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Results of a multi‐client benchmarking study show that in spite of operational improvements, dimension lumber mills in the U.S. West have struggled to overcome the narrowing gap between log prices and lumber selling values.

The study included 10 dimension lumber mills, the majority of which are located in the coastal region of Oregon and Washington where log exports to China and other parts of Asia have driven up timber prices and led at times to mill log shortages, says The Beck Group, the company that completed the study.

The benchmarking study spanned the year July 2010 through June 2011 and examined a variety of operating metrics including manufacturing cost, lumber recovery, sales values, log costs, productivity, staffing levels, and adoption of technology. Mills have made a variety of improvements in recent years. When compared with results of a similar study conducted in 2005 (near the peak of the U.S. lumber market), the average sawmill has improved lumber recovery and productivity per man‐hour by more than 5% each. In addition, the average mill has more than doubled the prices it receives for byproducts (such as chips and sawdust).

Unfortunately, those improvements have not been enough to overcome the diminishing spread between log and lumber prices. Since the end of the study period in mid‐2011, log export pressure has diminished and lumber values have improved modestly, but many sawmills continue to struggle as they wait on the dragging U.S. housing market to restore lumber demand and prices closer to historical norms.

From The Beck Group: http://www.beckgroupconsulting.com/press_releases.html