WOOD 365Gaston January 2020 1January 2020 1Value.docx

WOOD 365
Gaston January 2020 1
January 2020 1
Value Propositions /
Innovation Strategies
Chris Gaston, Ph.D.
WOOD 365
2WOOD 365 Gaston January 2020
Objectives…
By the end of this presentation you should be
able to describe:
– What we mean by “innovation”
– What we mean by “marketing”
– The basics of the “NABC approach” to innovating,
or creating a value proposition
– The process of designing an “elevator pitch” as a
first step in developing a “business plan”

Customer
Competition
Company
What
people
want
Who else can
deliver this
want?
What you
have that
people
want
MARKETING!!!
The concept of marketing
WOOD 365
Marketing
Research
Market
Mix

Marketing
Strategy
• Customer
• Company
• Competition
• Context/Climate
• Collaboration
• Product
• Price
• Place
• Promotion
Marketing Plan
Marketing plan
The SRI approach to innovation
SRI – The five disciplines of innovation
“Innovation is the creation and delivery of new customer
value in the marketplace that also provides a
sustainable return to the enterprise.”
WOOD 365

It is not the strongest of a species that survives,
nor the most intelligent, it is the one
most adaptable to change (Darwin)
WOOD 365
Work on what’s important, not just what’s interesting
- Incremental or transformative

You don’t define value—your customers do!
Value Factor = Benefits / Costs
Value Propositions
NABC
WOOD 365
Value Factors
Prius
Quality Importance 0-5 Satisfaction 0-5 Benefit 0-25
Pollution 5 5 25
Styling 2 2 4
Reliability 5 4 20
“green” identity 5 5 25
Rear spoiler 0 4 0

74
Cost attributes Importance 0-5 Expense 0-$$$$$ Cost 0-25
Base price 1 $$$$ 4
Gas costs 3 $ 3
Repairs 4 $$ 8
Insurance 2 $$ 4
19
Value Factor for Prius 3.8
Value Factor for Taurus 1.4
Value Factors – Conjoint analysis
Choice-based analysis
• recognizes that most purchase decisions come
down to a few specific attributes
• excellent way to determine the trade-off of these
attributes (including price without directly asking)
• take a proprietary lumber product as an e.g.

WOOD 365
No Champion, no project, no exception!
- Market or technical champions
No Champion, no project, no exception!
-Market and technical champions
-Importance of “watering holes”

WOOD 365
Launching these disciplines of innovation throughout the
organization
-Fostering innovation culture
-Continuous Value Creation
FPInnovations template for industry engagement
WOOD 365
Plastic Wood Composites
Profile Decking

An example – Profile Decking
Need
• Decking is a 3 bbf + market in the N.A. ($6 billion +)
• Wood plastic decking has taken 30%+ market share (with
considerable price
premiums)
Approach
• Produce profiled decking
• Applying considerable technical and market research
• Establish demonstration sites
• Develop value chain, including product positioning, branding
and distribution
Benefit
• Pacific silver fir treatable and dimensionally stable
• Profiling minimizes checking, adds design appeal
• Brandable
• Attractive pricing, high margin / return-to-log potential
• Attractive LCA
Competition
• Plastic wood composites, non-wood, traditional treated
wood decking
WOOD 365

Profile Decking – Vancouver Home Show
Profile Decking – Boathouse Restaurant Opening
Profile Decking
WOOD 365
Profile Decking
Profile Decking
UBC
South Campus
150 units with
150-350 sq ft
decks
Profile Decking

WOOD 365
– Commercial and residential demonstration sites
– Validated in trials: margin uplifts of over $200 per mbf
– Distribution agreement; sales at over $2200 per mbf
Profile Decking
Assignment 1
For this Tuesday OR Thursday (Group A / Group B).
In class work on developing a one-page elevator pitch.
Final one-pager for each group due this Friday by
midnight.
For following two Tuesdays OR Thursdays (Group A /
Group B).
Elevator pitch presentations.
SRI – Elevator pitch template

WOOD 365
SRI – Elevator pitch in action
https://www.bing.com/videos/search?q=yutube+elevator+pitch+
TV+show&view=detail&mid=1
7B6FF22929E933FFF9117B6FF22929E933FFF91&FORM=VIR
E
Quiz #2
1. What is the difference between an “invention” and a
“innovation”?
2. What does “N-A-B-C” stand for?
3. What are the two categories of value proposition
“champions” that were identified in the lecture?
Instructions
Timberline Health, an integrated delivery system serving
residents in five counties in eastern Washington, is considering
new opportunities to increase community awareness of the
organization’s outpatient health services. As the new business
development manager of hearing health services, Jack Andrews
is responsible for evaluating the feasibility of marketing
activities for the hearing service line and must allocate
resources to promotional activities that forecast positive return

