Lumber Drops... Again
Montana’s Wood Products Industry Continues to Decline
By Robert Struckman, 11-28-07
Whatever happens with logging on Montana’s forests and why, one thing is clear: Montana’s traditional wood products industry continues its slow stumble toward oblivion.
The latest news? The slumping U.S. housing industry this year has dampened demand – and prices – for manufactured wood products such as 2-by-4s and other building materials, said Todd Morgan, the new director of forestry research at the University of Montana’s Bureau of Business and Economic Research. Morgan bases his analysis on visits to mills across the West as well as on surveys, discussions with mill owners, federal data and other sources.
With raw timber already priced high and hard to come by, Morgan said, Montana mills are getting squeezed. They’re cutting back on production, and several mills have closed in the past few years, including the big former Stimson Lumber plywood plant in Bonner near Missoula. Expect more closures if business conditions don’t improve, he said.
Check out these numbers: in the third quarter of 2007, Montana mills produced 187 million board feet of lumber, a precipitous drop compared to the 232 million board feet in 2006 and 252 million in 2005, Morgan said.
Morgan said one main culprit is the shortage of wood from federal timber lands. As much as seven times the present amount of logging could be done – and would remain sustainable, he said.
The trend toward a warmer globe will play into the picture, too, he said. Warm weather and rain rather than snow will increase the length of Montana’s growing season. Wood that grows faster can be harvested more often, he said.
“Really, until the management of the National Forests increases, nothing’s going to change,” Morgan said.
Morgan also said efforts (often supported by federal grants or other public money) to develop alternative uses for small-diameter logs and other innovative products have not yet grown enough to make a sizeable impact on the state’s manufacturing sector.
One specialty developed decades ago remains the biggest niche in the state’s wood products industry. That’s the 30-year-old log cabin manufacturers, and their market prominence has waned over the past five years from a peak of $100 million in annual revenues to $85 million last year. Log home manufacturers in Colorado and Utah have emerged as tough competitors, and new manufacturers are popping up on the West Coast, Morgan said.
One new niche product worth mentioning is landscaping material, such as compost from mulch and other wood residue and decorative Ponderosa bark, he said.
As new uses are found for otherwise undesirable bits and pieces of wood, and markets develop, Montana’s industry may take a new direction, but don’t expect any big news soon, he suggested.
“It’s still a very small scale, when you think of the millions of acres of forests in Montana,” Morgan said.
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A summary of the report is also below:
The number of larger, permanent softwood lumber mills in the United States and Canada has shrunk from 1,311 in 1995 to 990 as of June 2007, according to economists at the USDA Forest Service Forest Products Laboratory (FPL).
In a report issued this week, economists Henry Spelter, David McKeever, and Matthew Alderman also report that economic prospects for the industry are clouded by overcapacity caused by a cyclical downturn in housing.
This report is part of an ongoing effort to present periodic snapshots of the evolving softwood sawmill industry, which is highly diverse with a multitude of publicly traded and privately held companies, says Spelter.
The report contains information on the location, ownership and approximate capacities of the 990 softwood sawmills currently existing in the United States and Canada. The authors also review major end markets for lumber and changes in usage trends along with data on the amounts and uses of chips, shavings, and sawdust generated as byproducts in the course of sawing lumber.
Economic issues affecting softwood sawmills are also addressed in the report, including the 2007 housing recession, the 2006 Softwood Lumber Agreement affecting the terms under which lumber is imported from Canada into the United States, and the ongoing mountain pine beetle epidemic in British Columbia that threatens to cut timber supplies over the next 5 to 10 years.
The report notes that the mountain pine epidemic in British Columbia has the potential to shrink North American lumber supply by 4 percent within 10 years, a development that is likely to benefit the economics of the timber industry in the U.S. South.
The U.S. Forest Service Forest Products Laboratory was established in 1910 in Madison, Wis., with the mission to conserve and extend the countrys wood resources. Today, FPLs research scientists work with academic and industrial researchers and other government agencies in exploring ways to promote healthy forests and clean water and improve papermaking and recycling processes. Through FPLs Advanced Housing Research Center, researchers also work to improve homebuilding technologies and materials.
A summary of the report is also below:
The number of larger, permanent softwood lumber mills in the United States and Canada has shrunk from 1,311 in 1995 to 990 as of June 2007, according to economists at the USDA Forest Service Forest Products Laboratory (FPL).
In a report issued this week, economists Henry Spelter, David McKeever, and Matthew Alderman also report that economic prospects for the industry are clouded by overcapacity caused by a cyclical downturn in housing.
This report is part of an ongoing effort to present periodic snapshots of the evolving softwood sawmill industry, which is highly diverse with a multitude of publicly traded and privately held companies, says Spelter.
The report contains information on the location, ownership and approximate capacities of the 990 softwood sawmills currently existing in the United States and Canada. The authors also review major end markets for lumber and changes in usage trends along with data on the amounts and uses of chips, shavings, and sawdust generated as byproducts in the course of sawing lumber.
Economic issues affecting softwood sawmills are also addressed in the report, including the 2007 housing recession, the 2006 Softwood Lumber Agreement affecting the terms under which lumber is imported from Canada into the United States, and the ongoing mountain pine beetle epidemic in British Columbia that threatens to cut timber supplies over the next 5 to 10 years.
The report notes that the mountain pine epidemic in British Columbia has the potential to shrink North American lumber supply by 4 percent within 10 years, a development that is likely to benefit the economics of the timber industry in the U.S. South.
The U.S. Forest Service Forest Products Laboratory was established in 1910 in Madison, Wis., with the mission to conserve and extend the countrys wood resources. Today, FPLs research scientists work with academic and industrial researchers and other government agencies in exploring ways to promote healthy forests and clean water and improve papermaking and recycling processes. Through FPLs Advanced Housing Research Center, researchers also work to improve homebuilding technologies and materials.
More hard times coming for B.C. sawmills: expert
Vancouver Sun, Tuesday, November 20, 2007
VANCOUVER - B.C. lumber companies can look forward to another 18 months of curtailments and shutdowns before the U.S. housing slump is over, a leading wood products researcher forecast today.
Russ Taylor, president of International Wood Products Group Inc., said the U.S. housing slump is now impacting the entire world and all major lumber markets are heading into over-supply.
The housing market is unlikely to recover until 2009, making it a three-year-long slump. And with no relief in sight on the demand side, the alternative is to close mills, particularly in the B.C. Interior, Taylor said in an interview.
High-speed Interior mills, feeding on a diet of low-cost beetle-killed logs, have been among the last to cut back in North America. Prices are below operating costs but marginally higher than the cost of shutting down.
Taylor said to date it is the smaller operators in the Interior who have been taking most of the hit. But with losses piling up - Canfor is now averaging losses of $40 million to $50 million a quarter - the major players are going to have to decide which mills survive and which ones go down.
"The bigger guys have been going hard but they now realize they just can't sell it. That's how weak the demand is right now.
"I think we are going to have not so much company casualties but we are going to have mill casualties."
He cited production figures to make his point. B.C. lumber production peaked in 2006 at 15.2 billon board feet but is forecast to drop to 13.7 billion board feet by 2008.
