With winter behind us, sawmills reported they still had low log decks and mill output was reportedly lower in Ontario and Quebec than in the U.S. Appalachian regions. Supplies of green No. 1 Common and Better grades of Hard and Soft Maple, as well as White Oak, were reported as low compared to buyers’ needs. The lower grades for most species were also not doing as well as the upper grades. It was commented that markets for Beech, Aspen and Basswood were slow in early spring. Businesses expressed concerns of a possible decline in mill output as we move forward in spring. With the end of winter and the poor weather conditions ending this season, and a slower housing construction market both in Canada and the U.S., this has impacted sales of Hardwood finished goods. Those in the Hardwood industry remain optimistic that sales will improve moving forward. Some secondary manufacturers noted business already having picked up for them, as is the case for kitchen cabinet manufacturers. Millwork and moulding manufacturers noted better sales at this time than compared to last year. Flooring manufacturers, however, note weakened markets for their products. Exports markets are still reported as weak.
Even though the Emerald Ash Borer has killed off many tree stands of Ash in Canada and the U.S., and reported low log levels, production is holding up. Supply is meeting demand in the short term with prices steady. International markets are mixed, thus keeping inventories manageable.
Kiln-dried Aspen is low, although interest for FAS is better than for the Common grades. Log decks are thin, report sawmills, with some avoiding this species.
Contacts note Basswood interest has improved, but is still very low. Interest is seen in the No. 1 Common grades as having picked up. Supplies of green Basswood are closely aligned with demand, causing stable prices.
Wholesalers and secondary manufacturers are working to replenish their Hard Maple supplies as demand has picked up for this species. Kiln-dried inventories are reported as low for several grades and thicknesses. Soft Maple markets for FAS are doing better than other grades. Kiln-dried Supplies of this species are low, and prices have risen. Demand for the Common grades are decent noted contacts. Sawmills struggled at the end of winter and early spring to get sufficient logs, so production is going to yards and end users.
Birch output was high in fall 2023 compared to buyers’ needs, but has since dropped and more in line with demand. With prices of Maple having increased in certain areas, end users supplemented Maple with Birch. Markets of kiln-dried Birch gained traction due to the Maple price increase. Thus, inventories for Birch have edged down.
Some contacts noted that Maple was the preferred species, but low log decks restricted its production, and so sawmills sawed what was available, i.e. Red Oak. Demand for green Red Oak is absorbing developing production. The interest is in the higher grades. Business for kiln-dried business improved at the beginning of the year, with demand being steady. Inventories are thus thin in certain areas, with prices firm.
Sales of White Oak in both domestic and international markets (Australia, Europe and U.S.) are taking up all production, which is sufficient to meet demand. Green White Oak production, noted contacts is controlled, with output of upper grades falling short of demand.
Depending on areas contacted, Oak flooring manufacturers are seeing varying degrees of sales. Some experienced slow sales at the beginning of the year, then slight increases in mid-February, and some in early March. Business is still reported as competitive, as consumers’ appeal is strong at this time for both Red and White Oak. It was predicted that with the Hardwood flooring trend continuing of the past several years, business for Oak strip flooring would continue in this same vein. New home construction was seeing an increase, and it was felt that the repair and renovation markets would also be positive in the coming years.
On the labor side, the Government of Canada raised the minimum wage to $17.30 per hour on April 1, which was increased from $16.65 reflecting the increase in the annual average Consumer Price Index of 2023. The government says about 30,000 employees in the federally regulated private sector will benefit from the increase. Ottawa introduced the federal minimum wage in 2021. If the provincial or territorial minimum wage rate exceeds the federal rate, employers must pay the higher of the two.
According to an annual Ontario Construction Secretariat (OCS) survey, contractors expect a busy year as there is an abundance of work and more projects on the horizon.
Although concerns remain about rising costs for labor and materials, there has been an improvement in the supply chain and growing interest in innovation and technology to increase productivity and lower costs. Approximately two-thirds of the contractors had positive outlooks for the coming year. Projects cited include power generation, transit and healthcare facilities are leading projects across the province. In Northern Ontario, increased mining and institutional projects are the focus while contractors in Eastern Ontario anticipate a bit of a breather in 2024.
Recruiting skilled workers remains a challenge, and the availability of experienced skilled labor is top concern in 2024. However, 34 percent of respondents expect their workforce to be larger this year, against only 8 percent who expect the number of people they employ to drop. Other concerns are: for labor costs (27 percent), materials (28 percent) or higher interest rates, and transportation costs (25 percent) for the year.
They are encouraged, however, there are still strong expectations for growth and expansion this year, as many contractors implement new technologies to help create efficiencies and support business success.
This positive outlook provides encouragement to the Hardwood industry as business opportunities will be available from these construction projects.