on investment. One option under consideration is to sponsor the
health and wellness pavilion at the Spokane County Fair.
Research from comparable markets has shown
that wellness fairs are not only effective at educating
communities about potential risk factors for health problems,
including hearing loss, but also increasing consumer awareness
of new or existing health services provided by local health
organizations. These activities are essential to Timberline
Health’s mission within the community.
Since little is known about the hearing status of residents in the
market area, Jack enlists the services of his organization’s
epidemiologist, Dr. Ruth Litchfield, to help him evaluate the
potential return on investment for this marketing campaign. Dr.
Litchfield incorporates several factors into her analysis. She
reviews public health data on hearing loss, occupational and age
distribution data for local residents, as well as a query of
Timberline Health’s patient databases. Based on this research,
she estimates the prevalence of hearing loss in the five-county
service area at 18 percent, slightly higher than the national
average (NIH, 2010). Jack receives information from the fair’s
sales and marketing department to help in his calculations.
Specifically, sponsorship consists of an investment of $50,000
for the design and production of promotional materials and
rental of pavilion space for the duration of the twelve day fair.
Data from the previous three years shows on average 250,000
people attend the fair, of which 1% visit the wellness pavilion
and participate in health screening services.
If Timberline Health is to offer mobile hearing screening, the
organization must invest in new portable audiology equipment.
Jack receives a quotation from his supplier and estimates the
total investment in new audiometers and audiometric booths at
$16,000. Timberline Health will use existing diagnostic
equipment to test people who have failed the initial screening
(i.e. test positive for hearing loss), so it is unnecessary to invest
in additional equipment for the hearing centers. Vendor
specifications for the screening and diagnostic equipment are

indicated in Table 1.
Table 1
Vendor equipment specifications
Equipment
Sensitivity
Specificity
Portable audiology equipment for free screening
90%
96%
Clinic-based audiology equipment for follow-up diagnostic
testing
99%
99%
Furthermore, Jack calculates that he must provide coverage for
three 6-hour shifts per day and each shift must have three
audiologists to meet demand for screening tests. He anticipates
hiring nine people to provide coverage for the duration of the
fair. The hourly rate for audiologists is
$37.50.
People who fail the initial screening at the fair are referred to
an audiologist for a diagnostic test. Jack assumes in his
calculations that all people who are referred for diagnostic
testing follow up with an audiologist in one of Timberline
Health’s hearing centers. Initial screening tests at the fair are
free; however, Timberline Health charges $57.00 for a
diagnostic hearing test, which costs the organization $24.00.
Using past sales data and industry metrics, Jack forecasts that
of
the total number of people diagnosed with hearing loss at
hearing centers only 20% will purchase hearing aids (NIH,
2010). He reviews sales and margin data from the prior year to
identify the product mix for his calculations as indicated in
Table 2.
Table 2

Sales and margin data
Hearing Aids
Unit Price
2015 Sales
Margin
Low-end
$1,000
$400,000
25%
Mid-range
$2,500
$1,250,000
45%
High-end
$4,000
$400,000
60%
Reference
National Institutes of Health (NIH) (2010, October 1). Fact
Sheet: Hearing aids. Retrieved from
U.S. Department of Health and Human Services: National
Institutes of Health:
https://report.nih.gov/nihfactsheets/viewfactsheet.aspx?csid=95
Write a Memorandum (no more than 2 pages) addressed to your
faculty on the Subject of: Statistical Data representation in the
Timberline Health case study
1. Construct a 2-by2 contingency table to determine the total
number of people who fail the screening test and will be
referred for diagnostic testing in the hearing centers.
2. Construct a 2-by-2 contingency table to determine the total
number of people who fail the diagnostic test, which represents
the target market for hearing aid sales.
***For each table: list what data (and calculations) you used for
the table
3. Explain the significance of Sensitivity and Specificity of

Portable audiology equipment and Clinic-based audiology
equipment.
4. Explain why Sensitivity and Specificity for the Clinic-based
audiology equipment for follow-up diagnostic testing is higher
than for
Portable audiology equipment for a free screening.
**When appropriate, refer to credible resources following APA
format.
Note:
There is an underlying assumption in this case that the
screening and diagnostic tests are independent, such that the
first test does not affect the results of the second test even
though this is generally not true with a series of tests. The
resulting cohort of people who test positive for hearing loss
represents the target market or total number of prospects for
hearing aid sales from the proposed marketing campaign
As a guideline, a 2-by-2 contingency table is constructed in
Table TN-1:
Table TN-1
Contingency table construction
Test result Disease (D) No Disease
(NoD) Total
Positive
Negative
(a)
True Positive
(b)
False Positive
(a + b)
(c + d)
(c)
False Negative

(d)
True Negative
Total (a+c) (b+d)
(a+b+c+d)
(prevalence) (1 –
prevalence)
WOOD 365
BC Forest Products Industry:
a Renaissance?
WOOD 465
January 2020
Chris Gaston, PhD
2Chris Gaston January 2020
Overview
• Canadian fibre supply
– land base, production and trade
• End-use markets
– Lumber, wood based panels and engineered wood
products / composites

• Residential, R&R, non-residential and industrial
– Bio-energy and bio-chemicals
• The renaissance of our industry!
– Product and system evolution / revolution
• The Green Economy (?)
• Social change (?)
Objectives…
able to describe:
– The trends in “commodity” versus “value added”
forest products
– The advantages of engineered wood products /
systems
– The concept of the “three-legged-stool”; economic,
environmental and social objectives of the forest
industry
– The concept of “bio-pathways”
WOOD 365

Overview of the Canadian forest sector
Forests of Canada
• 396.4 M hectares
– 166.2 M certified
– 37.3 M national parks
• 2017 (hectares):
– 0.78 M harvest (153 M m3)
– 15.5 M lost to insects
– 3.4 M lost to fires
• 67% coniferous,
16% mixed wood
and 11% hardwood
• 94% publicly owned
• 30% of the world’s
boreal forest
Source: The State of Canada’s Forests, 2016 Annual Report
Forests of Canada
Source: BC Archives