"You just can't have the same number of mills running, especially where you have the beetle and you want to put mills on three shifts.
"Big companies are going to have to decide which mills go first. It's going to be a very tough call. Community leaders are all very nervous because it could be their town."
Morgan says: "As much as seven times the present amount of logging could be done" and would remain sustainable.
This is the timber industry trying to convince people that "sustainable forest management" is simply cutting down a volume of trees every year that is equal to the annual growth rate of the forest.
Leave it to the timber industry to only look at cut and growth rate in their "sustainability" equation. For example, what about decades of damage from "unsustainable forest management" (largely 1960 to 1990) that still hasn't been address and is still out on the landscape? Does that figure into the timber industry's sustainability equation?
What about the 440,000 miles of roads on national forests? What about the $10 billion backlog of road work that's needed? What about the 85% of fish passage culverts in the Northern Rockies that are currently impassible to fish? What about the weeds? What about the soil conditions? What about wildfire species?
Clearly if you are looking at truly "sustainable forest management" you need to look at sustainability in the context of these complex forest ecosystems and way beyond just the growth, death and cut rate of trees.
The USFS Wood Products Lab correctly points out "that economic prospects for the industry are clouded by overcapacity caused by a cyclical downturn in housing." That's right, over-capacity (ie too many mills, too much lumber production) and an over-supply of lumber caused by a US housing slump (which has lessened demand).
But somehow Morgan can say, "one main culprit is the shortage of wood from federal timber lands." One of the main culprits of what? We have over-capacity and low lumber prices caused by too much lumber on the market and Morgan wants us to believe that one of the main culprits of this over-capacity and low lumber prices is not cutting enough trees from national forests? That makes zero sense.
Morgan then goes on to say: "Really, until the management of the National Forests increases, nothing's going to change."
Really? We need to dump more cheap, taxpayer subsidized timber on the market by increasing logging of our national forests and that's going to address the over-capacity, over-supply issue? Even though the Forest Service is currently having a hard time getting any bidders on many timber sales right now, despite the bargain basement low prices? This is just crazy talk.
If people seriously want to help the logging industry they should want to get all the facts out there, figure out the truth of the situation and then build a business plan or strategy around that, right? At least that's what I would do. And you can bet that behind closed doors that's exactly what the industry is doing, but they will gladly let their hand-picked economist and lobbyists' say whatever they want to try and increase their advantage.
Wed Nov 28, 9:21 AM
OTTAWA (Reuters) - Canfor Corp said on Wednesday that it will lay off about 300 employees "indefinitely" as it reduces shifts at four sawmills due to poor lumber markets and a high Canadian dollar.
Canfor said it will move to two shifts from three at its Rustad, Clear Lake, Polar and Mackenzie sawmills for an indefinite period. The change represents about 355 million board feet of annual lumber production.
Monday, November 26, 2007
By THE ASSOCIATED PRESS
PORTLAND -- Bush administration plans to boost logging in Northwest national forests have collided with low timber prices blamed on the housing slump.
The U.S. Forest Service is running short of money to draw up new timber sales.
Government and industry officials say lumber prices are as low as they have been for years, down by about half from the peak in 2004.
Thus the Forest Service earns far less for timber, meaning less money for future logging projects.
"We didn't know this was going to happen," said Peggy Kain of the Forest Services regional office in Portland. "The market hasn't been this bad in a very long time."
Some mills are cutting back production. "It's probably as bad as its ever been, maybe worse," said Kevin Binam, of the Western Wood Products Association.
Without more federal funds, forest experts say, national forest logging will drop off again hampering efforts to thin crowded and flammable timber.
The Forest Service counted on some logging revenues, plus federal money to pay for the accelerated logging. The cash pays for plotting timber sales, environmental reviews and other preparatory work.
But the Forest Service didn't anticipate the drop in timber prices. Some Forest Service timber sales have gone without bids.
Reduced home construction, which consumes about 40 percent of Northwest lumber, depressed demand and prices. It's unlikely to get much better before 2009, Binam said.
The entire article can be downloaded here:
http://seattlepi.nwsource.com/local/341124_logging26.html
Story Published: Nov 14, 2007
By Tom Adams
http://www.kval.com
Dropping lumber prices, the credit crunch and the continued housing slump, are putting the hurt on Oregon's wood products industry.
Another round of layoffs are affecting workers in Lane County and parts of Southern Oregon.
200 more mill jobs are being whittled from the payrolls of three companies. Officials all point to the slumping housing market as the chief reason.
President and Publisher Jon Anderson of the Random Lengths publication says, "What we're seeing is an adjustment in the supply and that means mills are making less lumber, making less plywood, making less oriented strand board and to make less, guess what you do; you reduce your workforce."
By Nathan VanderKlippe, Financial Post
Tuesday, November 06, 2007
VANCOUVER -- British Columbia's lumber producers are flooding the U.S. market with cheap lumber and mowing down forestry companies in the rest of Canada, an Atlantic Canada sawmill president said yesterday as an East Coast versus West Coast yelling match broke out in the forests.
"Our conditions are such that we've already responded by dropping our production in Atlantic Canada. But B.C. continues to maintain production, which drops the price overall for everybody, so we get damaged," said Gordon Shupe, president and chief executive of Nova Scotia's MacTara Ltd., which runs a pellet operation and Nova Scotia's largest sawmill.
Last week, MacTara filed for bankruptcy protection after Nova Scotia Power, alleging $440,000 in unpaid power bills, obtained a court order allowing it to seize the company's assets. Mr. Shupe admits part of the reason for MacTara's woes is the high-flying loonie, which has bled money from forestry companies across Canada, but he lays a good deal of the blame for poor lumber prices -- which many say are mostly attributable to the meltdown of U.S. housing -- at the feet of B.C. sawmillers.
"We in the East can only do so much to balance the whole supply and demand equation. We don't have enough production. The balancing has to happen in B.C.," he said.
And if the West continues the way it has, there won't be much forest work left anywhere else, he charged.
"At the end of the day, you'll have a strong forest products sector left in the interior of B.C. and the rest of Canada will be annihilated," he said.
Rest of the article at: http://www.financialpost.com
Fri Nov 2, 2007
VANCOUVER, British Columbia, Nov 2 (Reuters) - Canfor Corp sees North American lumber industry woes as a chance to buy assets even as it cuts back production at its own sawmills, its chief executive said on Friday.
Pope & Talbot Inc, which filed for creditor protection this week, will likely not be the last lumber producer to fall victim to the slumping U.S. housing market, CEO James Shepard told analysts.
"Certainly there are going to be opportunities not just in Canada, but also in the United States. We will be looking at them carefully," said Shepard, adding that Canfor has been "very pleased" by its expansion into the U.S. Southeast.
Canfor purchased U.S.-based New South Companies Inc in 2006 in its first major expansion outside of Canada. In September it agreed to buy Chesterfield Lumber Co in South Carolina. Most of Canfor's Canadian mills are in British Columbia.
"I don't think it will be last man standing, but it will be last men standing, and we will definitely be one of them," Shepard said of the troubles facing Canadian forest-products companies.
Canfor is North America's third-largest producer of softwood lumber such as pine, spruce and fir, which is used largely for home construction.
