The lumber industry has been around for centuries, but it picked up steam in the early 1800’s. The work was difficult and dangerous back in the day when the crews were cutting trees with two-man hand saws and axes and transporting the logs by horse and wagon. The current process has mostly been automated with very efficient machines that can fell a tree, cut it into logs, and stack it in under a minute. The logs are transported by truck, rail, or floated down a river to the mill where they are cut into dimensional lumber, or made into plywood, particle board or OSB.
The United States is the largest consumer of wood products in the world, and Weyerhaeuser Company is the largest producer of those products - they own over 12 million acres of forest in the U.S. and lease over 14 million acres in Canada. Weyerhaeuser started business in 1900 and has been instrumental in re-forestation efforts to ensure the supply of lumber is available for the future.
causes of deforestation
Have you ever wondered what the effect is when a forest is banned from logging? Its resources (lumber) essentially lose their monetary value. And without value, the property owners are faced with a financial sustainability dilemma.
This exact situation has occurred in South American mahogany forests, where concerns over deforestation prompted logging bans. As a result, sawmills were shut down and jobs were lost. Since the once-valuable resource of timber had lost all value, the landowners were forced to find a way to make a profit from their land. Since logging would no longer meet that need, they burned down the forests to make space for cattle grazing or soybean crops. This explains why cattle ranching accounts for 65-70% of deforestation, and agriculture accounts for an added 25-35% of deforestation, while the lumber industry accounts for only 2-3% of deforestation.
As counterintuitive as it may seem, the lumber industry gives timber value and, by extension, offers landowners a significant motivation to protect and manage it. Forestry companies also help stimulate the local economy by creating jobs and raising awareness about protecting our forests. In the long run, buying imported lumber protects the rainforests!
WHY HAVE LUMBER COSTS RISEN SO QUICKLY?
The COVID-19 pandemic has been a major factor in the recent lumber shortage and high prices, as well as many of the other construction materials used in constructing houses or wood-frame buildings.
By June 2020, the construction industry had slowed down or paused due to the COVID-19 restrictions and lockdowns. As a result, the mills and lumber yards quickly filled with inventory that was not being sold, so the mills started closing and stopped production.
Around the end of July into August 2020, the interest rates were very favorable, and the home building industry exploded with pent up demand. The once-full lumber yards and mills were quickly depleted and had to start ramping up production again; to date they have not been able to catch up with the demand.
In addition to new construction, many households were working from home and decided that the money that had been earmarked for family vacations could now be used for an addition with maybe a home office in it, or remodeling the home for the same reason, or finally adding that new deck in the backyard since they were at home most of the time and could enjoy it. This all added to the demand for lumber and the increased cost.
Cedar and redwood used to be a much higher cost material for exterior decks, but with the high cost and limited supply of green treated decking material, they are now a viable option because of availability and cost.
Lumber prices in June 2020 were about $250 per 1000 board feet. The price in March 2021 had climbed to $950 per 1000 board feet - an increase of about 180% in the past year!
On another note, Home Depot has posted a 25% gain in year over year sales, and Lowe’s posted a 30% gain.
On average, the price increase to build a house has been approximately $15,000 - $25,000 per home in the last year, and the lumber futures predict steady or slightly rising lumber costs for the next year or so. Likewise, construction costs for commercial wood-frame projects have reflected similar increases.
Any construction projects using lumber will have to factor in these increased costs for at least the next year or so. In commercial construction, alternative structural means can sometimes be considered. Hopefully, the lumber industry will balance out with time, and costs will return to “normal.”
ABOUT THE AUTHOR
David deNeui has over 40 years of commercial construction experience, on nationwide and international projects. In his role as Shingobee’s Vice President of Operations, David is responsible for the oversight and management of the Project Manager team at the Loretto office, as well as all field personnel. He is a member of the executive planning team, supporting the core company values to promote future growth of the team and company.