WOOD 365
Forest industry in Canada—key facts
• Forest Sector Revenues (2014)
– Forestry and logging $ 9.3 Billion
– Pulp & paper $24.5
– Wood products $26.5
$60.3
• Contribution to GDP (2017): $24.6
Billion
• Balance of Trade (2017): $24 Billion
• Average Wage per Employee (2011):
$52,673
– 16% above the national average
• Jobs (2017): 317,320
• Research and development (2011)
– Wood Products Manufacturing: $95 Million
– Pulp and Paper: $56

– Forestry and Logging: $ 6
Source: FPAC; The State of Canada’s Forests, 2016 Annual
Report
Structural changes in (or affecting) supply
• US housing collapse
• Drop in newsprint consumption
• Rise in lower grade demand (China, bioenergy)
• Rise in CDN $ value against US currency
• Annual allowable cut drops
– Recently Ontario and Quebec; pending in BC with the MPB)
• Increasing fiber costs
• Decreasing fiber quality
• Increasing natural
disturbances
WOOD 365

Wood supply cost in Canada
Source: Wood Resources International, February 2007
Global fibre supply changes
Source: Pöyry
WOOD 365
Canada forest products exports
Source: Industry Canada
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60
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
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Canada Exports of Wood Products + Pulp and Paper
SW Logs SW Lumber PB/OSB/Plywood
WCS and Builders Joinery Wood Furniture Other
Pulp Paper

BC / rest of Canada lumber production
Source: Statistics Canada
Canada lumber exports
Source: Industry Canada
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4
6
8
10
12
14
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
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Canada Exports of Softwood Lumber
United States China Japan EU 27 Others
WOOD 365
Canada lumber exports
Source: Global Trade Atlas
Some context: wood-use in the U.S.
Source: RISI, Boston, Massachusetts

U.S. housing starts
Source: US Bureau of the Census
WOOD 365
‘Stick-built’ platform frame construction
The average cost of rough framing, sheathing, soffit,
and door / window installation is as low as $8 per sq. ft.
($16,000 for a 2,000 sq. ft. home)
‘Pre-fab’ platform frame construction
Move to 6-story multi-family
Source: WoodWorks
Library Square, Kamloops, BC, 2010
WOOD 365

Source: FPInnovations
Testing of 6-storey 2x4 construction in Japan
Source: Adera, Vancouver, BC
Residential, University of BC
Six story hybrid wood-concrete
Source: FPI, Quebec
Quebec, QC
2010
WOOD 365

Six story hybrid wood-concrete
Source: FPI, Quebec
Concrete cores/walls to
resist lateral loads
Glulam post & beam
+ Three levels of parking (concrete)
Five story hybrid wood-concrete
Source: Perkins + Will
Earth Sciences Building, UBC
Five story hybrid wood-concrete
Source: Perkins + Will
Earth Sciences Building, UBC
WOOD 365
Consumer reaction to Canadian softwoods

Cross laminated timber
Kobe-level seismic test
WOOD 365
‘Tall Buildings’
Source: Michael Green Architecture
Wood Innovation Design Centre, Prince George, BC
‘Tall buildings’
Source: Michael Green Architecture
“We are in a unique moment in

architectural and building engineering
history when shifting world needs has
asked us to question some of the
fundamentals of how we have built for
the last century and how we will build
in the next.”
Michael Green
‘Tall buildings’
WOOD 365
Tall wood structures
Source: https://www.naturallywood.com
UBC Brock Commons
Tall wood structures
UBC Brock Commons
Source: https://www.naturallywood.com
Promotion video

Eight-story condominium—Portland, Oregon
“ …made with mass timber that accounts
for 223 metric tons of avoided carbon dioxide
emissions, while also storing 577 metric tons
of C02 in the wood itself. That’s the
equivalent to taking 169 cars off the road
for one year."
Source:
WOOD 365
“It took 12,000 trees to make the
manufactured structural elements
for the building.”
Source: https://www. wpxi.com/news/tallest-timber-building-in-
the-world-nears-completion/828246795
18-story high-rise—Norway
“The state legislature earlier this year called on the Washington
State
Building Code Council adopt rules for CLT use when building

residential
and commercial buildings. The move represents ongoing efforts
to bring
CLT into mainstream use for residential and commercial
construction,
which would create commercial value for the small-diameter
trees that
are contributing to poor forestland health in Washington state.
It’s value was recognized by the state
Department of Natural Resources
in its 20-year forest health plan as
a way to minimize project costs”.
Source: TJ Martinell, July 2018
CLT as forest-management strategy
Tokyo 70-story building announced!
Sumitomo Forestry (90% wood, 10% steel)
Source: https://archinect.com/news/article/150050204/70-story-
wooden-skyscraper-proposed-for-
tokyo-could-become-world-s-tallest
WOOD 365

Wood pellets
Source: www.pellet.org
Bio-pathways
Source: http://fpac.ca/
Bio-pathways
-50%
-40%
-30%
-20%
-10%
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WOOD 365
Industry transformation
Forest Industry Transformation (IFIT) program provides
significant industry support to help with the “valley of death”.
Source: http://cfs-scf.nrcan-rncan.gc.ca/selective-cuttings/51
Life cycle assessments
Source: Athena Sustainable Materials Institute
Examples of new tech / product development
• Past
– Heavy focus on commodities
– Heavy focus on manufacturing cost reductions
– More limited:
• Wood modification
• Engineered wood products
• Present / future
– Growing interest in engineered wood products

and systems
• Solid and Composites
– Bio-energy
– Bio-chemicals
WOOD 365
Glulam
Source: Chantiers Chibougamau
Glulam
Source: Nordic, Structurlam, Western Archrib
Laminated Veneer Lumber (LVL)
WOOD 365

