Story by Dan Shell,
Managing Editor

This issue a special thanks goes out to those owners, managers, supervisors, shift leaders and others who have taken the time to complete Timber Processing’s annual Sawmill Capital Expenditure Survey. The effort all of you make provides Timber Processing with invaluable information concerning the current state of and health of the U.S. sawmill sector. Sharing that information through the articles contained in this issue makes all involved in the lumber industry, from component and equipment suppliers to lumber producers, more knowledgeable about their businesses in the context of the overall lumber industry.

The numbers reflect an industry that’s looking to rebound after a truly tough past decade, as sawmills across the country seek to gear up and meet increased demand and higher prices. The old rule of thumb is to make upgrades during the downturn in order to take full advantage of better markets, but critically poor markets and cash flow conditions of the recent past made capital improvements hard to justify and financing even harder to find in many cases.

Yet as evidenced by the number of mills looking to make significant investments in their timber processing operations,  there’s plenty of optimism out there as the housing market continues to improve:

  • The number of softwood mills that project to produce 90-100% of annual capacity this year is up by more than 20%, compared to those that produced 90-100% of capacity in 2012. The increase is more than 15% for hardwood mills.
  • Looking at capital investment: 42% of softwood mills report capital projects totaling more than $1 million in the past three years, while 51% say they plan to invest $1 million or more in their mills during the next three years.
  • Meanwhile, good news continues as the Random Lengths Framing Lumber Composite Price was up 34% from mid April 2012 to mid April 2013. Most analysts believe prices will remain firm into the third quarter as lumber producers ramp up to meet demand.

Yet there may be a few clouds on the brightening horizon, and one of the most important is the health of the forest products logging community and the serious damage the recent downturn has done to logging capacity, which is down 25% in the past 10 years and accelerated since 2008, according to a recent article in TP sister publication Timber Harvesting magazine.

The issue popped up in a recent Random Lengths weekly lumber market report, with one sawmill sales rep in the South Central U.S. questioning whether all the mills looking at adding additional shifts will be able to find the logs that such expansions require.

Editors traveling to do interviews and articles for Timber Harvesting hear it from loggers across the country: Plenty of optimism for future work, but a lot more caution when it comes to investing in expanding their productive capacity. And in the past four or five years, many of the second or third crews out there were downsized, and formerly spare equipment sold to raise cash.

While concerns about logging capacity surfaced now and again in the sawmill survey, it didn’t appear to be an overriding concern. Let’s hope the mill expansion projects are not taking for granted their timber supply and the required logging muscle.