Thursday, March 4, 2021
Despite the many challenges presented by the pandemic, wood products manufacturers are responding to the high demand by producing wood products at levels not seen since before the Great Recession. Production output of wood products is the highest it’s been since 2007, according to the Federal Reserve Board.
At the beginning of the pandemic, wood product manufacturers were operating under the same uncertainty as the rest of the country. Many curtailed production in anticipation of worker shortages and reduced demand. At the same time, many wholesale and retail lumber customers significantly reduced their inventory levels. But then, the need for wood products quickly rebounded as people stayed home and tackled DIY projects, restaurants rushed to build outdoor accommodations, and many states declared home building an essential industry allowing construction to rapidly resume. New home sales are up over 19 percent year-over-year as demand for single-family homes have increased during the pandemic and mortgage rates have remained low.
The industry has quickly responded and put in extensive worker health and safety protocols to protect the 450,000 employees across the industry and prevent large scale shut-downs due to COVID exposures. Many wood products mills are back at pre-pandemic production levels or higher, with some operating seven days a week.
Additionally, many wood products companies have continued to make significant investments in improving the throughput of their existing mills and building new mills in the U.S. since the sharp rebound in demand in the second quarter of 2020. These investments will create additional supplies in 2021. However, new equipment lead times remain long in many cases, engineering and construction resources are constrained, and additional production often requires environmental permitting reviews, so near-term relief during the spring building season from new production is likely to be limited.
Constraints in supply and transportation have also continued, which are issues facing manufacturers of all kinds, and it has proven difficult to rebuild the near-zero inventories up to meet the renewed retailers’ and wholesalers’ demands. Some mills have taken temporary curtailments or reduced shifts due to localized COVID outbreaks and quarantines. All of this has been further exacerbated by constraints on log supplies resulting from recent extreme weather events, some of which also caused production downtime.
While the wood products industry is far from the only one facing supply chain challenges, we have worked hard to protect our workforce through significant health and safety measures to stay in production.