Laminated Veneer Lumber (LVL)
Source: FPInnovations, Quebec City office/laboratory
Parallel and laminated strand lumber (PSL. LSL)
Source: FPInnovations, Weyerhaeuser
Cross laminated timber
WOOD 365
Treated lumber
Source: US Borax
Source: ThermoWood
Economic, environmental and social

Thermally modified wood
Wood-plastic composites
Source: Trex
WOOD 365
Plastic-wood composites
Chemically modified (acetylated) wood
Source: Accsys Technologies
Pulp-based hybrids
Source: https://www.dascanova.com/en/Home.html
WOOD 365

Light weight panels / partition walls
Wood fibre insulation
Source:
http://www.gutex.de/en/Products/Installation_and_Product_Info
rmation/#
Steico, Actis, Pavatex,
Gutex and others
Bio-plastics
WOOD 365
Biodiesel
Rudolf Diesel
Rudolf Diesel's designed his
demonstrated engine in
Germany in 1893 running on
nothing but peanut oil.

Linoleum
Biodiesel
Biochemicals / bioproducts
WOOD 365
Star Trek replicator
3-D printing
Source: http://www.technewsworld.com/story/83035.html
3-D printing
Source: http://www.collective-
evolution.com/2014/02/22/scientists-develop-giant-3d-printer-
that-can-build-a-house-in-24-hours/

WOOD 365
4-D printing…. the addition of time
Source: http://www.smithsonianmag.com/innovation/
The 4th industrial revolution!
Source: https://www.simfactory.io/news/what-is-industry-4-0-
and-how-did-we-get-here/
The ultimate goal
Transportation Fuels
Other Fuels and Products
Chemicals, Plastics, Rubber
Petroleum End-uses
70%
26%

4%
Revenues
43%
42%
15%
Source: T. Werpy, 2009 BioWorld Conference (Modified by
Tom Brown)
WOOD 365
Economic, environmental and social
Opening Doors!
Questions?
Chris Gaston
[email protected]
+1 604 827 1417

Quiz
• Define the main difference between a
“commodity” versus a “value-added” forest
product
• Of these two, which dominates Canadian
exports?
• What are the three measures used in defining
“bio-pathways”
1/27/2020
Gaston Wood 365 January 2020 1
Global wood product
trade flows
WOOD 365, Faculty of Forestry
Chris Gaston, PhD
Winter 2020
Overview
able to describe:
– The top five exports of forest products from Canada

and their destinations
– Canada’s largest competitors
– The difference in wood products / export focus in BC
as compared to Ontario/Quebec
– The present day dominance of China production and
trade in forest products
– Canada’s share of commodity versus value-
added trade to importing countries
– “Balance of Trade”
Canada exports
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60
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2017

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Canada Exports of Wood Products + Pulp and Paper
SW Logs SW Lumber PB/OSB/Plywood
WCS and Builders Joinery Wood Furniture Other
Pulp Paper
1/27/2020

Canada exports
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12
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Canada Exports of Pulp (all categories)
Canada exports
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16
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20
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

2017
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Canada Exports of Paper (all categories)
Canada exports
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25
30
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
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Canada Exports of Wood Products
SW Logs SW Lumber PB/OSB/Plywood WCS and Builders

Joinery Wood Furniture Other
1/27/2020
Canada exports
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15
20
25
30
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
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Canada Exports of Wood Products
United States China Japan EU 27 Other
Canada exports
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200
300
400
500
600

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
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Canada Exports of Wood Chips and Pellets
SW Chips HW Chips Pellets, wood waste, etc.
Canada exports
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1/27/2020
‘Stick-built’ platform frame construction
The average cost of rough framing, sheathing, soffit,
and door / window installation is as low as $8 per sq. ft.
($16,000 for a 2,000 sq. ft. home)
Grade ‘turn-out’ at typical dimension
lumber sawmill
Current product mix of grades (US South)
Grade (2x4s) Percentage
No. 1 & Btr. 18
No. 2 51
No. 3 16
Other 15
$430/mbf

$320
SYP kiln dried, West, 2x4 x8’
(Random Lengths, Sept. 2016)
$220
Canada exports
1/27/2020
Japan housing starts
Source: JAWIC
0
200,000
400,000
600,000
800,000
1,000,000

1,200,000
1,400,000
1,600,000
1,800,000
1
9
7
4
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8

2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9

4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0

6
2
0
0
8
2
0
1
0
2
0
1
2
2
0
1
4
2
0
1
6
P&B 2 x 4 Total Starts

Japan post & beam construction
Global fibre supply changes
Source: Pöyry
1/27/2020
Canada exports
-
100
200
300
400
500
600
700
800

900
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
M
ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
Canada Exports of Softwood Logs
China Japan Korea, South United States Others
Canada exports
0.0

0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia

n
D
ol
la
rs
Canada Exports of PB/OSB + Plywood
PB/OSB to US Plywood to US PB/OSB/Ply to Other
Canada exports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill

io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
Canada Exports of Wood Continuously Shaped + Builders
Joinery
United States EU 27 Japan Others
1/27/2020
Canada exports
0.0
0.5

