7 ms·

There are multiple contributing factors, but the supply-side limitations are very real. Sawmills slowed down in anticipation of a housing slump that never came

There are multiple contributing factors, but the supply-side limitations are very real. Sawmills slowed down in anticipation of a housing slump that never came, and now they're stuck playing catch-up. Wildfires destroyed huge swaths of trees and even equipment last year, especially in Oregon. Oregon officials estimate that they lost 4X more harvestable trees last year than the state produces in an average year: https://www.ofic.com/after-the-fires-timber-industry-faces-generational-losses-and-longer-term-supply-questions/ https://www.ofic.com/after-the-fires-timber-industry-faces-g... Even various policy changes from timber harvesting quotas to required sawmill safety retrofits have contributed. If you were a sawmill looking to upgrade, what better time than to do it during a pandemic? Turns out this wasn't such a great time.

cmrdporcupine 6y ago
WSJ youtube had a segment the other day on the price increases and shortages but pointed out that this isn't necessarily translating into increased prices paid for trees, and interviewed a couple who own a wood lot in Georgia (for 40 years) who sounded like they were barely getting by: https://www.youtube.com/watch?v=m_5MkGbXXKc https://www.youtube.com/watch?v=m_5MkGbXXKc So yeah, problem is at the mills.
- deleted 6y ago
  [deleted]
- mcphage 6y ago
  Ah yes, the proverbial "trouble at mill."
- xyzzyz 6y ago
  Additionally, the wildfires in the Northwest also contributed to glut of timber. The wildfires kill the trees, but usually don’t destroy the timber, which is still good for harvest — however, it must be harvested quickly before it rots or gets infested by insects. Thus the owners of burned timberlands are scrambling to harvest the timber ASAP. This results in plenty of cheap logs, but since sawmills aren’t keeping up, its a double whammy to owners of burned timberlands: not only they have to harvest at less than optimal time, they also have to pay top dollar for logging crews as everybody else is also scrambling to harvest their burned timber, and selling the logs for cheap, as there are so many sellers and too little milling capacity.
- Loic 6y ago
  As a plot owner, at least in Europe, you cannot make a living with just the trees. At the moment, and this is expected to worsen with the time, we go through series of very harsh weather conditions over long periods of time. We have a lot of wood getting lost or sold at the cost of harvesting (if not less). You basically lose 20 to 30 years of taking care of the trees and you need to "restart" the forest naturally afterwards, because anyway, you have no ideas what could be the right kind of trees to support the climate change. You lose money on the forest, the land is getting more value, but it means just more taxes nothing more. At the moment, it does not make sense to own only the land, the value is extracted one level above. But here in Europe (at least in France), forest is owned by a lot of people. Many, many people have 1ha or less, here and there, because of the agricultural tradition of the country (forest has been growing again on not taken care of fields). Source: We have about 300ha, taken care of in a "sustainable" way (all the stuff you read about the "best/ecological" way to take care of a forest) for the past 30 years, we just break even. That is, the forest is bringing no money at all to the owners, everything is going back to pay the workers and taxes.
  - Fiahil 6y ago
    I think it's been the case for a long time, that cutting trees and selling them is not financially interesting. My own goal is to get a couple of ha, plant "a few" trees and let them grow without planning on cutting anything for the next century. Nobody is doing that anymore, so it might be interesting to see what happens!
    - Loic 6y ago
