In 2022, U.S. softwood lumber exports to Mexico reached an all-time high, totaling $282 million, and nearly double 2020 sales figures. Mexico is now the number one international market for U.S. softwood lumber, unseating China in 2018 following a 25 percent U.S. tariff on wood products from China. January to August 2023 exports ($171 million) are down slightly from the same period in 2022, ($195 million), yet analysts expect end of year totals to be almost on par with 2022 figures.
Demand for U.S. softwood lumber in Mexico is increasing at an unprecedented rate for a number of reasons, including limited domestic supply of quality lumber, positive impacts of the US-Mexico Canada Agreement (USMCA), and the logistical advantages of a shared border. Cartel related violence has further constrained access to Mexico’s domestic timber. Increased onshoring from Chinese firms seeking lower cost labor and a means of avoiding the U.S. tariff on Chinese goods is also a huge demand driver. Once the world’s center for low cost labor, by 2020 the average hourly wage in China for manufacturing workers was $6.50, a 12 percent increase from a year earlier. Meanwhile, the average hourly wage in Mexico in 2020 was $4.82, a 3 percent increase from 2019. While the labor rate in Mexico is rising, Mexico’s ample supply of comparatively low cost labor, and proximity to one of the largest consumer markets in the world, will likely continue to fuel continued manufacturing growth.
The Softwood Export Council (SEC) has been active in Mexico for decades. With its staff in Mexico, SEC holds seminars and webinars for Mexican producers, leads inbound buyers’ missions, and exhibits at leading industry trade shows. The association and its members also hold regular webinars for architecture associations. Topics have included mass timber design and engineering, and use of preservative treated wood products. As interest in Mexico has taken off, the association and its members introduced new activities, including SEC’s first U.S. supplier trade mission to Mexico.
SEC Mexico Mission Generates Almost $700,000 in Immediate Sales, $4.16 Million Projected for End of 2023
In May, a group of 13 U.S. softwood lumber suppliers and trade association members participated in a week-long SEC trade mission to Monterrey and Tijuana. The group met with wooden pallet and packaging producers and importer-distributors and toured their facilities and distribution yards. Over 65 importers and end-users also attended seminars where presenters spoke about U.S. softwood lumber grades and trends affecting U.S. softwood lumber availability and competitiveness in Mexico. Sales reported within one month of the mission totaled $670,000 and U.S. participants project $4.16 million in sales by the end of 2023. SEC is working on a follow up mission to Mexico in April 2024.
SEC members and U.S. suppliers also reported great success at the August Tecnomueble show, Mexico’s largest furniture supply trade event. SEC organized a day of visits with manufacturers and importers prior to the four day show, which led to over $300,000 in reported sales by SEC participants.
National Wooden Pallet and Container Association (NWPCA) Holds Second Annual Mexico Pallet Conference
From webinars to conferences, educational activities consistently attract large numbers of industry representatives from across Mexico. In September, the National Wooden Pallet and Container Association, an SEC member, held its second annual Mexico pallet conference in Guadalajara. The event drew a sell-out crowd and nearly doubled attendance from the year prior. Pallet producers and traders from 13 countries attended the event, including a delegation from the Softwood Export Council who reported making a number of very solid business contacts.
The conference included speakers on topics including nearshoring and strategic planning, Mexico’s economy and political situation, sustainability trends, and design software to improve pallet manufacturing. Next year’s seminar will be held in Queretaro, Mexico in September (dates TBD).
Opportunities to increase the use of U.S. softwoods and demand for higher grades through continued education and promotion are excellent. SEC has seen interest from Mexican producers in sustainability increase dramatically over the past several years, and demand for higher grades of lumber for pallet production has increased as specifiers have learned that higher grades result in better performance and better yields.
The Softwood Export Council is a trade association whose membership includes U.S. softwood lumber grading associations, wood products associations, state trade agencies, and universities. Members work together to address international codes and standards and to educate international buyers about the benefits of using U.S. softwood lumber. More information is available at www.softwood.org.