When you read about how a number of lumbermen assessed their markets in 2021 and how they have anticipated their businesses will succeed in 2022, the end result may not be what you would think. Lack of lumber supply, labor shortages, transportation issues and problems due to COVID all surfaced in 2021. Nevertheless, business was good. And, as one lumber provider stated, “We anticipate another very good year in 2022.” Others echoed that sentiment. Read the following forecasts, and you’ll get a fuller perspective on how opportunities and historic problems can coexist, and the net result is success.
Allegheny Wood Products,
Petersburg, West Virginia
We are an exporter of hardwood lumber. 2021 has been a good year for our export business. In fact, the first six months could be considered great. The biggest reason for “great” would be the lack of “global” lumber supply. Domestic – as well as export – prices went up, and inquiries were more than plentiful. Since July, our customers’ inventories have gained a slight bit, and they are out of panic buying mode. I do see “good” business through 2022.
We are facing the same transportation/shipping issues as everyone …. not enough containers. However, once we find containers there are not enough chassis. Bookings are hard to get, and bookings are being rolled. Domestically, there is a shortage of truck drivers …. not trucks, but drivers.
We sell to importers/distributors, as well as to end use manufacturers. Our hot export items are: No. 1 White Oak, No. 2 Walnut, No. 3 Red Oak and No. 4 No. 1 Common and No. 2 Common Poplar.
Domestically, our top sellers are: No.1 4/4 FAS Poplar, No. 2 4/4 No. 1 Common Hard and Soft Maple, and No. 3 4/4 FAS Hard and Soft Maple.
Like everyone in every business, labor is issue No. 1, then transportation. It could easily be said that part of the transportation issue revolves around lack of labor. COVID has made a bad situation worse, but not just the virus and people contracting it and being out while sick. I believe the bigger impact is how the government has handled the virus. Giving away money not to work is a recipe for disaster, and we are living it.
Alan McIlvain Company,
Marcus Hook, Pennsylvania
This was a very successful year for us breaking all the good kinds of records.
That being said, we do still have some challenges. The main issues we have faced this year have been supply shortages, price increases and port congestion. Supply is just now coming in and will hopefully continue. Prices have increased, and now the unknown is what will happen with the freight rates. Port congestion is still a major problem with costly demurrage charges even when the port is not able to find containers and load trucks that show up for appointments. There is an incentive for the port to perform behind schedule. If the demurrage was due to any fault of the shipper or the buyer, then I would understand the reason for demurrage. But when it is the fault of – or at least caused by – the port, then why should the importer have to pay demurrage?
Domestically the main issue is the delays created from having to wait to get a truck to actually make the run. It was not uncommon to get loads picked up in a day or two, but now it is closer to a week.
Internationally the ships are not getting into the ports when they were originally scheduled. This can mean they show up early before documents are ready or weeks later, creating long delays down the supply chain. Having empty containers is another issue that foreign sawmills are having trouble with, making it impossible to ship more material.
Our customers consist of retail lumber yards, architectural millwork shops, cabinet manufacturers, door and window manufacturers and other manufacturers that use wood products.
All of our products sold well this year, from rough lumber to finished mouldings and everything in between. It was a great year to clean out old, slower moving items that were previously in less desirable widths or lengths.
Through all the events of 2021, we have been able to maintain a consistent supply on most items and maintain the quality of our stock. We have improved our production through machine upgrades and material handling. We have replaced and added new moulders, knife grinders, infeed equipment, rip saw and grinder, and we rebuilt our planer. This was all done in an effort to improve safety and quality and to increase production.
COVID has reminded us again that things can change rather quickly, and it pays to run your business in a manner that allows for quick action when large shifts occur.
Simon Lussier Ltée,
Blainville, Quebec, Canada
At the beginning of 2021, we had no real idea what to expect. We knew that green lumber was difficult to source and that the prices were going up quickly. Many times, after purchasing significant volumes at high prices, we would wonder if we made a mistake and misjudged the market. We anticipated that mills might overproduce the demand and flood the market as we have seen so many times in the past.
Now that 2021 is coming to an end, we wished that we had purchased a lot more lumber in the early months of 2021 because prices have not stopped rising.
COVID-19 has had a big affect on our industry. Many mills cut down production in March 2020 and have not been able to recover since. Many people have left the industry and are not coming back. Many loggers are having problems finding a market for pulpwood, which is reducing the availability of saw logs.
