The USA timber industry is grappling with depressed demand and job losses, potentially leading to supply chain crunches, shortages, and surging prices.
Maine, a major timber and forest products producer in the USA, is a striking example. The University of Maine report reveals a stark downturn post the Covid pandemic, impacting around 32,000 jobs. This shift has prompted many to exit the industry, directly influencing sectors like home construction and repairs.
For a more detailed overview, refer to the report summary: here.
The study further indicates that Maine’s logging industry’s support of the job market and economic output has shrunk over the past five years. It shows a recent drop in the state’s economic output from $619 million in 2017 to $582 million.”
One-third of forest contractors have left the industry
Dana Doran, the Executive Director of the Maine Professional Logging Contractors Association, highlights the impact of the industry’s volatility, which has driven many contractors to leave.
“In the last three years, about a third of the harvesting and transport sector had essentially walked away for a multitude of reasons,” Doran said.
Doran further pointed out the economic constraints faced by the industry: “Wages paid are not keeping up with inflation,” he explained. “So, we’ve seen about a third of capacity and a third of the employment walk away over the past three years.”
A substantial rise in operating costs further exacerbates this industry-wide issue. Doran estimates these costs have increased an average of 24% over the last two years, affecting everything from tires and hydraulic filters to brake parts and labour.
To compound the problem, Doran added: “And that’s before the price of diesel fuel doubled to more than $6 a gallon in Maine in just the last year.
Operating costs in the forest have jumped 20-30%
Scott Ferland is the General Manager of Maine Woods Co., the largest single manufacturer of hard maple lumber in the state’s northeast.
“We’ve struggled to keep a full workforce,” Ferland said. “It has been a really frustrating time for different reasons, and we have yet to go back to a fully staffed production rate, and I don’t know when that will be.”
Thomas Douglass, who took over his grandfather’s logging business in Maine 10 years ago, estimates his operating costs have jumped 20-30% within the last two years, especially in the previous six months.
But he’s back in the forest, checking on his crew, clearing white birch and other trees for pulpwood from a 28-ha plot outside Portland.
He has four people working for him now, but he’d like to have three more — if he could find the talent and pay them enough to take the job.
Equipment costs, he added, were soaring as well.
“That machine there, I was told the other day by the equipment dealer I bought that machine from — I don’t know if it was worth it or not —, but it cost another $80,000 higher a year later that was plenty expensive in the first place,” he said.
Douglass said because of supply chain challenges, local stores no longer seem to carry what they used to, and the wait times to ship the parts are unreliable.
“Every day you’re waiting for a part is a day you lost because you just can’t make it up,” he said.
Labour shortage could lead to a surge in lumber prices
Dana Doran suggests that the current low prices for wood products may become problematic once demand increases and there’s a shortage of workers.
“When that demand does return, there will be issues with production and supply as all wood products begin in the forest,” he said.
He adds, “If you don’t have a logger to harvest the wood, if you don’t have a trucker to bring it to market, then there’s going to be major restrictions on supply and demand and prices will go sky high. That’s how the market works.”
Doran points out that many mills in Maine are now paying loggers a bonus to offset the cost of fuel, and some are paying slightly more for fibre.
“That’s helped,” says Doran, “but the volatility is forcing some loggers to leave the industry, scale back their operations or retire.”
Finding new markets for low-valued wood could be the answer
This issue is not confined to Maine, Doran insists, and he proposes a potential solution: the wood industry could expand into lesser-explored markets that use wood products.
“What we really need is more markets for low-valued wood. We have a market starting this spring that’s going to make insulation for homes and businesses out of wood fibre. We see opportunities in the next few years to use wood to create biofuel. That could be transportation fuel and a home heating fuel,” he said.
Doran summarises: “Keeping a long story short … if we have more markets, more markets create more competition for fibre, which in turn increases the price that’s paid for that wood fibre, which creates a more sustainable business plan for logging contractors in the long run.”