Economic, environmental and social optimization of forest-based biomass supply chains for bioenergy and biofuels
Utilization of forest-based biomass for bioenergy and biofuels production could generate additional revenue streams, reduce greenhouse gas (GHG) emissions and generate development opportunities for forest-dependent communities. Barriers such as the capital intensity of conversion technologies, complexity of biomass procurement logistics, and the need to establish sustainable supply chains must be overcome. Mathematical modeling has supported the optimal design of biomass supply chains for bioenergy or biofuels production separately, mostly from an economic perspective. Some studies incorporated environmental and/or social criteria in the optimal supply chain design. However, no study modeled forest-based biomass supply chains for the simultaneous bioenergy and biofuels production, considering economic, environmental and social benefits. The development of such model is the objective of this thesis. First, an optimization model is developed that determines the optimal network design and the optimal yearly flows of raw materials and products that maximize the net present value (NPV) of the supply chain. The model considers the flow of energy among co-located conversion technologies and is applied to a case study in Canada. Second, a life cycle environmental analysis is developed to analyze the environmental impacts of the supply chain alternatives in the case study. Third, the optimization model is reformulated as bi-objective with an environmental objective that maximizes the GHG emission savings associated with the supply chain. These savings are estimated by comparing the emissions of the forest-based biomass supply chain system, versus those of the baseline system where unused biomass is disposed with current methods and energy demands are satisfied with currently available sources. Finally, a multi-objective optimization model is generated that integrates a social objective. The social objective is quantified by a social benefit indicator that assigns different levels of impact of job creation based on the type and location of the jobs. The bi-objective and multi-objective optimization models are applied to the case study and solved using a Pareto-generating solution method. Results indicate a trade-off between the NPV of the supply chain and the other two objectives, and a positive correlation between the generation of high impact jobs in the region, and the overall GHG emission savings.
Developing simulation models to improve the production process of a parallam mill
Engineered wood products are manufactured by adhering small pieces of wood together with a bonding agent. They have many benefits. They allow the logs to be used more completely and more efficiently. They can increase the structural efficiency of wood frame construction, and natural wood defects can be dispersed in the product, which increases the uniformity of the mechanical and physical properties. Parallam® is one of these engineered wood products. It is manufactured in only two facilities in the world – Delta, British Columbia, Canada, and Buckhannon, West Virginia, United States. Parallam is manufactured from a grade of veneer that is not suitable for other products using Douglas Fir at the Canadian plant, and various species of pine at the American plant. The veneer is cut into strands, which are then adhered into long billets and are cut into the desired sizes. The Canadian plant was experiencing limitations in their total throughput, and was interested in exploring solutions to improve it. Since production operations are complex and subject to a variety of uncertainties and complexities, discrete-event simulation modelling was used to analyze the processes and evaluate potential improvement scenarios. Two projects were conducted in this research where simulation models were developed to analyze different scenarios for possible alternative plant configurations or policies. The first project analyzed the replacement of a machine, changing the policy of order customization, and the flow of quality assurance pieces. The main finding was that the machine replacement had no positive impact on the throughput and should not be done. In addition, it was determined that a decrease in the amount of customization could increase the throughput by 20%. The second project analyzed the worker-machine interactions within the entire mill and the automation of an outfeed conveyor. The main finding was that the addition of one worker to the packaging station and the automation of the conveyor could result in a 22% increase in throughput. Further research should iii be conducted to assess the impact of quality assurance pieces through the mill, or to assess the impact of different workers’ schedules instead of just their assignments.
