Southeast Business Trends – March 2025
Southeasterners Offer A Variety Of Species And Opinions On Tariffs
Throughout the Southeast, lumber industry sources expressed mild disappointment at the time of this writing in a lack of demand due to competing products but still have some hope for the future.
While the “industrial products are pretty good” in Arkansas, explained a representative from the area, lumber is “pretty hard to move; it’s not great.” He assumed that is due to demand, plant closures, a lack of hardwood lumber usage in addition to imitation wood and “cheaper options,” especially for flooring.
Compared to six months ago, “it’s a little bit better in upper grades and Common and Better Red Oak,” he remarked.
He explained they offer 10 different species, including White Oak, Pecan, Sycamore and Ash in No.1, No.2 Common and FAS. They work with 4/4 thickness for the most part. While White Oak is their best seller in “the long run as far as price, it’s not the biggest percentage” of what they do, he said.
Regarding the proposed tariffs, he said “I’m certainly not any kind of expert but I’ve heard that the little bit of buying that has picked up has been in anticipation of the tariffs to try and get ahead of them. They probably will have a negative effect. Truth be told, it probably must happen. The United States’ policies since the 1980s have decimated the manufacturing base and the purchasing power of the United States citizen so a certain amount of people profited by taking manufacturing businesses to China and Vietnam and wherever else they’ve gone. It’s coming back to haunt us now because it’s gutted the American middle class as far as a work base. It’s just brought a myriad of problems that people are dealing with today. Something has to be done about it but it has really made it tough on the people in the manufacturing business. I’m not happy about it because it is going to affect our bottom line but we can’t keep going like we were.”
As for problems his business has encountered, he explained, “during the pandemic, every cost went up across the board like labor but then the lumber costs went back down. When it goes up, it rarely goes back down. The lumber prices and the finished goods prices go down far faster than any of the other expenses.”
They sell to wholesalers, end users and exporters. There haven’t been “a lot of positive comments about export” or in the flooring market, he said. “Besides industrial, I think people are holding on but I don’t think anyone has spoken glowingly of any sector necessarily.”
A lumber representative from Kentucky reported that the market in his area is fair. His reason for this optimism is, as he explained, due to “how low supply is. With us being a supplier, we see a shortage coming up but we don’t know how soon. A lot of sawmill production has been going off the market in the last six months to a year.”
According to this source, “it’s getting better,” when compared to six months ago and is “definitely heading in the right direction” because “of supply versus demand, not necessarily that our business has picked up that much. Supply and demand seem to be getting closer together.”
They offer “pretty much all Appalachian species,” he said, continuing on to list Poplar, White Oak and Walnut as examples. They work with “normal NHLA grades” such as FAS – No. 3 Common. 4/4 and 5/4 are the two main thicknesses they handle in addition to “a lot of thick stock in 8/4,” he added.
As for their customer base, he mentioned that 70 percent is residential flooring and the remaining 30 percent is truck and trailer. He specified that 80-90 percent of their customers for “the Oaks” are concentration yards and the “rest of it is going to end users like component plants.” His customers are feeling, as he said, “a little bit bleak but definitely hopeful for the long-term.”
The main complaint he has is about pricing. “Supply and demand are just too far apart, which creates a softness on the pricing but other than that, we would be ready to open up the throttle and go wide open if we just had more demand,” he said.
In Alabama, the White Oak market is “good,” Poplar is “okay” and upper grade Red Oak is “moving,” according to a lumber source. “It’s just the No. 2 Common, 2A grade in Red Oak that there’s no demand for right now,” he added, before listing interest rates as an issue which are “still too high and they need to drop so people can get back to building.”
When asked how the market is compared to six months ago, he explained, “it feels like the same to be honest. We’re hoping it will get better.”
They handle Red and White Oak, Poplar and Ash with White Oak as their best seller. They are “strictly” 4/4 and 5/4 kiln-dried. “No.1 Common Red Oak is okay. It could be better. Red Oak FAS is doing pretty well. The White Oak FAS price is coming down but it was too high to begin with. White Oak No. 2 Common is doing well. Poplar No. 2 Common isn’t faring well,” he stated.
They have a mix of domestic and international customers including Vietnam, China and Mexico but they don’t do any importing.
He thinks “everybody is concerned about the proposed tariffs” and that the issues his business grapples with involve low demand more than labor and fuel costs. He said they are going to keep their “fingers crossed.”