      Do it! A forest is wonderful and buying a small lot does not cost that much. But if in France, stay below the 40ha limit to not have to deal with massive costs of having your forest to be managed with validated planning every X years etc. which makes it very hard to keep "wild" areas in it (even more paperwork!).
      - Fiahil 6y ago
        > But if in France, stay below the 40ha limit to not have to deal with massive costs of having your forest to be managed I read about that a while ago! To me it seems like good-intent at first that turned out a complete bureaucratic creep! My question is: Can we decide to "manage" the forest ourselves and be registered as an official "forest manager", draft a management plan, publish any outstanding paperwork, etc ? I'm not sure about which administrative body would enforce the planning and management (municipalities, ONF, ...) I won't go above 40ha for any foreseeable future, so it's probably not an issue!
- mrfusion 6y ago
  Could that couple buy portable milling machinery and start selling finished lumber? My relative had someone come out to his land and turn his trees into finished lumber for his house.
  - cmrdporcupine 6y ago
    They're not operating at cottage industry scale, they're talking hundreds of acres I believe. Those portable mills are more of a cottage/craft industry (I had one come and mill some of my trees a few years ago) I suspect owning a mill exposes you to additional risks as well. I know here in Canada a bunch of the softwood mills in B.C. closed a decade ago, I suspect it's big time boom and bust and now you've got expensive equipment you're in debt for...
  - throwaway0a5e 6y ago
    Good luck buying a sawmill. Every yuppie that fancies themselves a handyman and every landscaper looking for more side gigs had that same idea and sawmills are back-orded as bad or worse than outdoor recreation items. Furthermore, milling lumber is one of those things that only pencils out to be economically in the black at very large scale or at very small scale where you focus on a high margin niche. Then there's regulatory compliance...
    - brodouevencode 6y ago
      This. Good luck getting your hands on a Miser right now.
- RyanPringnitz 6y ago
  Homes in North America are not built with wood from Southeastern US. Wood from PNW and Canada is used. I believe this is why a lot of furniture, cardboard boxes and cabinetry is made in Southeast US. Mills / lumber yards consolidated during 2008-2009 financial crisis. In the years leading up to covid, Canada unintentionally lowered lumber prices by cutting down trees that were infested with a certain type of beatle. At the same time, Canada was reducing the number of (healthy) trees allowed to be harvested for wood every year. Some have argued that wood prices have been too low, for to long. The industry has never recovered from 2008-2009, and has a conservative mindset. There are definitely a lot of perspectives to hear in this equation. I like a quote from this podcast; higher prices cure high prices. Transcript: Stinson Dean On The Soaring Price Of Lumber ["https://www.bloomberg.com/news/articles/2021-04-29/transcript-of-stinson-dean-lumber-episode-on-odd-lots https://www.bloomberg.com/news/articles/2021-04-29/transcrip..."]
hedora 6y ago
Prices were spiking before the pandemic. Immediately after Trump’s tariffs Canada (and, also China), $/sqft increased over 20% for new construction in the SF Bay Area. I imagine the percentage increase was higher in places where labor and bureaucracy are a lower percentage of construction costs.
- balozi 6y ago
  Prices in Canada are just as high.
  - bonestamp2 6y ago
    They're very high in Canada compared to two years ago, but then the US government adds a 9% tariff.
jartelt 6y ago
Another issue is rail capacity for transporting lumber from sawmills. Even if the sawmills were able to ramp up and massively increase their supply, we could run into a bottleneck with transport. The mills typically sign contracts with rail companies ahead of time (based on projected demand) and it's not likely they could all of the sudden get double the number of trains if supply went up.

