Hardwood Matters - National Hardwood Lumber Association

EXECUTIVE DIRECTOR'SMESSAGEA PEEK AT THE TEENSDespite having been around this industry for more than 35 years, I am not too old toremember my teenage years. The time when we all had the excitement of not knowingexactly what was ahead, but we’re sure that whatever it was, we could handle. Those were theyears of wild adventures and bold actions that were high risk and occasionally high reward.So here we are back in the “teen decade,” the 2010–2019 years, and how should thebeloved hardwood industry look upon these years ahead? Like a teenager, we can look uponthese years with anticipation and wonderment, with hopes of high success. But as clearthinking businessmen, a review of the realities might help us actually succeed. So here is mytake on reality of the teen years which lie ahead.Supply & Demand: Good news, supply has dropped to the point where demand cannotbe met for the short term and hardwood lumber is becoming more valuable. Bad news,without increased end-user demand, the empty pipeline will be filled in short order. Withthe ultimate consumer price for our products not increasing anytime soon, the economicformula is not in place for a sustained recovery just yet.Housing: Despite the risk of repeating myself from past columns, I will re-emphasizethe importance of housing to our industry. Simply put, without new homes, there is nogrowth in the current markets for hardwood lumber. Flooring, cabinets, moldings and tosome extent furniture are in strongest demand when they are put into new houses. The teenyears will eventually be inviting for new homebuilding once all the pain from the currentrecession is past, but the harsh reality is it could take years yet.Energy: I recently read where loggers are finding a nice profit in sending their timber towood fired boilers and some are just cutting it up and selling it for firewood. With newfederal legislation and the proposed regulatory action as a result of the global warming scare,demand for wood supplied energy will only increase. We may see forests cleared to makeway for ethanol production. Competition for logs is going to get tough.Environmentalism: Still there, but mostly forgotten by an industry where environmentalactivism was considered one of our biggest threats. Since the industry is now cutting 50percent less hardwood forest today than we did at the start of the last decade, we haven’tnoticed just how much more of the timber base has been eroded by environmental actions.Case in point, do you know how much timber is cut from the National Forests? Most likelyyou don’t know and don’t care. The answer is not much.Exports: Considered the panacea for the highly competitive domestic market, exportsrepresent a growing percentage of production, but no longer with the higher returns. Theworld market is, in a word, competitive. Many countries subsidize their export operationsand rely on a continued raw material market to exist, which will severely limit ouropportunities to increase profit margins.In review, there may be risks and the rewards may be hard to find but after 2009, thisindustry is now made up of tough survivors who will likely prosper through the teenThere are markets yetdiscovered... and thosemarkets will make theyears ahead the best theindustry has seen.years. There are markets yet discovered, I amconfident of that, and those markets will makethe years ahead the best the industry has seen.Sincerely,Mark Barford, CAE, Executive DirectorNational Hardwood Lumber Associationwww.nhla.comWWW.NHLA.COM JANUARY/FEBRUARY 2010 HARDWOOD MATTERS 5