Is the lumber industry in the US a dying one?
I am working on a feasibility study for a lumber mill in the southwestern US where the raw timber is actually imported from others states such as Colorado, for example. This facility will process the raw timber into construction grade lumber to be kiln-dried and then sold to the wholesale market.
First, what are thoughts on a lumber mill located not directly by its source? We have added costs from transportation of the logs over 100 miles which could impact pricing.
Second, what are thoughts on environmental impacts. I am thinking of writing in there a plan to reforest the cut areas by providing replacement saplings, for example.
Lastly, what is your take on this industry? Is this a dying market or is it poised for growth with the construction trade picking up?
I see the potential in this plan, but I think more insight from those familiar might aid me more than my research has. The location was chosen to add employment to the region, but I am just trying to wrap my head around the logistics side.
Last question first: The lumber industry is not dying, and won't be as long as there is construction and rebuilding. It will come from either domestic sources or be imported.
Why locate in the Southwest? (And where: the Southwest is a big place.) Some particular advantage or resource?
It's expensive to haul logs, but it's also expensive to haul lumber. Is there an advantage to hauling logs instead of lumber?
There must be surplus lumber mills in the Northwest, either because they have logged out their areas, or because the government has declared their forests off limits to logging. How could this provide an advantage to you in the Southwest?
Lumber mills take special skills. More lumbermen in Oregon than in Arizona. Where will the skilled people come from?
Is there a source of timber in the Southwest, e..g, the mountains of northern Arizona, that is not being exploited? For example, a specialty lumber, such as hardwood or bamboo?
Lumbering is labor intensive, capital intensive, low margin. Where will your capital come from?
You want to add employment to the region, but the best way to do that is via a business that is natural to the region, not a force fit.
Dear Christopher Fernandes,
Please acknowledge this answer which is taken by myself directly from Wikipedia Encyclopedia sub-titled: Twenty-First Century on today's date January 31st, 2014 but last modified on 8 January 2014 at 02:01. Please note that this information as enclosed does not at all disclose or express any of my personal thoughts on the situation, or does not apply to any research done on my part, it is simply a given link liaison to help on your study. Hope this helps. Here is the link for your reference needed: http://en.wikipedia.org/wiki/History_of_the_lumber_industry_in_the_United_States
As mentioned, this page was last modified on 8 January 2014 at 02:01.
Wikipedia - Twenty-First Century:
Presently there is a healthy lumber economy in the United States, directly employing about 500,000 people in three industries: Logging, Sawmill, and Panel. Today, more than ever, many more workers rely on the industry for employment. Annual production in the U.S. is more than 30 billion board feet making the U.S. the largest producer and consumer of lumber. Despite advances in technology and safety awareness, the lumber industry remains one of the most hazardous industries in the world.
Challenges in today’s market persist. Due to federal and provincial subsidies issued in Canada, Canadian lumber firms in several ways have successfully wrestled jobs and market share from the United States.
Regardless, the United States remains the largest exporter of wood in the world. Its primary markets are Japan, Mexico, Germany, and the United Kingdom. Due to higher labor costs in the United States, it is common practice for raw materials to be exported, converted into finished goods and imported back into the United States. For this reason, more raw goods including logs and pulpwood chip are exported than imported in the United States, while finished goods like lumber, plywood and veneer, and panel products have higher imports than exports in the U.S.
Recently there has been a resurgence in logging towns in the United States. This has been due in large part to the housing recovery.
Ms. Dale M. LeBlanc
No Lumber Industry is not dieing however more conservative efforts must be practiced such re-forestation to control depletion in certain and areas and at times localized consumption might not be able to keep up with demand so a regional system might be needed based on supply/demand www.us.fsc.org and the Forrest Stewardship Council- U.S. Or Canada is a good organization to consider in producing green lumber that is controlled removal/replaced certified products! Please rate my comment http://tack.bz/JnWs and also visit our website: www.targetmartone.com
I grew up in Oregon, one of the largest lumber commmunities in the nation. And over the last few years unfortunately several lumber companies are no longer in business. However, I have seen many trucks carrying lumber all over. And Oregon has been replanting saplings for years. I suggest you contact Oregon State University's Forest Department--they are the leaders in Forestry.
Good luck with the feasibility study, from my 17 years in the timber and lumber industries I know that there are many factors to take into consideration, not least of which are the three area of concern you noted in your concerns.
Firstly, the proximity of the mill in relation to the raw material source is crutial as far as cost per square foot of lumber is concerned for obvious reasons (i.e. the further the wood has to travel the more expensive it becomes). The price achieved for the final product will determine whether the additional cost is warranted or not. An alternative could be to do some preliminary breakdown of the logs before transport, avoiding the transportation of waste or marginal timber.
Secondly, there are very good guidelines supplied by the FSA (Forestry Stewardship Councill) on the regeneration of raw material and sustainable forestry practices. I will strongly recommend replanting, even if it is only for the "green" footprint, but you should consider that the cost of replanting will be high and the maintenance of newly afforested areas are high (i.e. weeding, pruning, etc), so you must take that into consideration.
Lastly, I cannot comment specifically on the US timber industry, but consider whom the US producer must compete against, i.e. South America (Brasil), Indonesia, etc. whom all have much lower cost of production and may be able to land the sawn lumber cheaper that can be produced in the US. What is crutial here is the market, its size and the prices that can be achieved for sawn lumber.
Hope the comments above help.
Replenishing the environment is a must.
Adding value 100 miles from the source will impact prices for sure, that is the reason why the first transformation rtage at the site.
Regarding the industry, construction is picking up, rising the lumber demand. Canada is the main raw materials source, American producers have an opportunity, even when labor is more expensive. The US is slowly changing from being a raw materials producer to a high-tech source all over the world, the more value added given to local raw materials, better will be the competitive advantages in the domestic markets.
See my comment to Kim's answer for my experience. I have never worked directly with a mill, but it was my feeling that if their was a stable part of that industry, it was the mill. Investors come and go. Logging companies come and go. The one constant is that the timber needs to be milled. No one is buying retail trees. To get top dollar you need to be selling a retail product and that means making the trees into something that can be marked up to an end consumer, whether that is home builders, remodelers, or truly retail outlets like Home Depot, Lowes, or Menard's.
John makes a good point as well. If ancillary industries that rely on milled lumber are doing well...a rising tide raises all boats. I was reminded of this when I read Corning's latest earnings. One of their biggest accounts is Apple for their Gorilla Glass product used in iPhone/iPad screens. When iPhone sales sagged, so did Corning's.
It's interesting you ask this because I did a project on a failing lumber company in college. From what I learned about it, it's extremely competitive and a lot of companies don't survive both due to a saturated market with big players and the inherent seasonality of the lumber industry.
The transportation aspect of it will be incredibly costly. The environmental impact is always a problem in the lumber industry, and so being able to angle your company as sustainable or eco-friendly in any sort of way is always helpful (although you will need to make room for it in your budget). Keep in mind that there are already a lot of environmental regulations in place to begin with, and most lumber companies are already looking for "green" angles because it is incredibly trendy.
I guess the point I'm trying to make is that its not necessarily dying; however, its INCREDIBLY competitive and difficult to break into. A lot of lumber companies struggle to ever break even. Keep that in mind before jumping in!
I can not talk educatedly about the whole industry but I can tell you, from my work with cabinet manufacturers, there is growing need for plywood. Across the country these manufacturers are paying 5 - 10% more than last year for plywood.
I do not know about raw lumber but it can not be a bad thing for the industry as a whole that construction was up. Where I am at is was new home builds were up 18% over 2013.