Wall Street Journal: West Coast logging makes a comeback


Fueled by demand from China, the West Coast timber industry is on the rise, according to today’s Wall Street Journal. The story highlights the upswing in timber towns in California but notes that the same trend is happening in Washington and Oregon.

Arnold, a town of close to 4,000 people, high in the Sierra Nevadas about 150 miles east of San Francisco, struggled for years from a logging slowdown. But last year, timber receipts in surrounding Calaveras County rose to $4.1 million, from $1.8 million in 2010, according to county data.

The revival comes as California timber harvests and revenue rise for the third straight year, according to state data and timber companies. Timber harvests are up by 20% or more—and revenue is growing by a substantially higher margin—since a post-housing-bust slump sent harvests to a record low in 2009.

…Sierra Pacific Industries Inc., California’s largest timber firm, says general domestic demand has been improving, too, especially for wood products used for purposes other than home construction, such as fence posts.

The Journal story (including a photo gallery) is much more complicated though. First off, as we’ve written about before, the log exports to China also hurt local sawmills because most of the exported wood is whole logs.

Second, the demand from China may be waning, according to a report from Wood Resource Quarterly, an industry journal in Seattle. The Oregonian recently took a deeper look at the declining demand and its corresponding low timber prices.

(The lower demand has) made more reasonably priced timber available for Northwest mills, (said Tom Partin, president of the American Forest Resource Council). In addition, mills have been able to charge more for finished lumber and plywood because building has picked up in the past three months.

“Having a log supply is really helping — at a decent price and not having the Chinese competing,” Partin said. Mill operators hesitate to add shifts and hire more workers, however, because they aren’t sure if the improved log supply is a blip or a long-term trend, he said.

Lumber demand is relatively good, given the overall economic climate, agreed Kevin Binam, president of the Western Wood Products Association in Portland. The group represents lumber manufacturers in 12 western states.

“If there’s less demand from China for logs, you’d think — everything else being equal — it would help the log supply” to the region’s mills, he said.

No industry trend story is as simple as it looks. There are no doubt positive signs ahead for the timber industry, but each trend must be looked at with a critical eye.