National Hardwood Magazine - June 2015

2015

2015 MARKET ACTIVITY Continued mills, ours included, did not run out of logs like last year. So production overran existing demand creating the price and supply problems we are currently experiencing. Overall I am optimistic that lumber this year and next will remain steady especially with new emerging export markets, such as Vietnam, Malaysia, India, and now the Middle East. I also find it refreshing to see our domestic market expanding and new product lines opening up. I am encouraged that housing starts will get a boost domestically as we move into prime construction season. We have seen disposable income improve due to the lower fuel costs. This translates into consumers purchasing home wood products that were put off previously. There have certainly been major logistical issues in freight, mainly because of the West Coast ports’ debacle. We had many containers that were rolled, rerouted or no provider equipment available. Fortunately this situation has been resolved with the new union contracts. It will still take several weeks to get freight and containers moving more efficiently as ports come back to full capacity. Fortunately we have our own corporate fleet of trucks for domestic deliveries making just in time orders. Many mills are having problems in getting timely commercial haulers to pick up freight. There is an apparent shortage of truck drivers and other issues that have impacted not only our industry, but also many others. This will no doubt be a lingering problem for the remainder of this year. Enduring the six-year recession has been taxing to say the least. We, along with many colleagues in the industry, struggled to maintain without upgrading equipment and rolling stock, all while slowly wearing existing equipment out. Now that we have seen 18 months of decent sales, many mills are now upgrading older equipment. Unfortunately, what we are finding is that inventories of new production equipment are not readily available and we are seeing lengthy delivery times of replacement equipment. Our company is making purchases of new handling equipment and upgrades, etc. We have ordered a new cut/rip line to improve our production and efficiency in our millworks division. We are preparing to make major upgrades of our sawmill and dry kiln operations. Our focus, like others, is to reduce labor by more efficient equipment. Technology improvements are also making a significant impact in costing our supply chain and quick access for our customers lumber demand. Again this equipment has long lead times especially with forklifts and log loaders. Most machinery distributors have been reluctant in keeping too much inventory of their stock as well. I do believe that over this year, vendors will begin producing more equipment for our industry and are reassured that the lumber industry has rebounded. It is apparent that we have overcome this very harsh recession and mills are primed to supply the vast global lumber market. D Wendell Cramer W.M. Cramer Lumber Co. Hickory, NC This year things have been pretty good. The only thing is that the Chinese market has fallen pretty big for exporting. The domestic business is a lot better than it has been for a long time, but that’s kind of filling in for the slowness of the Chinese market. Overall the export market is fair, but we notice that the Far East is considerably slower. Overall we’re happy with the year. We think it’s a good year. It could be better. It could be worse, but it’s a good average year. Of course we ship a lot of Poplar. It’s moving excellent. I would say that Poplar is one of the best moving products right now. Oak is coming off in price some due mainly to the Chinese, but it’s still moving at a lower price. The only big problem in Oak is that your flooring Oak, which is No. 2 and 3 Common, is really tough to move right now. They’ve got overstock of flooring lumber coming in so that makes it hard to cut the rest. In other words, Common and Better is moving pretty good at a lower price, but the No. 2 and 3 Common is very hard to move and that’s what makes it very difficult to move. That’s also what makes it very difficult to cut a lot of Red Oak and White Oak because at the low end, it’s just not moving very well. As for the lumber pricing in our market right now, the flooring stock is very low. Pricing is terrible. Other stock, like the Common and Better Red Oak is very low, but it is moving in pretty good volume and hopefully that will settle down. Transportation issues are always a big problem here in the last year and into this year as well. Although, even though the fuel has gone down, they’re still charging a fuel surcharge. They should be making out very well, though. Hopefully this will help the trucking people, because they should be able to make some fairly decent money, which will bring more trucks on-line I hope. At our facility we haven’t upgraded much of anything. We are waiting to see how things evolve. We’re a little concerned about the future, particularly this year. All of the tragedies that have gone on in the Far East, in Lebanon and those places, we’re concerned about. For example, 9/11 just shut down exports for three or four months. Terrorist attacks: We hope they get settled down some. And we do plan to kick up some production as we see the markets hopefully go up. All in all, it’s going to be a fairly good market for the year. The only thing I really worry about is production compared to usage and that’s always a concern. And that’s the only thing I can see that could hurt us if we overproduce in some items like Poplar, which has been a steadfast overall up to this time. On a scale of 1 to 10, I would say the market is a 7. 