While construction remains a bright spot for the U.S. economy during the pandemic, soaring costs and shortages of materials are creating havoc for companies across the country. This is especially true of lumber.

LMC Construction Vice President Kyle Anderson said he’d seen a 40 percent increase in material prices over the past couple of months. For one recent $2 million project in North Portland, he said, from the time the contract was awarded to the time of procurement, the cost of materials jumped to $430,000.

“We’ve dealt with material inflation and supply shortages before, but nothing like this – this drastic in a short period of time,” he said. “I’m hearing that message pretty consistently with subcontractors and with wood suppliers.”

Idaho Pacific Lumber Company, a leading supplier for multifamily construction, routinely releases market reports. In the Pacific Northwest, the cost of 4-by-8 sheets of 15/32 Oriented Strand Board (OSB) has risen from $395 per 1,000 board feet (MBF) last year to $1,550, said Scott Sunday, vice president of purchasing and sales for Idaho Pacific Lumber.

“Lumber has more than doubled in price, panels quadrupled, and OSB quadrupled,” he said.

Project teams across the country are stopping work, Sunday said, because they can’t find the materials they need. Items ranging from metal fasteners to dishwashers are becoming scarce. But nothing is causing more concern than lumber.

Just before talking with the 91��Ƶ, Walsh Construction senior project manager Ed Sloop had spoken with someone about how to deal with lumber – it was his fourth call of the week on the subject.

Sloop, Walsh Construction’s chief estimator, has been watching the market particularly close for the past several months trying to determine the best time to buy materials or, more frequently, how to account for a project’s cost with escalating prices.

“It’s just gone crazy,” he said of lumber. “That is the single biggest impact to us.”

How did we get here?

The Associated General Contractors of America last month released a survey on the impacts of COVID-19 on the construction industry. Results showed that backlogs and shutdowns at factories, mills and fabrication facilities – both domestically and internationally – are causing the majority of the supply issues.

While many manufacturing facilities and mills responded to the pandemic like a recession was imminent, Sunday said, builders for the most part did not. There was a slight pause early on, but then construction was deemed an essential business and work picked up again. This led to pent-up demand for materials such as lumber, Sunday said.

Even after factories and mills resumed operations, COVID-19 case counts led to some pausing again. Suppliers couldn’t catch up.

At the same time, the single-family market started booming – and the home improvement market ramped up. Even greater pressure was placed on supply.

Historically, single-housing construction has significantly impacted supply of lumber. But in 2006, the market fell off a cliff. According to Trading Economics, housing starts dropped from a little over 2.1 million in 2006 to under 750,000 in 2008 – an approximately 65 percent drop.

But single-family construction has since recovered slowly, and that trend became even more apparent entering 2020, Sunday said.

Then COVID-19 arrived. The pandemic shocked producers, but not builders. Demand for lumber failed to wane.

It wasn’t always that way, said Steve “Tiny” Morlock, a counter crew leader for Milwaukie Lumber Co. who has been in the industry 30 years. In 2007-08, he said, there was a glut of lumber and not enough demand, which led to a number of mills closing down.

Now those mills that remain can’t produce enough.

“The single-housing market combined with certain factories or mills being affected by COVID shutdowns … Those two items together combined then created a perfect storm,” Anderson said.

Then in late summer 2020, the lumber supply caught fire … literally.

Disastrous consequences

In a letter to Idaho Pacific Lumber customers in mid-March, Sunday wrote: “In regard to lumber, the results of the 2020 forest fires last September in the western United States had a (devastating) effect on the industry. It was reported the Oregon alone lost 15 billion board feet of timber, enough to build a million homes. The amount of logging equipment lost in these fires is in the hundreds of millions of dollars.”

The loss of that amount of lumber – as well as equipment – due to the fires has been “catastrophic to the lumber market,” Sunday said. It “all added to this terrible situation that we’re in and being so undersupplied.”

While the coronavirus has disrupted job sites, the volatility of the lumber market could have a more devastating effect, Sunday said.

“(It’s as) bad as it could possibly get,” he said. “If we get another fire season, it’ll truly cripple the industry.”

LMC Construction in the past could procure lumber for projects in two to three weeks, Anderson said. Now it’s closer to six to eight weeks, he said, adding that he’s definitely worried about the schedule for any project getting out of the ground and heading toward framing.

Walsh’s Sloop has similar concerns.

