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Fibre and labour key to lumber recovery

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to work on recruiting people to the industry and to address the large number of private woodlot owners who have withdrawn from the sector.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.