1.0
1.5
2.0
2.5
3.0
3.5
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs

Canada Exports of Wood Furniture
United States Other
Canada exports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an

ad
ia
n
D
ol
la
rs
Canada Exports of Softwood Lumber to Japan
BC Rest of Canada
Canada exports
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
Canada Exports of Softwood Lumber to China
BC Rest of Canada
1/27/2020

Canada exports
-
2
4
6
8
10
12
14
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n

D
ol
la
rs
BC Quebec Rest of Canada
Canada exports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io

ns
o
f C
an
ad
ia
n
D
ol
la
rs
Canada Exports of Wood Continuposly Shaped and Builders
Joinery
BC Quebec Ontario Rest of Canada
Canada exports
0.0
0.5
1.0
1.5
2.0

2.5
3.0
3.5
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
Canada Exports of Wood Furniture
BC Quebec Ontario Rest of Canada

1/27/2020
U.S. imports
-
5
10
15
20
25
30
35
40
45
50
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill

io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
US Imports of Wood Products
SW Logs SW Lumber PB/OSB/Plywood WCS and Builders Join
ery Wood Furniture Other
U.S. imports
-
5
10
15
20

25
30
35
40
45
50
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs

US Imports of Wood Products
Canada China Vietnam EU 27 Other
U.S. imports
-
2
4
6
8
10
12
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an

ad
ia
n
D
ol
la
rs
US Imports of Softwod Lumber
Canada Other
1/27/2020
U.S. imports
-
1
2
3
4
5

6
7
8
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
US Imports of Particle Board/OSB + Plywood
Canada PB/OSB/Ply Canada Plywood China Plywood Other
PB/OSB/Ply

U.S. imports
-
1
2
3
4
5
6
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B
ill
io
ns
o
f C
an
ad
ia
n

D
ol
la
rs
US Imports of Wood Continuously Shaped + Builders Joinery
Canada China Brazil Chile Other
-
2
4
6
8
10
12
14
16
18
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
2017
B

ill
io
ns
o
f C
an
ad
ia
n
D
ol
la
rs
US Imports of Wood Furniture
Canada China Vietnam Other
U.S. imports
Malaysia
Mexico
Indonesia
Italy
1/27/2020

Japan imports
Japan imports
Add HS 94
Japan imports
1/27/2020
Japan imports
China imports
Break out HW lumber
China imports

1/27/2020
China imports
China exports
Russia exports
1/27/2020
New Zealand exports
Canada trade balance
8.337
2015

0.862
-0.012
U.S. trade balance
-12.597
-4.981
2015
1/27/2020
N.A. trade balance
Japan trade balance
China trade balance
1/27/2020

India trade balance
Europe (EU 27) trade balance
Russia trade balance
1/27/2020
New Zealand trade balance
Trade data online
Quiz # 3
1. What are the top three Canadian wood exports by
value, in order (excluding pulp and paper)?

2. What are the top three destinations of Canadian
softwood lumber exports, in order?
3. How does Canada’s “trade balance” differ from
China’s for wood products?
1/27/2020
Chris Gaston
[email protected]
[email protected]
+1 604 827 1417
WOOD 365 Marketing Report
“Plasticell”

Group 28
Claire Huang (56197932)
Kelly Joe (66549320)
Dingfan Cui (90884099)
Zixuan Wang (74009747)
Introduction
Nowadays, plastic pollution is becoming more of a public
concern. Until 2015, the world consumption of plastic products
reached 381 million tonnes. Typically, wasted plastic is
discarded. In 2015, about 55% of plastic was discarded and 22%
was burned globally, while only 6% of plastic waste was
recycled. These discarded plastic then pollute ocean habitats
(Eriksen et al., 2014). In BC, there is a problem with wood
waste after timber harvesting. From 2004 to 2008, about 4.3%
of the total harvested went to wood waste. The coastal region
accounted for 60% of the provincial wood waste volume (Forest

Practices Board, 2010). Currently, burning is the cheapest way
to deal with these wood waste. In 2012, slash burning
contributed up to 13% of BC’s carbon emissions (Hernandez,
2016). A new and sustainable way of converting these wood
waste and plastic waste into valuable products is necessary, and
this is where our product “Plasticell” comes in.
Product
“Plasticell” is an innovative form of eco-friendly, biosynthetic
fiber that will be woven into textile. It is a composite material
consisting of both recycled wood and plastic waste to capture a
part of the market not yet assumed by existing recycled
materials or biomaterials (such as recycled polyester or bamboo
fiber). By combining these two materials, we are able to
combine the strength and water-resistant properties of plastic
with the softness of modern biological fibers. This material will
then be used to incorporate into a wide variety of different
clothing and accessories with superior softness, lightweight
protection, and durability.
Price (cdf)
The cost of producing Plasticell is similar to the cost of
producing bamboo fibers. For example, to produce bamboo
thread, it costs ￥29,000 (about CAD $5500) per ton and to
produce wood thread, it costs ￥35,000 (about CAD $6600) per
ton (Yao, 2004). In a survey we conducted, based on their
monthly incomes, most of the people were in the middle-upper
class (Figure 1) and these people had little to a strong interest
in Plasticell (Figure 2). We collected some comments from
those who did not want to buy our products and the most
significant reason was because the price of Plasticell is higher
than other threads used to create clothing. If we choose to sell
Plasticell to other clothing factories, sales volume-based pricing
would be the most fitting as we would sell Plasticell in
volumes. However, if we choose to further develop Plasticell
into clothing, which would then be sold under a company called