Canfor announced on Thursday it plans to idle more mills in the fourth quarter to reduce production by 250 million board feet, and Shepard said there will likely be more curtailments next year to preserve cash.
"If the (lumber) market continues to ratchet down, we will continue to ratchet down. We will be market responsive. Full stop."
Shepard said Canfor has been able to make its mills more efficient, but the company does not expect to see a rebound in the U.S. home construction market for the "foreseeable future."
Canadian lumber mills have been hit by weak prices, the stronger Canadian dollar and the tax placed on lumber exports to the United States under the U.S.-Canada softwood lumber agreement.
You are obviously trying to distance your zest for litigating USFS timber sales from any blame assigned to the troubles of Montana's forest products industry and the associated negative economic impact the industry's trouble has on Montana citizens.
Your implication that the troubles of Montana's sawmills are simply part of a larger trend doesn't fly. The fact is that many of the mills in Montana possess the technology and resources to withstand the lumber market's down cycles. Their real problem, as Morgan correctly points out, is the shortage of federal timber.
Roy
Why are the mills in Canada closing? Seriously Roy, why? From all the research that I've been able to do, in Canada they have low stumpage fees, lower environmental standards and have greatly expanded public lands logging on their much more vast and productive forests. And as bad as the situation for the US logging industry is, the situation appears to be much worst in Canada in terms of layoffs, closures, etc. Nobody seems to blame environmentalists for mill closures in Canada. You know what they blame in Canada for the mill closures and layoff? Mill over-capacity, over-supply of lumber products, a dramatic US housing slump (ie weaker demand), lowest lumber prices in 35 years, high gas/energy prices, unfair trade practices and the $$/Loonie exchange rate. You think these factors are having any impact on the US logging industry too? What I take from your comments is to ignore these strong economic forces and just focus on increasing logging from our national forests. How more logging helps solve over-capacity, over-supply issues as well as overcomes 35 year low lumber prices, high fuel costs and a big US housing slump is a mystery to me.
Somehow I have to go along with Matt. There's a lot going on here. My chief culprit is always bad trade deals and crazy casino capitalism gone amok with no regulation. Basic Friedman flim flam. Read Naomi Klelin's "The Shock Doctrine" for a real hair raiser. Then read the new book on the CIA called "Legacy of Ashes". Then tell me that we aren't in a heap of trouble.
Hunkering down for a bit will be forced on us.
What I am saying is that you are trying to shift the blame for Montana's troubled industry from your crippling litigation to the current economic tough times.
Roy
If you want to ignore or discount all of this simply because you think the handful of lawsuits we have filed against the Forest Service is the primary reason Montana mills are struggling, then so be it. If the facts, statistics and analysis from trusted industry experts don't sway you, then certainly nothing I say will.
I'd still like to know why the mills in Canada are closing down and laying off workers.
Can you please explain who "hand-picked" me and exactly for what I was picked? You have not contacted me to discuss my credentials, research experience, publication record, or other qualifications.
I find it interesting that you quoted the entire Forest Products Lab press release, but from your comments, I get the distinct impression you did not read the actual press release I wrote, relying instead on Struckman's paraphrasing and interpretation of the release and a 20+ minute telephone interview.
A little background research would have turned up several peer reviewed articles and publications coauthored by me about the forest products industry in the western U.S., including Montana, Idaho, Wyoming, Oregon, California, Arizona, Colorado, New Mexico, and Utah. These pieces are in the Journal of Forestry, Forest Products Journal, and several US Forest Service publications.
You should also be aware that neither I nor anyone on my research staff receives any money from the forest products industry. We do, however, communicate with mills throughout the West on a regular basis (much like the other sources you quote) in order collect data about timber harvest, wood products production, employment, sales, mill residues, log prices, capacity, log sizes, and a variety of other items. And, yes, we read press releases and publications from the Forest Products Lab, Western Wood Products Association, Random Lengths, and many other sources.
I can appreciate that you feel strongly about your cause and that you disagreed with some of the content of Struckman's article, but your insinuation that I am a spokesperson for the forest products industry is just not accurate.
Todd
Montana's Forest Production, Employment Continue Decline
Wednesday, November 28, 2007 8:05 AM
Nov. 27, 2007
Contact: Todd Morgan, director of forest industry research, UM Bureau of Business and Economic Research, 406-243-5113.
MONTANA’S FOREST PRODUCTION,
EMPLOYMENT CONTINUE DECLINE
MISSOULA—
Ongoing weakness in the U.S. housing industry and related low wood product prices continued to impact production and employment in Montana’s wood products industry during the third quarter of 2007, reports a University of Montana researcher.
Todd Morgan, director of forest industry research at UM’s Bureau of Business and Economic Research, said this will be the second year with significant declines in Montana’s industry resulting from national housing issues.
The third quarter of 2007 was especially rough for Montana wood product facilities, with the July closure of the Stimson plywood facility in Bonner and curtailments at other mills because of weak markets and log shortages related to summer fires.
Lumber production from Montana mills in the third quarter of 2007 was 187 million board feet, down from 232 million board feet in the third quarter of 2006 and 252 million in the third quarter of 2005.
Production workers averaged 3,115 in the third quarter of 2007, down from 3,527 during the same period in 2006 and from 3,677 in 2005. Production wages were $30.4 million in the third quarter of 2007, down $2.3 million from the third quarter of 2006 and $3.0 million from 2005.
U.S. housing starts peaked in 2005, Morgan said. Through the third quarter of 2007, housing starts were down by about a third from that peak and are at their lowest levels in the past 10 years. Lumber prices have declined by nearly 30 percent from October 2005 to October 2007.
The effects of the slowing U.S. housing market and corresponding reductions in wood products usage and prices are being felt at mills from British Columbia to the southeast United States. Morgan said weak markets, mill curtailments and closures can be expected throughout the remainder of 2007 and well into 2008.
Wage, employment and production figures refer only to Montana production workers at timber processing plants and facilities processing wood fiber residue from timber processing facilities. Production workers account for 30 to 40 percent of the workers in Montana’s forest products industry. Estimates do not include the several thousand workers in logging, trucking and other related jobs.
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JE/cbs
Local, state papers
112707bber
Declining timber availability is and has been an issue for timber processors in the West. Several of the peer-reviewed publications I have coauthored note a decline in the timber-processing capacity in the western U.S. This capacity decline, most prominent in AZ, CO, NM, and UT, but also occurring in MT, ID, and WY parallels the decline in national forest timber harvest in those states AND continued during periods of quite high wood products prices and demand (i.e., mills were shutting down in MT and other western states when the housing/building boom was going strong). A lack of available timber contributed to that decline in capacity.
The current decline in housing has been going on for about two years and is expected to last into 2008. It has definitely affected the industry. But when the housing market eventually turns around and demand and prices for wood products go up again, the ability of mills to find timber to meet that demand will almost certainly become a key issue again.
Harvest levels on national forests in Montana and other western states are at their lowest since the end of World War II. There is a supply of wood on national forest land, and it can be harvested in ecologically, economically, and socially sustainable ways. A sustainable supply of timber is one of the multiple uses that national forests were originally intended for and is still allowed.
