In the woods of cardinal Maine, trees are gaining value by the minute, and lumber producers aren’t sit tight a second. They are scrambling to expand production, build new facilities and cost more workers.
Lumber prices soared over sixty percent since betimes 2017, thanks to a perfect storm that hit Canadian supply. Sooner tree-eating beetles, then forest fires, transportation issues involving a deficit of trucking and rail cars, and finally, last fall, U.S. duties inflicted on Canadian lumber that amount to a 20 percent tax on the commodity.
It all adds up to break in the eyes of Jason Brochu, co-president of Pleasant River Lumber, which runs two mills in Maine, employing 300 workers.
“I think with the duties that are in niche, that’s given us a level of confidence that we didn’t have in the vanguard, and with a level playing field, looking ahead, the confidence we’re at, we’re proficient to expand and produce more lumber,” said Brochu.
The plan, he state, is to invest $20 million in the company over the next two years, improve production by 50 percent and add up to 40 new jobs. A large dirt pit is already technique near the current mill in Dover-Foxcroft, as workers blast open new grouts for additional equipment and machinery.
“You’re seeing it throughout the country where mills are flesh out, or building new mills, and our industry is starting to grow to meet the increase in the requirement,” said Brochu.
Demand for lumber is rising as the housing market continues on its ponderous recovery. Housing starts were up over 18 percent in May year-over-year, conforming to the U.S. Census.
Canadian lumber currently supplies about a third of all U.S. cry out for, and while U.S. producers are planning to expand, there are plenty of roadblocks on the way to new crowd.
“We’re going to need more land that you can harvest lumber on,” express Robert Dietz, chief economist for the National Association of Home Builders. “We’re prospering to need more mills in terms of increasing the production capacity, and that makes materials, it requires regulatory approvals, permits, and hiring, and let’s keep in note the labor shortage has been affecting the housing market from a builder angle. It’s also going to limit the uptake of sawmill producers and transportation to increase that hired help supply.“
Brochu admits it is hard to find enough workers in today’s competitive furnish, and wages are therefore going up. It also takes steel and aluminum and engine parts to build new lumber production facilities, and the U.S. just levied complex tariffs on Chinese imports of these products. Brochu said on that van, he is not concerned.
“It’s not a factor in our decision-making. We’re not looking ahead saying, Oh Jeez, block up might be more expensive so we’d better hold back,” said Brochu. “We deem confident that we’ll be able to put in the equipment we need at the price we need to put it in and increase and grow and we’re gonna do well.”
But so far this year employment in the lumber application has been flat, and production has not increased by very much. The cost of overload has come off its record high in March but is still elevated substantially. That grows homebuilder costs, and builders are thus passing those costs on to customers.
“In 2017 we were expecting the tariffs to increase home prices by here $1,300, $1,400, It’s gone way beyond that, and currently the impact is about $7,500,” told Dietz.
Lumber supply is not keeping up with demand, so prices are unimaginable to lose much ground in the short term. Producers still receive a long runway ahead, which may be why they’re not concerned about the set someone back of expansion.
“We know there are going to be highs, we know there are universal to be lows,” added Brochu. “What we try to react to is confidence. Things that are longer expression give us confidence to spend money to improve the mill or expand the bray.”