Hemlock Clothing, cost-based pricing while maintaining
somewhat of a status quo pricing would be used. The status quo
pricing would be based on the cost of other somewhat upper-end
clothing costs that would also hopefully incorporate the cost-
based pricing. There is somewhat of a danger in starting up and
perhaps maintaining our business as the customer is price
sensitive (it is elastic) as there are many other clothing options
available; however, we hope the other benefits such as
sustainability and durable yet soft clothing among other benefits
would be sufficient to appeal some customers.
Place
The production of Plasticell is separated into three processes:
from wood and plastic waste into fiber, then from fiber into
textile, then from textile to clothing. To reduce transportation
fees, the fiber processing plant will be located near harvesting
sites. The processing of converting wood and plastic waste into
fiber then to textile will be done here. After the two different
wastes are transported to the factory, a fiber extraction machine
will extract cellulose obtained from bark and stem. As for the
plastic waste, they will be melted into tiny resin pellets. Then,
by adding the “cellulose extract” and melted resin pellets in
different ratios needed, they can be formed into a “Plasticell”
fiber. This can then be run through a spinning machine and loam
to become fabric (Majumdar et al., 2013). Afterwards, this
fabric can be transported again to a clothing factory close to
indigenous communities to support local indigenous people and
other locals by providing job opportunities for them. The
clothing will then be sold by intensive distribution in both
online and physical stores. Our product will mainly target first
world countries such as the USA, Canada, and China. Appealing
to the Asian markets is especially important as they have strong
purchasing power which can account for 38% of the global
outputs (Romei & Reed, 2019). There will be physical stores in
the States, Canada, and some Asian countries such as China,
Korea, and Japan. Physical stores will be located in shopping

malls and main streets. Consumers can also purchase clothing
online and have it delivered to the closest store.
Promotion
To promote our proposed company “Hemlock Clothing” which
uses our product “Plasticell”, we will use a multi-channel
marketing approach to capture a larger portion of the
environmentally friendly consumer base. This will be done
using a mixture of television and internet advertising so as to
show our process of development and thus allow us to capitalize
on our company’s competitive advantage of being a superior
environmentally friendly material. This will also draw added
awareness to the importance of environmentally sustainable
textile and production methods, thus promoting sustainable
consumption habits through our recycled material. From there,
we will start to develop our online social media presence
through collaboration with celebrities that are shown to
advocate for both environmental awareness and consumer
responsibility in the fashion industry. Therefore, our company
will be able to position itself in both the minds of older
demographics as well as millennial and generation-z consumers
as a company aligned with both fashion-forward and
environmentally sustainable initiatives.
Customer
Within the market segmentation, several factors were identified.
Under the geographic feature, we would appeal to first world
countries such as Canada, the States, and few other Asian
countries. Our target demographic would be those from Gen X,
Gen Z, and millenials. The clothing we choose to produce will
not be gender-restricted, and anyone who would like to buy our
clothing will be able to buy them. The most restricted
demographic factor would be income. As this product is on the
more costly side, those in middle-upper classes will most likely
purchase our products. If possible however, it would be great to
further make our products more affordable, though this may

take some time when the business is just starting. In the
psychographic category, those with interests in environmental
stability would be most likely to buy our products. Lastly, under
the behavioral factor, we would benefit from those behaviors
associated with occasions as different clothing items depending
on different seasons will be produced. Thus, with all of these
factors considered, people aged 18 to about 40 who are
interested in environmental sustainability and are in middle-
upper classes will most likely be our target market. Our market
positioning will be in the middle of inexpensive and premium,
with more utilitarian, middle-level products. An additional
survey was conducted with 149 people. Half of them, from age
21 to 30 (Figure 3), showed strong awareness of the
environment (Figure 4). This age structure meets the
expectation of our biggest customers age range.
We also asked additional questions asking what kind of features
they found attractive. Most people noted that whether the
product is fashionable or not was the most important factor,
then followed by price, then the type of materials used to make
the clothing. So, from this survey, we learned that we should
shift our focus in creating fashionable clothing items.
Company (SWOT)
Currently, there is no competitor who produces a product
similar to Plasticell. We also have a complete supply chain from
raw material to final product which can potentially prevent
other competitors from entering our supply market. There is
however, competition from those who create clothing with other
fabric types. To make the product become more appealing,
besides the value of the product itself, our company will
promote our product as a symbol of sustainable development.
For example, we could make a promotional film to connect our
product with wildlife animals and marine habitats, and show
consumers that our products are able to mitigate the effects of
waste pollution. We also have opportunities to collaborate with

charity organizations to support third-world countries. For
every piece of clothing we sell, our company will donate that
equivalent piece of clothing to those in need. Our company will
also collaborate with non-governmental organizations to help
with rainforest and ocean conservation. The optimal result by
doing these things is our company becoming a symbol of
environmental conservation. It means what we are selling is not
just clothing but that our product is also the combination of
tangible good and intangible idea of conservation. Therefore,
consumers will be more willing to pay for our product. Thus,
our strengths are that we are able to decrease wood and plastic
waste and bring sustainability and environmentally-friendly
products to those who are interested. Another strength is the
amount of potential collaborations we are able to do, which are
further listed in the collaborations heading.
There are several potential weaknesses and threats of our
product such as not as many people may not care about
environmental problems or are not willing to change their
habits. However, a survey conducted by Nielsen found that 81%
of people globally feel that companies should help improve the
environment, with the highest support from millennials (The
Evolution of the Sustainability Mindset).
This means that there is a high number of people, especially
youth, who are potential target groups of our product, and there
is a great opportunity for our product to enter and succeed in
the market. Also, a survey in 2014 indicated that the public
concern about conservation is increasing and people tend to do
more to reduce their personal impact (Easman, Abernethy,&
Godley, 2018). Our product can provide what they want, so
there may be a large group of potential customers for our
product. For people are not as willing to change the clothing
they are used to wearing, advertisements through social media
and other promotional activities may be ways to encourage them
to try our product.
A weakness of our company is our resources because harvesting
wood waste is limited due to the annual allowable cut. The