Cutting trees in one of the key ways to manage forest vegetation, not just for timber but for wildlife, recreation, water, fire, insect and disease protection, and to create and maintain desirable forest conditions. Timber harvesting does not necessarily diminish wildlife habitat, old growth, water quality, or other values; in many cases it can enhance, protect, or help develop those traits or values. There are many good reasons to manage our national forests with tree-cutting as a part of that management--protection and enhancement of various other forest values, community and economic stability, reducing the impact of American consumer demand on unregulated forests in other parts of the world, carbon sequestration, less reliance on non-renewable energy sources, etc. Only cutting trees at the edge of the forests around homes will not benefit these other values or provide for the these other uses to the same degree that managing the majority of the forest will.
I enjoyed the peeing match between the eastern and western Canucks. No surprise there. Still, BC needs to log its beetle kill within a certain time frame or lose all present value, despite the marginal cost thing. Part of something is always better than absolutely nothing...at least the trees will still be there for the eastern Canuck mills when the market improves, as it will.
As for our trees here in Montana, I'm having my doubts, Matt, and I'm with Roy when it comes to your constant deflection of the issue.
Wheedle about global commodity markets all you want, but the fact remains that market conditions were just wonderful the past few years. A huge opportunity to salvage fire wood as well as harvesting/treating marginal plots fell by the wayside in large part because AWR/TECI/NEC/SWC/FOB/SIERRA/Earthinjustice what-have-you have, over the years, litigated and browbeat the USFS into complete passivity. The agency is a kicked puppy that lacks the guts to try anything significant because any attempt to do real work will get wrecked in Molloy's court or Reinhardt's Ninth Circus.
I'll concede the incompetence of the Bush administration, especially in its choices for USDA and USFS leadership, are equally a factor. But the disastrous state of our forest industry, and our forest environment, has many causes. Litigation is a top-tier factor in this disaster, and no amount of transference can ever change that.
And let's just say that the Forest Service followed the law and best science when planning these huge-post fire sales following the 2000 and 2003 fires seasons in Montana, so there would then be no need to hold the federal government accountable through a lawsuit. And, of course, let's assume that we don't need to worry about things such as cumulative impacts to soils or watersheds or wildlife.
But let's assume that all that timber was cut on national forests following the 2000 and 2003 fires. OK, then what? I fail to see how completing huge post-fire salvage logging projects in roadless areas and within old-growth and critical wildlife habitat back during the period of 2001 to 2005 would have helped the timber industry get over the current situation it faces, which - once again - is that mills in the US and Canada are shutting down and laying off workers because of over-capacity within the milling infrastructure, over-supply of lumber products and low demand caused by a dramatic US housing slump, the lowest commodity (lumber) prices in 35 years and the high fuel prices.
Washington DC - The U.S. Forest Service is giving loggers more time to recover from a downturn in the housing market that is impacting their business. Today, Congressman Jim Oberstars office announced that the Forest Service will be adding an additional year to the time loggers have to pay off contracts to harvest timber on public lands.
Many of these contracts were drawn up when the housing market was booming and demand was high, said Oberstar. Since the housing market has slowed down, many of these trees have gone uncut. This extension will keep many loggers from suffering big losses or even facing bankruptcy.
Since September 2004, the softwood lumber market has dropped 36.4 percent.
November 27, 2007
LONGVIEW, Wash. (AP) - Forest-products companies that piled on debt to become conglomerates are selling assets as fast as they can, signaling an end to the so-called "integrated" era and leaving investors wondering what to bet on next.
Read more at:
http://biz.yahoo.com/ap/071127/forest_product_firms.html?.v=1
November 13, 2007
Read entire story from the Arkansas Democrat Gazette at:
http://www.nwanews.com/adg/News/207546/
For those who don't know Arkansas ranks third in lumber production - both softwood and hardwood - behind Oregon and Washington.
SNIPS:
As sales of new and previously owned homes continue to plunge and turmoil persists in the subprime mortgage market, perhaps no single industry has been more directly affected than sawmills.
“The market crashed in May or June of 2006, and it became obvious that things were not going to turn around quickly,” said David Cawein, vice president and general manager of Green Bay Packaging Inc. ’s Pinecrest Lumber Division.
Henry Spelter, a forest economist at the U. S. Forest Service’s Forest Products Laboratory in Madison, Wis., agrees. “The overhang of unsold homes is just too much,” Spelter said. “There’s about a 10-month supply of new and existing homes. We need to get down to about five or five-and-a-half months’ worth of supply before you can really start seeing a major uptick.”
With the decline in lumber demand, many Southern pine lumber prices have been driven below 1981 and 1991 levels on an inflation-adjusted basis, said Tim Cochran, an associate editor with Random Lengths Publications Inc. in Eugene, Ore.
Best,
Bob Struckman
Thanks for your postings illustrating differing opinions from various sources. Struckman's article based on Mr. Morgan's opinion as the only source is irresponsible journalism. I thought New West had higher standards.
Please do not let Dave and Roy's uneducated opinions reflect poorly on the rest of our state's population. Many of us do in fact understand Economics 101. Unfortunately, the wood products industry has a larger budget to make a louder whine.
Dave and Roy - take a minute to think about supply and demand before continuing to sound like idiots. If mills were closing because they couldn't find enough wood to keep up with demand, then yes, perhaps they should cut more on our national forests. But the opposite is true. Even Plum Creek's revenue is drastically declining and we all know they cut as much as they want around here.
I did, in fact, read your press release and I didn't have any issues with the stats and figures contained within it. My issue was with some of the statements attributed to you in the article above (For example, "As much as seven times the present amount of logging could be done – and would remain sustainable, he said" and "Really, until the management of the National Forests increases, nothing’s going to change."). I've attempted to offer my perspective and reaction to those statements as well posting articles and studies to help inform New West readers about the depth and complexity of issues facing the wood products industry in the US and Canada.
I did, in fact, read your press release and I didn't have any issues with the stats and figures contained within it. My issue was with some of the statements attributed to you in the article above (For example, "As much as seven times the present amount of logging could be done - and would remain sustainable, he said" and "Really, until the management of the National Forests increases, nothing's going to change."). I've attempted to offer my perspective and reaction to those statements as well posting articles and studies to help inform New West readers about the depth and complexity of issues facing the wood products industry in the US and Canada.
As I stated in my first post - most mills in Montana can withstand the current economic conditions. They can cut back shifts, they can temporarily shut down, they can implement low-cost/no-cost process improvements aimed at lowering costs, some may even have the capital to invest in new, more efficient processing technology that would allow them to fully capture the profits of a better market, or they can try to develop new markets - the low value of the dollar encourages exports. All these things could be done in an effort to survive the current conditions. What the mills absolutely cannot survive is an artifical (thanks to your litigation) log shortage.
By the way, Owens and Hurst shut down at a time when the lumber market was much stronger than it is now. The reason they cited for shutting down was a shortage of logs from the National Forests surrounding Eureka, MT.
In the late 90's, with metals at decade lows and environmentalism increasing, there was a lot of whining from exploration companies. Well-run, nimble and ethical mineral exploration companies survived and continue to do business in montana today. I learned through those experiences that it's the mismanaged companies that try to shift the blame from the economy to the environmentalists.
