market directions for hardwood lumber for the u.s. and … · market directions for hardwood lumber...

Market Directions for Hardwood Lumber for the U.S. and Ohio

Matt Bumgardner U.S. Forest Service

Northern Research Station

Ohio Forestry Association Annual Meeting March 2, 2017

Dow Gardens Archive, Bugwood.org

Outline

• Overview of hardwood industry:

- Ohio

- U.S.

• Impacts of housing on hardwood markets

• Export trends

• Summary/Questions

Main Locations for FDMC 300 Companies - 2016

Top 10 Wood Household Furniture states:

1. Ohio - 4,018 employees (12.3% of U.S. total) 2. California 3. North Carolina 4. New York 5. Virginia 6. Indiana 7. Illinois 8. Texas 9. Pennsylvania 10.Alabama

Data source: Bureau of Labor Statistics (BLS)

BLS: Hickory/Lenoir, NC = 1503 emp. BLS: Holmes/Wayne, OH = 1241 emp.

Top 10 Cabinet states:

1. Indiana 2. California 3. Texas 4. Pennsylvania 5. Minnesota 6. Florida 7. Alabama 8. Ohio – 4,048 employees (3.7% of U.S. total) 9. North Carolina 10.Georgia

Data source: Bureau of Labor Statistics

Top 10 Millwork states:

1. California 2. Wisconsin 3. Iowa 4. Minnesota 5. Oregon 6. Virginia 7. Texas 8. Pennsylvania 9. Ohio – 3,555 employees (3.7% of U.S. total) 10. Kentucky


Top 10 Pallet states:

1. California 2. Texas 3. Ohio – 3,789 employees (6.5% of U.S. total) 4. Pennsylvania 5. North Carolina 6. Indiana 7. Kentucky 8. Missouri 9. Wisconsin 10. Illinois


Hardwood lumber price index

80

90

100

110

120

13019

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

16

1990

= 1

00

Deflated Price Average 1990 to 2016

Data source: U.S. Dept. of Labor; Luppold and Bumgardner

Prices ($/MBF) for green 1C Appalachian hardwood lumber (4/4)

Species Price

Walnut 1300

White oak 975

Red oak 795

Soft maple (unselected) 790

Hard maple (unselected) 700

Cherry 690

Yellow-poplar 435

Source: Hardwood Market Report 2/24/17

Recent market observations

• “Moreover, [soft maple] is one of the few woods shipping in decent volumes to domestic furniture factories.”

• “Robust shipments of low grade White Oak to exporting concentration yards have left some residential flooring manufacturers with insufficient inventories of that species.”

• Hardwood Market Report 1/13/17

Eastern U.S. hardwood lumber production

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Billi

on B

oard

Fee

t

Estimate 1 Estimate 2 Estimate 3

Source: Luppold and Bumgardner

Getting harder to find good employees?

• Headlines from Woodworking Network website (1/17/17): – “Mississippi State University Furniture Academy aims to

increase skilled labor” – “Industry-led Skill Labor Fund will address skilled labor

shortage” – “Hiring and engaging employees discussed at Feb. 21

event”

• “Training issues top agenda for wood industry in Washington”

- Woodworking Network 2/18/17

Major markets for hardwood lumber

• Appearance-based: • Furniture • Cabinets • Flooring • Millwork • Exports

• Industrial:

• Pallets • Railroad ties

Photo: 2010 Ohio Hardwood Furniture Market

Photo: AHMI

Photo: USDA Forest Service Southern Research Station Archive, USDA Forest Service, SRS, Bugwood.org

Modern Woodworking

U.S. hardwood lumber consumption by market segment*

48 50 50

46

36 37 40

38 39

43

54

50

13 12 11 11 10 13

1991 1999 2002 2006 2009 2015

Perc

ent

Appearance-based Industrial Other

* Exports excluded Luppold and Bumgardner

Softwood lumber and pallets

• Pallet Profile Weekly now tracking softwood lumber: – #3 and #4 2x4 and 2x6 KD RL SYP – #3 and #4 2x4 and 2x6 KD RL SPF

• Some reasons why:

– Availability – Less mold – Better appearance

Pallet Enterprise. February 2017 issue.

Data sources: U.S. Census Bureau; International Trade Admin.

Market share estimates of imports in the U.S.

