How Can The Export Of Logs Affect Your Woodworking Business?
One issue we keep hearing about is the number of US companies that are exporting logs, with a majority of the exports going to Asia.
Since the Soviet Union changed their policy on the export of raw logs and since China has banned the cutting of timber (under penalty of imprisonment in labor camps), Asian buyers have focused their attention on purchasing US hardwood sawlogs to supply Chinese mills.
Up until recently, Asian log buyers would visit US sawmills and purchase sawlogs directly at the mill. The buyer would have the sawlogs stuffed into a container to be shipped to their customers.
Buyers would often pay a 20-25% premium, which made it unprofitable for US mills to saw their own logs. Owners were happy to make the additional profit without any expense or risk. We have heard of many mills only sawing 2-3 days per week so that they would have enough logs to export.
To increase their profits, the Asian buyers started to learn where loggers were selling their logs on the landing. As a result they offered the loggers a 10-15% premium over what they were selling the logs to the US sawmills for. The end result was a drastic decline in logs being offered for sale to US mills.
Mills are having a difficult time purchasing logs to fill existing orders for both domestic and Asian customers. Some mills had to start laying off US workers because they don't have enough work to keep them operating full time.
The logs that are being shipped to China are staying in the local marketplace. The problem is due to extremely low wages and no safety requirements, the Chinese mills are able to offer lumber produced from American logs at a 7% lower price than the US sawmills are able to offer delivered to China.
The overall effect for US woodworking companies is that hardwood lumber is becoming increasingly difficult to find, and the price is much higher than it normally would be. The other problem is that manufacturers who had reliable suppliers for their lumber are starting to find mills closing for weeks, if not months, at a time due to no logs.
Granted this is theUS and we operate under a free market business model. The problem is that once sawmills close and go out of business, they are not able to be replaced due to the extremely high costs and government regulations. Many US manufacturers are starting to question the long term benefit to our companies and workforce.
The WPMA has been trying to keep members aware of issues that could affect their business since 1929.
For more information individuals may contact Philip Bibeau of the WPMA at 978-874-5445.