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Lumber shortages; the ripple effect of supply and demand

saw millMost people don’t realize that the collapse of the housing market all but devastated the logging industry and the ancillary businesses that rely on wood products. Sadly, 2006-2010 brought an end to literally hundreds of family owned saw mills that supply lumber to a variety of business across the nation. An estimated 110,000 jobs were lost throughout forestry sectors during those lean years. The Southeast was especially hard hit, losing 41% of its wood manufacturing jobs. As a result, lumber distribution slowed significantly. The law of supply and demand soon took over, causing a hefty spike in pricing for wood products. Thankfully, the housing market has recovered greatly and so too have the related industries that depend on a steady flow of wood products. Yet, this heightened demand only serves to compound existing shortages. For instance, the railroad business is booming again with government subsidies for rebuilding and restructuring train tracks. Railroad ties made from wood generate an enormous demand for the 6’x 9’ planks that comprise the travel infrastructure. This, in turn, impacts lumber availability for the now revitalized flooring industry. Similarly, the oil and gas industry is finding success with fracking which requires the creation of temporary roadways to support the heavy vehicles traveling into drilling sites. These temporary roadways as well as the necessary protective pipeline construction mats are all made from low grade lumbar. With over 1.1 million active wells in the US today, the oil and gas industry plays an unexpected but substantial role. Today, there is less available raw material than before the economic downturn, with greater demand stemming from multiple markets. Competition for both low and high grade lumber is steep, requiring production to increase significantly in the months and years ahead. Ideally, this will generate more jobs and stabilize pricing. Until then, the race for procurement continues.

Posted on: June 19, 2014
Posted in: Flooring