Consumption = value of shipments + imports – exports Import share = imports/consumption

02468

1012141618202224262830

Billi

on $

China

Vietnam

Canada

Mexico

Total

61%

58%

Major U.S. import sources:

Household & Institutional Furniture & Cabinets (NAICS 3371)

Data source: International Trade Administration

31%

Housing update

Wood & Wood Products 2010

Value of private U.S. construction, 2002-2015

0

50

100

150

200

250

300

350

400

450

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Billi

on $

Single family housing Multi-family housing

Residential improvements Nonresidential construction

Data source: U.S. Census Bureau

Housing market’s importance to woodworking employment

Data sources: US Census Bureau; Bureau of Labor Statistics

0

20

40

60

80

100

120

140

160

180

200

0

200

400

600

800

1000

1200

1400

1600

1800

2000

59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

No.

of e

mpl

oyee

s (00

0)

Sing

le fa

mily

star

ts (0

00)

Year

Single family housing starts No. of employees - Cabinets No. of employees - Millwork

Multi-family percentage of total housing market (single family + multi-family)

20.0

33.4

0

5

10

15

20

25

30

35

40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Perc

ent

Value of construction # of Starts

Data source: U.S. Census Bureau

Value per start in 2016: SF = $310,887 MF = $154,492

0

10

20

30

40

50

60

Much worse Somewhatworse

Slightly worse Slightly better Somewhatbetter

Much better Unchanged

Perc

ent

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Year-over-year changes in sales volume

Year % Losing Sales Volume

2009 81

2010 50

2011 38

2012 31

2013 25

2014 21

2015 20

Perceived reasons for sales volume declines (for those firms indicating a decline)

1 2 3 4 5

Competition from non-wood substitute products

More domestic competitors entered the market

Offshore competition

We contracted in proportion with the overall economy

Downturn in nonresidential construction

Downturn in the remodeling expenditures

Downturn in the housing market

1=Minor reason to 5=Major reason

2015

2014

2013

2012

2011

2010

2009

Secondary Industry Trends

U.S. Employment Trends: Cabinets and Millwork

107,704

177,153

110,611

132,074

97,307

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,00019

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Num

ber o

f em

ploy

ees

Cabinets Millwork


U.S. Employment Trends: Wood Household Furniture

129,242

32,611

0

20,000

40,000

60,000

80,000

100,000

120,000

140,00019

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Num

ber o

f em

ploy

ees


Number of Firms: Millwork and Wood HH Furniture

[VALUE]

[VALUE]

[VALUE]

[VALUE]

2000

2500

3000

3500

4000

4500

5000

550019

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Num

ber o

f firm

s

Wood HH Furniture Millwork


Number of Firms: Cabinets

12,437

8,298

7,000

8,000

9,000

10,000

11,000

12,000

13,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Num

ber o

f firm

s


• “It used to be I only had a few large customers on my Christmas card list, now I have hundreds of small customers ”

• “Yesterday, it was five loads to one customer; today, it is one load to five customers” – and all five want something a little different!

• But, theory (economies of size) says it is more typical

for firms to become larger over time . . .

Flashback:

Increasing importance of smaller users?

- Hardwood Review Weekly 2007

Millwork: Average Firm Size

Recessionary periods Data source: Bureau of Labor Statistics

[VALUE]

34.2

[VALUE]

22

23

24

25

26

27

28

29

30

31

32

33

34

3519

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Empl

oyee

s per

firm

13.9

[VALUE]

[VALUE]

11

12

13

14

15

16

1719

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Empl

oyee

s per

firm

Hardwood Sawmills: Average Firm Size


Cabinets and Wood HH Furniture: Average Firm Size


8.9

[VALUE] 13.3

26.7

29.3

12.6

8

10

12

14

16

18

20

22

24

26

28

30

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Empl

oyee

s per

firm

Cabinets Wood HH Furniture

Secondary mfrs. are becoming larger: ways it matters

• Larger secondary firms (20+ employees) request more services from their lumber suppliers:

Requested service

Small firms (%)

Large firms (%)

Sig.

S2S 68.7 53.3 Width sorting 55.7 65.4 Break bundles 50.0 43.2 S4S 48.7 44.1 Just-in-time orders 36.8 59.1 * Special grading 39.3 54.6 * Certified products 33.3 62.0 * Imported species 43.6 48.7 Color sorting 36.7 47.5 Double-end trim 11.1 28.6 *

Buehlmann, Bumgardner, and Sperber. 2013. BioResources.

