Story by DK Knight,
Co-Publisher/Executive Editor

Your attention is directed to page 36 of this issue, which presents the results of a snapshot logging pulse survey this magazine recently conducted. The short study went to a small sample of logger subscribers via e-mail in early February, and loggers from 26 states responded, providing a sense of their 2013 profitability, their outlook for 2014, and a list of what is most impacting the financial health of their businesses. While the sample is small, and while there are always exceptions to the rule, the survey results are worth noting, as they probably are a good indication of the logging industry’s overall pulse.

It’s no surprise that steadily increasing operating costs, which are in stark contrast to the stagnant rates most loggers receive, rank high on their impact lists. Equipment costs continue to go up, and the wholesale switch to Tier 4 engines, and with it even higher attendant costs, has yet to come. Today’s gear is more sophisticated than ever, and it produces more and lasts longer, but when it does go lame, getting it going again often requires thousands, if not ten thousands, of dollars.

Now that fuel costs have remained well above $3.50 per gallon for years, most log and fiber consumers brush off loggers’ appeal for higher rates or some type of fuel adjustment, saying such fuel prices are the new norm. Their position: accept high fuel costs and move on. But high fuel prices are only part of the big picture. They inflate the cost of so many other consumables—tires, tubes, batteries, motor oil, hydraulic fluid, grease, filters, coolant, parts, labor, and the cost of freight to get them from point A to point B. Also, insurance rates are on the rise, labor is an issue for many, and then there is the 800-pound gorilla of trucking and all its increasing regulatory weight.

  • The burden of all this, and the fact that so many loggers are expected to manage with unrealistic pay, has thinned the logging/trucking ranks in recent years. With the challenging-to-crippling weather of January and February, it’s a wonder even more loggers have not opted out.

Below normal temperatures, snow, ice, rain, mud and wind combined to hobble timber harvesting across the country in recent weeks, interrupting cash flow for loggers and snagging deliveries at consuming mills and facilities. From what I gather, brutal weather has probably caused more wood supply problems in the Northeast than anywhere. Some pulp mills have come dangerously close to running out of wood fiber—a few may do so yet if an early and prolonged mud season develops. Some would likely have run out had they not slowed operations to compensate for dwindling fiber supplies.
According to February’s International Woodfiber Report (IWR), “every mill from Pennsylvania to Maine is suffering.” The newsletter reported incremental volumes were coming in from 100-450 miles distant, with hardwood delivered prices “over $90/green ton at some locations.”

Severe weather has also increased the demand for electricity in the Northeast, causing wood-fired power plants to demand more biomass, the price for which reportedly spiked to $35 per green ton in some locations in early February.

It’ll be interesting to see how it all plays out in the spring.

  • Last year’s improved residential construction climate bucked up the demand for oriented strandboard, causing North American OSB mills to use about 32 million tons of pulpwood logs. According to IWR, this was a 12% increase over 2012 demand. About two-thirds of North America’s OSB output is produced in the U.S. IWR indicates OSB production and raw wood demand will increase steadily in 2014 and 2015. During the record production year of 2006, NA’s OSB mills consumed about 46 million tons of wood fiber. Two-thirds of NA’s OSB is produced in the U.S.

Pellet plants and new/reworked wood-fired boiler installations also added to fiber demand in some locations, and sawmills, plywood plants and other wood products facilities consumed more tonnage. Log exports soared as well.

Unfortunately, there was a decrease of about a million tons on the paper and paperboard manufacturing front. This downward trend continued with the permanent closing of IP’s mill at Courtland, Ala. in February, which took out another half million tons, according to published reports. For the years 2011-2013, paper and paperboard mill closings and/or machine shuts have reduced fiber demand by a combined 11 million tons, according to PPI Pulp & Paper Week research.

  • Crad Jaynes, who directs the South Carolina Timber Producers Assn., always pours his soul into the group’s annual meeting, but he outdid himself this year with a standout program that attracted almost 400. Congrats Crad!

Regarding meetings, I applaud the American Loggers Council’s plan to alter the format of its annual gathering, beginning in September. The logging tour will be a pre-meeting (Thursday) option, leaving Friday open for a program that will include technical, operational and/or business management presentations. In my view, this positive step is long overdue in that it will offer valuable takeaway opportunities.

  • Three forest industry members, all friends of mine and friends to many subscribers of this magazine, continue to deal with lung cancer and need to be remembered. John Martin (404-307-6264), who retired in 2010 after more than 40 years with Timberjack and John Deere in various sales roles, is pretty weak. Travis Taylor (318-471-1166), well-known Louisiana logger and immediate past president of the American Loggers Council (ALC), is hanging in there as he takes additional radiation treatments. Jim Mooney (434-242-8609), also a former ALC president and current executive director of the Virginia Loggers Assn., is taking another type of treatment. Take time to give these guys an encouraging call. It’ll mean more than you’ll ever know.