Our level of sales in 2021 has been very strong in both the domestic market and the export market. We have been in a shortage situation on a multitude of items and could have increased our sales to a much higher level.
We anticipate another very good year in 2022. We think many items have probably reached their peak prices because we are seeing more and more substitutions with Eastern European species or African hardwoods. It should be some time before we see significant drops in prices in North American species because many wholesalers and distributors like us are very low in inventory and it should take a long time before we fill up.
In 2021, we would only export, and I would say that it was a level year for us. We only ship to China, and that market was up and down for 2021. Shipping has been an issue for export this year and will continue to be. Lumber was in demand, but keeping up with the domestic prices was an issue for us. In 2022, shipping will continue to be a problem domestically.
We face transportation/shipping issues. For export, containers and trucking of them has been an issue and looks to continue. Domestically, trucking (drivers) and pricing increases have issues and will continue to be.
We sell kiln-dried lumber into China, and we sell mostly to distributors in China.
In that country, COVID has caused slowdowns in demand and has caused issues at the ports.
Abenaki Timber Corp.,
Kingston, New Hampshire
2021 has been a successful year for us, although not without some challenges. Labor issues have plagued both of our production facilities in New Hampshire and West Virginia. We have been about five people short of full staff at both locations all year, and a lot of the regulars are not putting in a full 40-hour shift.
Transportation is the No. 2 biggest problem, and that has been in both exporting with container shortages and domestic with lack of equipment to move loads. Thirdly is the green supply line which, for us, has been tight all year. I see these as the biggest challenges moving into 2022.
We sell to both domestic and international customers. Our domestic business has improved this year, and up until recently our exports have done well, too. Lack of available vessels has dampened the export market as of late.
Quality, consistency and service are the three things we try to provide each and every time we make a sale, and that’s not new. We are expanding our European Beech imports in more sizes and grades.
We installed a new gas-fired boiler at our West Virginia plant, replacing the old one to be more efficient in our drying there. We are also in the process of putting up some T-Sheds to improve our air-drying and the appearance of our lumber.
As stated above, transportation is a real problem, and, from what I’ve heard, it is the same basically for all of our trading partners and competitors. The politics of actually working for a living here in the U.S. are not favorable for a quick solution, in my humble opinion.
At this time, I think that the issue of tariffs is secondary to the transportation and supply line issues.
With the disruption in supply chains due to COVID-19, our maintenance people at both of our concentration yards are buying extra parts to put on the shelf when available.
Bingaman and Son Lumber, Inc.,
In 2021, Bingaman Export was successful in staying ahead of the unprecedented demand for our products, as were most of our customers. We were unsuccessful in increasing production and strengthening our logistics channels.
Our end user customers fared the best, but distribution customers also did well. All White Oak and Tulipwood Poplar products shined.
Also this year, we connected our customers to logistics websites that gave them shipping lines info in direct/real time.
We have replaced and updated worn-out equipment in almost every area of our company at all five Pennsylvania locations, from replacing/updating sawmill equipment such as resaw, carriage and trim saws, to adding new boilers for KD steam, new kilns and new rolling equipment.
Domestic obstacles were finding long distance trucking, and then working out higher costs with our customers. Export-wise, transportation was a nightmare at times, as bookings were canceled or rolled oftentimes overnight after we had picked up and loaded the empty containers. This situation has not improved – but we are coping with it better now.
Regarding tariffs, the current and future concern is the dramatic effects of the Chinese government policies that gut real estate values, cut private company ownership by starving access to capital and reduce to half the raw material imports and manufacturer’s ability to produce by limiting electricity consumption.
As for the bandsaw shortage, we’ve found ways to cope.
In terms of the supply chain disruption due to COVID-19, we’ve made strategic moves in various ways to cope.
2022 should be a reasonably good year, albeit with some downward changes in prices more likely than continued upward. Domestic US/Canada demand should remain strong as well as UK/EU and some other first-world smaller countries. China could be quite unstable in 2022 as it’s a political year for the central committee, and a tipping point if their policies of recent years will continue stronger or somewhat abate. Our China wood customers’ demand is less for domestic consumption and more for export of finished product (back to the US, UK, EU) than has existed for many years. China domestic consumption of wood products is following the strong decline of real estate values.
As lumber folks, we are either inherently gifted or quickly adopt industry practices of finding a way to negate any positive. Quite often, our perspective of good or bad depends on which side of the transaction we find ourselves. With that in mind, looking at 2021, I could certainly lament finding adequate labor, cry over trucking woes and port delays, or wish that I hadn’t committed to a particular price when I did; but the reality is that pricing for our products reached some historic levels and demand trends were created from an unexpected catalyst that created, and will likely sustain, prosperous times for the forest products industry into next year.