Unfortunately for some of our small towns in Montana today suffering from mill closures, the same is true. It all comes down to profit margins - instead of having the foresight to upgrade, modernize, invest in new capital (as you suggested) when the times were GOOD (ie they had the cash flow), they now waste their time and energy blaming the lack of accessibility to subsidized trees on our national forests. Such a fairy tale when we're on the precipice of experiencing the greatest housing downturn since the great depression and lumber is at historic lows!
They will continue to tell you tales (such as the shortage of logs), but only you have the power over whether or not you believe them. I wouldn't blame environmentalists, i wouldn't blame timber prices, nor the housing market - i would only suggest that we look at the managment and the mills that survive the next 10 years and reflect on which ones had the foresight to prepare and invest for the inevitable downturn.
By The Canadian Press
OTTAWA - Canada's paper products industry will be in the red again this year, recording about $400 million in losses as a result of the surging loonie and falling demand, the Conference Board of Canada says.
That would mark the third straight year of losses in the $11-billion pulp and paper industry, which has been in a deep funk for most of the decade.
Read more at:
http://ca.news.yahoo.com/s/capress/071129/business/paper_products_losses_1
Good response, although I'm surprised you'd respond at all to the anti-timber propagandists. I was surprised to learn you were hand picked by the timber industry. Oh wait, you weren't. And neither was Chuck.
I've been listening and reading this stuff for (too many) years, and I still can't figure out the logic behind the sweeping resistance at almost any scale. Why is he so adamantly opposed to renewable resources?
Keep on keeping the record clear from misinformation and distortions of the truth.
Matt Koehler,
You're cutting the throat of your cause. Much in the same way the resistance to the timber policies of the 60's, 70's, and 80's was inevitable, so will be the backlash resistance to your exclusionary cause. Eventually.
Sorry to have included you in my comment about litigation.
Regarding the rest of your post, I was with you until you suggested that the industry is telling tales. I disagree. The mills that have survived to this point are the ones that are well managed. It's a simple, undeniable fact though, that they can't continue running their sawmills without an adequate log supply. About 3/4's of the forestland in MT is under Federal control. So aside from Plum Creek (and to a much lesser extent Stoltze and Stimson) who own timberlands, the USFS timber sale program is the only game in town for most of MT's sawmills. I don't know current numbers but in early 2006 over 500 MMBF of timber in Region 1 of the USFS was tied up in appeals and/or litigation. Thus, my point has been and remains - the number 1 limiting factor for MT's forest industry is the sorry state of the USFS timber sale program.
The reason for my initial post was to expose Matthew, who through the Native Forest Network and the Wildwest Institute has spent years monkeywrenching the USFS timber sale program. He siezed on this article as a way to shift blame away from his activities. Perhaps he's desperate as he senses support for his misguided cause waning?
the USFS could be the largest supplier, but to be fair, they are NOT the only game in town as you state. Plum Creek is also a supplier and we can not just eliminate them because they own less acreage. So let's take a look at their harvest volumes, eh? I'll try to gather historical data over a larger time frame, as that would be interesting to compare (anyone?) but in the mean time, I'd like to table a direct quote from Plum Creek's 10Q SEC filing from Sept 30 07 :
"Northern Resources Segment. Revenues decreased by $20 million, or 19%, to $86 million in the third quarter of 2007. This decrease
was due primarily to lower harvest volumes ($15 million) and lower sawlog prices ($5 million)... Sawlog prices were 4% lower in the
third quarter of 2007 compared to the third quarter of 2006 due primarily to mill curtailments as a result of weak lumber prices caused by the significant decline in housing starts."
Economics 101: housing construction declines; the demand for finished products is lower; the mills must reduce the selling price of those finished products to move inventory; in order to maintain profitablility in their margins, they must reduce their costs, including their raw materials (ie the purchase of the saw logs); Log sellers/land owners (e.g. Plum Creek) reduce their harvests and wait for a better price (their product grows over time, increasing in value, so why harvest at low prices?); milling volumes decrease, and if they hadn't invested in efficiency or prepared saving their pennies for a rainy day - mills shut down.
Lesson 2 - if there was indeed a limit of saw log supply, the first impact would be higher saw log prices; higher saw log prices would result in higher private harvest numbers (e.g. Plum Creek would harvest more timber!)
Please, oh please, explain to me why Plum Creek isn't harvesting more if there is the limited log supply that you speak of?
Remember, all I attempted to do here is share with New West readers a sizeable body of information concerning the fact that mills in the US and Canada are shutting down and laying off workers because of over-capacity within the milling infrastructure, over-supply of lumber products and low demand caused by a dramatic US housing slump, the lowest commodity (lumber) prices in 35 years and the high fuel prices.
You can discount or ignore this information all you want, but it's not going to change these facts. Our organization could fold up tomorrow and never file another lawsuit to hold the Forest Service accountable and ensure better management of our public lands, but that's not going to change these facts either.
I fail to see how doing more logging on national forests is the solution that Dan, Roy and Todd claim it is, especially in the context of over-capacity, over-supply, historic low commodity prices, high fuel costs and a US housing slump. And especially given the fact that the timber industry isn't currently bidding on many national forest timber sales, even when they are offered at bargain basement prices. Just how low will the Forest Service (ie public taxpayers) have to go to give away the public national forest timber to the logging industry? And does that make for good public policy?
You have failed to expose me; Dan Loeffler does not work for the Forest Service Economic Research Work Unit because there is no Economic Research Work Unit. All RMRS RWU's were dissolved and re-organized almost one year ago. I suggest a little more research and remember, just because something is on the internet and the Google-bots show it as #1 or #2 does not mean it is the truth. Also Matt, where do I say anything close to "doing more logging on national forests is the solution..."? You've twice mis-represented Todd Morgan's language and now my own.
I am not a proponent of irresponsible logging, nor am I a proponent of ignoring the forest's non-market AND market benefits. You seem to isolate non-market aspects of forestland as the only component of its total value, which is incorrect.
Wanna take another stab at who I work for?
But it provides some pretty illuminating information, such as:
"At the same time, the Flathead National Forest offered up for sale 3.4 million board feet of timber, trees already cut and lying right there alongside a road.
Not one bid was submitted.
That you can get the people to rally but you can't get the mills to bid “proves that public-land timber management is more complicated than some people think,” said Denise Germann, a spokeswoman for the Flathead forest. “We offered the trees, and nobody came to the table. The mills just didn't want it.”"
Seems like this cut came from NF lands and didn't get stopped by litigation. I support a functioning, responsible timber industry that provides sustainable jobs to rural areas (more on that another time), but where were the mills on this one?
Thanks for the link. Perhaps Robert Struckman can read the article and learn how to properly reference opposing views on a complicated issue.
I'm looking forward to Dan, Roy, and Todd's answer to your question. Guys? Where were the mills?
If the logs really did go unsold at the roadside, then I'd want to know what size were the logs, what species, what quality, what other restrictions/conditions were put on their purchase, etc. Simply put, if the logs were a bunch of junk, then the well managed mills you were referring to in an earlier post Jeff - made the right decision.
