2024 FORECASTS Continued
2024 FORECASTS Continued Ray White Harold White Lumber, Inc. Morehead, KY I wouldn’t call 2023 a successful year by any means, it was a pretty dismal year. This fourth quarter, however, has shaped up to be a very strong quarter. I am seeing every indication that I will be back in the black. I believe that there are many reasons for this, but I think that the simplest answer is that there is a lumber shortage that is taking place. The lumber market has been at a historical low especially with the production of Red Oak, Hard and Soft Maple, and other species being cut for industrial products, while simultaneously seeing historically high production costs. From my understanding, North American Hardwood production has now hit a 63-year low! Attrition rates are very high and will continue. I sell to domestic end users and distribution yards, and I export. I am probably still about 60 percent export and 40 percent domestic. The European Union is primarily facing better markets. They have started switching over to Red Oak since White Oak is so scarce and it’s jumping in price. The EU has figured out how to stain Red Oak to where it is a very close look to White Oak. I have as many orders for Red Oak as I do White Oak that are going into Europe right now. I have started exporting finger joints. Up until this year I have only shipped our finger joint production to the domestic market but now, I am shipping mixed containers with Hardwoods and finger joints. With interest rates being at an all-time high and it being difficult to get existing parts, the only upgrades I made were for support equipment. We did install a fully optimized scanning system from Corley’s Lewis Controls for our sawmill, which was at a substantial cost. Anthony Hammond Roy Anderson Lumber Company, Inc. Tompkinsville, KY 2023 sales have been steady. Challenges for profitable pricing has existed, but ability to move lumber is present. For 2024, export markets need to improve to help move products that don’t historically move domestically. We sell to flooring manufacturers, cabinet manufacturers, millwork/moulding manufacturers and distribution We are having a very hard time keeping employees. We have started working with the community prison to employ non-violent felons to subsidize our workforce, and if it was not for them, I would not be in operation. We are paying them the same amount of money that I would pay anybody else to work for me and while they are on work release their guidelines and their rules are extremely stringent. If it wasn’t for this program, I wouldn’t be running at 100 percent, and even with it I am still always short, depending on how many people are eligible for work release. While we own our own fleet of trucks, the burden of regulations as far as trucking goes domestically has always been a problem, and with the exports we must deal with the longshoreman and the railroad labor strikes. The logistics of exporting is always difficult at best, but I have to say it has gotten better over the last 12 months. When it comes to tariffs, I’m not sure what the federal government will do with a presidential year coming up. I am also not sure what the Asian countries are going to do, but the EU regulations that are on the table pose a very significant threat to exporters and all lumber producers in the U.S.A. No mill will be exempt from the overwhelming data collection necessary to sell and buy wood productions. So far in our dealings and negotiations as far as the American Hardwood Export Council (AHEC) and the USDA with the EU, they are not listening or understanding that the problem with the illegal harvesting and deforestation is not happening in the U.S. or Canada. Overall, I am worried for our industry. Everything is changing quickly, and I am not sure what the future holds. We are a resilient industry; however who could have ever predicated the major challenges facing us all! b yards. Our strongest sellers have been White Oak, Ash and Thick Red Oak. Job inquiries have been steady, but finding qualified employees needed to support growth has proven challenging. Transportation has improved substantially over the course of 2023. At present, we do not have concerns regarding tariffs. We suspect global economic concerns will outweigh desires for tariffs to be renewed.b 36 DECEMBER 2023 n NATIONAL HARDWOOD MAGAZINE RealAmericanHardwood.com/industry Bucky Pescaglia MO PAC Lumber Co. Fayette, MO 2023 turned out better than what we expected at the beginning of the year. The year started off very slowly, but shipments picked up in the middle of the first quarter and remained fairly steady up until the time of this writing. 75 percent of our customers are distributors, while the other 25 percent are end users. While Walnut represents 95 percent of our production, all items across our product mix moved well in 2023. The demand and pricing for Soft Maple suffered throughout most of the year. We have had problems over the past year retaining enough employees. In order to combat this, we have a unique work week with nine-hour workdays, Monday through Thursday, and then just four hours on Friday. This allows our employees to get in their 40 hours but have a 2-1/2-day weekend. It has proven popular for the applicants we interview. We also try to do as much cross training as possible to avoid mental and physical fatigue. We have noticed that container availability continues to be a problem for us shipping out of the Kansas City area. Brian Gibson Cole Hardwood, Inc. Logansport, IN International and domestic business landscape proved to be exceptionally challenging. Following the post- COVID boom, the abrupt fluctuations in prices, particularly the soaring costs of lumber and the rapid decline in overall pricing, placed us in a precarious position. The consistent rise in manufacturing expenses further compounded our challenges, making profitability elusive throughout the year. Export markets witnessed a significant decrease in demand during the latter half of 2023, and regrettably, I do not foresee a substantial shift in this trend in the initial months of 2024. Adapting to these market dynamics requires strategic planning and a resilient approach as we continue to face the complexities of the global economic landscape. RealAmericanHardwood.com/industry There are less containers coming into this area so the demand for empty containers can be intense. It makes it difficult to promise a delivery date when you are not guaranteed a container when you go to pick one up from the depot. Schedule changes have also created logistic nightmares. Exports represent over 60 percent of our sales in both dollars and footage. The whole topic of tariffs is unsettling with the experiences we had during the most recent trade war with China, but I am not as concerned with tariffs as I am with the new EUDR regulations that have the potential to cripple the U.S. Hardwood industry. This regulation has passed so we need to be ready to find a way to comply with it or risk losing a huge percentage of our market. We all hope that common sense will prevail with limiting these requirements, but we have to have a plan in case it doesn’t. Although compliance with these new regulations seems impossible, we can’t simply ignore it. The European Union has much more support for climate change policies than we have in the U.S. Keep in mind, those same regulations will cover wood components that are being brought into Europe from other countries, so it won’t just affect European lumber sales. This could be much worse than any tariff we have ever experienced. b Cole Hardwood operates as a Hardwood lumber concentration yard, catering to a diverse clientele of manufacturers and distributors. The standout performers in our product lineup this year have been the FAS/1F White Oak and various thicknesses and grades of Hickory. Notably, our proprietary rustic grades for Hickory and White Oak have experienced exceptional success, serving as a distinctive avenue to set apart our product offerings in the market. Cole Hardwood has recently integrated advanced scanners, implemented in collaboration with Aiken Controls, to assess thickness on both the green chains and all kiln-dried lumber machines. This technological enhancement has empowered Cole Hardwood to identify miscuts effectively, contributing to a significant enhancement in the quality of our kiln-dried Hardwood lumber. b Please turn the page DECEMBER 2023 n NATIONAL HARDWOOD MAGAZINE 37