“When you’ve been told, ‘Hey you can’t have doors until after you’re supposed to have occupancy,’ that’s a problem,” he said.

Project start and end times are all daisy-chained, Sloop added, and at some point, subcontractors will have to send their people to the next job. Unfortunately, delayed deliveries of materials could lead some contractors to turn to weekends to get work done on time, he said.

Where are we headed?

Both Sunday, who has 36 years in the industry, and Anderson, who has 24, said they’ve never seen lumber market volatility like what is happening now. And change might not come for some time.

“We’re expecting the remainder of 2021 to be turbulent on that front (lumber),” Anderson said. “Having any kind of shutdown on already … a strained market is going to make things worse.”

For the lumber market to normalize, it needs either a substantial infusion of supply (unlikely anytime soon, according to Sunday) or a decrease in demand – perhaps because of projects being put on hold.

Delaying projects would be a dangerous game to play, especially amid market volatility, Anderson said. He would prefer to see project teams simply account for cost increases.

Meanwhile, as COVID-19 vaccinations take place and mill shutdowns cease, supply might be able to catch up.

Morlock, of Milwaukie Lumber Co., said he’s seen logs at mills waiting to be processed. However, he added that even if operators were to work 24 hours a day, only so many logs can be processed at a time.

“I think we’re going to be in this kind of pricing into 2022 and maybe well into 2022 before seeing any type of release,” Sunday said.

The post How much wood could the market absorb? A lot more appeared first on Daily Journal of Commerce.

By ALEX VEIGA
AP Business Writer

U.S. homebuilders are poised to benefit this spring homebuying season amid strong demand, low mortgage rates and an all-time low inventory of previously occupied homes for sale. But soaring lumber prices and a shortage of construction-ready land could limit their ability to capitalize on the strong housing market trends, analysts say.

The price of lumber more than doubled over the last year to an all-time high, reflecting strong demand for new construction and home remodeling, and pandemic-related problems limiting production.

The sharp rise in the cost of lumber, among other building materials, is a concern to builders because it drives up costs, potentially shrinking the pool of would-be buyers who can afford to purchase a home.

Builders are also grappling with a shrinking supply of developed lots, or land that’s ready for construction.

Ali Wolf, chief economist at housing market data tracker Zonda Economics, forecasts that new U.S. home sales will rise 5 percent this year over 2020. That would be a far slower pace of growth than the nearly 20 percent jump last year from 2019.

“Supply is the limiting factor,” Wolf said. “If builders had more homes to sell, sales would be higher.”

Robert Dietz, the National Association of Home Builders’ chief economist, hasn’t issued a forecast, but also expects sales to grow at a slower pace, despite an overall strong housing market.

“The homebuilding market is going to grow in 2021, but the growth rate itself is going to be lower than what we experienced in 2020, due to the fact that these housing affordability headwinds like lumber, a lack of lots, are becoming more binding this year,” Dietz said.

The housing market mounted a strong comeback last summer after declining sharply in the spring when the coronavirus outbreak hit. Sales of previously occupied U.S. homes surged last year to the highest level since 2006 at the height of the housing boom, according to the National Association of Realtors.

Sales of new homes, meanwhile, jumped 19 percent in 2020 over the previous year, according to the Commerce Department. New home sales climbed a further 4.3 percent last month.

Several market trends are driving strong demand for homeownership. Mortgage rates remain at historic lows. Americans forced to work from home in the pandemic are seeking larger homes. And more millennials are entering the market.

Other trends, including an all-time low inventory of resale homes of 1.04 million (less than two months’ supply), should pave the way for homebuilders to enjoy a banner year. But those prospects have dimmed amid the industry’s land and building supplies constraints.

“You’ll see (housing) starts and sales grow more slowly than they could if we didn’t have these issues with availability of land and availability of materials,” said Carl Reichardt, a BTIG homebuilding analyst.

Although the price of lumber, cement and other construction materials fluctuate constantly, the volatility has worsened over the past year as the coronavirus pandemic led to factory closures, a shortage of truckers and other issues that have made the normally smooth supply chain unpredictable. That’s meant shortages in items like windows and faucets, translating to higher costs and delayed construction projects.

The pandemic has also left some municipalities short-handed, which can mean delays in approving building permits, inspections or the process needed to get land cleared for new construction.

For builders having to deal with such obstacles, this means more delays, uncertainty and difficulty in getting a home completed on time and on budget.

