While checking social media, I came a cross this article from ARCHITECTURE AU on LinkedIn. The Austrailian publication has great content. “The Buildings We Deserve” is a Q&A with Andrew Waugh. Andrew is the co-founder of Waugh Thistleton, a London-based architecture firm that specializes in Timber structures. Timber in much of the world is used to refer to lumber. More specifically, in the case of Waugh Thistleton, they are referencing Cross Laminated Timber (CLT).
The following is from a Column that I write for Timber Processing Magazine and appears in the June 2017 issue. Special thanks to Rich Donnell and the team at Hatton-Brown Publishing for providing the platform for me to share my thoughts.
The duties imposed on Canadian softwood lumber imports to the United States has everyone talking. That includes the National Association of Home Builders. As I was reading and writing on this subject I came across several quotes and ideas that simply aren’t accurate. Some statements from the NAHB stood out.
The first comments I will highlight are from comments made on NAHB’s own website dated April 25th, 2017. This statement is titled “Statement from NAHB Chairman Granger MacDonald on Comments by Commerce Secretary Ross Regarding Canadian Lumber Tariffs.”
“If the 20 percent lumber duty remains in effect throughout 2017, NAHB estimates this will result in the loss of nearly $500 million in wages and salaries for U.S. workers, $350 million in taxes and other revenue for the governments in the U.S. and more than 8,200 full-time U.S. jobs. Lumber prices have already jumped 22 percent since the beginning of the year, largely in anticipation of new tariffs, adding nearly $3,600 to the price of a new single-family home.
“Clearly, protectionist measures to prop up domestic lumber producers at the expense of millions of U.S. home buyers and lumber users is not the way to resolve the U.S.-Canada trade dispute or boost the U.S. economy.”
These numbers do not pass the smell test. Lumber has gone up about 20% since Trump was elected President. In the world of wholesale lumber that equals about $85 per thousand board feet. If a single-family house uses 15,000 board feet of framing lumber that increase represents $1,275 increase over the period, not $3,600.
What about the loss of jobs? Are we to believe that due to an increase of $1,275 per new home start would have such a disastrous effect on home building? US Census figures put the average home price in the US over $350,000 including land. An increase of .3% will not have those effects.
Realities of International Trade
Another quote from another statement dated April 21st, 2017 from Mr. MacDonald, NAHB Chairman says:
“The fact that Canada is seeking alternative sources to the U.S. for its lumber exports should serve as a wake-up call to Washington policymakers. More than one-third of the lumber used in the U.S. last year came from exports because the U.S. does not produce enough lumber to meet the nation’s needs. Home builders need a consistent, reasonably priced supply of lumber to keep housing affordable for hard-working American families.”
Granger MacDonald seems to be referring to a statement made by West Fraser about looking to export more lumber to China. Before I continue, I want to state that I have a great deal of respect for West Fraser. It is one of the most forward thinking and intelligent forest industry companies in the world. The only reason West Fraser would choose to send lumber to one market over another would be for strategic pricing purposes. Even with the duty, West Fraser along with every other mill in Canada will continue to send lumber to the market that gives their company the best chance to succeed. In the long term, that’s the United States.
China, Japan, Australia, and other worldwide consumers of lumber will continue to buy lumber from the US and Canada if it makes financial sense. Until this most recent increase in lumber prices, the United States and Canadian builders enjoyed some of the lowest lumber prices in the world. Not only that, North American wood fiber is some of the best quality and strongest lumber in the world. Even at $435/mbf, home builders in the US are getting a fair deal when it comes to lumber. (UPDATE: As of June 8, 2017, the price of framing lumber as reported by Random Lengths has dropped to $398/mbf.)
More Bad Math
On April 25th, 2017 NAHB released another statement, this time with both bad and good information. This one was titled “Proposed Lumber Duties Will Harm Consumers, Housing Affordability.” Here’s the bad:
These price hikes have negative repercussions for millions of Americans. It takes about 15,000 board feet to build a typical single-family home and the lumber price increase in the first quarter of this year has added almost $3,600 to the price of a new home.
Let’s show some simple math using these numbers. If this is true, that means that lumber would have increased $240/mbf ($3,600/15mbf = $240). If we were seeing a $240 increase on lumber I think it would be time to consider cashing in your chips and wait for the crash, and buy back at a discount. I don’t know where they are getting their information, but it’s not accurate and it has to stop.
What about Logs?
As for the good, from the same statement referenced above:
Increase domestic production by seeking higher targets for timber sales from publicly-owned lands and opening up additional federal forest lands for logging in an environmentally sustainable manner.
This could open the door for discussion that would allow the NAHB and the Forest Industry to jointly enter into discussions with the Trump Administration and Congress on doing a better job managing our forest resources. The United States has some of the best forest practices in the world. We should be focused on making the most of our resources while balancing the needs of society and the environment.
