Fibre and labour key to lumber recovery
April 2, 2012
By Scott Jamieson
April 2, 2012, Moncton, NB - Speaking at the Canadian Woodlands Forum AGM last week, Peter Woodbridge of Woodbridge Associates Inc., outlined why he feels strongly that when the industry takes off in 18 months, those with access to wood and the people to harvest and process it will be in the catbird seat.
His forecast involves the convergence of a range of
domestic and global factors, all essentially waiting for even a mild
recovery in US housing to explode. These include:
- China: Woodbridge does not share the concerns of some analysts
who feel the housing boom in China will be short-lived. The coming
starts will dwarf anything happening in the US or Europe, he feels, creating a
massive demand for lumber and building systems. Much of BC's production
will continue to go here, creating a vacuum south of the border.
- Brazil: Timber production here has hit a plateau, as the land
available for plantations is limited, and government policy is heavily
favouring the use of fibre for bioenergy, especially to fuel the
country's cement industry.
- BC Interior: Pine forests have been devastated, and will take
decades to recover. This region was a dominant player in the US housing
market, especially in machine stress rated (MSR) lumber, leaving an opening for other regions with wood, such as Atlantic
Canada and, to a lesser extent, Ontario or Quebec.
- US housing: While still in the doldrums, Woodbridge expects it
will regain the 1.5 million start mark within the next few years. As
this happens, there will be very little elasticity on the supply side.
- Labour constraints: Employment in forestry is a shadow of what
it was in 2004. Many of the players have left the industry to pursue
other opportunities, and like many of us, Woodbridge expects few will
choose to return when the cycle rises. That will mean a host of newbies to recruit, reduced
production as the traditional father-son training cycle is broken,
financing challenges, and reduced shifting.
Add this all up, and we are in for a unique recovery cycle, and one
in which suppliers that have an answer to both the timber and labour
issues will do very well. Woodbridge suggests a few other ways to
maximize that recovery. Building systems will be a key market
opportunity as the US housing sector also deals with its own skills
shortages; component suppliers will do well. MSR lumber will be in demand, as the BC Interior supplied close to 85% of those products in the past.
To capture all these opportunities, Woodbridge urges the Atlantic
provinces to work on recruiting people to the industry and to address
the large number of private woodlot owners who have withdrawn from the
sector. It would also be a good idea to take care of your equipment and technology needs before the boom if you have the available cash flow.
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