Supply chain planning for bioenergy and biofuel production from forest-based residues in interior British Columbia : a simulation study
This thesis analyzes a forest-based biomass supply chain network considering uncertainties and variations. It is based on the Williams Lake Timber Supply Area (TSA) located in British Columbia, Canada. The network includes: five conversion facilities distributed in three locations, two types of forest-based biomass, sourced from 337 cutblocks, and two types of sawmill residues sourced from three local sawmills. The main objective of this research is to evaluate the supply chain of forest-based residues for bioenergy and biofuel production considering uncertainties and variations. The specific objectives of this research are to: 1) Develop a simulation model to evaluate a forest-based biomass supply chain for bioenergy and biofuel production considering uncertainties and variations; and 2) apply the simulation model to a case study. To achieve the objectives, a discrete-event simulation model is developed using the commercial software Anylogic 7® (Anylogic 7, 2000). Evaluating a network with various supply and demand points, with various biomass types, and a hybrid push-pull biomass flow management distinguishes this work from previous research. The results show the demand is fulfilled to at least 95%, requiring 23 to 24 trucks during the peak season. Furthermore, the cost and CO₂ equivalent emissions vary per location, from $56.52 to $87.36 and from 19.66 to 72.61 (kg/odt), respectively. Long transportation distances and transportation cycle times greatly affected the number of required resources, and consequently the final cost per oven dry tonne. This results in higher costs than similar studies performed in less remote areas. Finally, a sensitivity analysis is performed to evaluate the effect of changes in moisture content and in supply and demand. Extreme changes in biomass supply and demand affected dramatically the demand fulfillment. By increasing the biomass demand 20% while simultaneously decreasing the biomass supply 20%, reduced the demand fulfillment by 23.18%. Finally, this model can be improved in several ways, one of them being by including the possibility of routing between different cutblocks to consolidate biomass pick-ups, therefore increasing the demand fulfillment of the supply chain and possibly reducing costs.
Developing decision support models for partnership evaluation in the forest products supply chain
The forest sector in Canada has been losing its competitiveness due to globalization and rapid change in technology. Partnership is one of the strategies that could help companies remain competitive; however, partnership is costly and has a high failure rate, according to the literature. Therefore, it is essential to monitor the performance of a partnership and evaluate the factors that affect its performance. Previous studies reveal that the performance of an ongoing partnership is influenced directly by a number of components, which are joint decision-making, information sharing, risk/reward sharing and relationship-specific assets. However, there is a gap for a comprehensive study that investigates partnerships and their components in the forest industry. In this study, first a survey is conducted from the forest companies in British Columbia, Canada, to investigate existing and potential partnerships and the factors that influence the performance of existing ones. The respondents are asked to subjectively evaluate partnership performance and the influencing factors using the Likert scale. The results of regression analysis indicate the degree of joint decision-making, relationship-specific assets, and risk/reward sharing as the best predictors of the performance of the surveyed companies. Then, two multi-criteria decision support models are developed to evaluate partnership performance and components quantitatively. Multiple quantitative criteria are used in the models. Interpretive Structural Modeling (ISM) and Analytic Network Process (ANP) are used in order to address the interdependency and the importance of criteria, respectively. Fuzzy Logic (FL) is used to capture the uncertainty in the criteria for evaluating partnership performance. The outputs of these two models are the importance of the criteria and two single numbers for the overall partnership performance and components in each period, named as Partnership Performance Index (PPI) and Partnership Component Index (PCI). The proposed models are applied to a partnership between a logging company and a sawmill in Canada, to find PPIs and PCIs in three different periods. The rankings of the criteria from the models are compared to the ones estimated by the managers, and the results show the rankings are compatible. The results are assessed by sensitivity analysis and validated by the managers.
On the design and analysis of forest biomass to biofuel and bioenergy supply chains
The efficient management of a diverse portfolio of resources is vital for sustainable economic growth in the bioenergy and biofuel sector. Considerable complexities and inherent uncertainties in supply and demand, and ever evolving technology for the utilization of biomass necessitate careful design and management of supply chains. Supply chain modelling is commonly implemented to develop “decision support tools” required in the planning of highly integrated, multi-faceted value-adding processes. This thesis demonstrates an object-oriented approach to simulate the supply chain of forest biomass to biofuel and bioenergy in three case studies in British Columbia, Canada.
Three main sources of complexity, namely uncertainties, interdependencies, and resource constraints, are considered in system parameterization and model development. After verification and validation, the models are used as a representation of the system to conduct model-based analysis. The supply chain of forest biomass for large-scale power generation is considered in the first case study. Different harvesting systems are considered that are employed based on the limitations on the annual harvest volume, characteristics of the stand, and intended products. Reliability of feedstock supply over the project’s lifespan, and the delivered costs were subject of the analysis. Demand fulfillment at the power plant and the cost of raw materials depend on the realized harvest volume, dictated by the practice of primary wood processing facilities. The delivered cost to the plant shows an ascending trend during the planning horizon, further complicating the investment. The second case study concentrates on the wood pellets production and distribution supply chains; modifications in an existing system are evaluated through simulation, and assessment of integrating torrefaction into the chain is carried out. Torrefaction technology promises an opportunity to reduce the distribution cost of wood pellets in the presented case study, contingent on the market readiness and fluctuating prices.Combined heat and power generation is considered in the third case study where modifications to an existing supply chain are evaluated.
