LYNNWOOD – Since the early 19th century, the timber industry has played a key role in laying the foundations of Washington State’s economy. Last year timber prices reached record highs. The Lynnwood Times spoke to the owners of Dunn Lumber and Pinnacle Roofing Professionals to understand why.
According to Market Insider, spotwood prices hit an all-time high of $ 1,390 per thousand board feet, up 275% over the past year. Those rising costs have increased the price of the average new single-family home by $ 36,000, based on data from the National Association of Homebuilders.
Pinnacle Roofing, based in Lynnwood, has forced rising timber prices to reduce its price estimate from the usual 30 to 60 days to 14 days. Despite this small setback, the company posted a 30% increase in sales last year. and according to Lenny Schwartz, CEO and President, “the numbers keep growing”.
“We [keep] Customers update about prices but most don’t know and [are] still buy, ”said Schwartz.
According to Schwartz, the slowdown in production in the second quarter of 2020 had serious effects: “We are only now experiencing the consequences”. The driving factors are low inventory levels and unprecedented disruptions in the supply chain.
“When inventory levels are healthy and predictable throughout the construction season, freight and transportation benefit from proper planning and logistics. Unfortunately, the need-it-now paradigm has also contributed to increased costs, ”said Schwartz.
Pinnacle Roofing Professionals, LLC, nearing its 12th anniversary serving the Seattle Roofing Sector, specializes in residential and commercial roofing, solar, electrical and chimney stacks.
For some time now, factors have gradually evolved, says Mike Dunn, president of Dunn Lumber, where Pinnacle sources its supplies. Factors such as powder beetle infestation that has become global and restrictions on deforestation for the maintenance of forestry. When the pandemic broke out, there was an increase in home projects and an increased demand for housing. All of these factors overwhelmed an already increasingly fragile supply chain.
The pandemic has resulted in sawmill closings, labor shortages, limited freight cars and containers for transportation, and forest fires. Mills that have been in operation all year round cannot get enough logs or staff, which means they cannot produce enough to meet the increasing demand. According to Dunn, the motivation to produce more strains is because the prices are right, but they just can’t.
“I think there’s a certain excitement about being back in life on top of that, so people pay prices that in normal times might be … just amazing,” said Dunn.
Mike Dunn, President of Dunn Lumber.
In certain circumstances, Dunn Lumber can only hold stocks for a few weeks at a time. Although they are trying to “ride the market,” as Dunn said, they can only buy a certain amount at a time of what is limited, and prices change weekly.
“They’re paying a small margin for the work of bringing them here and making them available. We [also] don’t have the space. If we could buy a hundred truckloads of something, we’d have nowhere, ”said Dunn.
Many Dunn Lumber distributors process their orders months in advance to deliver products to consumers. When the pandemic first broke out, the company suffered from shortages of fences and lumber, but inventory has remained relatively stable, despite only holding supplies for two weeks.
“There are just too many dollars to hunt for too few goods,” said Dunn, who has been with Dunn Lumber for 50 years and has never seen price increases like this in his career.
While Dunn Lumber sources most of its material from places like Lakeland Mill in British Columbia, plywood is still collected from the Pacific Northwest, including Oregon, where the Oregon Forest and Industries Council reported that the Oregon fires alone could potentially have 15 million people have killed. Meters of wood enough to build 1 million houses.
“It’s really not surprising when you take so many people out of work and suddenly the bodies are no longer there to handle a crisis … things get worse quickly,” said Dunn.
Companies like Dunn Lumber continue to source wood from British Columbia for its SPF (spruce, pine, fir), species that grow inland in cold temperatures. This is better for remodeling and construction because of its strength, ease of use, and aversion to defects. Most of the trees grown in the Pacific Northwest are hemlock and douglas fir, a faster growing tree that is rougher grained and heavier. Because of this, Dunn Lumber stopped sourcing from local mills like Buse in Everett and Hampton in Darrington in the 1980s.
In addition to the supply and demand for panels, resin used to cure composite panels is also in short supply after a major resin supplier in Texas went under during the Cold Crisis.
“I’ve been seeing some of the crazy things going around on YouTube lately when an economist took pictures of piles of wood outside Hampton Mill and said, ‘This is where all the wood is, and that’s why it’s so expensive.’
“First of all, the wood was being processed. It was between the time it was ground and the time it was dried and prepared and then packaged and shipped. A great deal of wood is processed in a large mill.
“Second, if you took all of the inventory, it was probably fifteen minutes down the supply chain. So much material is used every day that it looks like a lot at first glance. But you are literally talking about billions of boxes being produced internationally in a year, so a couple of truckloads doesn’t matter, ”added Dunn.
From the retailer’s perspective, the market is behaving exactly as Dunn said it would be.
“It’s not like food that when it reaches a certain price some people will starve to death and some people will be fed. It’s just a question, ‘Can you wait for your project or do you have to do it now – or are you ready to do it now with these prices?’ … This is how the free market works, “Dunn said.