Will Log Exports Hurt Secondary Wood Products Manufacturers?
Being part of a world economy is usually a good thing that gives US manufacturers a much larger base to sell their products and hopefully increase profits. One situation that is discussed more often is the sale of logs to Chinese sawmills, the affect it is having on US sawmills and the availability of lumber for US secondary manufacturers.
Due to the fact that companies in China are able to pay lower wages and do not have the same regulations as US manufacturers do, they are able to pay more for their logs than US sawmills are.
The 25-35% premium that Chinese buyers are paying for logs make them prohibitive for US mills to buy. As a result, many US sawmills are selling their sawlogs directly out of their yard, instead of sawing them. The result is that sawmill owners are making more profit while also cutting back on the hours their employees are able to work due to the fact that they do not have enough logs to saw.
Overall this sounds like the American way, make/sell a product for the highest price and grow your business.
The downside to this trend is that more sawmills in the US are starting to close as they are making more money selling logs than producing lumber.
This leads to more people losing their jobs and many ancillary businesses that supply sawmills are closing because they are losing their customers, too.
US manufacturers are finding it difficult to purchase lumber to operate their business as the amount of sawmills to purchase lumber from diminishes. As a result, prices are increasing and the availability is tightening.
If enough sawmills close, US manufacturers may have a difficult time purchasing raw material to make their products. Once sawmills close, it would be too expensive and too difficult to build and open a new one.
We as a country must think about this issue for the long term stability of the woodworking industry as we know it today.
The Wood Products Manufacturers Association has been working with companies since 1929 to remain competitive in today's global marketplace. One of our functions as an association is to make companies aware of current and future trends that could possibly affect their business.
For more information please contact Philip Bibeau, Executive Director, 978-874-5445 or visit www.wpma.org