Import/Export Wood Purchasing News - December 2023/January 2024

Lumber Forecasts for 2024 Continued from page 6
our products moved at normal rates.
We did not add any services or products in 2023 but spent more effort going
direct to customers, putting less reliability on brokers.
We installed a new optimized edger in November at one of our facilities. We also
began building a new grading and sorting line at that same facility. This project
will last into the first and, likely, second quarters of 2024.
Finding enough qualified employees is always a challenge but we do feel fortunate
to have a good crew right now at each facility. We have spent a lot of time
and money on automation in the last few years and that has paid off by allowing
us to retain the vast majority of our employees and keep production at the desired
level.
Shipping always has its own challenges, but we have not had any changes that
have affected our ability to deliver loads to the customers.
We have not had issues with shipments to Vietnam, but China is always a
concern with the potential for tariffs and market uncertainties. The European
Union has been down on shipments for some time but does seem to be increasing
at a small percentage.
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,
Brian Gibson 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.
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.
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
Ray White 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 and Hard
and Soft Maple, while simultaneously seeing historical high production costs.
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.
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. 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. 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.
Kirby Kendrick
Kendrick Forest Products
Edgewood, IA
2023 was an interesting year. The first half of ‘23
was still pretty good, while the second half of the
year wasn’t as strong but still looks like it will end
better than we were expecting. Challenges we must
overcome to be more successful in 2024 would be
labor, inflation cost and fuel cost, all while most
American hardwood prices have not kept up with the
Kirby Kendrick cost of inflation.
Our customers are a mix of distributors and factories.
Our Walnut and White Oak lumber items have been the strongest sellers for
us in 2023.
We recently started taking a higher-grade log and producing Walnut graded under
Oak rules. This has allowed us to tap into other markets while still being able
to offer our same consistent standard NHLA grade lumber as well.
This year was a year focused on growing our rolling stock, especially our semis
& log trucks. This allowed us to have more the control over our product and better
serve our customers.
We have been fortunate that we have many long-term employees with a nice
mix of the younger generation to teach and help grow. Wages are an important
part but there also needs to be a fun working environment, and a good relationship
with the employees which we have. Our employees aren’t just employees, they’re
more like family to us. When you can treat someone like family, I think they’re
more inclined to work hard and stick around.
Trucking in general has loosened up, but the cost of fuel is keeping rates elevated.
David Messer
MacBeath Hardwood Company
Edinburgh, IN
Overall, 2023 was not without its challenges, but
all in all it was a successful year. Looking ahead to
2024 I think the main challenge will be the availability
of lumber. Specifically, the availability of the
items most desirable. As it becomes more difficult
for sawmills to produce grade lumber profitably in
general, naturally there will be less of the few items
David Messer that everyone wants. It seems as though the majority
of the demand for hardwood products is focused on
a minority of the growing stock in the woods, which throws things out of balance
for sawmills and log producers. This certainly isn't a new challenge for 2024, but
an ongoing challenge for the industry as a whole. The challenges that steep price
adjustments in both directions present will be something that we all become more
acquainted with in the coming year.
A nice side effect of an economy that is moving very slowly is the availability
of transportation. The cost of freight domestically and the availability of equipment
necessary for export, as well as the cost to move that equipment have both
improved over the course of this year, and outside of seasonal events that have an
effect on flatbeds, I don't see the ratio of trucks to loads tightening as we enter the
new year.
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
Bucky Pescaglia 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. 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 US. 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.
Dave Halsey
Patrick Lumber Company
Philomath, OR
2023 has exceeded our expectations, 2024 has
a similar uncertainty to last year’s planning due to
geopolitical and economic conditions. Interest rates
and the election cycle figure to be most relevant in
forward planning. Patrick Lumber plans to further
invest in our people, processing and remain focused
on our core businesses.
Dave Halsey The upper grades of softwoods, especially Vertical
Grain clears were the best movers in 2023 for our
distribution customer base. Contemporary design elements in high-end home
construction across the USA were in favor. Timber frame construction, which we
highlighted in our headquarters building in Philomath, also has a strong showing
in 2023.
In 2023, we expanded our low grade customer base in several softwood categories
including Southern Yellow Pine. We continued expanding the hardwood
lumber business, especially West Coast hardwoods like Oak, Maple and Alder.
We purchased 10 acres next to our Philomath kiln and re-saw facility late in
2022 and began production in early 2023 of West Coast hardwoods. We continued
to add to the mill installing more equipment. In 2024 we plan to complete installation
of a Salem headrig which should increase production 10x. Our customers
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Import/Export Wood Purchasing News n December 2023/January 2024 Page 33