Mercer InternationalMERCER moves into mass timber

In an interesting strategic move into the mass wood market, B.C.-based Mercer International has purchased the bankrupt Katerra Mass Timber Plant in neighbouring Washington State—which uses Canadian SPF lumber as feedstock.

By Tony Kryzanowski

In a move into the mass wood market, Vancouver, B.C.-based, Mercer International last year acquired the bankrupt Katerra Inc mass timber plant located in Washington State’s Spokane Valley, also reviving and rescuing a significant consumer of Canadian SPF lumber.

Relaunched as Mercer Mass Timber, this huge state-of-the-art plant represents one-third of all mass timber production capacity in the entire U.S. It houses America’s largest mass timber press and one of the largest in the world.

Mercer International is a global producer of market pulp and dimensional lumber. In 2018, the company acquired the massive Daishowa-Marubeni International (DMI) pulp mill in Peace River, Alberta, and operates Cariboo Pulp & Paper and Mercer Celgar in British Columbia. They also operate a number of pulp mills in Germany, as well as one of the largest sawmills in Europe in the German community of Thuringia. They plan to integrate a second sawmill with their German Mercer Stendal pulp plant.

Mercer International was founded in 1968 by University of B.C. chemical engineering grad, Jimmy S.H. Lee, who serves as Chairman of the Board. The company has a long and storied history and was involved in a variety of business sectors before settling into forest products in Germany in the 1990’s, and later B.C. and Alberta.

Mercer InternationalPanels made at the former Katerra, now Mercer Mass Timber, plant (above). The Mercer Mass Timber plant can produce panels measuring up to 12’ X 60’ on the largest press in North America.

The Spokane mass timber plant’s former owner, Katerra Inc, announced in June 2021 that it was laying off staff, shutting down operations and filing for bankruptcy, claiming that it had fallen victim to the consequences of the COVID-19 pandemic. Two months later on August 3, Mercer International announced that it had purchased the mass timber plant for $50 million (U.S.). The original construction price for the plant in 2017 was $150 million (U.S.).

“We feel that we got a good deal,” says David Gandossi, who was Mercer International CEO until earlier this year, and recently retired from the company. He oversaw the acquisition. “It was a good opportunistic situation for us. We think that mass timber is going to be a very rapidly growing building solution. There are more projects in the design phase today than have been built in the past five to seven years alone. Our feeling is that it is really taking off. It’s a good space to be in with good growth potential.”

Gandossi has been succeeded as CEO by Juan Carlos Bueno, whose past positions have included Executive Vice President for Finnish forest company, Stora Enso.

The huge 277,000 square foot Katerra plant, situated on 54 acres, has the capability to produce 13 million square feet of five-ply panels annually on a five-day production schedule. The press is designed to produce a maximum of 12’ X 60’ long panels in three-ply, five-ply, and seven-ply thicknesses.

The entire production process is fully automated including the use of artificial intelligence so that once the panels are manufactured, the plant can even cut out door and window holes to match the building design. At full production capacity, just over 100 employees are required. The plant is not geared toward commodity production but it is driven by specific order fulfillment.

“It will take a bit of time to build the pipeline but we understand that,” Gandossi says, adding that the operation also has the ability to market long-length 2 X 6 fingerjointed lumber, produced with Western Pneumatics equipment, at a good profit margin to generate immediate cash flow.

Mercer InternationalMass timbers, also known as Cross-Laminated Timbers (CLT), are engineered wood products used primarily in multi-family residential, commercial and industrial building construction as a structural biological alternative to concrete and steel. It is produced using multiple layers of dimensional lumber and adhesive, with each layer laid up with its grain running perpendicular to the layer adjacent, and pressed under heat to create large, high-strength panels. At the time of the plant’s launch in 2017, Katerra announced that they’d be using primarily Canadian SPF lumber as their feedstock.

Mass timbers have been manufactured in Europe for the past 30 years but only arrived in North America about 10 years ago as a new use for dimensional lumber, to challenge the dominant use of concrete and steel in taller, multi-family residential and commercial construction. It has even gotten approval for use in tall building construction.

Gandossi says once they discovered that the Katerra mass timber plant was available, they went to work immediately to make a bid, anticipating that they would be one of several bidders for the plant. The company was already well-advanced in its own plans to enter the mass timber market. Although their roots were in pulp and solid wood production in Canada and Germany, they recognized growing demand and considerable potential for mass timbers in North America.

They were only interested in purchasing Katerra’s plant in the Spokane Valley. The company’s huge, 577,000 square foot cabinet and panel factory in California was eventually purchased by Volumetric Building Companies.

After making their bid, Mercer was surprised to learn that there wasn’t going to be any type of auction for Katerra’s mass timber asset and that their offer had been accepted. The sale progressed very quickly from that point.

