The 2020 Mid-Year Economic Update_long

Building Products Suppliers Accused of Price-Fixing

North American consumption of OSB was forecast to rise starting in late 2002, according to court documents. During 2000 and 2001, Louisiana-Pacific and its competitors had announced plans to build new OSB plants or expand existing facilities.

But these plans changed. Louisiana-Pacific canceled its planned OSB facilities in the second half of 2002. Norbord suspended its plans to build a new mill in Arkansas. The lawsuit claims these two decisions improved the supply-demand outlook for OSB. Price levels went up.

The lawsuit accuses the manufacturers of conspiring to further reduce supply while demand for OSB was climbing. The plaintiffs claim the defendants coordinated a series of plant closures” to decrease OSB production capacity.

Louisiana-Pacific in 2002 eliminated production from all its North American OSB mills on two separate occasions and took downtime at 13 of its 14 OSB facilities.

Also in the second half of 2002, Norbord, Weyerhaeuser, Potlatch, and Ainsworth announced periods of downtime at their OSB mills. Georgia-Pacific OSB shipments declined 13 percent from 2002 to 2003, according to court documents.

“The sharp increase in OSB prices beginning in 2003 was the natural and intended consequence of defendants’ reducing the available supply at a time when demand for OSB was increasing,” the lawsuit states. “… The production slowdown by defendants while demand continued to rise is not representative of a competitive marketplace, and is instead at odds with economic fundamentals, which would have predicted an increase in production and inventories to satisfy the rapidly rising demand for OSB.”

Production dropped 3.2 percent during the first two quarters of 2003, according to the lawsuit.

Prices rose dramatically, cracking the $200 per thousand square feet mark in April 2003. Prices peaked at $520 per thousand square feet, according to court documents. Profits soared for manufacturers: Louisiana-Pacific reported a 723 percent increased in profits from OSB in 2003. Norbord’s profits rose 400 percent the same year.

The plaintiffs are seeking unspecified damages.

The distributors accuse Oriented Strand Board manufacturers of suppressing supply to raise prices to unprecedented highs, despite increasing demand.

Five building products distributors have filed a class-action lawsuit against manufacturers of OSB, an engineered, mat-formed structural panel used primarily in new residential construction. The suit, filed at the start of March, claims the manufacturers have kept the price of Oriented Strand Board artificially high by conspiring to keep production in low during times of high demand.

The distributors accuse the suppliers of removing production capacity by delaying or canceling the construction of new OSB mills; buying needed OSB from competitors instead of manufacturing it themselves, which could be done at a lower cost; and having low operating rates at mills, according to court documents.

The lawsuit was filed in the U.S. District Court for the Eastern District of Pennsylvania.

The suppliers deny the allegations. Defendants include: Louisiana-Pacific Corp., Georgia-Pacific Corp., Weyerhaeuser Co., Potlatch Corp., Ainsworth Lumber Co. Ltd.; and J.M. Huber Corp.

Plaintiffs include Sawbell Lumber, Philadelphia, PA; Norwood Sash & Door Manufacturing, Cincinnati, OH; Columbare Inc., Jamestown, NY; West Lumber, Upper Darby, PA; and Frontier Lumber Co., Erie, PA.

The Product
OSB is an engineered, mat-formed structural panel product manufactured from fast-growing trees such as aspen, poplar, southern yellow pine, mixed hardwoods, and other suitable species. Logs are cut to length, debarked, and processed into precise, uniform strands; the strands are dried, sorted and mixed with wax and waterproof exterior-type binder and formed into large continuous mats. OSB can be made from trees of various sizes and shapes not suitable for plywood.

OSB’s sole competitor in the structural panel market is plywood. OSB has virtually replaced any other type of panel in new residential construction in the U.S., according to court documents.

In 1998, OSB consumption started to outpace that of plywood. OSB continues to increase its market share and now accounts for almost 60 percent of the entire structural panel market. OSB is also the principal component in numerous engineered building products manufactured by the defendants, such as I-Joists, OSB flooring and siding products.

From 2002 to 2005, OSB sales in the U.S. averaged more than $5 billion each year. OSB accounts for about 75 percent of the structural panels consumed in the new residential construction market.

The Market
As of 2004, the defendants in the lawsuit had 91 percent of the total OSB capacity in the U.S. Louisiana-Pacific alone controlled over 28 percent. Norbord is the nearest competitor, with 17.62 percent of the market, according to court documents.

The underlying demand for OSB has been strong since 1991 due to the strong residential construction market and steady gains in market share over plywood thanks to its high profitability and lower manufacturing costs.

A rapid increase in OSB production during the 1990s resulted in excess capacity and leading suppliers added plants anticipating further demand, according to court documents. OSB inventories swelled, and prices were suppressed to near five-year lows by the end of 2001. OSB prices slid 45 percent between 1994 and 1997 and 39 percent between 1999 and 2001, despite a strong housing market.

The defendants named in the suit recognized oversupply as the cause of poor financial performance in 2001, according to court documents.

By the end of 2002, OSB prices had fallen below what they were at the end of 2001, or an estimated 40 percent from 1999 to 2002. Louisiana-Pacific reported a 27 percent drop in OSB’s average net selling price in 2001 over 2002.


About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events


articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events



You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.