The rise in lumber prices, a consequence of many mills running at less than full capacity due to the pandemic, has been particularly worrisome for builders. A key building material used in framing new homes, it has been on a tear since April. It settled Tuesday at $1,018.10 per thousand board feet, just below the all-time high it set a day earlier, according to FactSet.

This surge in lumber has added more than $24,000 to the price of an average new single-family home, Dietz said.

“Costs are going up, it’s taking longer for materials to arrive, and it’s particularly acute in the lumber market,” he said.

For some builders, finding land to build on is a bigger problem.

Many builders tapped their own supply of construction-ready land parcels much faster last year than they anticipated in order to meet the strong demand. And some stopped buying land altogether for weeks after the pandemic struck in order to limit spending amid uncertainty about when housing demand would recover.

“The housing market was hotter than we all expected,” Wolf said. “And builders and developers burnt through lots quicker than anticipated.”

The number of lots available for new home construction has fallen steadily for years, reaching 630,800 last year, according to Zonda Economics. That’s down from 731,689 five years earlier. It can take a year or more to clear the hurdles required to turn raw land into a new home development.

The demand for lumber and other building materials has helped lift shares in companies that supply the construction industry. Weyerhaeuser, Rayonier, PotlatchDeltic are each up more than 26 percent, while Builders FirstSource is up 66.3 percent.

Homebuilders that have enough land to continue to grow their orders and their earnings are likely to have a better year than those who sold out their land, Reichardt said.

The post Builders grapple with land shortage, lumber costs appeared first on Daily Journal of Commerce.

Harold Miller, by his estimates, has more than 2 million board feet of reclaimed lumber at his 19-acre yard in Sheridan. Wood of seemingly every size, shape and type sit in hundreds – perhaps thousands – of stacked piles.

“When I first started, I took a lot of lumber from the St. Louis stockyards, the biggest stockyards in the U.S.,” he said. “That was 15 to 18 years ago. I still have a lot of that wood.”

The challenge now for Miller – and his business Reclaimed Accents Inc. – will be to unload that mountain of lumber before the elements degrade its value, said Terry Melzer, a sales representative with Cudahy Lumber Co. Time can take its toll on pieces at the bottom of the pile or those not given air pockets, he said.

“It’s a tough, tough business,” Melzer said. “You’re going to have in the 19 acres about five acres that he’s going to be able to make money out of and 14 acres that’s trash. Culling out the five acres that’s gold is where the hard work is.”

But Miller’s son, Paul, is spearheading an effort to spread word that Reclaimed Accents is joining competition that includes Viridian Reclaimed Wood Products and Salvage Works LLC in Portland. Reclaimed Accents is planning to invite contractors and designers to tour its property, and launch a website – – next week.

The web site is a good start, Melzer said. But he added that the Millers need to invest in more equipment and networking.

“What (Reclaimed Accents) needs to do is have open houses and barbecues,” he said. “Get every single architect in the Pacific Northwest and drag them out there. You have to see it and touch it to know see what’s available.”

Bend homebuilder Jess Alway discovered Reclaimed Accents through a family member who works in the reclaimed timber industry, he said.

Alway, owner of Alway Homes Inc., has built his past 10 homes using salvaged wood from Reclaimed Accents. For a 10,000-square-foot house in Salem, he used reclaimed oak handcrafted about 100 years ago. Harold Miller told him the wood came from a barn in Pennsylvania.

“To me, it’s like my wife going to Nordstrom,” Alway said. “I love going through that stuff.”

He has formed a strong bond with Harold Miller, he said, because they both appreciate the value of reclaimed wood.

“He knows every board by name and where it came from,” he said. “It gets kind of comical.”

Harold Miller, 73, said his earliest memories of collecting lumber date back to 1951, when his grandfather took apart an old barn.

“He pulled all the shingles and nails and straightened them out,” he said. “He took the building apart and built a new house out of what we took from it.”

Harold Miller later started a nursery business, but also began to collect things like old cars, tractors and massive amounts of wood. He has since shifted his focus back to wood.

“The last five years, the nursery business has come crashing down,” he said. “This has kept us alive.”

Most of Reclaimed Accents’ wood is Douglas fir – some from Boise Cascade mills in Oregon. Some oak, hickory and other hardwoods were disassembled piece by piece, nail by nail, from Amish barns in Indiana, Montana and Missouri, and old whiskey rack houses in Illinois.