Sure the current economic conditions encourage a contraction in the amount of timber harvested - on both public and private land. I suggested the same when I was talking about temporary shutdowns and cutting back shifts at mills. But the current market conditions are a short-term situation. In the long run, there simply has to be more timber harvested from MT's national forests if there is to be a globally competitive forest products industry in the state. As Morgan stated in the original article, forest inventory data shows that annual growth exceeds mortality and harvest by SEVEN times. Surely there is room for compromise between Koehler's extreme position and the current state of affairs.
Finally Jeff, consider these "economics 201" concepts - if there is no timber industry left in the state - what is timberland worth? Can landowners afford to pay for the cost of managing a forest when the trees have no value? If not, must they then leave the forest to "natural processes", i.e. eventual loss by insects, disease, wildfire, or all three? Who pays for the wildfire fighting costs? If you believe in global warming, then what about the environmental cost associated with all of the carbon that's released into the atmosphere during a big wildfire? Will the landowner's try to develop their property as real estate rather than leaving it as "worthless" timberland?
Tuesday, 04 December 2007, 03:00 PST
By GORDON HOEKSTRA, Prince George Citizen staff
http://www.princegeorgecitizen.com
A spate of recent forest sector closure announcements has pushed the job-loss tally from indefinite mill shutdowns and shift reductions in northern B.C. to more than 1,700 in the past year.
The figure doesn't include employment losses from temporary shutdowns and the impact on the logging and hauling sector, which would easily push the job impact north of Quesnel over the 2,000-job mark.
It's a signal that the province needs to come up with short-term and long-term strategies to help forest-based communities, says the NDP.
Both the NDP and forestry unions are calling for a summit to discuss the issue facing the forest sector and come up with a plan on how to move the industry away from relying on producing lumber for the U.S. market.
The Liberals, however, say the forest sector's fundamentals are good and it is well positioned to recover once the market turns around. Prince George North Liberal MLA Pat Bell says he believes the market will begin to turn around in 2008, instead of 2009, as most industry analysts have said.
"I think the big thing from my perspective is that before people kind of go into complete panic mode, is to remember our industry is very well positioned when the turnaround does come," said Bell. "We are the most competitive sector anywhere in North America as far as lumber recovery factors, as far as efficiency, fibre supply. So, as the market comes back on, we're going to be the first back into marketplace, not the last," he said.
NDP forestry critic Bob Simpson believes that anyone that thinks the market is going to turn around in 2008 is grasping at straws.
He says the fallout from the market downturn -- stretching into '09 -- will be caught up in the timber supply falldown from the mountain pine beetle epidemic, which means that some of the job losses could be permanent.
In the short term, the province, with the help of the federal government, should be looking at items like pension bridging and stabilizing forest contractors, perhaps by shifting them to forest health or fuel management work, said Simpson.
More work also needs to be done in involving communities in the potential to use wood waste for bioenergy, he said. (Bell also cited the bioenergy sector as an expansion opportunity).
But it's time also to start to try to understand what the forest sector is going to evolve to, particularly finding ways to diversify away from lumber production, said Simpson. That's an issue that could be discussed at a summit.
"This is no longer a decade-long time horizon, we need to make adjustments now," said Simpson.
Lumber producers are being hammered by a combination of factors: poor lumber prices, a high Canadian dollar which erodes the bottom line, and a 15-per-cent export tax on lumber shipments to the U.S.
Prices have tumbled as the U.S. housing sector has collapsed, dropping to a low of 1.2 million starts this year from a peak of more than two million in 2005.
Forest analyst Russ Taylor said he expects the lumber output slide to continue in 2008 before it picks up in '09. However, he expects some stabilization in prices in '08 if companies continue to cut back production.
Once a turnaround starts, Taylor said he believes Interior producers are in a good position to
take advantage of an upturn as they will continue to have access to salvage timber from the beetle epidemic. "That's our advantage," he said.
Central Interior Logging Association manager Rick Publicover said there's no doubt the slowdown in the lumber sector is impacting loggers and haulers.
Some loggers have lost significant amounts of timber volume this year already, and others are being shifted around which makes them less efficient, noted Publicover. However, the circumstances differ from area to area, and Canfor loggers in the Prince George area are being given more flexibility, viewed as a positive, he said.
The very competitive labour market is also creating problems for the logging sector as skilled workers can be attracted to areas where the work is more consistent, he said.
---
2007
Nov. 29 - AbitibiBowater announces indefinite closure of two sawmills and newsprint mill in Mackenzie -- 550 jobs.
Nov. 28 - Canfor announces third-shift cutbacks at Rustad Bros., Clear Lake, Polar and Mackenzie -- about 300 jobs. Earlier shift reductions at Houston and Vanderhoof cut about 80 jobs.
Nov. 5 --Pope & Talbot sawmill in Fort St. James supposed to restart after three-week shutdown, but doesn't. Caught up in bankruptcy proceedings. About 300 jobs.
Oct. 24 - West Fraser announced indefinite idling of Terrace sawmill -- 100 jobs.
August --Stuart Lake Lumber goes down in Fort St. James indefinitely -- about 85 jobs.
July 27 - Canfor announced reductions at Mackenzie sawmill -- 130 jobs.
Feb. 15 - Canfor's OSB mill in Fort Nelson announces cut back -- 20 jobs.
2006
Dec. 8 - Canfor plywood plant in Fort Nelson announces cut back -- 80 jobs.
Nov. - McBride Forest Industries goes down permanently -- about 60 jobs.
Nov. - Tolko knocks back third shift at Quesnel mill -- 34 jobs.
Good article. Interestingly though, their mills are shutting down and they're not whining about lack of lumber. Is it possible that we (Montana) are susceptible to the same economic factors?
I guess only the true economic forecasters (Dan Loeffler & Mr. Morgan) can make that call... so i'm sure glad that they say that the problem lies only in the lack of timber sales from the USFS. It certainly would be quite frightening if we weren't immune to the rest of the nation's economic woes! Open up those forests and lets get logging! we can sell the lumber to, uh, mexico!
Did you take note of what Russ Taylor cited as an advantage of interior producers? ACCESS TO LOGS!!!
Are you sure you're qualified to speak for all Americans?
I don't think so because I'm one that supports increased logging. And I don't mean "logging the beJesus outta our forests". I'm talking about harvesting enough timber to adequately supply the existing mills in Montana. I think that can be done in a responsible and sustainable manner, especially when you consider that current annual growth exceeds mortality and harvest by seven times.
Roy
Regarding the repeated comparison of Canada and MT - the strong Loonie means that US dollars have less lumber buying power. That is an important economic factor negatively affecting Canadian mills, but not MT mills. So the logic underlying your comparison is flawed. Try a new argument.
Canada is getting a one-two punch, and montana is getting hit hard by housing alone. I can't continue this debate if we can't address how more logging will help. You have yet to address why Plum Creek isn't logging more; why they're reducing their harvest "primarily to mill curtailments as a result of weak lumber prices caused by the significant decline in housing starts". REPEAT: the mills themselves are curtailing because of squeezing margins. If the USFS let more logging happen now, there would be a glut of finished products on the market. With declining demand, all mills would have to lower their prices in order to move the inventory - and in the end ALL of the montana mills would be hurt even more! If some are being shut down, at least the remaining have a fighting chance.