2021 saw a growth in domestic demand from manufacturers and distributors for our company and a reduction in overseas business. China, in particular, has been a dominant player in hardwoods for the past decade, and the ability to turn our sales focus toward domestic demand was refreshing and honestly a positive development for our brand and ongoing sales strategy. As much as lumber supply was strained and we sometimes found ourselves having to delay fulfillment of orders, we were able to strengthen the relationships we have with key customers in all segments of our customer base from industrial grade buyers to cutting grade component manufacturers to high-grade buying distributors. At a time when trade issues seem to always be looming on the horizon, diversifying our sales reach domestically and to alternative global markets will be a benefit going forward.
Unfortunately, the hardwood space has been shrinking now for over a decade. Of course, we rebound from catastrophic supply corrections like occurred after the great recession and most recently in 2020, but we have not been recovering all that we lost during those past cycles. I wish the hardwood space had enough room for everyone that wanted to participate in it. If it did, then that would mean demand for – and understanding of – the products we make was ingrained in consumers’ minds. Unfortunately, that isn’t where we are, yet.
I am a firm believer that things happen for a reason and in the properly anointed timeframe. I also believe that we must recognize this and act to capitalize on the opportunities we are presented with…turn lemons into lemonade, find the silver lining in the clouds.
The COVID pandemic was a catastrophic event, and I am not going to try to make the event itself into a positive. But the catalyst it provided to our industry, and what influences our industry’s health, are undeniable. Prior to COVID, the demise of McMansions had shifted home buying toward smaller spaces. New generations, not so quick to start families, were more content to rent within walking distance of work and daily needs. The shutdown and need for isolation created during the height of the pandemic and persisting through the onset of COVID variants, reversed those housing trends by creating a need for more designated spaces in a home and a desire/ability to live more rurally and still work where you want. This alone didn’t create a lack of adequate housing, but it accelerated the timeframe to correct it. Government subsidies, agreed with or not, kept households whole financially, sparking consumer spending. Our products have never faced a better time to be valued for what they are actually worth than right now.
Consumers with cash in hand and a reason to make new-home or remodeling decisions are abundant right now. The industry finally has a promotional campaign started that can educate the general consumer about why wood, real wood, is a better choice than fake wood or other alternative materials. We have an opportunity to start controlling our own destiny instead of playing the victim of our circumstances. Even though we may be shrinking as an industry right now, our key demand driving segment, housing related products, is growing and should for another year at least.
Without being a master economist, even a shrinking product line in a growing customer segment gets a boost. And perhaps this boost coincides with a promotional campaign that extolls the real value in hardwood products and allows comfortable growth.
I am not naïve; current lumber prices, as of when I am writing this in early October 2021, will not all hold. But it is not naïve to understand that we have a product that adds value to a home and has environmental benefits that far outweigh competitive products. That is a value we as an industry need to sell and charge for. We are approaching 2022 with hope and optimism. I believe 2022 is unlikely to repeat the record setting prices of 2021; but I don’t believe the fundamentals of demand are collapsing either. Manufacturing will start the year still trying to catch up from the curtailments of 2021. Eventually, manufacturing will achieve that and growth in manufacturing will stabilize. Pushback on packaging prices will occur and pallet lumber prices will adjust, but the reality of packaging as an important, not just necessary, part of a manufacturer’s needs will keep dimension pallet lumber prices above prior levels. Housing will take longer to catch up, and remodeling will continue to be strong as unemployment remains low and household income remains reliable. Increased lumber production will come online but at a pace for only 7.5-8BBf annually, about 10-15 percent below the 2019-early 2020 level. Supply will maintain a better balance with demand but will not surpass it next year, allowing peak prices to ease but maintaining some gains in grade lumber. Flooring lumber will likely adjust more in line with industrial grades, but cabinetry, furniture, and millwork will still have strong demand, retaining some of the price gains for No. 1 and Better lumber.