“During prohibition, they made whiskey, but they couldn’t sell it,” Harold Miller said. “They had these 10-story houses that were owned by Hiram Walker. Some of this wood is wound so tight, you can hardly count the grain.”

The Millers and their four-person crew are in the business of painstaking disassembly. First comes the molding, then the flooring boards and wainscoting. Finally comes the roofing and rafters, the walls and the posts, said Paul Miller, the company’s president. Reclaimed Accents removes most of the nails and even power-washes some of the boards.

“We do it one board at a time, disassembling or deconstructing,” Harold Miller said. “We take it apart as it was put in, in reverse.”

Disassembly of one building, the old Boise Cascade veneer mill in St. Helens, required 10 months. The four-acre conifer plywood mill in Willamina required two years.

“People wonder why reclaimed wood is so expensive,” Paul Miller said. “You’ve got to take a lot of time with it.”

The Millers believe they can offer clients value. Melzer referred one of his customers, Brockamp & Jaeger Inc., to Reclaimed Accents. That led to some of its wood being used for a renovation of Hotel Rose in downtown Portland after the contractor had almost given up finding salvaged lumber within its budget.

But Harold Miller said the wood from the whiskey rack houses will command a bit more.

“I hold a ransom on some of my good wood,” he said.

The post Sitting on acres of ‘gold’ appeared first on Daily Journal of Commerce.

A group representing wood industry associations hopes that a new online calculator will show businesses benefits of using wood as a construction material, particularly on non-residential buildings.

, a cooperative venture of wood associations under the , launched two tools using RSMeans statistical data to compare cost and carbon impact of various construction materials. WoodWorks selected Oregon as a target state for its lobbying because it is a “wood-friendly area,” according to national director Dwight Yochim.

Yochim said his organization’s goal is to find demonstration projects in Oregon that use wood for shell construction on non-residential projects up to six stories tall. Then it will spread the message to less “wood-friendly” locations.

“On most projects, cost-effectiveness ranks right up there with code acceptance and safety on the list of priorities,” said Yochim. “By illustrating that wood has significant cost advantages for most building types, we hope the calculator will lead more design and building professionals to take advantage of wood’s other benefits, such as design flexibility, sustainability and low carbon footprint.”

The post Wood industry launches online calculator to show benefits of wood appeared first on Daily Journal of Commerce.

A mill for Stimson Lumber Co. in Gaston caught fire and exploded on Tuesday.

Firefighting crews were dispatched around 7 p.m. when sawdust in a dust collector was ignited by a spark, according to Gaston Rural Fire District spokesman Ken Bilderback. The sawdust was smoldering when it exploded around 9:30 p.m.

The damage is estimated to be roughly $100,000, Bilderback said.

Official representatives from Stimson Lumber Co. were not immediately available for comment this morning. The mill paused operation briefly, Bilderback said, and is operational today.

In another explosion in May, in an accident with a hydraulic accumulator machine.

In Tuesday’s explosion, three firefighters where injured. The firefighters were taken to Oregon Health and Science University Hospital with non-life threatening injuries and were released without being admitted overnight.

Stimson is based in Portland and assets and operations in Idaho, Montana, Oregon and Washington, including timberland on 500,000 acres.

The post Stimson lumber mill explodes again, continues to operate appeared first on Daily Journal of Commerce.

The second draft of the Leadership in Energy and Environmental Design 2012 standards is out, and the U.S. Green Building Council is accepting public comments from Aug. 1 to Sept. 14. The new draft reflects thousands of comments made on the first draft and includes some major changes, especially in the materials and resources section.

The overhaul of the materials section puts a new emphasis on both life-cycle assessment of building materials and transparency by manufacturers. This focus departs from Pilot Credit 43, which was just released in June to protest from environmentalists, particularly those interested in sustainable forestry practices.

The pilot credit relaxed LEED‘s standard for certified wood products – prior to the pilot credit, LEED would only award credits for wood that was certified by the Forestry Stewardship Council.

Now, the standard has swung back and FSC is again the only forestry certification recognized under the Responsible Sourcing credit, and the Materials Transparency credit has shifted away from Pilot Credit 43’s approach to recognizing other forestry certifications.

New requirements for sourcing of mined and extracted materials for concrete, steel and other materials are also included in the draft, although major certifications for those materials aren’t widely available yet.

