Story by Rich Donnell,
Editor-In-Chief
Trade shows are known for the endless discussions that go on there as to the future of the wood products industry, the future of the housing market, the future of your operation, a project in the future, a technology in the future. But what I also like about them is they provide a moment in time to reflect on what has already happened.
The Timber Processing & Energy Expo will be held October 15-17 at the Portland Exposition Center in Portland, Ore. This is the second TP&EE, with the first one held at about the same time and at the same venue two years ago.
So let’s reflect on what has happened in the interim.
October 2012 represented the highest point at the time of a very, very gradual but steady movement upward in U.S. housing starts (single and multi-family). We weren’t there yet, but for the first time in a few years, everybody was talking about reaching a million starts for the year, which, compared to the half million starts of a few years earlier, was like eating candy. We didn’t quite make a million in 2012, but got very close.
We got even closer in 2013, so close that some reports say we barely topped a million and others say we fell just short. So far in 2014 the charts show some rising and some dipping, above and below a million annualized, but when the 2014 TP&EE is held in October, housing starts may not look a lot different (maybe a tad higher) than they were during the October 2012 TP&EE. Something that many operators would like to remain as it was in 2012 is the surge in lumber exports. There’s no question some operations have had a good run between the last TP&EE and the one upcoming.
Some of us seem to be disappointed at the lack of a housing boom, but a doubling of housing starts over a period of five years, when you think about it, is somewhat of a boom. I prefer to say that this current flirtation with a million starts the past two years is a period of U.S. housing stabilization. If we’re to believe the forecasters, it precedes a 20-30% hike in 2015 into the 1.2 to 1.3 million starts range.
So it is still looking good, just as it was looking good two years ago, which explains why our sawmill capital expenditure surveys continue to reveal increasing capital expenditures, and why we expect a lot of activity on the exhibit floor at TP&EE 2014.
What has changed the most since TP&EE 2012 is the actual look of the sawmill industry.
Since then, three Canadian companies—Interfor, West Fraser and Canfor—have purchased 13 southern pine sawmills. I don’t how this affects (if at all) the U.S.-Canada Softwood Lumber Agreement. The two countries signed the agreement in 2006, and in 2012 extended it through October 2015. But what I do know is that some of the southern pine lumber operators that were purchased by the Canadian companies were some of the lead “barking dogs” on behalf of the U.S. softwood lumber coalition.
But that discussion is for another day.
Another development since TP&EE 2012 was that the success of TP&EE 2012 prompted its organizers, including yours truly, to proceed with the planning and production of TP&EE 2014.
I’ll see you there.