There is alot of adjusting happening in the US Building Industry as the labor shortage took its toll on us. We are now adjusting with pre-fab innovation factories to overcome the need for seasoned onsite framers. Pre-Fab factories can find younger labor that is easier to find and train and lessen the need for skilled labor on site building pre-fab components for both stick framed and mass timber buildings.
The Canadian lumber above in the picture was marked blue for very high moisture content after being sorted at the West Fraser Timber Co. sawmill. The mountain pine beetle attacked and killed more than 700 million cubic meters of pine trees in the inland forests of B.C. prompting greater investment in U.S. facilities by some Canadian companies.
*US Builders Need To Look Deeper At The Devil In The Details In “Turn Key Framing Contract” Today Because Cheaper Bottomline May Not Be The Best In Todays Climate. Builders have been subjected to spot buying for years with framers prices including labor, lumber, trusses and hardware. Builders today are concerned with two things in their negotiations with framers today. First, is do they have enough labor with our labor shortage. The second is price and can you lock it in on the lumber market. What happens then, is the framers buy lumber as cheaply as possible from brokers yet much of that cheap lumber is already saturated and has rot and mold on it.
Now That It's Clear Canadian SPF Is Not The Right Lumber Choice Today, Maybe Builders Can Think About Supporting American Lumber Mills That Support American Reforestation And Consider How Turn Key Framing Deals Subject Them To Bad Wood.
The strongest soft wood lumber for US High Density 5 story wood framed apartments today is Doug Fir, because it's has always been supported Best By US Reforestation Programs, where Canada didn’t. Doug Fir has always been the strongest of the softwood but now builders also should consider the Canadian SPF has a short logging deck so quality could be compromised.
SPF shrinkage is not the kind of cutting Canada’s forestry companies wanted to be doing. Canfor Corp. announced last week that it will temporarily curtail operations at three sawmills due to current market conditions, following an announcement of further cuts by West Fraser Timber Co.
The industry-wide move to scale back, is a logical move according to one analyst. “With the economics not making sense – just because the log costs are so high and the lumber prices so low – the logical outworking of that is curtailment, or outright closures,” Kevin Mason, managing director at ERA Forest Products Research, told BNN Bloomberg in a phone interview. “West Fraser has always been viewed as the – if not one of the – lowest-cost producers out there and yet, here they’re [reducing production hours]. Canfor’s taking an ounce curtailment and additional extended curtailments. We’re definitely seeing the fact that even traditionally low-cost-producers are realizing that the current situation is untenable and they’ve got to take production offline.”
Rival producer Interfor Corp. and Resolute Forest Products Inc. both scaled back production in the fall, also citing market conditions. Lumber prices in North America have regained some ground, touching US$418 per 1,000 board feet as of 10:10 a.m. ET on Friday after briefly dipping below US$300 on Oct. 25. The swing was dramatic, with the commodity hitting a 2018 high of US$659 on May 14. The wild swings, in combination with the devastation wreaked by the mountain pine beetle, slowing U.S. housing demand and high log costs have forced many of B.C.’s producers to do what they must to survive. “It’s a bit of a battle,” Mason said. “Which mills are going to survive? And we know regions that there’s not enough fibre in particular regions and we know that mills are going to have to shut, but everyone’s going to do what they can to hold on as long as possible.”
SOUTHERN EXPOSURE Many of the large B.C. players have invested in the southern U.S. to balance their dependence on local Canadian supply. Mason estimates that Canadian firms now own almost a third of production in southern U.S. states as they seek alternate sources. Robert Hagler, principal at Forest Edge, said it’s not just a Canadian concern. “We are seeing capacity move out of the western part of North America, both western Canada and the western United States into the U.S. south, simply because of log supply and production economics,” Hagler told BNN Bloomberg in a Jan. 1
Hagler says the companies that have moved south will ultimately outlast their local competitors.
“What I see is that there’s going to have to be some more capacity declines in places like British Columbia where log supply is constrained, and I see those players who have gone into the U.S. south – diversified geographically – probably doing better going down the road,” he said. Shares of Canfor, Interfor and West Fraser have all gained ground in 2019, while Resolute shares are down three per cent from their final 2018 close. However, an industry leader also sees the U.S. push as a hedge against U.S. President Donald Trump’s softwood lumber duties, which have remained in place since April 2017. “Some companies have invested in the U.S., which is more of a hedge on the trade file, actually, more than anything,” Susan Yurkovich, CEO of the B.C. Council of Forest Industries, said in a phone interview. “The constraints that we’ve had in place would be a 35-year fight around softwood lumber,” she added. “That’s certainly been one of the factors that has led people to purchase or acquire production in the U.S., and they’re doing that.”
FOREST FOR THE TREES So, where do these issues leave the industry? Yurkovich says one of the keys to future success for B.C.’s producers is to lessen their dependence on trade with the U.S. “We have made huge in-roads into China. We have about 25 per cent of our product going there. We see lots more opportunity in China and while China’s economy is slowing, as well, it’s slowing on a massive base. So if they have even five per cent growth on that massive base there’s lots of opportunity,” she said. Mason agreed that diversification was key. “We saw the B.C. guys pivot pretty aggressively in November to China… just because selling into the U.S. market with the duties and everything else, the economics just made absolutely no sense.” However, Mason also said that supply constraints may spell the end of the line for some producers in the province. “At the end of the day there’s just too much iron in the ground compared to the amount of fibre there,” Mason said. “So, we are going to see more mills close permanently. That’s just a reality. The wood isn’t there.”
ITS TIME BUILDERS BUY BETTER WOOD
Why would US Builders Support Canadian Lumber when American Grown and Harvested is Stronger and Better and supports better reforestation programs? Maybe it's because the Framers are doing the buying for the big builders. If National Builders could only realize what John Schwager at The Home Depot did before his retirement to end up with home center grade perfect studs in 2200 stores they would realize their buying strength could put a similar program together for them. If builders would only realize today it's all about change and if they put their yearly buying out in front instead of giving spot buying to all the framers they use they would get consistent quality they are defiantly not getting now. Most framers buy from brokers for the cheapest price. The broker never leaves his office so the framer and the broker only hope for good wood. Today some of the smarter national builder are about to change that. How about if a builder says the the framer and there lumber supplier we will only accept lumber that is wrapped and arrives at 19% or less moisture content and weather wrapping in mandatory. What if the big national builder also adds the penalty clause to reject and delays. Are any of those requests out of line when the Cal Green Code says lumber must be 19% before you dry in and no water staining in allowed on lumber? The builder need to stand up now and demand this before the Construction Defects Attorneys catch wind of design value loss in lumber and EWP products when saturated.
Climate Change For US Builders means saturated lumber should never show up on job sites they should be getting wrapped lumber and weather protected pre-fab walls so its gets in the building free of high moisture content free from rot and mold so in it vertical positions it can never reach the high moisture content reading that can cause engineering design value reduction. The entire supply chain owes this to our great builders they create job for all of us in the supply chain and they. Support our economy.