Additional highlights in the second draft include more stringent credentials to earn the LEED Accredited Professional Credit, extensive changes to the credit language for operations and maintenance of existing buildings, and a nod to the sustainability of historic preservation. Historic projects and renovation of abandoned buildings are awarded maximum points in the New Building Reuse Credit.

If a final version of LEED 2012 is approved by USGBC members next year, it will be released in November 2012.

The post Second draft of LEED 2012 focuses on materials appeared first on Daily Journal of Commerce.

As debate continues over proposed changes to the Leadership in Energy and Environmental Design rating system, forest certification is emerging as a heated issue.

Under the 2009 system, the Forest Stewardship Council (FSC) was the only system eligible for LEED forest certification credits, which sparked a backlash from other certification groups, particularly the Sustainable Forestry Initiative (SFI).

A pilot credit announced last week moves away from the FSC-only policy, although the U.S. Green Building Council has not made final decisions about how to deal with the complex issues surrounding wood certification.

Pilot credits are intended to spark conversation among interested parties about how to deal with complex issues facing LEED. For a pilot credit to be adopted as a regular credit in LEED, it must go before a vote by members.

The new Pilot Credit 43 deals with the use of certified products, including wood. The policy, now available for use, establishes two pathways to earn the certified products credit. By following the “certification pathway,” products can be certified by third parties that meet approved standards; or, by following the “EPD (Environmental Product Declaration) pathway,” manufacturers can offer product data in pre-approved formats.

The certification pathway will depend on the forthcoming “LEED standard for standards” document, which will lay out criteria that certification programs must meet in order to be approved.

The USGBC published a preliminary list of pre-approved product standards and programs that can be used to claim Pilot Credit 43. The list includes SFI among forest certification programs.

FSC proponents and environmental organizations, however, argue that other standards, including SFI and the American Tree Farm System (ATFS), are not as rigorous. Ultimately, they are concerned that the policy change will weaken forest industry practice standards and perhaps LEED itself.

“Our concern is that if LEED gives equal recognition (to SFI and ATFS), that could really do a disservice to the high green standard LEED has been trying to set for green building,” said Kirk Hanson, director of Northwest Certified Forestry, a Northwest Natural Resource Group program that provides small woodland owners with forest management and  marketing assistance. “Those two programs will certify status quo forest management. FSC is nationally and internationally recognized as the highest standard for forest management; equal recognition would result in the dilution of the high quality standards that LEED has been trying to pioneer.”

Other stakeholders also are concerned about what could happen to LEED.

“I think the forest issue is a litmus test for (LEED) and what it’s going to be in the future,” said Jason Grant, a consultant in the sustainable forest products industry and a member of the Sierra Club Forest Certification Team. “(USGBC officials) seem to be caving on the stuff that is most controversial and where they come under the most pressure.”

For representatives of SFI, opening the LEED door to other certification systems is overdue.

“SFI has proactive requirements that are making a major difference in how forestland is being managed in the U.S. and Canada,” said Jason Metnick, the group’s senior director of market access and label use.

Some supporters of SFI say that similarities among the major forest certification systems made the FSC-only policy unfair.

“To have the LEED standard out there exclusively giving credit to FSC when we value both (SFI and FSC) seemed to promote a lack of parity,” said Brian Kernohan, director of policy at Forest Capital Partners, which owns nearly 2 million acres of forestland across the U.S., all SFI certified.

One of the most common criticisms of SFI is that it certifies “status quo” forestry practices, but owners of SFI-certified land reject this claim.

“Oregon and Washington have some of the strictest forest practice rules in North America,” said Chris Lipton, general manager and chief forester of Longview Timber, which owns and manages 650,000 acres of forest in Oregon and Washington, all SFI certified. “SFI does a good job recognizing those rules and then going above and beyond forest practice rules in both states.”

The inclusion of other certification standards under Pilot Policy 43 has eliminated the cornered market that FSC enjoyed under LEED’s previous FSC-only policy. Supporters of SFI believe this sends the right signal to the marketplace, while FSC proponents believe they rightly deserved the niche. Those who test the pilot credit may ultimately determine its fate.

“My primary concern is that architects and builders and the general public are still not that familiar with the various certification programs for forest management,” Hanson said. “When people see a label identifying wood as harvested from a ‘well managed forest,’ they may not understand the differences between certification programs.”

Some in the building industry are more concerned with different certification schemes than others.

