National Hardwood Magazine - May 2022

At the recent

At the recent Appalachian Hardwood Manufacturers Inc. (AHMI) meeting, Jay Reese (left), of Penn-Sylvan International Inc., Spartansburg, PA, passed the gavel as chairman to Tom Sheets, Blue Ridge Lumber Co. LLC, Fishersville, VA. AHMI Annual Meeting Sheds Light On Key Industry Challenges Story by Tom Inman and Sue Putnam Hollywood, FL–Business sessions at the annual meeting of the Appalachian Hardwood Manufacturers Inc. (AHMI) recently provided valuable information on key industry topics in 2022. Attendees were pleased with each of the presentations and many requested copies of the reports. The following is a recap of the business presentations and the slides are available on the AHMI website www. appalachianhardwood.org. Forest Carbon Credits In Appalachia NCX Carbon is America’s top provider of forest carbon credits and Landowner Success Manager Kathryn Morse explained the program in the AHMI region. The NCX model pays forest landowners on an annual basis to defer timber harvesting activities. She said there are no costs to landowners to participate and no minimum acreage required, but there is an annual deferral commitment. The NCX model is the only system that has been designed to eliminate these barriers, Morse said. “We’re able to achieve this through leveraging the technology we’ve developed and meticulously designing our methodology to support this framework,” she said. Alan Robbins, USNR, Jacksonville, FL; Connie Miller, National Hardwood Magazine, Memphis, TN; and Robert Wagner, USNR, Graham, NC Photos by Paul Miller Jr. Using artifical intelligence and remote sensing data, the NCX assessment calculates a landowner’s model and the volume of carbon eligible for earning credits by deferring harvests for one year. The primary factors are standing inventory (size, species of trees) and harvest risk (proximity to markets, mill demand). Landowners then bid on the price at which they would be willing to sell some or all of those credits to the market, Morse said. NCX gives landowners a report on what corporations are willing to pay to help determine the market clearing price. Landowners are notified of the results of the auction and if bids are accepted, they enter into a binding agreement to reduce their harvest by the agreed amount for one year. Morse said that after the year, a second evaluation is completed that issues the credits to buyers and payment to landowners for the actual amount of additional carbon delivered. The Appalachian region has averaged - per acre in the past. For more information, visit www.ncx. com. Industry’s Growth And Challenges Addressed Hardwood Market Report Editor Judd Johnson provided AHMI attendees an overview of the lumber industry’s strength during the past year and the news is positive. The Hardwood industry in large part has been buoyed by a robust housing market with consumers driving demand not only in new home sales but remodeling, renovation and DIY projects. Supported by an economy that emerged strong after the first year of the pandemic, homeowners have generously spent disposable income. Noted Johnson, additionally, as the Millennial Generation “comes of age” and enters the market as first-time home buyers – soon to be followed by Generation Z – this contributes to a positive mood in the housing market. That positively impacts the lumber industry. Johnson noted that a temporary economic/housing cool down is afoot. He added, though, that is not due to a decline in product demand. Instead, product demand is actually building up, he said. Some takeaways from Johnson’s detailed presentation include the following: •The Institute of Supply Management puts the PMI (Purchasing Manager’s Index) at the highest level in 16 years. Johnson said that if the index is above 50 percent, it indicates expansion in the manufacturing sector. His presentation cited the most recent data for January of this year when the PMI was about 58 percent. It peaked at nearly 64 percent between February and March 2021 and has settled at a positive percentage. •The housing industry has thrived, and like other industries, has been challenged by supply/demand issues. Johnson’s presentation compared the stages of homes under construction, those that have not yet started construction and those that completed construction between December 2019 to December 2021. Nearly 749,000 single family units were under construction, including those in inventory available for sale, those that had been sold, and those that were started but not included in inventory. •These challenges in the housing market, too, are pushing home prices literally ‘through the roof.’ According to Johnson’s data, in two short years homes priced at 0,000 or more have increased from representing about 32 percent of homes sales in January 2020 to nearly 55 percent in January 2022. The 0,000-0,000 priced homes have decreased from 35 percent of the market in January 2020 to less than 10 percent. This has forced more homebuyers into the 0,000-0,000 price range. This segment of the market has grown from about 24 percent in January 2020 to nearly 35 percent in January this year. As of the first of this year, fewer than 5 percent of U.S. single family homes sold for under 0,000. That’s a decline from approximately 7 percent in January 2020. •Lumber consumption between 2018 and 2021 decreased, creating the supply deficits that impact consumers, home builders and end use manufacturers, Please turn the page Tom and Rosemary Inman, and Wendy and John Bowman, AHMI, High Point, NC Barry and Brenda Johnsa, Suwanee Lumber Co., Suwanee, GA; and Pat and Chip Underwood, Thompson Appalachian Hardwoods, Huntland, TN Tony and Taylor Stringer, Stringer Industries Inc., Tylertown, MS; John Crites II, Allegheny Wood Products Inc., Petersburg, WV; and Frances Cooper, Cooper Machine Company Inc., Wadley, GA Deb and Kelly Johnson, Biolube Inc., Fort Wayne, IN; and Tom and Peggy Sheets, Blue Ridge Lumber Co. LLC, Fishersville, VA 32 MAY 2022 n NATIONAL HARDWOOD MAGAZINE MAY 2022 n NATIONAL HARDWOOD MAGAZINE 33