April 6, 2021 by Alan Coors
It has been just over a year since the COVID-19 pandemic reached Canada. Since then, almost every aspect of life has changed. In forestry, it affects how we build, trade and purchase, and how we live and work.
Appropriately, this is the theme of the Virtual Montreal Wood Conference (MWC) held on March 24 this year, which is called the Montreal Wood Conference Experience.
The event mainly included a panel discussion between four CEOs: Cees de Jager, CEO of the Cork Timber Committee; Kevin Edgson, President and CEO of EACOM Timber Corporation; Craig Johnston, President and CEO of Forest City Trading Group; and Andy Gu Deman, President and CEO of Sherwood Lumber Company.
In response to the pandemic, most companies have transitioned to let as many employees as possible work from home. This is the case for every company represented by the team members.
De Jager, who chaired the group, asked a question: As vaccinations increase, the changes in our working methods are permanent. Will we resume work as before the pandemic, or will it be completely different?
Most panelists agree that there may be more flexibility in the future in allowing employees to work from home, and some companies are considering a hybrid model.
This change in the way we work has also affected the way we build. De Jager said this trend has shifted from multi-family homes to single-family homes. The demand for non-residential buildings—especially the hotel industry—has been reduced, and the repair and renovation (R&R) market is very strong. Since last summer, the industry's demand for timber has surged and prices have remained high, which has led to this situation.
But are these trends a temporary or long-term response to the pandemic?
Goodman said that since the 2009 financial crisis, housing demand has been suppressed, and millennials now account for the largest proportion of first-time homebuyers. This demand is even higher and housing demand exceeds supply.
There is also a tendency for families to leave cities for rural, "safer" areas. However, he said, cities always recover after experiencing such crises.
Johnston agreed, noting that as we recover from the pandemic, we will see more people move back to the city and the multi-family sector will make a comeback.
"I think you must first realize that the urbanization trend in the past 100 years has been very stable and that these driving factors have not changed," Edson added. "What's happening now is more of a slowdown and a flattening of the urban-rural division. With the arrival of the next generation, and the next generation, we may see people return to the city."
Even if the vaccine is launched, the strong R&R market may continue into 2021. According to Johnston, the summer market may slow down, but as people hope to complete the projects that were planned a few months ago, demand for the product will remain fairly stable.
"R&R has always been a very stable part of our business," Edgson added. "This is an important part of the market. It may not be as strong as new house construction next year, but I don't think it will weaken."
However, this is not all good news for forestry—the industry still faces labor shortages, even if the unemployment rate returns to pre-pandemic levels, Dejager said.
When an attendee asked how the industry plans to increase the diversity of its workforce, Edgson admitted that the industry has encountered difficulties in overall recruitment.
“Therefore, the source of this solution will be part of the population that is currently underrepresented in our industry, whether it is gender or ethnicity,” he said. "To attract these people, we must first recognize which aspects of our industry are not attractive, and we must ensure that opportunities are discovered. This is a process of education and participation."
Like any other forest products company, EACOM has felt the impact of labor shortages. Edgson said that, therefore, the company has been proactive in terms of participation, striving to involve a wider range of people, and introducing it to people who may not know the industry. They also recruit foreign workers through federal programs.
"This is an educational issue for us, in terms of the conditions needed to encourage people to join us, frankly, we educate these people about what these opportunities are."
The labor contraction will also affect how we use wood to build houses. All team members agreed that the lack of skilled workers helped drive the trend from on-site construction to off-site precast construction. Goodman explained that in addition to being safer and more cost-effective, this type of structure allows you to arrange skilled workers more efficiently.
"In the final analysis, all aspects of the work we do in terms of control and quality have been valued," he said. "Facts have proved that the work control and quality of off-site construction is better than on-site construction. Therefore, I think it will stay here and will continue to rise."
Johnston agreed and pointed out that his company's customer base for off-site construction continues to grow, which is a growing market segment.
"I think this is an evolution that will continue to develop, and people will continue to be attracted by the opportunities provided by softwood timber," Edson added. "A lot of wood is a good example."
When it comes to large amounts of wood, the panelists agreed that this is a growing trend with multiple benefits. However, there are some challenges in its adoption, including the knowledge of architects and contractors and the reliability of supply.