cmrdporcupine 6y ago

WSJ youtube had a segment the other day on the price increases and shortages but pointed out that this isn't necessarily translating into increased prices paid for trees, and interviewed a couple who own a wood lot in Georgia (for 40 years) who sounded like they were barely getting by: https://www.youtube.com/watch?v=m_5MkGbXXKc https://www.youtube.com/watch?v=m_5MkGbXXKc So yeah, problem is at the mills.

deleted 6y ago
[deleted]
mcphage 6y ago
Ah yes, the proverbial "trouble at mill."
xyzzyz 6y ago
Additionally, the wildfires in the Northwest also contributed to glut of timber. The wildfires kill the trees, but usually don’t destroy the timber, which is still good for harvest — however, it must be harvested quickly before it rots or gets infested by insects. Thus the owners of burned timberlands are scrambling to harvest the timber ASAP. This results in plenty of cheap logs, but since sawmills aren’t keeping up, its a double whammy to owners of burned timberlands: not only they have to harvest at less than optimal time, they also have to pay top dollar for logging crews as everybody else is also scrambling to harvest their burned timber, and selling the logs for cheap, as there are so many sellers and too little milling capacity.
Loic 6y ago
As a plot owner, at least in Europe, you cannot make a living with just the trees. At the moment, and this is expected to worsen with the time, we go through series of very harsh weather conditions over long periods of time. We have a lot of wood getting lost or sold at the cost of harvesting (if not less). You basically lose 20 to 30 years of taking care of the trees and you need to "restart" the forest naturally afterwards, because anyway, you have no ideas what could be the right kind of trees to support the climate change. You lose money on the forest, the land is getting more value, but it means just more taxes nothing more. At the moment, it does not make sense to own only the land, the value is extracted one level above. But here in Europe (at least in France), forest is owned by a lot of people. Many, many people have 1ha or less, here and there, because of the agricultural tradition of the country (forest has been growing again on not taken care of fields). Source: We have about 300ha, taken care of in a "sustainable" way (all the stuff you read about the "best/ecological" way to take care of a forest) for the past 30 years, we just break even. That is, the forest is bringing no money at all to the owners, everything is going back to pay the workers and taxes.
- Fiahil 6y ago
  I think it's been the case for a long time, that cutting trees and selling them is not financially interesting. My own goal is to get a couple of ha, plant "a few" trees and let them grow without planning on cutting anything for the next century. Nobody is doing that anymore, so it might be interesting to see what happens!
  - Loic 6y ago
    Do it! A forest is wonderful and buying a small lot does not cost that much. But if in France, stay below the 40ha limit to not have to deal with massive costs of having your forest to be managed with validated planning every X years etc. which makes it very hard to keep "wild" areas in it (even more paperwork!).
    - Fiahil 6y ago
      > But if in France, stay below the 40ha limit to not have to deal with massive costs of having your forest to be managed I read about that a while ago! To me it seems like good-intent at first that turned out a complete bureaucratic creep! My question is: Can we decide to "manage" the forest ourselves and be registered as an official "forest manager", draft a management plan, publish any outstanding paperwork, etc ? I'm not sure about which administrative body would enforce the planning and management (municipalities, ONF, ...) I won't go above 40ha for any foreseeable future, so it's probably not an issue!
mrfusion 6y ago
Could that couple buy portable milling machinery and start selling finished lumber? My relative had someone come out to his land and turn his trees into finished lumber for his house.
- cmrdporcupine 6y ago
  They're not operating at cottage industry scale, they're talking hundreds of acres I believe. Those portable mills are more of a cottage/craft industry (I had one come and mill some of my trees a few years ago) I suspect owning a mill exposes you to additional risks as well. I know here in Canada a bunch of the softwood mills in B.C. closed a decade ago, I suspect it's big time boom and bust and now you've got expensive equipment you're in debt for...
- throwaway0a5e 6y ago
  Good luck buying a sawmill. Every yuppie that fancies themselves a handyman and every landscaper looking for more side gigs had that same idea and sawmills are back-orded as bad or worse than outdoor recreation items. Furthermore, milling lumber is one of those things that only pencils out to be economically in the black at very large scale or at very small scale where you focus on a high margin niche. Then there's regulatory compliance...
  - brodouevencode 6y ago
    This. Good luck getting your hands on a Miser right now.
RyanPringnitz 6y ago
Homes in North America are not built with wood from Southeastern US. Wood from PNW and Canada is used. I believe this is why a lot of furniture, cardboard boxes and cabinetry is made in Southeast US. Mills / lumber yards consolidated during 2008-2009 financial crisis. In the years leading up to covid, Canada unintentionally lowered lumber prices by cutting down trees that were infested with a certain type of beatle. At the same time, Canada was reducing the number of (healthy) trees allowed to be harvested for wood every year. Some have argued that wood prices have been too low, for to long. The industry has never recovered from 2008-2009, and has a conservative mindset. There are definitely a lot of perspectives to hear in this equation. I like a quote from this podcast; higher prices cure high prices. Transcript: Stinson Dean On The Soaring Price Of Lumber ["https://www.bloomberg.com/news/articles/2021-04-29/transcript-of-stinson-dean-lumber-episode-on-odd-lots https://www.bloomberg.com/news/articles/2021-04-29/transcrip..."]

hedora 6y ago

Prices were spiking before the pandemic. Immediately after Trump’s tariffs Canada (and, also China), $/sqft increased over 20% for new construction in the SF Bay Area. I imagine the percentage increase was higher in places where labor and bureaucracy are a lower percentage of construction costs.

balozi 6y ago
Prices in Canada are just as high.
- bonestamp2 6y ago
  They're very high in Canada compared to two years ago, but then the US government adds a 9% tariff.

jartelt 6y ago

Another issue is rail capacity for transporting lumber from sawmills. Even if the sawmills were able to ramp up and massively increase their supply, we could run into a bottleneck with transport. The mills typically sign contracts with rail companies ahead of time (based on projected demand) and it's not likely they could all of the sudden get double the number of trains if supply went up.