Specifically at Collins, we continue to invest in manufacturing efficiencies at our Kane, Pennsylvania, plant. We installed a 38-bin sorter/stacker in late 2020 that has been helpful in navigating labor issues this year. We rebuilt the debarker this year to improve the quality of our edging and the infeed flow to the mill. We rebuilt several air-dry yards and redesigned our stacker outfeed to allow for more ideal weight distribution in our sticker packs to keep our lumber flat as possible. We are entertaining an upgrade to our kilns to improve efficiency and effectiveness and we are paving several of our roadways which will help with flow issues on our yard, and keep our sticker and finished goods bundles better packaged for better quality lumber and better presentation. Collins is a land-owning company that believes in the environmental benefit of not only owning timberland but also properly managing the harvest of our timberland to generate environmentally friendly raw material for manufacturing household goods. We value the customer relationships we have and approach our responsibility to honor their trust in us by producing the highest quality lumber responsibly with good width distribution, on grade and as on-time as possible. Relationships, consistency and reliability have always been stalwarts of the hardwood industry, but never more so than now.
Best of Luck in 2022!
2021 has been a successful year, with crazy-good demand in the first half of 2021. It will be hard to match in 2022, but I anticipate a successful 2022 as well.
Our customers – distributors, cabinetmakers, flooring manufacturers and furniture crafters – all have had strong years.
Availability of transportation has been tough, and rising prices have been challenging.
With COVID-19, we have just tried to stay ahead on parts for our sawmill and order further out.
Dana Lee Cole,
The Hardwood Federation works on your behalf in Washington, DC to protect the future of the hardwood industry. We are the united voice of the hardwood industry and work to influence federal policies that maintain a healthy economic environment for the hardwood community, including family businesses and small companies.
The Biden administration set an ambitious agenda early in 2021…one that is sure to carry over into 2022. There are certainly opportunities for the hardwood sector to benefit from some of their plans, but there are also some proposals that are cause for concern. While it is difficult to predict exactly what form that agenda items will eventually take, in terms of legislation, there are key policy directions that Hardwood Federation will pursue on behalf of the industry in 2022.
Recognize the important role forest products play in reducing atmospheric carbon: The Administration recognizes that the trees in our public and private forest lands absorb and store significant amounts of carbon. But it is equally important for them to acknowledge that the products resulting from well managed forests are 50 percent stored carbon by weight and that well managed, working forests are more effective and efficient carbon sinks than those that remain untouched. The Hardwood Federation will continue our efforts to ensure that the wood products market is not left behind in the Administration’s plans.
Prevent tax increases that harm small and medium sized businesses: Congress is considering a number of tax increases in 2021 and those deliberations could carry over into the new year. The Federation will oppose tax reform measures that have negative impacts on hardwood businesses.
Support efforts to increase labor pool: Lack of workers is a top issue of concern for the industry. The Hardwood Federation is advocating for action that encourages workers to rejoin the workforce.
Back infrastructure proposals that help the hardwood industry: The Hardwood Federation supports infrastructure and transportation legislative initiatives that help our companies transport raw materials, manufacture goods and ship finished products (better roads, safe bridges, better access to international shipping, reliable energy sources, etc.). We also advocate for proposals to increase the number of truck drivers, including increasing the number of younger drivers and women drivers.
While these are the Federation’s priority issues, we will also speak out on other issues that impact hardwood companies as they come up. As a leader in the hardwood industry, we encourage you to do the same. Meet with your Member of Congress, invite them to visit you and your employees at your facility, call, text or write to them about what is impeding your ability to sustain and grow your business. We are here to help!
Write to us at email@example.com if we can provide guidance and advice.
Bucky Pescaglia, MO PAC
2021 was a record sales year for our company. We had a good-sized inventory to work from at the beginning of 2021, but it has been reduced to a historic low for most of the second half of the year. It will be difficult to repeat these sales volumes in 2022 as we simply do not have the same inventory to work from.
Although we have several large end-user customers, the majority of both international and domestic sales are to distribution yards.
As with most in the hardwood business in 2021, all of our products have experienced a strong and consistent demand throughout the year.
As I write this forecast, we are installing a new Corley carriage, Tyrone-Corley shotgun drive, and Lewis Controls Optimization to upgrade our sawmill. This will increase production and improve yield for our mill.
We are experiencing the same transportation issues everyone I talk to is. Congestion at the ports and on the rail, and lack of available trucks, result in delayed shipments and frustrated customers.
So far, it appears that the China tariffs return has been postponed for now. This should help stabilize the market.
We always try to stay far ahead of any possible bandsaw shortage by having a good supply in our warehouse. When we heard there could be shortages, we doubled our normal order and have been able to avoid any problems.
Regarding COVID-19 supply chain disruptions, we installed a new maintenance program this year, and it has been very helpful in keeping our parts inventory stocked.