Management and Technical
Consultants to the Wood & Forest Products Industry
Last updated on
July 10, 2009
Recession, housing crash, credit crisis saw into region's hardwood industry
By LISA THOMPSON
lisa.thompson@timesnews.com
The signs of an economy based on northwest Pennsylvania hardwood sales are all around the Spartansburg Township area in Crawford County. Plant manager Greg Welch tours a warehouse at Coastal Lumber Company on Jan 23. |
The answer can be found in the sounds of silence here.
Idled saw blades; shuttered and snow-covered mills; a drop in loaded log trucks swaying along Routes 8, 89 and 77 -- they all testify to the reach of the global financial crisis on the local forest-products industry.
Automobile and banking executives loudly broadcast their carefully spun cries for a bailout.
In Penn's deep woods and other areas of the country that cull pine planks, cherry laminate and birch flooring from remote hillsides, Carhartt-clad woodsmen are quietly sweating out their own epic downturn with no apparent relief in sight.
Across Pennsylvania, sawmills are reporting mass layoffs and temporary shutdowns, said Paul Lyskava, executive director of the Pennsylvania Forest Products Association.
The industries fear 2009 will not be much better.
The first hit came nearly a decade ago, when American furniture manufacturers chased cheap labor overseas.
The recession, the housing market crash and the credit crisis lately have combined with those global market forces to deliver a crippling blow.
"The forest-products industry is facing an economic crisis of historic proportions," Lyskava said. "I have members that have been in the business for 40 years telling me this is the worst they have ever seen."
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In Erie and Crawford counties, an average of 1,182 people were working in logging and wood-products manufacturing from April to June, according to the latest statistics from the state Department of Labor and Industry.
In wood-products manufacturing alone, an average of 764 employees were working at about 36 businesses in Crawford County between April and June, and an average of 335 employees were working at about 20 businesses in Erie County during that period. Also between April and June, workers in wood-products manufacturing were paid an average of $569 a week in Erie County, $619 a week in Crawford County.
Roots run deep
Hardwood lumber production in the United States peaked in 2000 at about 13.44 billion board feet. About the same time, furniture manufacturers abandoned the United States en masse for foreign countries such as China, which offered cheap labor. Nearly 300 United States furniture factories have shut down since 2000, changing the face of the nation's hardwood business, said Art Raymond of A.G. Raymond & Co., a hardwood consulting company based in Raleigh, N.C.
In northwestern Pennsylvania, the booming housing market for a time buoyed local sawmills and dry kilns, which supplied building materials for the homes and everything in them. Due to growing conditions, this region boasts some of the world's finest hardwoods, especially in the Allegheny National Forest.
In Spartansburg, the Coastal Lumber mill, off Route 89, struggled to meet demand, plant manager Greg Welch said.
Now, the business has turned upside down.
"I get probably anywhere from two to four calls a week from contractors looking for work," said Sid Clevenger, timber manager for Coastal, a national company that operates one of the largest mills in Spartansburg. "Two to three years ago, I was the one making the calls."
The residential building industry started a slow, steady decline about three years ago, with housing starts dipping yet again to reach a near 10-year low in January.
People are not even buying wood products to remodel. Orders for wood for flooring, cabinetry and molding are all down.
Welch said he used to regularly purchase lumber from 15 to 20 smaller area sawmills. He is now down to four.
"Our procurements are probably down 60 to 75 percent from this time last year," he said.
When manufacturers do order these days, they don't do it in the same way.
At Penn-Sylvan International, a competitor of Coastal's on Route 8 southwest of Spartansburg, boards lie stacked high in the once-bare yard.
Sales manager Jay Reese said manufacturers refuse to carry large supplies of lumber because of the drop in demand for items like cabinets.
"They put the burden on the mills to carry the inventory," he said.
Weathering the downturn
Shane Coulter, of Shane's Timber Service, in Elgin, recently sold a truckload of hemlock for $800 to an Amish mill on a Spartansburg side street. Wood for pallets or sheds is still selling, he said.
There's a market for high-end hardwood, like cherry, although the prices are not what they were. Companies like Coastal are still contracting with loggers like Coulter and Bruce Komenda, lone operator of Lonesome Logging of Columbus, Pa., outside Corry.
But Coulter and Komenda both know plenty of people who are out of work.
"I am just grateful I have some connections," Coulter said.
The conditions have turned Sharon Clevenger into a keen-eyed hunter. She is the wife of Sid Clevenger, the timber manager for Coastal Lumber, and she works as a saleswoman for the company. At Lowe's and Home Depot, she studies the product labels for the names of any manufacturers she has not yet contacted. When she's out of town, she runs her finger through the Yellow Pages searching for potential customers. She'll even jot down the company names of tractor-trailers she passes on the highway.
Sharon Clevenger said Coastal is a frugal company that survived past crises. To get by, the Spartansburg plant has reduced its 60-plus person work force through a handful of layoffs and attrition. They shut down the mill on Fridays.
"Everybody is in the same boat. We are making cutbacks, cutting costs to survive," Sharon Clevenger said.
Other companies might not make it. Outfits that tied up their cash in timber procurement or other investments are struggling to come up with the funds to continue business in this cold credit market, said Lyskava, of the Pennsylvania Forest Products Association.
Hope for future growth
Those caught in this downturn expect a slow recovery that will track the recovery of the housing market.
The Pennsylvania Forest Products Association advocates, among other things, expanding access to state financing for cash-strapped mills. Raymond, of A.G. Raymond & Co., puts his hope in the timber still standing in the forest. At some point, he said, China will run out of low-cost labor. Manufacturing may return to the United States, with smarter and more efficient plants capable of turning out custom, high-quality wood products, Raymond said.
For local lumber entrepreneurs, such as Greg Welch at Coastal Lumber, the solution is simple.
"People have to go back to spending," he said.
A. G. Raymond & Company
Inc. 1033 Wade Ave. Suite 102 Raleigh, NC 27605
Phone: (919) 831-0070 Fax: (919) 831-0072
Email: info@raymondnet.com