Realization of the vast bioenergy and biofuel potentials in BC requires coordinated planning across the forest biomass supply chains, and simulation modeling provides valuable decision support tools to facilitate future investments.
Value chain optimization of a forest biomass power plant considering uncertainties
Mathematical modeling has been employed to improve the cost competitiveness of forest bioenergy supply chains. Most of the studies done in this area are at the strategic level, focus on one part of the supply chain and ignore uncertainties. The objective of this thesis is to optimize the value generated in a forest biomass power plant at the tactical level considering uncertainties. To achieve this, first the supply chain configuration of a power plant is presented and a nonlinear model is developed and solved to maximize its overall value. The model considers procurement, storage, production and ash management in an integrated framework and is applied to a real case study in Canada. The optimum solution forecasts $1.74M lower procurement cost compared to the actual cost of the power plant. Sensitivity analysis and Monte Carlo simulation are performed to identify important uncertain parameters and evaluate their impacts on the solution. The model is reformulated into a linear programming model to facilitate incorporating uncertainty in the decision making process. To include uncertainty in the biomass availability, biomass quality and both of them simultaneously, a two-stage stochastic programming model, a robust optimization model and a hybrid stochastic programming-robust optimization model are developed, respectively. The results show that including uncertainty in the optimization model provides a solution which is feasible for all realization of uncertain parameters within the defined scenario sets or uncertainty ranges, with a lower profit compared to the deterministic model. Including uncertainty in biomass availability using the stochastic model decreases the profit by $0.2M. In the robust optimization model, there is a trade-off between the profit and the selected range of biomass quality. Profit decreases by up to $3.67M when there are ±13% variation in moisture content and ±5% change in higher heating value. The hybrid model takes advantage of both modeling approaches and balances the profit and model tractability. With the cost of only $30,000, an implementable solution is provided by the hybrid model with unique first stage decision variables. These models could help managers of a biomass power plant to achieve higher profit by better managing their supply chains.
Design and scheduling of agricultural biomass supply chain for a cellulosic ethanol plant
The overall objective of this dissertation is to design and schedule a highly constrained agricultural biomass supply chain to meet the daily biomass demand of a commercial-sized cellulosic ethanol plant at the minimum delivery cost possible. To this end, an integrated simulation/optimization model is developed. The developed simulation model plans and schedules a flow of multi-biomass in the supply chain to meet the daily demand subject to the dynamics and stochasticity of the supply chain. The developed optimization model is used to meet the annual demand at the minimum delivery cost by prescribing the design of the supply chain. The design includes the selection of farms, the location of storage sites, and the assignment of the farms to the storage sites. It also determines the flow of biomass between farms, storage sites and the plant. The integration of the models is made via an iterative procedure. In this procedure, the design is used in the simulation model to manage the flow of biomass in the supply chain. On the other hand, the outputs of the simulation model are used as the inputs of the optimization model to adjust the design. The iterative procedure continues until no improvement can be made in the design. The integrated model is applied to a proposed ethanol plant in Prince Albert, Saskatchewan. The numbers of selected farms and the established storage sites in the integrated model are reduced by 6% and 10%, respectively, compared to the optimization model. Compared to the simulation model, the integrated model leads to the reduction in number of farms (15%), number of storage sites (57%), amount of purchased biomass from farmers (7%), harvested area (13%), supply radius (13%), number of maximum trucks (2 trucks), supply costs (6-12%), energy input (19%), and emitted CO₂ (12%). The results of the sensitivity analysis reveal that the most influential parameter on the design is biomass yield. In addition, bale bulk density and in-field and road transportation operations have the highest impacts on the total supply cost compared to other input parameters.