“It was part of the LEED credit, which is why we went after FSC wood,” said Mike Gorman, a senior associate at BLRB/GGL Architects. “We go through the LEED process, but that’s about as far as we take it.”

Other architects, however, have been following the certification debate closely.

“SFI is an engineered distraction trying to water down the notion of forest certification,” said Craig Briscoe, associate partner at ZGF. Briscoe said he has made a personal effort to meet FSC foresters and explore their land.

Some supporters of the pilot credit contend that builders will benefit from the wider eligibility of LEED-approved, certified wood.

“The ability for specifiers and builders to use and get credit for certified wood across North America makes their job easier,” said Kathy Abusow, president and CEO of SFI.

The post LEED pilot credit spurs new debate on certified wood  appeared first on Daily Journal of Commerce.

Logs and lumber, by the numbers

60 percent: The increase in log prices in western Oregon since the second quarter of 2009, according to the Oregon Department of Forestry.

$543: The average log price in western Oregon for Douglas fir and Western hemlock, according to the Oregon Department of Forestry.

1 billion: The amount of timber, in board feet, that was exported from the western states to other countries in 2010, according to the American Forest Resource Council.

$291: The price of framing lumber per 1,000 board feet as of March 25, according to the Random Lengths Framing Lumber Composite Price.

According to the Oregon Department of Forestry, log prices in western Oregon have risen 60 percent since hitting a low in the second quarter of 2009.

Prices for finished lumber, however, remain cheap because of stagnant domestic demand – especially among home builders.

The combination has left sawmill officials across the western states questioning how to turn a profit. It’s a concern that’s leading them toward uncharted waters – the possibility of selling their finished products to foreign buyers.

“Foreign demand for our logs has been the 800-pound gorilla in the room for years,” said Tom Partin, president of American Forest Resource Council, an industry group that represents 80 sawmills in Oregon, Washington and Idaho. “And we are finally starting to see it take the first crunch on our closest mills to the West Coast, the ones in the Willamette Valley.”

The problem stems from an excise tax that Russia has imposed on logs leaving the country, which has turned China log buyers toward the western United States, driving up demand and prices for raw logs. But because of low demand for finished lumber, sawmills must pay higher log prices without generating a comparable increase in lumber prices.

The Boise Cascade LLC plywood mill in Medford paid 35 to 40 percent more for logs in the past eight to nine months, said John Sahlberg, the company’s general counsel and human resources vice president. But prices for plywood have remained steady. They will rise only if mills cut production in response to the high price of logs, curtailing demand, he said.

“For some of these sawmills going out and buying logs on the open market now, it’s hard for them to convert profitability,” said Shawn Church, editor of Random Lengths, a Eugene-based newsletter that publishes data on softwood lumber and panel markets.

As an example, Douglas fir logs are selling for around $650 on the Oregon Coast, up from $500 at the end of 2010. Conversely, framing lumber is selling at $291 per 1,000 board feet, down from $319 at this time last year and $301 at the beginning of 2011.

“What’s driving the North American lumber market is offshore business,” Church said. “Domestic demand is very suspect, and the housing market has not performed anywhere close to expectations for this year so far.

“At the same time, you have the Chinese and Koreans buying logs off the coast, paying premiums to the (U.S.) market. That in turn is helping to drive up domestic log prices at a time when domestic lumber demand is historically weak. It is creating a pinch for North American lumber producers.”

Further compounding the problem is that a lot of the large mill operators – like Georgia Pacific and Boise Cascade – have sold a majority of the private logging land they owned to real estate investment trusts over the past decade. This means that they no longer control where the logs go, and investors in these REITs don’t care about lumber prices because they are profiting from increased log prices.

According to Partin, mill officials are now looking for buyers in countries like China, Japan and Australia – three of the biggest importers of U.S. logs.

“It’s somewhat of a double-edged sword,” he said. “On one hand we don’t want the logs being exported to these countries. But on the other hand we have to make a case that these countries should buy our finished lumber.”

Some mills in Oregon are testing these waters. Hampton Lumber, a large company that mills in Oregon and Washington, recently purchased a Warrenton mill from Weyerhauser. Hampton will cut all of its logs into metric measurements in order to ship them overseas.

Dan Phillips, chief financial officer of Banks Lumber in Banks, said officials with the company have explored options overseas, but haven’t nailed down a definitive plan.

