Story by DK Knight,
Executive Editor/Co-Publisher
RISI, Inc., a leading information provider for the global forest industry, recently estimated the 2014 U.S. timber harvest at 411 million green tons, an increase of about 4% over 2013 and the highest since the 497 million ton mark in the peak year of 2005.
The organization pegged the softwood harvest at roughly 279 million tons compared with 326 million in ’05. The hardwood harvest was an estimated 132 million tons, compared with 171 million in ’05.
On the softwood side, lumber claimed 49%; pulp 25%; OSB, plywood and bioenergy a combined 12%; and various other categories claimed the rest. The hardwood breakdown: lumber 26%; pulp 32%; and ‘other’ 37%. This broad category included traditional firewood, posts, poles, pilings, and other products, and volumes left on the harvesting site or otherwise cleared and not utilized. OSB, plywood and bioenergy claimed the rest.
The Southern region accounted for 67% of the softwood harvest and 63% of softwood, much the same as it was in 2005.
Loggers, Logging Capacity
The larger harvest was driven by a stronger economy and greater demand for various products derived from wood, not to mention log exports. Perhaps the most interesting aspect of the harvest was that it was accomplished by a logging force that many, including yours truly, believe to be reduced in number and weaker in overall capacity.
It’s widely accepted that the number of logging business units has receded from the level of the leafy days of 2005 and the stark days of 2009. The ‘treecession’ thinned the ranks by way of bankruptcy or voluntary liquidation, and tight credit made it much harder for startups to germinate. Many loggers responded to tough times by trimming employees and parking equipment and by holding on to existing equipment. The result was less production and more machine breakdowns, the latter dampening production and thereby exacerbating capacity. According to a study authorized by the Wood Supply Research Institute, logging capacity fell an estimated 20% during the economic meltdown.
Evidently, that capacity contraction has dwindled—significantly in some places, less so in others. Across the last 30 months, market conditions and attitudes generally have improved, prompting many surviving loggers to upgrade equipment and leading some to expand. In addition, a few loggers who had exited the business got back in and scattered startup operations emerged.
Regarding equipment, most manufacturers enjoyed very robust sales in 2013 and 2014. Their bigger, more powerful, better-engineered, more reliable, and longer lasting machines are the most productive ever. They can move mountains of wood, and do it day in and day out.
A change in harvest prescriptions among certain TIMOs was another ingredient that last year helped accelerate the harvest, at least in certain parts of the South, where thinning and longer rotations have been the practice for many years. That ingredient was regeneration cutting, which some TIMOs embraced to generate cash to appease shareholders. Until the price for larger logs improves substantially, TIMOs could keep more regeneration cutting in their revised management plans.
I sense that overall, the financial position of loggers has improved in the last couple of years due to greater demand, additional production, lower fuel costs of late, and in some cases better compensation. As has always been the case, some loggers are doing better than others, especially if they’re located near where new markets have evolved, established markets have turned up production, or where shut mills have reopened.
Even in cases where no significant real financial gains have been realized, loggers who survived seem to have a better attitude and generally are going about their work with renewed hope and confidence. However, as a group they are juggling lots of debt, and for the most part remain quite wary as they grapple with stubbornly high operating costs, labor woes, transportation issues, and regulations. In some locations quite a few limped through a very trying winter. Some continue to struggle with limited markets and scarce supplies of timber. Others anticipate possible spring or summer quotas. All expect fuel prices to climb again.
The nation’s annual harvest should increase again this year, possibly exceeding 420 million tons, assuming that the economy holds/grows and there is enough logging and trucking horsepower to get it done. I think there will be. Looking ahead, I wonder if the harvesting troops will be up to extracting 450 million tons or more in 2017?
The Canadian South
A limited supply of timber in British Columbia (read mountain pine beetle devastation) and an abundant supply in the South (read lower cost and proximity to Canadian lumber’s biggest market) have led to the large-scale Canadian investment in sawmills located south of the Mason-Dixon line.
According to Business Vancouver (BV), West Fraser now owns 15 U.S. sawmills, compared with 12 in western Canada. West Fraser recently announced a $600 million capital improvement program for its southern operations. BV notes that Interfor, with five mills in BC, now owns 13 U.S. mills. All but two are in the South. Canfor owns 10 mills in the region, compared with 12 in western Canada.
By now these companies probably have learned that the South’s resource of small sawlogs, while plentiful today, is not always low cost, especially when sawmill interests go jaw-to-jaw with pulp mills for the same timber.
For the record, last year the U.S. produced just under 31 billion BF of softwood lumber, with the South turning out 51% of that.