The do-it-yourself binge that emerged during COVID isn’t expected to continue in 2021. But the trend contributed to the demand for wood products and pushed up prices in 2020, according to Todd Morgan, director of the Forest Industry Research Program, of the Bureau of Business and Economic Research.
Morgan’s forecast for the industry in 2021 was a generally positive one.
At the same time in 2020 that consumers were buying more for fixing up and remodeling, to while away the stay-at-home mandates, wood products supplies were reduced even more by production slowdowns and curtailments. Lumber shipments from Canada declined due to limited timber supply and reduced milling capacity. The result was “historic price hikes in lumber and panel markets responded, reported Morgan. “The Random Lengths framing lumber composite price index increased nearly 150 percent the beginning of 2020 to its record high in September, when it started to slowly decline. In Montana, delivered log prices to mills were up 6% to 10% from 2019, just a small increase compared to national lumber prices.”
While new housing starts slowed down in March and April, as economic mandates befell the business world, there were other events that boosted activity throughout the year. There was a lot of post wild fire rebuilding and “a fairly mild winter through the end of the year that supported higher demand for wood products.”
“What we saw in wood products manufacturing were slight declines in earnings and in the number of employees.”
The forecast for wood products in 2021 are mixed, but generally positive, according to Morgan. Lumber and plywood demand is expected to remain strong. New housing starts continue to increase, and the home repair and remodel markets are expected to contribute to strong wood products sales. Likewise, there are positive signs for Montana on the forest management side.
In the longer term forest products has been declining since the 90s. It “has been relatively flat since end of recession,” and predicted earnings will continue to be down and so will employment levels. Although, “we have seen some recovery in workers and employment in forestry support services.”
In Montana, in 2020 employment was down 8.5%, wages were down 6.7% and lumber production was down 16.5%. – “but not all because of COVID” – in fact when surveyed log buyers and mill controllers reported limited to no impact on their operations due to COVID.
The R-Y sawmill in Townsend curtailed operations mid-year because of a lack of log supply, which had been announced in January 2020. The Idaho Forest Group’s sawmill in St. Regis was down several months for a planned equipment upgrade, then resumed operations in August.
“Montana mills were generally able to continue operating. Even when they had sufficient logs to fill lumber orders, some mills were hard-pressed to match sales and shipping demands. This frenzy was short lived as mills worked through their log inventories while waiting for logging crews to get back into the forest after spring breakup. Lumber production in Montana through the first nine months of 2020 was 318 million board feet (MMBF), down 12.5% compared to the same period in 2019. Employment at Montana mills over the same period was down almost 5%, and wages paid to production workers slipped by about 10.6% compared to 2019.”
Earnings have gone up and primary sales have gone up, said Morgan, but “all that gain has been because prices have gone up and not because of production has.” Production actually declined slightly since 2014.
Lumber production peaked in 1988, and has been declining since even though housing starts have been increasing. That has to do with log supply, said Morgan. Log supply in the state has declining from private and national forest lands. Mills in Montana are operating close to capacity levels.
There are positive signs for Montana on the forest management side, said Morgan. State and federal agencies continue to cooperate under the 2014 Farm Bill’s Good Neighbor Authority to restore forest health, reduce wildfire hazard and harvest timber to meet ecological and economic objectives.
A total of 291,000 acres of former Plum Creek/Weyerhaeuser land was purchased by Green Diamond with plans to manage it as working forests open to the public.