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Denis Dubé J.D. Irving Ltd. Saint John, NB Overall we’ve had success in Birch, mostly because we’re doing a lot of Birch. Sales in Birch are stable. We see a good demand for residential flooring for the No. 2, No. 3 and Select, and the demand is also very good for No. 1 and Better natural. Of course that goes mostly into paint grades and kitchen cabinets, and a little bit in furniture. We only produce Hard Maple, Birch and a little bit of Soft Maple here. We don’t do any other species like Oak or Ash. So the sales in upper grade Hard Maple are good and steady. Commons are really weak. In thick materials, the 5/4, 6/4 or 8/4 is stable as well. And all of those three species, all products like pallets, cants and railroad ties, are quite strong right now. In regard to lumber pricing, it depends on the grade. In Birch it’s quite stable. Hard Maple uppers and thick materials are stable. It’s just the No. 1, 2 and 3 Common that we’re seeing some pressure on pricing. Everything we move to Canada moves well. We don’t have any issues over there, but we feel there is starting to be a shortage of trucks going down South in the states, as well as into the Midwest. We have good relationships with our transporters, so it hasn’t been a big issue for us so far. But we feel there is starting to be a bit of pressure over there. At our facility, we have projects on the table like we always do. We have done some modifications over the last few years, but so far this year we haven’t done anything. D Michael Tarbell RAM Forest Products Inc. Shinglehouse, PA Sales so far this year have been so-so. With the late Chinese New Year, increased production, and less exciting housing news than we had hoped for, it is a challenge to keep stock moving at profitable levels. We are seeing price pressure especially on the No. 1, 2 & 3A Common Red Oak. Hard Maple also continues to come under downward price pressure due to less than stellar cabinet industry activity and substitutes encroaching on our market share. We anticipate 2015 to be a difficult year for profitability. All thicknesses and grades of Ash are moving the best, followed by Red Oak, Soft Maple, Hard Maple, White Oak and Cherry. Prices are coming down on most species and grades. Red Oak No. 1, 2 & 3A Common seems to be coming under the most pressure, while Red Oak FAS is hanging in there for now. Hard Maple has been under a lot of price pressure over the last 2-3 months, and we anticipate this pressure to slow a bit, but continue to be challenging to move. No. 2 & 3 Common lumber in all species is a concern as flooring plants are full with poor orders going forward. Regarding transportation, trucking is not an industry that interests a lot of our young people, and this is causing massive driver shortages. I anticipate more and more companies will have to add their own trucks to supplement the lack of outside trucks, especially on short hauls which seem to be the most difficult to obtain. RAM has upgraded as we have added four new dry kilns (approximately 350mbf of capacity). We are also installing a new kiln dried line with a bin sorter that will move the lumber to a packager. This should be ready to go by the end of the summer. D Jeff Mercy HMI Hardwoods LLC Clinton, MI If we are comparing Q1 2014 to Q1 2015, business in Q1 2015 is less than Q1 2014. Much has to do with the decreased export activity. Domestic business is similar this year to same time last year. Domestic buyers are cautious in purchasing, and less purchase planning is needed because of industry availability. The majority of our items are moving, as they should. Our philosophy is to partner with our customers, forecast their needs and “pull” products through our system. In Q1 2014, this philosophy protected products and stabilized pricing for our clients. In Q1 2015, this philosophy has allowed us to maintain volume shipments. The majority of items, both green and kiln dried, have downward price pressure. Regarding transportation, containers were a problem in February; it seems this has settled down. Flatbed transportation is available, however, one would think due to fuel prices we would see cost decreases and we have not. D Lawson Maury Hermitage Hardwood Lumber Sales Inc. Cookeville, TN We have seen mixed business this year, though, it has worked out pretty well. We have picked up some markets that had not previously been active that we’ve had good business in. We’ve had other markets slowing down. My focus is predominantly in Europe and the Americas. We have another salesman in the office who handles the sales in China, Vietnam, and most of the Far East. In the markets I’m dealing in, the strength of the dollar at the moment is making things very difficult. Please turn to page 50 JUNE 2015 n NATIONAL HARDWOOD MAGAZINE 23