Wood extracted from trees needs to be processed in some manner to make it useful as a building material, and a large industry in North America is devoted to the manufacture of wood products. Lumber is sawn into desired shapes and sizes, dried in kilns to achieve dimensional stability and then planed to the desired dimensions and surface finish. Plywood and composite panels are manufactured by peeling, slicing, or chipping wood to create a raw material, pressing and gluing these raw materials into panels, engineered wood shapes, and other wood products, and setting the glue with the application of heat. Particleboard and fiberboard panels can also be made from sawdust, planer shavings, and board trim from lumber operations.

In the modern era, wood products manufacturing utilizes sophisticated, efficient and highly automated processes to ensure that the best features of a given wood resource are used to best advantage to create the optimal product with minimal wastage. Residuals from the manufacturing process, such as bark, sawdust, planer shavings, sander dust, and trim are either returned to the process, used as fuel to dry wood or produce steam, or are made into other products such as landscaping mulch or animal bedding.