annual allowable cut in the Fraser region is 1,220,808 cubic
meters per year (Nicholls, 2019). If we want to produce more of
our products, we need to collect wood waste from other
harvesting areas which will increase the transportation cost.
Also, there is a threat that the integrated wood product
companies such as West Fraser, which will lead to their
becoming our competitor due to the production of biomass
energy using wood waste. To ensure we have enough resources,
we may need to collaborate with these wood product companies.
Competition (cdf)
Some of the textiles our competitors produce include traditional
cotton clothing, bamboo fiber-based clothing, synthetic
clothing, etc. Our survey, as seen in Figure 6, shows that 90.6%
(=135/149) of participants love cotton clothing followed by
synthetic clothing. Other plant-based (bamboo and linen) and
animal-based (wool and silk) have fewer preferences. Our
product, however, combines both advantages of cotton and
synthetic textiles. Compared to traditional cotton clothing, this
product can maintain temperature and meet the requirements of
human skin’s moisture without static electricity. Not only that,
but the production of cotton requires excessive amounts of
water, pesticides, and fertilizers, which further leads to soil
depletion. This product does not directly require pesticides and
fertilizers, so it becomes more environmentally-friendly. This
product also has better fiber softness than true, organic bamboo
fiber-based clothing. Compared to synthetic clothing, this
product may have features, such as their being anti-bacterial,
self-cleaning, removing unpleasant odors. Additionally,
Plasticell is created with renewable resources unlike polyesters
which is also toxic to produce.
Porter’s five forces are mentioned in Figure 7. above, as well as
some other factors of Plasticell. Firstly, producing it does not
need a high technological basis, while manufacturing will be

costly. Secondly, this career highly depends on the supplier of
wood and plastic, which means the locations of the factory are
limited to the proximity of timber mills or other areas which
will not require expensive transporting fees. Another threat is
that once wood waste supplies are low, the product will face a
high risk of closing. Thirdly, as Figure 6 shows, the number of
substitutions of Plasticell is huge, and the cheaper price and
clothing-purchasing habits will lead to our losing many
potential customers. And for customers, we are aiming to target
middle-up class customers because of higher price.
Climate (PEST)
The fashion industry is also growing at a steady rate, showing
an increase in purchases by 60% from the year 2010 – 2015
(McFall-Johnsen, 2019). However, being that the growth of fast
fashion is one of the biggest contributors to environmental
waste pollution globally, as over 85% of all textiles are dumped
yearly, this creates an opportunity for Plasticell as an
ecologically sustainable production method when compared to
traditional materials (McFall-Johnsen, 2019). While people are
buying more clothes than ever before, products made by our
materials will capitalize on the growing segment of individuals
making the shift towards more environmentally conscious
products without compromising their consumption habits. Many
global retailers are also starting initiatives that focus on
recycling and repair services instead of buying new items such
as Patagonia which makes 40,000 repairs a year in its Rio,
Nevada location alone (Butler, 2018). This shift in consumer
preferences can be seen in the development of additional sub-
brands of sustainable fashion in companies such as H&M too
which have been well known for their reliance of fast fashion
models in the past, as well as the rise in consumer interest
shown in search activity for sustainable fashion rising in places
like the global fashion search platform LYST, by an average of
75% every year (Benson, 2020). While this at once creates
ample opportunity for the brand, it should also be noted that due

to this shift in consumer attitudes and demand, that there is also
a higher rate of competition as more and more new entrants
attempt to penetrate the market to satisfy this growing segment.
Along with the shift in consumer demand the company will also
be at the forefront of environmental policies such as the
Environmental Stewardship Initiative in Canada through the
creation of this new area of sustainable technology
(“Environmental Stewardship Initiative”). This makes countries
like Canada where social, economic and political values align a
market extremely well suited for our proposed composite
material.
Collaboration
As mentioned above in promotion, to best advertise our
products in an increasing digital age, we plan to collaborate
with celebrities, or otherwise known as influencers, that
promote on platforms such as YouTube and Instagram. By
collaborating with those who equally value the environment and
sustainability, and those who have a large fanbase, we will be
able to appeal to a much larger audience. We also may
collaborate with charity organizations to support third-world
countries. For every piece of clothing we sell, our company will
donate that equivalent piece of clothing to those in need. Our
company will also collaborate with non-governmental
organizations to help with rainforest and ocean conservation.
Despite that Plasticell was originally thought of being used in a
clothing company called “Hemlock Clothing”, it may be
difficult to enter the clothing market due to high competition
between the already existing companies. Another idea of
distributing our main product, Plasticell, might be by
collaborating with pre-existing clothing companies that may
have the same values, such as sustainability. One company that
is taking a step into sustainable fashion is H&M and their
“Conscious Products”. According to them, products that contain
at least 50% of sustainable materials qualify as “Conscious”
products. By introducing our product to H&M and collaborating