In another quote from Bloomberg in a piece from Joe Light titled “Homebuilders Could Be Losers in Early Test of Trump Trade Policy,” there were numerous parts of this piece that didn’t come together for me, much of which we already covered. The most troubling part was at the tail end.
“Fearing further supply disruptions, the homebuilders’ association has searched for lumber in other countries.
Chile looked like one promising source and the homebuilders sent a delegation there in September to meet with producers. But weeks of fires this year ravaged Chile’s forests, making it unlikely the country will be a large supplier anytime soon.”
Time to come together
The US lumber producers really need to work with groups like NAHB to educate them on the issues. If their interest is more stable pricing, then we should develop a coalition to make more wood or logs available to US producers.
It’s time to reach out and build collaborative strength with groups like the NAHB. The builders certainly have a stake in this value chain. It’s up to us to inform them of our issues and interests. This whole issue is about fair trade. We all have more in common than what may put us at odds. Identifying our collective interests is the best way to find solutions everyone can prosper from.
European Mass Timber Tour
May 22nd to May 26th, we had the opportunity to visit the epicenter of Mass Timber. Europe has been developing the market for mass timber production and construction for more than a decade. It’s not much of a surprise to see Cross Laminated Timber (CLT) and Glue Laminated Beams (Glulam) structures in most parts of Europe. And that is continuing to grow.
On May 23rd, we stopped in London to see Waugh Thistleton. Considered by many as the world leaders in Mass Timber design. They have many projects completed with many more to come. There’s a small, unassuming sign above the mid-block, street level entrance. The firm looks like many architecture firms. Two rows of desks with designers quietly looking at their screens, adjusting current projects.
We were quickly greeted by Karis Eaves, who had helped arrange the visit. Unfortunately, we were not able to spend any time with the ever-busy Andrew Waugh, but he set us up with Architect Luke Pawlina. We were quickly outfitted with hard hats and safety vests to visit a nearby site. We walked for about 7 minutes to their latest project. A five-level timber structure of CLT called Pitfield Street. The project will be a beautiful mixed residential structure, that when finished, will look like the beautiful 1914 structure Hoxton Cinema.
Waugh Thistleton works hard to find projects that will be best suited in Timber because they have a strong conservation ethic. As Andrew Waugh says in his speaking engagements, they don’t think it’s enough to build without considering the primary building products. Simply including solar power or wind power isn’t enough. To be truly eco-friendly, the choice of Timber helps store the embedded carbon in the wood. At the same time using CLT and Glulam helps support healthy, managed forests and rural economies. A true win-win. We salute Waugh Thistleton. We are grateful for the time spent with us while in London.
Our next stop was in Munich, Germany. From there we drove 2 ½ hours to the small village of Sachsenburg, Austria. There you will find a quaint little mountain town with lots of history. Sawmilling and timber experts, Hasslacher Norica Timbers are headquartered here. They recently celebrated 115 years of business. Their sawmill and value added facility is an ever-expanding site with many new timber buildings housing new projects. The sawmill is impressive, but it’s what they do following that really sets them apart.
They look to add the most value possible at each stage. They create biomass power, produce wood pellets, beautiful pattern boards, and all types of Glulam beams. All in one integrated facility. 20 miles away they have another very impressive plant that produces CLT. This was my second visit to Hasslacher in 15 months. The change in that time was truly impressive. And more changes are on the way.
The Glulam plant is amazing. It combines two Kallesoe multi beam presses that lead to multiple Hundegger CNC lines for finishing. The beams can be produced up to 88 feet in length. It appears that nearly everything is produced with a destination in mind. A far cry from the commodity production seen in so much of North America. The buildings themselves are incredible. Massive timber beams supporting CLT and Glulam paneled roof systems. They made all the walkways or catwalks with wood. It’s awesome.
The CLT plant has a Kallesoe press capable producing 8-foot-wide, 60-foot-long panels. This unique layup line allows for openings prior to being pressed. Allowing for better lumber utilization. Springer wood handling equipment help move the lumber and lamellas into place. Following the press the panels are transferred to the Hundegger CNC line. Since the last visit in February of 2016 they have added on to the building and added a new CNC line from the SCM Group. This time of year, the plant is buzzing with activity with pressure behind every order.
A new Kallesoe press is being delivered in October 2017. Upgrades to the finger jointing and pressing should nearly double their capacity to produce CLT. It’s incredible to see how much value they are adding to what was traditional lumber.
Off to the world-wide wood show in Hannover, Germany. This marks the third time I’ve attended Ligna. It never ceases to amaze. I don’t know that I’ve ever been able to see the entire thing. To say it’s huge is an understatement. Massive halls with everything from small hand tools to large robots. Some displays are fully functional wood handling systems with demonstrations on going. Others had full size equipment on display before being shipped to its final destination somewhere in the world. Companies like Ledinek, System TM, Microtec, Springer, Weinig, Linck, Nicolson, Conception, USNR, had displays to name a few. We also spent time with friends from Veisto, Valuetec, Kallesoe, Minda, and Henkel.
