Southeast Business Trends
A “Perfect Storm” In The Southeast
Certain areas are more successful than others in the Southeast at the time of this report, but most seem to be struggling with labor, interest rates and concern about the economy.
The market in Mississippi, at the time of this writing, as reported by one softwood lumber representative, is “depressed in general because of the current economic situation. Our business is not bad, but it is not as good as we would like it to be. It isn’t as bad as the dimension market because we make more of a specialty product. It is certainly off from where it has been.”
It “might be a little worse” than it was six months ago, he said.
They offer “Southern Yellow Pine in 1-inch to large timbers” and they are “so diversified that I don’t know if there is one product selling better than the others – it’s a pretty even mixture,” he commented.
The majority of their customers are treaters, and he said, “Pretty much everybody has shared concerns about the market, whether they are wholesalers, treaters or concentration yards – everybody seems to be more concerned with the market than they were six months ago. They are worried that high interest rates are causing the overall slowdown of the economy.”
He explained that transportation is more available because of the economic slowdown but labor is still difficult.
When asked if there was anything he was looking forward to regarding the market’s future, he replied, “It’s funny that you asked that because that’s the topic of just about every conversation customers have had with us over the past several months, especially if they felt like there was something coming in the next quarter, or next year. I don’t think people are very optimistic about the overall economy. If interest rates start dropping and people can start qualifying for homes, that will certainly have a positive effect but as far as saying, ‘We’re only 90 days away from seeing a turnaround,’ nobody is saying that as far as I can tell.”
Interest rates, prices, housing and labor are cutting into the Southeastern softwood market.
A lumber source in Alabama said the market is “a little down but we’re doing pretty good. Pine levels are still where they were in the 70s, so that’s tough. Between market decrease in pricing, uncertainty with the economy and questions about tariffs, it’s a perfect storm right now.”
Even though it is the same as six months ago, he added that they have “been trending up for a while.”
Southern Yellow Pine, Spruce, Cedar, Cypress, Fir and Radiata Pine in “1-inch, 2-inch and any grade from No. 2 Common to C grade” are what they offer.
“Everything we sell is going to retail lumberyards,” he stated before mentioning they “service the entire Southeast. Huntsville and Nashville are still booming, and the beach is still booming but some areas are not as good as others.”
He is hopeful that “prices on commodities like Spruce and plywood will get to a normal number so the mills can actually make money.”
“There is no market in our area,” stated a lumber spokesman in Louisiana. “Until interest rates come down, we won’t have a market. With interest being up like it is, there isn’t much new home construction going on. We’re losing money hand over fist and every time we sell a load, we’re losing money on it. We’re not going to increase production because of that.”
It is worse than six months ago but “some of the pallet people have picked up a bit and that’s always a good sign,” he said.
As a dimension mill, 22-to-24-foot timbers is their main product. They also work with Southern Yellow Pine in No. 1 Common.
He mentioned their mill had a visit from the TPI grading institute several months ago. “They said they visited about 30 mills, and the common denominator was that interest rates need to come down,” he added.
“Labor sucks,” he complained. As an example, he recalled a man who recently “worked two hours and quit, saying it was too hot and dirty.”
