As 2013 gets into full swing, the outlook is good for the Northwest timber industry. Weyerhaeuser Co., based in Federal Way, just posted its highest revenue in four years, with Q4 2012 revenue going up 25 percent to $2 billion.
Spokane’s Potlatch Corp. also posted very positive fourth-quarter results, showing increased U.S. lumber demand, lumber prices and sawlog prices. According to the Lewiston Tribune, Potlatch’s performance will help all the mills in north central Idaho, where Potlatch has a lot of land.
The bounceback of the U.S. housing industry has a lot to do with the improvement.
(Weyerhaeuser) Chief Executive Dan Fulton said the recovering housing market helped Weyerhaeuser improve its profit and raise dividend last year, and that the company would look to build on that.
Housing starts rose 12.1 percent last month to their highest level since June 2008, a report from the U.S. Commerce Department showed last week. Permits for future home construction were also the highest in about 4-1/2 years.
The recovery in the housing market has already helped Weyerhaeuser, with its shares jumping 58 percent over the past year.
Not everything is perfect. The Idaho state lands director says government timber revenue is down, even among record timber harvests, because the price of standing trees is still relatively low. And the recovery of the U.S. housing industry also means the competing Canadian timber industry is also doing well.
But the overall trends are positive. Look no further than Elk Creek Forest Products, a small mill near Salem, Ore. The Oregonian just did a long feature on the company and its skill in finding a successful niche in a wood-products industry that’s still recovering.
In less than 10 years the company has grown to nearly 40 employees and $20 million in annual sales. It ships small batches of specialty beams and timbers to New York, Hawaii and points between. At any given time Slaughter has about $3.5 million worth of inventory sitting in his lumberyard, and his graders and traders are hopping.
By all accounts Elk Creek has found a successful niche in what the timber industry calls “secondary manufacturing.”
In Oregon, where recurring recessions, environmental restrictions and technological changes have whittled the wood products workforce and emptied mills for 35 years, that’s saying something.
Small is good for Elk Creek.
With the housing market showing recent signs of improvement, people in all facets of the wood products industry are allowing themselves a little optimism.
“Markets for wood seem to be picking up,” says Tom Partin, president of the Portland-based American Forest Resource Council, an industry advocacy group. “Dimension lumber and plywood are at levels we haven’t seen for a couple of years.”
Having ridden out the recession, (Elk Creek President Brett) Slaughter says his company is in an especially good position. “In 2005 and 2006 it was a great economy,” he says. “I was catching crumbs off the side of the plate of the big guys and building clientele. When the recession came it didn’t affect me as much.”
Even a small mill has a huge effect on its community, including Elk Creek’s hometown of Independence, population 8,500.
Shawn Irvine, the city’s economic development director, says the impact of an Elk Creek-type business in a small town cannot be overstated.
“This one is really important,” Irvine says. “The real big sexy project that brings in 500 jobs gets the press, but jobs like this are really the most important. These guys pay a good wage, they want to hire local people and they’re growing.”