Economic assessment and optimization of forest biomass supply chain for heat generation in a district heating system
This research investigates the feasibility of exploiting local forest biomass for district heat generation in Williams Lake, BC. The objectives of this research are (1) to examine the economic viability of delivering forest biomass to the gate of a potential heating plant, and (2) to find a cost-optimized supply chain for delivering biomass to the plant. Considering the impact of biomass availability on the design of the supply chain and the required logistics in the system makes this study distinctive from the previous research. To achieve the first objective, the annual total delivery cost of biomass to the plant, namely the material, handling, processing, and transportation costs, was calculated for supply chain options with and without terminal storages. The results of the feasibility study showed that depending on the distance of source points to the plant, the delivery cost of woodchips to the plant ranged from $2.19 GJ⁻¹ to $2.87 GJ⁻¹. However, the gap between supply and demand in some months indicated that the direct flow of woodchips from source points to the plant would not be always possible. To meet the demand in months with biomass shortage, forest biomass should be stored in a terminal storage although this could increase the total annual cost to $6.59 GJ⁻¹. At the same time, transferring all the plant’s demand via terminal storage would not seem economical since in the months with more supply than demand and also with good accessibility to the collection areas, the direct flow is possible. Using a mix of direct and indirect flows might provide the opportunity to deliver forest biomass to the plant at a lower cost. A linear programming model was used to minimize the total annual cost and to determine the optimal flow of biomass to the heating plant. The optimization results revealed that the optimal flow of biomass would cost $2.62 GJ⁻¹, which is less expensive than the current delivery cost of natural gas to the plant ($6.39 GJ⁻¹). Therefore, the use of forest biomass for energy generation might be economical depending upon the capital and operating costs of the energy conversion facility.
Evaluation of Strategic Software Investments for the Canadian Cabinet Industry
Manufacturing is the single largest sector of the Canadian economy, accounting for 12.7% of the nation’s GDP in 2009 (Statistics Canada 2011). Over the past decade, this sector has faced numerous challenges such as a stronger Canadian dollar, increased foreign competition, and the recent decline of the US economy. One of the ways Canadian manufacturers have responded to these challenges is through increased information technology (IT) investments (Baldwin & Sabourin 2004). Wood products industries, though, generally invest much less in IT than the sector as a whole (Atrostic & Gates 2001). When wood manufacturers do invest in IT, it is often at a very basic level (Hewitt et al. 2011). Consequently, more intensive and sophisticated use of IT presents an opportunity for the cabinet industry to improve their competitive position.
The first research objective was to determine the types of software products currently available to the cabinet industry and their associated functionalities. This was done using simple proportions, cluster analysis, and association rule learning. Next, a strategic analysis of which types of software applications are most important for the industry’s future competitiveness was done using the analytic network process. Lastly, any large gaps between what is currently represented in the industry and what is important for future competitiveness were identified.
Operations & Engineering functionalities were found in 65.7% of all observed functionalities, whereas Content, Collaborative, and CRM functionalities were found in less than 10% each. Operations & Engineering and ERM software were determined to be the most important for future competitiveness because of their contribution to the Quality strategy. While Operations & Engineering software is important for the industry, they may be overrepresented because the current market is highly saturated with these functionalities. ERM, Collaborative, and CRM software are underrepresented as their future priority is higher than their current presence. The sensitivity analysis shows that the final priorities of software applications are most sensitive to the weighting of the Customer Service strategy. If an individual firm places a high emphasis on customer service and marketing, then CRM and Collaborative software become most critical for success.