Sources of hardwood lumber (by volume) - Large firms 45

39

16

01020304050

Direct fromsawmills

Distributors &concentration

yards

Brokers / Other

Perc

ent

28

59

13

010203040506070

Direct fromsawmills

Distributors &concentration

yards

Brokers / Other

Perc

ent

Sources of hardwood lumber (by volume) - Small firms

“What services were being requested by your hardwood lumber customers” (n=12)

Service requested

Requested 2011 (%)

Requested 2015 (%)

Change

Offered 2015 (%)

Double-end trim 83.3 91.7 + 91.7

Kiln drying 75.0 75.0 = 83.3

S2S 58.3 66.7 + 50.0

Special grading 50.0 66.7 + 58.3

Width sorting 58.3 66.7 + 50.0

Quick delivery 41.7 58.3 + 50.0

Color sorting 50.0 50.0 = 41.7

Just-in-time orders 33.3 41.7 + 41.7

Break bundles 16.7 25.0 + 33.3

S4S 16.7 16.7 = 16.7

Custom molding 0.0 8.3 + 8.3

Other (“phytosanitary heat treat.”) 8.3 8.3 = 8.3

Price of 1C lumber versus the price of stumpage in Ohio

708090

100110120130140150160170180190200210220230240

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Inde

x 19

82 =

100

OH Stumpage 1C Lumber

Sources: Luppold; HMR; ODNR/OSU

Exports

Photo: National Hardwood Magazine

U.S. hardwood lumber exports

Year

Volume (billion bd. ft.)

Percentage of total

consumption plus exports

Percentage of appearance-based

consumption plus exports

1991 0.88 8% 16%

1999 1.18 9% 16%

2002 1.17 10% 17%

2006 1.32 11% 21%

2009 0.80 10% 25%

2014 1.65 17% 37%

2015 1.49 16% 34%

2016 1.66

Luppold and Bumgardner

U.S. hardwood lumber exports (Top 4 destinations)

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mill

ion

$

Canada

China

Mexico

Vietnam

Total to World

~ 76% of total

99 other trading partners account for the remaining 24%

Data: USDA Foreign Agricultural Service

+10%

Top 5 U.S. (eastern) hardwood lumber export species - 2016

Species

Volume (MMBF)

2016 Rank for Species

% of total

Red oak 442 1st 26.7

Yellow-poplar 274 3rd 16.5

White oak 252 2nd 15.2

Ash 179 1st 10.8

Walnut 82 1st 4.9

Species

Value

(million $)

2016 Rank for Species

% of total

Red oak 610 1st 26.9

White oak 411 2nd 18.1

Ash 272 3rd 12.0

Yellow-poplar 250 3rd 11.0

Walnut 214 1st 9.4

Volume:

Value:

Data source: USDA Foreign Agricultural Service

U.S. hardwood lumber exports by species

Data source: USDA Foreign Agricultural Service

0

50

100

150

200

250

300

350

400

450

500

Red oak White oak Y-poplar Maple Ash Walnut Cherry

MM

BF

2000 2003 2006 2009 2012 2016

Export destinations 2016: Top 3 markets for major hardwood lumber species

0

50

100

150

200

250

300

350

400

450

500

Red oak Yellow-poplar White oak Ash Walnut

MM

BF

China Canada Mexico Vietnam UK Pakistan Rest of World

70%

38% 31% 74%

39%


U.S. red oak exports

0

50

100

150

200

250

300

350

400

450

500

2009 2010 2011 2012 2013 2014 2015 2016

MM

BF

China Canada Mexico Rest of World

70%

29% 34% 47% 51%

60% 62% 65%


Changes in species exported, volume 2009 = 100

50

100

150

200

250

300

350

400

2009 2010 2011 2012 2013 2014 2015 2016

White Oak Red oak Yellow-poplar Maple Ash Walnut Cherry


Summary

• Exports continue to be critical to the hardwood industry

• Housing markets continue to be critical to the hardwood industry

• Industrial markets have slowed for hardwoods • Continued movement toward more “typical”

conditions, but not all the way back yet

Thank you.

Questions?

market directions for hardwood lumber for the u.s. and … · market directions for hardwood lumber...

Documents