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36 | Sector Focus: North America


SUMMARY


■ The US hardwood sector was damaged by the US/China tariff war


■ China-centric species, such as ash, cherry and red oak lost value


■ Few sawmills or yards shut down due to the pandemic


■ Some hardwood mills switched production to softwood


TO BOOST DEMAND POST PANDEMIC


DEMOGRAPHICS The US hardwood sector has been tested by the health crisis,


but American population trends point to strengthening long-term demand, Hardwood Market Report editor Judd Johnson told Mike Jeffree


Of course Covid-19 hit the timber industry globally. But according to Judd Johnson of the Hardwood Market Report (HMR) the impact on the US hardwood industry was heightened as the pandemic struck when the sector’s resilience was already diminished.


“As a prelude to how Covid affected business, you have to take account of the financial damage to the US hardwood supply grid caused by the US/China trade war and China’s soft economy in 2018/2019,” said Mr Johnson.


Eastern US hardwood sawmill production Cubic meters - Annualised


24,000,000 22,000,000 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0


Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2021 HMR 2018 2019 2020 2021


“We estimate that US hardwood sawmill production decreased 8.2% in the 18 months from mid-2018 through year end 2019.” This was a substantial decline, but output contraction was less of a problem than loss of value for grade lumber in China-centric species, such as ash, cherry and red oak. “Between the direct hit on prices and shift in production from this grade lumber to more industrial products, US hardwood mills could easily have lost up to 40-45% of revenue from the China downturn. Not every US mill or lumber yard experienced that sort of contraction, but all saw sharp revenue declines and lost money. So substantial wealth was sucked out of the US hardwood supply grid leading up to 2020. Then came Covid-19.”


Few sawmills or yards shut down due to the pandemic, although, according to Mr Johnson, the difference for many between staying in business and closing was the federal government’s Paycheck Protection Plan. But federal government strategy also made securing labour a challenge. By supplementing laid-off workers’ state unemployment benefit, it meant many received more money than their normal salaries.


“It paid them more not to work and effectively companies found themselves competing against federal government when rehiring laid-off employees,” said Mr Johnson.


TTJ | May/June 2021 | www.ttjonline.com


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