.

"That's where our intentions are. We will be doing flush doors and v-joint doors and we also want to do pattern stock," said Barnes.

He also revealed that the company is considering listing on the stock market.

"It's something that is at the board level," he said.

The lumber plant will create up to 45 jobs in the medium term.

Arc Systems principal Norman Horne at the launch ceremony lauded National Commercial Bank for refinancing at a more competitive rate a loan the company had with a US financial institution, making the project possible.

Noting that Jamaica needs to focus more on growth, Horne said it is an opportune time for businesses to start investing again in real assets in the country given the relatively low interest rate environment.

"Jamaica's problem is not how much we owe, it is how much we must grow," said Horne, who also urged consumers to buy Jamaican products.

Minister of Industry, Investment and Commerce Anthony Hylton said Arc's lumber treatment plant is a welcome investment that will help to further grow the country's economy.

"The launch of this facility is a clear indication of the owner's confidence in the country and its evolving business environment. The launch of the lumber treatment plant certainly represents the kind of innovative response from businesses needed to drive our economy and country to the next stage of its development," he said at the ceremony.

The minister praised Osmose Inc, a wood- preserving company which collaborated with ARC to establish the facility, for the "strategic partnership in allowing the technology to come not simply to ARC but to Jamaica".

Jamaica Manufacturing Association President Brian Pengelley and JAMPRO President Milton Samuda also lauded the initiative at the ceremony.


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