Article by Rich Donnell

Once again we present the Softwood Lumber Sawmill Operations and Capital Expenditure survey results. Again, this is a survey of U.S. softwood lumber operations. We receive a sprinkling of sawmillers from Canada and overseas who go ahead and complete the survey, but we remove their answers from the final tallies, though we’re very interested in what they have to say and appreciate their participation. We have considered expanding the survey to include our friends up north and abroad, and may do so somewhere down the road. We also try to eliminate any duplicate responses—that is, if different officers from the same mill took the survey, we’ll knock out one of those.

As we’ve said in the past, this survey isn’t perfect science, but it provides
an accurate glimpse at how things stand at that moment in time when lumbermen completed it, which in this case was during April-May, when lumbermen on our e-mail address list were asked to participate and provided a link to the on-line, 23-question survey. One thing I like about the survey is that it brings in sawmillers large and small, from those producing 200-300MMBF annually to those knocking out less than 10MMBF a year, from the vice president in charge of three mills to the small business owner who may not even run his mill five days a week.

A quick glance through the survey results revealed that while obviously the bigger mills are spending more money on capital projects than the smaller guys, the expectations and concerns of the bigger and smaller operations are very similar.

As you’ll read in the article, we put a lot of emphasis on how the lumbermen are feeling about their business this year and into next year. It’s the same question we have asked in this survey every spring for many years.

We define as being optimistic those who have checked the excellent or good boxes with regard to their expectations for the immediate future. Another box they can check off is called “fair,” but we don’t consider “fair” as being optimistic.

A significant 69% who took the survey said their business is in excellent
or good shape for the remainder of 2019 and going into 2020. I remember at the end of the recession when that number was closer to 25%, and even that seemed high.

However, while 69% is impressive, it’s not as optimistic as the lumbermen were in 2018 (89%) or 2017 (87%), which were significant jumps from the optimism of 2016 (66%).

Perhaps the most telling numbers inside that 69% is that 15% said excellent
and 54% said good, whereas last year 35% said excellent and 54% said
good. Where did the difference go? Many “excellent” slipped down into the
“good” condition, and many who were “good” last year fell into “fair” condition this year.

We may be guilty of focusing on a little bit of negative in what are generally positive results, but the important question is whether this is the beginning of a trend in declining optimism. We’ll have to wait for next year’s survey to get a handle on that; oh yeah, the housing and building markets for the remainder of this year may have a little bit to do with it, too.