I was hopeful we had moved beyond that issue as you addressed "economics 201" in a previous post. So what does happen to the industry if logging comes to a screeching halt? Now THAT is a good question and a great topic for discussion; because, unfortunately, that will be something that our great state should be addressing NOW (as this housing recession will last much longer than most are estimating). The boom/bust cycle is, unfortunately, an economic consequence stemming from our Federal Reserve policies (they could change that but it's another story).
Being a geologist, here's an analogous story: in 1908 there were roughly 45 Brick factories in Montana. Each employed a quite a number of folk from mining of the clay to delivery of the bricks. I would even suggest that a higher PERCENTAGE of the Montanan population was employed in Brick factories than in the Timber industry today. By the 1980's the last of the Montanan brick factories closed down. What happened? technology, consolidation (aided by cheaper transportation), and competition from substituting materials. And only plants outside of montana evolved fast enough to survive.
So while we might be experience hardship from the housing downturn, it's my opinion that we are on the waning side of a much larger trend. The woods product industry is being impacted by technological improvements (this consolidates some mills and expands others); and substitution? of course! cement board siding, trex decking, etc.
Am i suggesting that we roll over and accept that the timber industry will go the way of past brick factories?! HELL NO! There will certainly be mills in the future, and I'd much rather have them here than in Utah (where one of the nearest brick factories is). We get lean, mean, and we fight! Beyond letting survival of the fittest run its course, there's any number of initiatives that we can implement; such as making tax incentives for operating mills to spend cap-ex and improve their technologies, etc. HOWEVER, giving subsidized logs from USFS will only encourage outdated mills die a slow and painful death. Would i prefer small local mills to remain? would i like to see the neat old brick factories in almost every town? Sure, I actually think we'll eventually have to head that way when transportation costs balloon, but i'm also realistic and the here & now won't allow it. Do you think government-run timber mills are a good idea?
Here's my take about the likely future, (all conjecture vs. the facts that i've listed describing today's environment): 1) The housing cluster F. continues sliding for 1-4 more years, before bottoming and another decade passes before construction returns to present levels. 2) Demand for finished products therefore shrinks; 3) mills reduce milling volumes; 4) those that can not sustain on thin margins and low volume close, making it at least bearable for those still remaining; 5) some may even be able to expand to take closing market share; 6) how US vs Canadian mills compete is based on the exchange rates and has more to do with politics than anything else - so it's a coin toss. However, it certainly looks like the Kanooks won't let us be the only ones to debase our currency, so look for a competitive race to the bottom - that will likely help all commodities, including timber at some future point; 7) when we exit from the housing recession those consolidated mills will emerge leaner and meaner; 8) they will employ less people (i'm not an advocate of that, but it's the unfortunate consequence of technology); 9) and we should hope that most of those plants are still in montana.
SO PEOPLE - LET's stop arguing about trying to cut more trees on the USFS (opening it up now would be the WORST possible thing to do for the industry). I know it hurts, but the bust part of a boom/bust economy always does. Let's help those mills that can and want to improve do so. Let's help those folks that loose their jobs retrain and re-educate so they can get another job. Let's argue about how we're going to stop Plum Creek from selling all it's timber land as "recreational real estate" in the mean time. But let's PLEASE stop with this silly argument about logging more on the USFS.
The Canadian Press
December 5, 2007
VANCOUVER - Canfor Corp., Canada's largest lumber producer, is closing another West Coast sawmill - this one in Chetwynd, B.C., affecting 188 employees. Vancouver-based Canfor says poor lumber markets and the impact of a high Canadian dollar are behind the closure. Just one week ago, Canfor gave the same reasons for laying off 300 workers at four sawmills in British Columbia for an indefinite period, starting on the last working day before the holiday break.
The Associated Press
Friday, December 28, 2007
The housing market plunged deeper last month, with sales of new homes plummeting to their lowest level in more than 12 years. The nationwide slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession. New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995.
"It was ugly," declared Richard Yamarone, economist at Argus Research. "It is the one sector of the economy that doesn't show any signs of life. It doesn't look like there is any resuscitation in store for housing over the next year," he said.
Turnaround unlikely until 2009 amid low lumber prices, stronger dollar
December 27, 2007
Toronto Star
VANCOUVER – It's hard to see how 2007 could have been tougher for Canadian lumber companies. A loonie near parity with the United States greenback, a tanking housing market south of the border, a new export tax, falling lumber prices, a pine beetle epidemic, the list goes on.
And the light at the end of the tunnel might turn out to be a train as many see further woes in 2008 and do not expect a turnaround in the pivotal industry until 2009.
"I don't think anyone is expecting it to turn around next year and that it will be a pretty tough year," said Ric Slaco, chief forester at International Forest Products Ltd., a big West Coast lumber producer.
"There will be further consolidation and further rationalization I think that will occur as a consequence of the downsizing to take further supply out of the system."
Hardly a day went by through the fall that a lumber company in all parts of Canada didn't announce a shutdown of some sort as companies rushed to reduce production.
Tens of thousands of forestry workers, in mill towns from B.C. to Newfoundland, lost their jobs as sawmills were shut down and paper machines were mothballed.
Rest of the story available at: http://www.thestar.com/Business/article/288787
- Jeff Weber, Stimson Vice President, in letter to mill workers.
Stimson shutting down for one month
By MICHAEL MOORE of the Missoulian
Jan 26, 2008
About 100 millworkers at Stimson Lumber Co.'s Bonner sawmill will be laid off beginning Feb. 4.
In a letter to employees, Stimson Vice President Jeff Webber said the closure, which will last at least a month, is a response to the nation's lagging housing market and dismal lumber prices.
Employees got the news at work on Friday, said Michael Woodworth, business manager of Lumber Production and Industrial Workers Local 3038.
"This is the beginning of the worst," Woodworth said. "They will reopen at some point because they'll have a log inventory they have to process, but we'll see for how long."
Stimson, like other lumber companies, is struggling to sell even the lumber it's been producing at curtailed capacities.
Stimson had already "indefinitely idled" 20 percent of its lumber-milling capacity, Webber wrote, and "lumber markets during the first quarter will likely be worse than what we've experienced so far. Lumber demand from our customers is predicted to be less than our production capacity.
You can read the entire article at:
http://www.missoulian.com/articles/2008/01/26/news/local/news02.txt
By Anthony Faiola
Washington Post Staff Writer
Friday, February 1, 2008
<http://www.washingtonpost.com/wp-dyn/content/article/2008/01/31/AR2008013103946.html?sid=ST2008013103949>
Lumber industry flat as a board because of housing slump
By MICHAEL JAMISON
KALISPELL - After five remarkably robust years for the nation's wood products industry, "we're now in the steepest two-year decline in lumber consumption ever."
So said Butch Barnhardt, director of information services at the Western Wood Products Association. Barnhardt and many others predict that "2008 is more than likely going to be a very tough year."
The problem, he said, is housing - because some 75 percent of all lumber goes to building or remodeling homes.
That explains why the past several years were so good to the lumber business, as real estate boomed and national lumber consumption hit an all-time high of 64.3 billion board feet in 2005.
But then came a credit crunch and a mortgage crisis, a devalued dollar and an economy not a few think may be teetering on recession. New housing starts crashed from 2 million in 2005 to fewer than 1.4 million in 2007.