If you like wood this is the place for you. Outside, between the halls there are trucks, lift trucks, logging equipment, personal hobby sawmills, and everything in between. Attendees from all over the planet come to see the latest and greatest in their respective market segment. The overall sentiment and outlook of the visitors was very positive according to many of the exhibitors. Deals were being discussed regularly with many quotes being put together for future purchase decisions.
For some companies, Ligna is only a short drive. Minda is one of those. Being 90 minutes from show floor, we arranged a factory tour. Gerhard Binder was kind enough to break away from the show to let us see the company’s manufacturing capabilities. The weather couldn’t have been better. It was sunny and clear with warm temperatures. When we arrived, the place was a ghost town. You see, Thursday was the European Father’s Day and that leads to a long weekend with very few working on Friday or the weekend.
The lack of activity allowed us to walk through the work stations and see the components up-close and personal. We saw some familiar names on some of the almost completed projects destined for North America. Respectfully, we won’t name them here. We were impressed by the facilities and the components. In the office there were displays of completed lines as well as product renderings. Minda has been around for a few decades now. They have a reputation for building quality and innovating in mass timber and corrugated box markets. I look forward to seeing more of their products in action in North America and worldwide.
This week was awesome. Hopefully the notes we took will help us recall much of what we witnessed. This trip showed us that mass timber is here to stay and growing rapidly. Adding value in the form of CLT and Glulam will have a serious positive effect on markets over the next few decades. There’s a great deal of opportunity in all markets to take advantage of possibilities. Once critical mass starts to take hold in North America we think it could be even bigger than what’s happening in Europe. It would sure be a good way to re-shape how we manage the intermountain forests. Providing value to urban infill needs with an eco-friendly product that also helps support rural economies while providing forest restoration. This is a worthy endeavor and we need to make this vision a reality.
We’ve seen the future. Now we just need to apply the sensibilities of the North American marketplace and build a new future for America’s forests.
What does SLA mean? For those of you that haven’t been in the lumber world, it means Softwood Lumber Agreement. This is used to refer to the agreement that the United States and Canada had for 10 years starting in 2006. Essentially it is the agreement between the two nations that regulate the trade of softwood lumber.
This issue it complicated because there are so many different details. Since we have two countries supplying the same market it is important the playing field is level.
Something finally happened. The US government imposed a 20% duty on Canadian softwood lumber imports to the United States. Everyone seems to have an opinion.
For those that think this is something new, it’s not. This dispute has been going on for decades and will continue far into the future. Why, because both nations rely on each other, yet there are enough differences to cause market problems. Let’s keep in mind that we just completed a decade-long (2006 -2016) Softwood Lumber Agreement that included duties and quotas on lumber entering the US marketplace from Canada. Continue reading “North American Softwood Lumber: 20% Duty”
On March 28th & 29th in Portland Oregon, the second annual Mass Timber Conference took place. Hosting approximately 800 attendees, speakers, and exhibitors to discuss everything to do with mass timber. The well-attended conference was organized by the Forest Business Network.
Each day had a morning general session with keynote speakers that included renowned London-based architect Andrew Waugh. His firm, Waugh Thistleton, has completed many of the largest timber structures including the world’s largest Cross Laminated Timber (CLT) building, Dalston Lane. Continue reading “Mass Timber Conference 2017”
I said I would write more about reorganizing the Forest Service. Before we take a deeper dive, let’s look at our current land management structure. The Department of Agriculture oversees the US Forest Service. The Forest Service manages 193 million acres of land, much of which is forests. The Department of Interior oversees the Bureau of Land Management and the National Park Service. The BLM manages a total of 247 million acres, 58 million of which is managed under Forests and Woodlands. The National Park Service (NPS) manages our National Parks, National Monuments, Historical Sites, and National Recreation Areas. Continue reading “How Many Agencies Does It Take?”
It’s not entirely rare for me to get calls from reporters. It tends to happen locally when either our company or the collaborative that I’m a part of is in the news. I enjoy the opportunity to tell the story. If you’ve ever been quoted in the newspaper, you start to see very quickly that the news is often based on how the reporter either interprets what you said or how that reporter wanted to use what you said to support their slant on the story. After writing this blog, I have a new appreciation for creating content. It must be a difficult task to do every day with a deadline. There are times, once in a while, where you see a reporter that is either in a hurry or just has decided not to do their homework.
That happened to me the other day. I received a call from a reporter from a newspaper in Montana. I’ve done a considerable amount of work in Montana and know the state pretty well. The reporter said that he had been following a blog that has subsequently picked up some of my writings. Then he said something that caught my attention, but I didn’t immediately think much of it. He said he was doing a year-end article on forest products companies “down here” in Montana. I thought it was funny, as I live in Washington. Although where he was located in the state was geographically southeast of where I’m from it’s still not the way I’d expect to hear it described. He went on to say a few things about the forests and lumber trade. Then he said it.