Gandossi says that they were familiar with the Katerra operation because they had been studying it as part of their own research.

“We hadn’t figured out what our entry point should be and when we read about the bankruptcy, we reached out right away to the bankers to say we’d be very interested in the CLT facility in Spokane if it was going to be sold separately,” he says. “We understood what that facility was and sure enough, they were planning a quick sale.”

Mercer has re-hired the former general manager, Jason Herman, who oversaw the construction, commissioning and operation of the mass timber plant.

Gandossi says that Mercer International is approaching their operation of the plant much differently than the integrated model used by Katerra Inc. Their approach was not only to provide the mass timber panels but to also supply the related installation hardware as well as installation services right down to the plumbing and electrical. It presented many challenges.

In its final months of operation, Katerra’s main issue became cash flow in the midst of disruption caused by the COVID-19 pandemic. A U.S. Securities and Exchange Commission investigation launched in 2020 regarding their accounting and reporting practices also didn’t help, making it more difficult to secure additional capital support. At the time of its bankruptcy announcement, the company owed $73 million (U.S.) to its contractors.

Gandossi says that Mercer’s approach is focused solely on supplying building materials and technical support.

“We will be providing products to general contractors as specified by their architects and engineers,” says Gandossi. “So we are working with those kinds of organizations to be a provider of the products that they specify and we will support them.”

While they have not operated a mass timber production plant in North America or Europe previously, Mercer has staff in their European sawmill operations with considerable mass timber experience.

Gandossi concludes that the CLT market is evolving. The initial focus was on use in large, custom-designed, architecturally-attractive buildings. While that market will continue to exist, he views mass timber moving more toward standardized building materials for residential low-cost housing and warehouses, almost as catalogue products. Mercer anticipates producing a broad range of products—using Canadian lumber—to serve both these needs.

Production process at Mercer’s CLT plant

As described in a previous story on the Katerra plant in Logging and Sawmilling Journal, the production process at the now Mercer-owned plant is fairly straightforward.

The raw material first passes through a sorting line purchased from USNR in Woodland, Washington. The moisture sensors supplied by Finna Group from Denver, Colorado, determine which material is dry enough for processing. If the wood is dry enough, it is sent through the CLT production line. If not, it goes into a USNR kiln. The CLT line has three planers, all manufactured by Gilbert in Roberval, Quebec.

From the CLT press, the product then travels to one of three CNC machines. Two of the CNC machines were purchased from Uniteam (Biesse), of Thiene, Italy. The third came from Germany’s Hundegger AG.

After the CNC work is complete, the material travels on to the sander, which the plant sourced from Costa in Archdale, North Carolina. From the sander, it continues on to a crane purchased from Galifco Oregon, out of Eugene. The crane offloads the finished CLT panels and prepares it for Quality Assurance/Quality Control certification.

Logging and Sawmilling Journal

September/October 2022

On the Cover:
Adam Williams, owner of A.R. Williams Logging, of Englehart, Ontario, has been learning the ropes on some new, but also familiar, logging equipment, from John Deere, harvesting wood in northeastern Ontario, near the Timmins area. Over the past year, Williams has been demo’ing a John Deere 953MH Tracked Harvester with a Waratah 623C harvester head—and which features John Deere’s latest operator assistance control feature, Intelligent Boom Control (IBC), which the company has introduced for its 900 MH-Series Tracked Harvester. Read all about how IBC is working well for Williams beginning on page 22 of this issue. (Cover photo courtesy of John Deere).

Mercer moves into mass timber
In an interesting strategic move into the mass wood market, B.C.-based Mercer International has purchased the bankrupt Katerra Mass Timber Plant in neighbouring Washington State—which uses Canadian SPF lumber as feedstock.

On a Mission to build a new sawmill
The new $160 million (U.S.) Mission Forest Products sawmill in Mississippi draws on a wide variety of suppliers for equipment, including a number of Canadian companies.

Forest management: from planning to planting…
Silvacom’s comprehensive Forest Management System software seamlessly covers operations, from planning right through to planting.

Deere’s new Intelligent Boom Control (IBC)-equipped tracked harvester at work in Ontario
Contractor Adam Williams is having solid success working with the new IBC-equipped harvester, working in northern Ontario forests.

PAL Lumber is all fired up…
Ontario’s PAL Lumber is one busy operation these days, producing firewood for everyone from cottagers to large commercial customers, with the solid support of a tough Bells 4000 firewood processor.

Included in this edition of The Edge, Canada’s leading publication on research in the forest industry, are stories from the Canadian Wood Fibre Centre (CWFC) and FPInnovations.

The Last Word
B.C.’s Forest Practices Board is keeping tabs on spruce bark beetle harvesting, notes Jim Stirling.


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