"It's left us with way too much lumber on the market for the current demand," Barnhardt said. Board prices are down 30 percent or more, "in some cases, more, to near historic lows."
Read the rest of the story at Western Montana InBusiness Monthly at: http://www.mtinbusiness.com/inbiz-0801/bus04.php
Rest of the story at:
http://www.flatheadbeacon.com/articles/article/stoltze_lumber_new_manager_surveys_new_economy/2466/
JOEL MILLMAN
The Wall Street Journal
Ernie Johnson figured $100-a-barrel oil was bound to happen someday. But the 58-year-old businessman in Missoula, Mont., never thought he'd see sawdust at $100 a ton.
The price of sawdust has soared since 2006, up from about $25 a ton to more than $100 in some markets. Blame the housing slump: Fewer new homes mean fewer trees cut for use in construction, which leads to less sawdust and other wood waste, driving up the price.
Rest of the story online at:
http://www.tucsoncitizen.com/ss/nationworld/78504.php
10,000 forestry jobs gone in past year
By Gordon Hamilton, Vancouver Sun
Published: Saturday, March 01, 2008
Almost 10,000 British Columbia forest sector workers are out of jobs as sawmills respond to the collapse lumber demand in the U.S. by cutting production and sending people home.
Rest of the story at:
http://www.canada.com/vancouversun/news/business/story.html?id=8450a367-0e58-4e92-9901-0ee170c62b5a&k=28347
Entire story at:
http://www.missoulian.com/articles/2008/03/19/news/top/news01.txt
SNIP: "It is really just due to the effects of the housing market today and the reduction of lumber demand in North America. It has gone from 60 billion board feet two years ago to estimated 40 billion board feet this year." - Jeff Webber, Stimson Lumber Co VP
Plum Creek Feels Pain of Housing Woes
By Myers Reece
People just don’t need studs like they used to. On March 19 Stimson Lumber Co. announced the closing of two stud mills in Bonner and Coeur d’Alene as a response to nationwide struggles in the housing and lumber markets. A little up north in the Flathead, Plum Creek Timber Co., the giant of the timber industry, is running into similar difficulties.
Full story at:
http://www.flatheadbeacon.com/articles/article/plum_creek_feels_pain_of_housing_woes/2829/
By the Associated Press
April 13, 2008
SPOKANE - The drop in new home construction has timber industry experts predicting a staggering drop in U.S. demand for lumber.
Compared with record lumber consumption in 2005, this year’s demand is expected to drop by 19 billion board feet, industry leaders told several hundred logging contractors at the Intermountain Logging Conference here on Friday.
The sum is roughly equal to the annual output of sawmills in 12 Western states.
“We’ve never seen a decline like this in the history of the industry,” Butch Bernhardt, spokesman for the Western Wood Products Association in Portland, told The Spokesman-Review newspaper in a phone interview.
Rest of the story at:
http://www.missoulian.com/articles/2008/04/13/bnews/br34.txt
Lumber industry threatened by glut of unsold homes
Thursday October 23, 2008
By Timothy R. Brown, Associated Press Writer
JACKSON, Miss. (AP) -- The glut of homes in foreclosure, vacant, or stuck on the market has the nation's lumber industry hanging on by a limb.
Since housing starts hit their peak in mid-2005, demand for lumber used in floors, home frames, and cabinets has declined sharply, and experts say the number of unsold homes would need to significantly decrease before homebuilders commit to building new ones.
Glenn Hughes, a forestry expert with the Mississippi State University Extension Service, said many loggers are faced with difficult decisions. A global economic slowdown, tight credit, and the housing bust are hitting sawmills hard and shutting down logging companies.
"Boy, surviving this downturn. I have talked to a lot of people who have been in the business for many, many, years -- this is probably the roughest they have seen it," Hughes said.
The brutal economics of the housing crisis don't appear to be letting up, continuing to drag down demand for both hardwood lumber, for floors and cabinets, and softwood, used in home frames.
Even if home buyers miraculously returned to the market to purchase unsold homes, Al Schuler, a research economist with the USDA Forest Service, says it may be a little too late to lift up the lumber industry because the inventory of unsold homes is "a huge number."
"We are going to be building smaller houses. We are going to see lot more 2,000 square-foot homes rather than 5,000 square foot," he said.
http://www.theworldlink.com/articles/2008/10/25/news/doc49022a91e76cf893775265.txt
Timber industry falls on tough times
Friday, October 24, 2008
ASTORIA (AP) - A spokesman for Oregon forest owners and wood manufacturers says the economic meltdown is going to be harder on the state's timber industry than was the early 1980s recession that caused a major shakeout.
Ray Wilkeson, legislative director of the Oregon Industries Council, also said the situation caused by the nation's weak housing market will get worse before it gets better.
"The worst thing is we don't really know when we're coming out of it," he said. "There are more foreclosures predicted."
The crisis has brought home construction to a virtual standstill and decreased the demand for lumber.
"Until the housing market stabilizes and the oversupply of housing is absorbed, we'll see new construction stay pretty bleak," he said. "There's only limited demand for the product at a very reduced price."
"Nobody really wants the lumber right now," said Steve Zika, chief executive officer of Hampton Lumber. "Prices are at historic lows.
U.S. Financial Crisis Will Delay Recovery of Housing, Lumber Markets until 2010
SOURCE: Western Wood Products Association
PORTLAND, Ore., Oct 21, 2008 (BUSINESS WIRE) -- The historic downturn in lumber demand will likely extend another year until the American financial system and housing market can be repaired, according to a new lumber supply and demand forecast from Western Wood Products Association.
According to the lumber trade association, lumber demand is expected to drop 15 percent to 44.3 billion board feet this year, then fall another 3 percent to 43 billion board feet in 2009. In just three years, demand for lumber has plummeted by some 20 billion board feet -- more than what Western mills [in twelve western states] produced in all of 2005.
Housing starts are forecast to reach just 993,000 in 2008 and decline again to 933,000 next year. Since new housing typically accounts for more than 40 percent of annual lumber demand, the more than 50 percent decline in starts from 2005 has been a body blow to lumber mills.
The volume of lumber used in new home construction is expected to total 11.8 billion board feet in 2008 -- less than half of the 23.3 billion board feet used just two years earlier.
The WWPA forecast calls for housing markets and lumber demand to grow in 2010, but cautions that any recovery will be slow.
Entire article at:
http://www.marketwatch.com/news/story/us-financial-crisis-delay-recovery/story.aspx?guid={323BF266-93C2-489B-81BF-295FFCFA16D0}&dist=hppr
Almost 600 Potlatch Corp. employees, including 220 in Lewiston, are temporarily being laid off as five of the company's seven wood products mills take down time because of sluggish housing starts.
"The wood products market is at a 25-year low now and the amount of orders from our customers is not improving, so we unfortunately have no choice but to balance our product (inventory) with demand," said Matt Van Vleet, Potlatch's Lewiston spokesman.
- Shawn Church, editor of lumber trade magazine Random Lengths.
Loggers, haulers hit hard by slump
By MICHAEL JAMISON of the Missoulian (1/13/09)
Read the entire story at:
http://www.missoulian.com/articles/2009/01/13/news/local/news04.txt