Softwood Lumber & The US Forest Service

Softwood Lumber and the US Forest Service

What do the Softwood Lumber dispute and the US Forest Service have to do with one another?  At first glance, very little.  However, there could be an unlikely connection.  One of the main complaints from the US Forest Industry (Coalition for Fair Lumber Imports) has been that the Canadian Forest Industry had been subsidised with lower-priced logs.  The argument was that the available supply and low prices allowed Canadian mills to ship lumber to the US market at a profit while US mills lost money and were harmed.

US Forest Industry History

Although there are some pieces of truth to that assertion, it only tells part of the story.  The untold portion was that the US Forest Service was not substantially supplying the American mills.  In the late 1980’s the Forest Service sold about 12 billion board feet per year, providing a steady supply of logs in up and down markets.  By the early 90’s that volume dropped to below 2 billion board feet.  This put a major strain, to say the least on mills.

Down the tracks
Mills went away, as did many of the old rail lines

US mills went bankrupt and out of business by the hundreds.  This devastated communities and caused the entire industry to shift.  On the other hand, the Canadian sawmills still had much of their raw material supply in place.  Canada’s forest industry had its challenges, but nothing at the scale of what was going on in the American West.

Canadian Issues

Today the issues are different.  Canadians are seeing their industry contract due to the devastation left by the mountain pine beetle epidemic.  Mills have shut down and consolidated.  This has prompted many of the major companies to look for other markets to build mills.  This has caused a mass migration of Canadian sawmill knowhow and investment in the US South.  Not only are mills closing a moving, but the supply model has shifted to a much more competitive purchase system which raises log cost.

The smaller, family companies in Canada are the ones that will most significantly feel the strain of the softwood lumber dispute and related duties because they don’t diversify their business by investing in US markets.   The lumber from all the Canadian mills is important for the US lumber market, but there needs to be competitive balance.

Where the Forest Service comes in

So how can the US Forest Service help in all this?  If there were to be a massive increase in the forest restoration efforts in the Western States, it could shift the supply dynamic enough to help keep US mills profitable during market downturns.  If American companies had the ability to keep their mills profitable at lower prices, the harm from Canadian imports would be reduced.

Thin the west
US Forests need active forest restoration

Out of the 192 million Forest Service acres, 82 million acres are in need of forest restoration.  This means the forests need actively managed by way of logging, thinning, and deferred maintenance.  The by-product of this much-needed work could take medium and long-term pressure off the Softwood Lumber Agreement.

This isn’t the whole solution.  We still have currency fluctuations and market pricing to deal with, but running sawmills has everything to do with supply.   If we can help ease that, we may be able to reach an agreement that is good for North America.

4 thoughts on “Softwood Lumber & The US Forest Service”

  1. Russ,

    This is a great post and really puts a lot of things into perspective for me, both personally and professionally. Although currently employed by a state agency as a forester, my early forestry career goes back to the early 1980’s and included over 22 years with the private sector in 4 western US states (mostly in forestry & logging contracting and the procurement of timber for medium to large sawmills). Have also been involved in numerous logging, sawmill, and other associated businesses bankruptcies/shut downs over the years and know very well the animosity that this can create (especially when you have a family to support!).

    Personally, I have always felt that in a lot of ways we as a country have “hogtied” our local forest industry infrastructure and cut our own throats by allowing excessive environmental regulatory overreach over time by our many different levels of government. Conscientious management, forestry BMPs, forest practice rules, and third party certification systems (e.g. ATFS, FSC and SFI) make our timber some of the most environmentally-friendly, albeit costly on the planet.

    In short, I do not really think the Canadian forest industry is out to get us; they just know how to take advantage of a given market situation. It will be interesting to see whomever figures out all of this in the end; this is definitely above my pay grade and station in life. In the meantime, we will hopefully see an increase in the pace of forest management; including fuel treatments, restoration, and timber sales and ultimately more competitive resource prices for our local industries.

    Thanks again for your excellent observations! (Have shared on my LinkedIn page).

    Rich Edwards

    1. Rich,
      Very good points. I’ve been in the center of those shut downs, and it’s painful. I’m sorry that you and the people you know had to go through that.

      Just as I know you’re right about the Canadians not being out to get us (quite the opposite really. Some of the best people in the world.), I don’t think most environmentally conscious people wanted to see the result of the public land overreaction. If they knew that by going “zero cut” we would have wide scale forest disease, massive wildfire, and destruction of sensitive habitat it would not have been supported. I can say that because many of those same people are spending countless hours to collaborate on new solutions.

      Thank you for taking the time to read and share your thoughts.

      Russ

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