Multi Criteria Evaluation of Wood Pellet Utilization in District Heating Systems
The hypothesis that this thesis investigates is that ―the wood pellet is a competitive primary energy source option for generating district heat in Vancouver, BC. The competitiveness of the wood pellet as an energy source is evaluated by investigating a major district heating project in Vancouver, BC in which the wood pellet option was compared with natural gas, sewer heat, and geothermal heat. It is observed that in addition to technical and economic factors, environmental and social acceptability criteria play an important role in the selection of the energy source for district heating systems. These include stakeholders‘ concerns regarding global warming impacts associated with production and transportation of the wood pellets, as well as particulate matter emissions from wood pellet combustion at the facility. In order to investigate the hypothesis, detailed study of: (a) particle emissions formation and levels, (b) techno-economic performance, and (c) upstream and life-cycle environmental impacts when using wood pellets at the district heating centre, has been carried out. This thesis accepts the hypothesis in that:
- Particulate emission levels from wood pellet combustion when an electrostatic precipitator flue gas cleaning system is used is below the 18 mg/m3 (20°C, 101.3 kPa, 8% O2 ) regulatory limits in Vancouver, BC,
- The cost of heat generation (CAD/MWh th ) from the wood pellet option (19.08~23.66) is comparable to that of the natural gas option (17.38) and well below those of the heat pump options (26.34~30.71),
- Based on the upstream environmental impacts of the energy options, a single energy option, which outperforms others when all the impact categories at the same time are considered, cannot be identified. However, it was shown that the impact of upstream production and transportation activities for the wood pellet option does not offset the global warming mitigation advantage of this option. The greenhouse gas equivalent of upstream emissions from the wood pellet option is in the same order of magnitude as the renewable heat pump options, and has remarkably lower (less than 200 kg eq of GHG emissions per MWh of produced district heat) than that of the natural gas option.
The Simulation Modeling of Supply Logistics of Forest Biomass in British Columbia
The search for alternative energy sources has increased interests in forest biomass. During the last few years, the sever infestation of the Mountain Pine Beetle (MPB) within the Interior BC forests has led to huge volumes of dead wood that exceed the capacity of the lumber industry. One way to make the most value of the surplus wood is to use it as the feedstock for bioenergy. The forest biomass can be supplied through conventional (roadside residuals), full-tree chipping, or satellite yard systems. This thesis presents the development of a simulation model of supply logistics of forest biomass and its application to a case of supplying MPB-killed biomass from Quesnel Timber Supply Area (one of the most infested areas in the Interior BC) to a potential 300 MW power plant adjacent to the city of Quesnel. The model has the ability of providing estimates of quantity, delivery cost, and moisture content of biomass which are critical in feasibility study of any bioenergy project. The results obtained from simulation model showed a delivery cost of C$45 per oven dry tonne of wood chips to the power plant. The results also revealed that the feedstock recovered from roadside residues in one year meets about 30% of the annual demand of the power plant. Potential increase in the Allowable Annual Cut (AAC) for Quesnel TSA increases the quantity of biomass supplied from roadside residuals. However, as long as the biomass is supplied only through conventional harvesting, increasing the AAC even by 40% does not provide enough feedstock to meet the annual demand of the plant. Using the simulation modeling, this research has the benefit of considering the logistics of forest biomass supply as an integrated and interacting system as well as providing different critical parameters over time. The model also has the potential of considering dynamic and random behavior of the logistics system of supplying forest biomass. The model can be modified and applied to similar cases of conventional forest biomass supply. It also can be extended to other harvesting systems including satellite yard and whole-tree chipping.
Evaluation of wood Biomass Utilization for the Greenhouse Industry in British Columbia
The Canadian greenhouse industry is challenged by high operating costs as the natural gas price has been increasing and fluctuating over the past few years. Natural gas is the primary energy used by the greenhouse industry to generate heat and carbon dioxide (CO2 ) to enhance the crop productivity. There are concerns about the global warming effect caused by natural gas usage as it is a non-renewable energy. Therefore, the greenhouse industry is seeking an alternative energy source which is economical, renewable, and environmentally friendly to reduce the fossil fuel consumption. Wood biomass, mainly wood pellets and wood residue, is a renewable energy used in the greenhouses to decrease the natural gas demand. However, the long-term economic value, the air quality emission, and the long-term resource availability are the main barriers for the industry to convert into wood biomass boiler. The main objectives of this study are to 1) evaluate the economic feasibility of using wood biomass for the greenhouse heating application, and to analyze the associated impacts of the technical and economical changes, and 2) determine the optimal biomass mix with the consideration of emission limits and resources availability constraints. Specific case studies will be considered in this research to achieve the mentioned objectives.