“We’ve been approached by the Chinese and a few other countries, but it’s not as easy as making a deal and sending lumber over,” he said. “In any deal you have concerns about how you are going to get paid, and that is only intensified when you are dealing with someone overseas.

“If something went wrong we wouldn’t even know who to sue.”

This problem is compounded by international trade politics, Phillips said. China tends to import raw materials, but isn’t willing to export them. It isn’t fair to ship products and get nothing in return, he said.

“I would love it if a log never left the U.S., but we understand that isn’t practical,” he said. “So we are turning our attention to fair free trade.

“But if we are sending over our materials, we are going to need to get materials in return.”

Editor’s note: Brad Carlson of the Idaho Business Review contributed to this story.

The post Rising lumber prices have saw mills looking for buyers overseas appeared first on Daily Journal of Commerce.

The Environmental Protection Agency has switched its stance on emissions from biomass facilities, a move that some say could end up hurting Oregon’s forest products industry.

In the past, the EPA has excluded emissions from biomass facilities from regulation under the Clean Air Act. Now, under the EPA’s recently finalized Prevention of Significant Discharge Tailoring Rule, emissions from biomass facilities could be regulated in the same manner as emissions from fossil fuels.

That doesn’t sit well with R. Wade Mosby, senior vice president of The Collins Cos., a Portland-based wood products company. Most facilities that process forest products burn waste wood and convert that to electricity to offset energy costs, Mosby said. If those facilities are subject to new permits or required to purchase expensive emissions control equipment in the future, Mosby said job losses could result.

“We would have to spend a huge amount of money to meet the standards the EPA has set,” Mosby said. “Paying for emissions control equipment can cost anywhere from 2 to 5 million dollars depending on the size of the biomass facility. If someone says, ‘I can’t afford to spend that,’ and shuts down a facility, it will put people out of work.”

Under the Prevention of Significant Discharge Tailoring Rule, which goes into effect in January 2011, facilities already subject to permitting under the Clean Air Act will be required to get permits that also address their greenhouse gas emissions. In July 2011, all facilities that produce more than 100,000 tons of carbon dioxide per year will have to obtain permits for their greenhouse gas emissions. If a company constructs a new facility, or alters an existing facility after July 2011, it is expected to use the best technology available to minimize its emissions, which could require the purchase of expensive equipment, Mosby said.

According to Ann Forest Burns, vice president of the American Forest Resource Council, the wood products industry is already in a dangerous economic situation.

“The economic balance is precarious for mills right now,” Burns said. “Once these mills tip over, they aren’t coming back. In Eastern Oregon, these mills are the only industry in town. I think the effect of this rule will be fewer American-made building materials are available.”

The EPA hasn’t finalized its decision on biomass yet. According to the agency, it will seek further comment on how to address biomass emissions under the Prevention of Significant Discharge through a request for public comment.

A letter sent recently to EPA administrator Lisa Jackson requesting written explanation of the decision to reconsider the treatment of emissions from biomass, a review of that decision in consultation with the U.S. Department of Agriculture, and a delay in applying the new rule to biomass facilities pending the review was signed by 63 members of Congress, including Reps. Peter DeFazio, Greg Walden, Kurt Schrader and David Wu.

“The EPA rule as its stands would make development of new biomass facilities less desirable,” DeFazio said. “The biomass industry is very nascent at this point. This would kill it in its infancy.”

Uri Papish, the Oregon Department of Environmental Quality’s air quality program operations manager, said that the debate over biomass emissions is complex. One camp believes that biomass emissions are carbon neutral because wood found in the forest is part of a natural carbon cycle. The other says that carbon emissions are carbon emissions.

“The greenhouse gases are the same whether you burn wood or fossil fuels,” Papish said. “But if you have a sustainable forest management program with equal regrowth for any trees that are removed and burned for energy, the trees capture carbon dioxide as they regrow. You’re releasing carbon dioxide either way; it’s just how you account for the carbon’s life cycle that is different.”

Papish said there are several biomass facilities in Oregon that emit more than 100,000 tons of carbon per year. The Collins Cos. is working with alternative energy developer Iberdrola Renewables to construct a cogeneration biomass facility in Lakeview. Mosby said his company would be willing to pay for additional emissions control technology to keep facilities open, but he wasn’t certain that others would.

The post EPA rule worries Oregon timber industry appeared first on Daily Journal of Commerce.