"I think this is an evolution that is about to happen," Johnston said. "Education about the large amount of wood in construction is imperative."
de Jager added that the understanding of the entire supply chain is improving and will continue to improve in the coming years. He said that despite the current tight supply of timber, large timber is part of the long-term trend that Canada and the United States will occupy.
However, at present, the increase in demand for wood and the reduction in US interest rates are putting pressure on the entire supply chain.
So, the question now is where does the wood come from? Reinhard Binder, the owner and CEO of Binderholz, stated that it will not come from Europe. In an interview with Quebec’s softwood and value-added timber manager Sven Gustavsson, he shared Europe’s views on the North American timber market.
According to Gustavsson, the volume of imported wood from North America in 2020 will increase from 3.5 million cubic meters in 2019 to 5 million cubic meters in 2020. The Forest Economic Adviser (FEA) estimates that consumption in the region will increase by 10 million cubic meters by 3 million meters in 2021 and 3 million meters in 2022.
However, "the European market is empty," Binder said.
“The United States is booming, but in the Far East, such as China, the consumption of wood products is rising. China goes to Eastern Europe to purchase logs and other materials for the packaging industry. We have no wood at all,” he explained.
Therefore, the North American timber market will need to find supplies from other sources to meet demand.
Johnston believes that part of the supply will come from the southern United States. He shared that a new sawmill in the area has recently come online, which can produce 3 million trillion British mana per week.
Goodman agreed, adding that the US government wanted to see whether sawmills could use their existing operations to produce more wood.
However, "I think we will face the challenges of high prices and certain supply channels that are drying up," he said. "I think nothing can provide short-term relief."
In order to solve the shortage of supply in the near future, he believes that builders will start to use alternative products, such as different kinds of wood or prefabricated wood. Ultimately, he hopes to see a balance between supply and demand.
It is not just timber traders and customers that are affected by global supply tensions. Wood manufacturers (such as EACOM) are struggling to find the logs needed to meet demand.
"As far as Canada is concerned, almost all of the sawnwood supply has been allocated," Edson said. "As we improve and optimize, we may see incremental improvements, but there is no overall sawing quality.
“There are some areas that need additional logging, but we are looking for low-grade logs that may be more suitable for biomass or pulp and paper,” he continued. "We really suit Canada."
Looking to the future, the participants agreed that although the current timber market situation is abnormal, it will not return to the state before the epidemic.
"The new normal will be a different type of operating environment, but we will adapt," Dejager said. "But I think the future for all of us is bright."
I hope we can overthrow the timber tycoon. It is wrong to get rich from pandemics and depleted natural resources. I believe they don’t have to worry about putting food on the table. Leave the forest alone. We need to build a better alternative than wood, and come from carpenters. The technology is there, let's do it. Stop buying wood, stop building houses with wood, and let these greedy bastards kneel down.
I built a new roof for my house last year. It was built with rough sawn boards 90 years ago. About 10 or 12 years ago, I used 7/16 OSB to spread the roof, which I bought for 3.52 cents. There are a bunch in my barn. Now its price is almost 10 times its price. This is crazy and unsustainable. I am now retired, but if I try to keep up with inflation, I will have to make $420 per hour.
The article did not mention that due to the closure of many factories in the United States and Canada, factory output has dropped significantly from 2019. These companies did not reopen them because they enjoyed the sky-high timber prices. This is similar to OPEC pushing up oil prices through production cuts. At the same time, wood producers get much less raw materials than they were two years ago, because the factory has many timers available, but as production drops, there is an oversupply of raw materials. As the author wants us to believe, there is no shortage of supply. At the same time, steel mills drove us up by 500%. shameful.
The Democrats are using free money to buy votes. Timber companies (4) wanted to get their due share, so they artificially created a shortage of channels, eliminated various completely unfounded reasons, and increased prices by 400% to consumers. No, this is not a family project. This is not a pine beetle. Find a reason. It seems they don't speak?
Has the price of siding also increased? Especially Diamond Kote...
Are timber prices currently rising or falling? I have about 31 AC 31 year old pine trees, I am interested in selling! About 12 years ago, they became thinner (every three rows)! ? ?
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