The results of the techno-economic analysis showed positive net present value (NPV) for the four cases considered: using wood pellets or wood residue boiler, with or without an electrostatic precipitator (ESP), to generate portion of heat demand for a greenhouse. Although the decision making would be affected by the price changes and the size of a greenhouse, a positive NPV was determined from a pure economic view point. Wood biomass is a carbon neutral‖ material; therefore, combusting wood biomass could reduce over 3,000 tonnes of CO 2 equivalent greenhouse gases annually. Sensitivity analyses indicated that wood biomass attractiveness would increase with higher natural gas prices or larger energy contributions from wood biomass. The optimization study suggests a feasible biofuels mix for the case study of a 2 ha flower greenhouse and a 7.5 ha vegetable greenhouse. The model was solved considering the inclusion of an ESP system to ensure the air quality limits were satisfied. The optimal result was compared to an existing 2 ha flower greenhouse and revealed almost 20% reduction on the total fuel cost per year.
Evaluation of Information Technology Investments in the Wood Industry
Manufacturing industry is the largest business sector in Canada. It has contributed significantly to the Canadian prosperity in terms of employment and economic growth. However, this industry has faced increased competition from low-price producing regions. Also, appreciation of Canadian dollar and increasing price of energy and other resources lowered the profit margins of the Canadian manufacturing industry. In order to survive and gain higher profit margins, Canadian manufacturers have adapted various strategies one of which is to offer high-value customized products to best meet the changing needs of their customers. To that end, there have been significant investments made in advanced technologies such as information and communication technology (ICT) in Canadian manufacturing companies.
Due to expensive cost of acquiring ICT and its long term effect, it is important to use suitable holistic approaches for evaluation of this type of investments. The evaluation should involve inclusion of multiple tangible and intangible criteria. It may also include consideration and aggregation of different decision makers’ viewpoints. Unlike some other sectors in the manufacturing industry, systematic approach for assessing ICT investments have not often been used in the forest products industry. In this research project, the evaluation and selection of a design and manufacturing software package at a Canadian cabinet manufacturing company is addressed. A list of design and manufacturing software selection criteria is presented which could be modified and used by any other goods/service producing companies. The impact of interdependencies among the selection criteria on the results of the decision making process is also investigated. Various sensitivity analyses were performed to investigate the stability of the decision when the decision parameters changed.
The results show that the inclusion of intangible criteria would yield to a better decision than that of revealed by just considering tangible factors. In the case study presented in this research, a software package with reasonable cost and good features (Software D) was chosen over the cheapest software which did not offer these features. Furthermore, the results show that the inclusion of interdependencies among the evaluation criteria would impact the decision outcome. In the considered case study, the inclusion of such interdependencies not only changed the weights of the alternatives, but also partially changed the ranking of the alternatives. In our case, the ranking of the top alternative (Software D) did not change.
Finally, sensitivity analyses which were performed in this research project revealed that the choice of Software D (top ranked software) was stable upon changes in the influence of decision makers. Also, it was determined that this choice was stable upon changes in the importance of selection criteria for the decision makers.
Life cycle assessment case study of North American residential windows
This thesis is a life cycle assessment (LCA) on three window types commonly available to the North American residential consumer: PVC, fiberglass, and wood covered with an aluminum cladding. The LCA was a case study based on the production of the three windows by a single representative manufacturer of each type. Average transportation distances, commodity systems, maintenance, and service life estimations were used to complete the life cycle inventory model. These inventories were grouped into impact categories and scaled based on IMPACT 2002+ v2.1 characterization and damage factors. The damage modeling results indicated that the life cycle impacts are dominated by the combustion of nonrenewable energy resources. Burning fuels cause increased emissions of respiratory inorganics, terrestrial acidification/nutrification impacts, and global warming. The PVC window’s life cycle used the most nonrenewable energy and caused the most damage due to that window’s shorter service life, 18 years vs. 25 years for fiberglass and aluminum clad wood. This is despite the fact that PVC requires less energy to produce than the fiberglass. The impacts of the steel reinforcement required to strengthen the PVC window outweigh the benefits of the PVC over the fiberglass. The wood window was negatively affected by the addition of aluminum cladding, which required greater energy to manufacture than the wood component. The sensitivity analysis revealed that replacing the virgin material in aluminum cladding with recycled content improved the life cycle impacts of the wooden window. Using fiberglass or PVC to clad the wood window also improved the environmental performance by reducing energy consumption. The use of cladding materials other than aluminum also prevented the disposal of aluminum into municipal landfills which reduced the aquatic ecotoxicity of the wood window’s life cycle. Other potential improvements to the impacts of the three windows’ life cycles include improving energy efficiency, particularly during secondary manufacturing.