with them, we will be able to more easily enter into the market.
Patagonia is another brand that values the environment as
indicated by their “1% for the Planet” program, in which they
donate 1% of their annual revenue to the “preservation and
restoration of the natural environment” (1% for the Planet).
Again, by appealing our product to them, we may enter the
clothing market much more easily and effectively.
Summary
Plasticell, which will then be created into clothing under the
company “Hemlock Clothing” has a lot of potential as it is an
innovative product that no other has yet thought of. It has great
potential in garnering attention through its extensive
promotional and collaborative methods. Not only that, these
products are able to attract a whole range of people, which will
further contribute to its potential success. However, its pricing
may be an important factor in determining its success as there
are many other competitors who produce clothing much cheaper
than ours would be. Other threats such as the decrease in timber
supply and competitors threaten our position in the market.
Despite this, the increase in the interest of sustainable fashion
and the wide range of our target market may allow the success
of Plasticell and Hemlock Clothing.
References
1% for the Planet. (2020, February 22). Retrieved from
https://www.patagonia.com/one-percent-for-the-planet.html
Benson, S. (2020, February 15). The Myth Of Sustainable
Fashion. Huffington Post. Retrieved from
https://www.huffingtonpost.ca/entry/sustainable-fashion-
climate-change_n_5e3984eac5b66c4
eafda7d35?ri18n=true
Butler, S. (2018, December 29). Is fast fashion giving way to

the sustainable wardrobe? Retrieved
from
https://www.theguardian.com/business/2018/dec/29/fast-
fashion-giving-way-sustainable-ward
robe
Conscious products explained. (2020, February 22). Retrieved
from
https://www2.hm.com/en_ca/customer-service/product-and-
quality/conscious-concept.html
Easman, E. S., Abernethy, K. E., & Godley, B. J. (2018).
Assessing public awareness of marine
environmental threats and conservation efforts. Marine Policy,
87, 234-240.
doi:10.1016/j.marpol.2017.10.030
Environment - environmental protection; findings from wuhan
university in the area of environmental
protection reported (how much are the public willing to pay for
the environmental protection:
Evidence from chinese general social survey data). (2019).
Ecology, Environment &
Conservation
Environmental Stewardship Initiative. (2019). British Columbia.
Retrieved from
https://www2.gov.bc.ca/gov/content/environment/natural-
resource-stewardship/consulting-wit
h-first-nations/environmental-stewardship-initiative
Eriksen, M., Lebreton, L. C. M., Carson, H. S., Thiel, M.,
Moore, C. J., Borerro, J. C., Reisser, J.
(2014). Plastic pollution in the world's oceans: More than 5
trillion plastic pieces weighing
over 250,000 tons afloat at sea. PloS One, 9(12), e111913.

doi:10.1371/journal.pone.0111913
Forest Practices Board. (2010). Measuring Wood Waste in
British Columbia. Retrieved February 23,
2020, from
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Measuring-Wood-Waste-in-BC.p
df
Hernandez, Jon. (2016, June 28). Province-wide slash burning
sparks controversy. CBC News,
Retrieved from,
https://www.cbc.ca/news/canada/british-columbia/province-
wide-slash-burning-sparks-contro
versy-1.3652496
Majumdar, A., Das, A., Alagirusamy, R., Kothari, V. K.,
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Institute (Manchester, E., . . . Elsevier All Access Books.
(2013;2012;). Process control in
textile manufacturing (1st ed.). Oxford;Philadelphia;:
Woodhead Publishing Limited in
association with the Textile Institute.
McFall-Johnsen, M. (2019, October 21). The fashion industry
emits more carbon than international
flights and maritime shipping combined. Here are the biggest
ways it impacts the planet.
Business Insider. Retrieved from
https://www.businessinsider.com/fast-fashion-environmental-
impact-pollution-emissions-wast
e-water-2019-10
Nicholls, D., British Columbia. Ministry of Forests, Lands,
Natural Resource Operations and Rural
Development, & British Columbia Government EBook

Collection. (2019). Tree farm licence
52 held by west fraser mills ltd: Rationale for allowable annual
cut (AAC) determination,
effective june 17, 2019. Victoria, B.C.: Ministry of Forests,
Lands, Natural Resource
Operations and Rural Development.
Romei, V., & Reed, J. (2019). The Asian century is set to begin.
Retrieved February 23, 2020, from
https://www.ft.com/content/520cb6f6-2958-11e9-a5ab-
ff8ef2b976c7
The Evolution of the Sustainability Mindset. (2018, September
11). Retrieved from
https://www.nielsen.com/us/en/insights/report/2018/the-
education-of-the-sustainable-mindset/
Yao, F. (2004). Study on the manufacturing process of straw-
wood fiber composite material [D].
Nanjing Forestry University.
9. The British Columbia forest products manufacturing industry
is broken down into primary (commodities like lumber and
pulp); secondary (e.g. engineered products); and tertiary
(further value-added wood products like cabinetry, flooring and
other millwork). Given the supply and demand shocks for wood
supply discussed in this class, what directions would you
recommend for the industry in the coming one-two decades?
Include in your answer what you consider Canada’s
competitive advantage to be in serving wood product markets
(300-400 words).
(30 points)

10. Thinking back to your Group’s product / service idea, do
you feel that it was “innovative" (as defined in this class)? If
yes, why; if no, what could you have done to make the idea
more innovative? (300-400 words). (30 points)

WOOD 365Gaston January 2020 1January 2020 1Value.docx

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