Louisiana-Pacific (LP) has you surrounded. The building materials company specializes in manufacturing products for floors, walls, and roofs. LP produces oriented strand board (OSB), siding products, and engineered wood products. It also makes decorative molding and cellulose insulation. Products are used in new home and manufactured housing construction and for repair and remodeling. The company sells its products to distributors, dealers, professional lumberyards, and retail home centers, including The Home Depot. It has production facilities throughout North and South America. After a difficult period during the recession and housing crisis, LP is poised to capitalize on the uptick in housing starts.
LP is headquartered in Nashville, Tennessee and operates about 20 production facilities in the US and Canada. LP also owns two facilities in Chile, and one in Brazil.
LP operates four business segments. The largest, oriented strand board (OSB), makes and distributes OSB panels and accounts for 40% of sales. Siding products and related accessories represents about a third of total sales, while engineered wood products (laminated veneer lumber) accounts for about 15%. The company's South America business which manufactures and distributes OSB and siding products in South America and certain export markets, account for the remainder. Other products include decorative moulding and a joint venture that makes cellulose insulation.
Sales and Marketing
LP's sales and marketing efforts are focused on traditional two-step distribution, professional building products dealers, home centers, third-party wholesale buying groups, and other retailers. The company's wholesale distribution channel includes a variety of specialized and broadline wholesale distributors and dealers focused primarily on supplying products used by professional builders and contractors. LP also supplies large retail chains and smaller independent retailers. The company's top 10 customers accounted for nearly half of its total sales in 2011. The Home Depot and Taiga Building Products are major customers.
LP is dusting itself off after enduring the tough market conditions that plagued operations during the economic downturn. Declining new home construction created low demand for LP's products from 2008 through 2010 and sales suffered and profits suffered. The company moved to cut costs, refinance debt, and improve operations. In order to reduce costs and adjust to lower demand for its products LP shut down plants in Alabama, Georgia, Maine, North Carolina, Tennessee, Texas, and other locations in the US and Canada. Production was curtailed at other plants.
Housing starts are slowly improving but demand is still not at prerecession rates. In light of the challenges, the company remains focused on cash management, while at the same time preparing for the future.
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