Efficiency and productivity measurement of the Canadian manufacturing sector : 1994-2002
Performance assessment has been gaining increasing attention in different sectors, including the manufacturing industries. The need for assessing the performance of firms has increased as a result of growing competition and globalization. Information technology advances along with changes in political and economic conditions have promoted industrial globalization. While a global marketplace means more customers, at the same time, companies face intense competition when they produce and sell their products globally. Companies need to learn about foreign societies and understand foreign customers; they also need to have long term plans on how to remain competitive. Evaluating and monitoring the performance and increasing productivity and efficiency are important issues for competitive companies and their investors. The Canadian manufacturing industries, which are important building blocks of our economy, face similar challenges since they are mainly export oriented. New countries, such as China or other South East Asian countries are currently exporting their manufactured products globally. These emerging exporters have greatly increased their market share in recent years, mainly because they have access to cheap resources and can offer their products with lower prices compared to other industrialized countries. This has created a major challenge for Canadian manufacturers. In Canada, forest industries contribute greatly to the economy by contributing to the country’s trade surplus and by creating jobs in rural areas. Wood products manufacturing is the second largest forest sector in Canada and is also classified under the manufacturing sector. The same issues faced by other manufacturing industries apply to wood industry as well. Considering the importance of manufacturing sector and the wood industry in particular, it would be useful to study their performance over time. Therefore, the intent of this research was to evaluate the performance of the manufacturing sector in Canada and in the United States, Canada’s major trading partner. Productivity growth of the industries was studied separately for each country, using a non-parametric productivity measure, Malmquist Productivity Index. The results showed that both countries had an overall growth in Total Factor Productivity (TFP) during the study period. However, their growth was mainly due to the technological progress (frontier shift) rather than the efficiency improvements. In both countries, TFP of the wood products manufacturing was below the average for the sector and technical efficiency decreased over the study period. In order to obtain a complete understanding of the wood products manufacturing sector’s performance, the efficiency changes of its sub-sectors were studied. These subsectors were sawmilling and wood preservation, veneer, plywood, and engineered wood products, and other wood products manufacturing. Data Envelopment Analysis, a nonparametric efficiency measurement method, was utilized for the analysis. Sawmilling and wood preservation showed the highest efficiency, on average, during the study period, while other wood products manufacturing was identified with the lowest efficiency. The results of the study suggest that wood products manufacturing needs to direct its strategies mainly towards improving the technical efficiency of the whole industry as well as its sub-sectors. This includes better managerial knowledge, labour training, and investment in machinery and equipment among other things. The wood industry can follow examples of the best practices in the manufacturing sector and identify improvement possibilities for its performance.
Efficiency analysis of primary wood producers in British Columbia using data envelopment analysis
The Canadian wood industry has faced several changes during the last decade. These changes include increasing global competition, changes in macro and micro practices, market restructuring, and technological advancements. One of the most affected sectors by these changes in the business environment is the primary wood manufacturing sector in British Columbia. This study examines the performance of this sector over the period of 1990-2002. The base methodological approach used is Data Envelopment Analysis. The study has two major objectives: first, to evaluate the efficiency of BC primary wood producers in 2002 and in relation to some environmental and managerial factors. Second, to analyze the efficiency trend of BC primary wood producers during the 1990-2002 period and identify the underlying causes. The first part of the study reveals some technical inefficiencies for the BC primary wood sector, but predominantly high scale efficiencies. Technical efficiency may be improved by increasing lumber and chip production, as well as enhancing the labour productivity. BC forest regions were significantly different in terms of efficiency; the northern interior regions showed the highest efficiency, followed by the regions in the southern interior. The coastal forest regions had the lowest efficiency. The second part of the study suggests a productivity decline in 1991 for the sector, followed by a steady state until 1996 when continuous growth began. The major reason for the productivity growth was technological advancement rather than technical efficiency improvement. The analysis of the mills which were shut down in 2002, demonstrated that most of them had been performing below average provincial efficiency levels, either due to lack of technical capabilities or the scale of operations.