Why the High Cost of Lumber Isn't Helping Loggers
From home renovations to home building, the pandemic pushed people to start projects.
But not all of those projects are cheap – especially if they require lumber.
Lumber prices are up 180 percent since last spring, and they’re still climbing.
Mills are flourishing, but the same can’t be said of the Northwoods logging industry.
On a hillside south of Crandon, a giant yellow machine grabs logs with its mechanical arm, then cuts them to identical lengths.
Matt Jensen is the man behind the machine.
He’s a third-generation logger, following in the footsteps of his father and grandfather, and he’s been in the industry for a long time.
“I’m 55 years old, so I’ve been self-employed since I’ve been 20 years old,” he said. “It’s in your blood. I just love it.”
The logs he harvests are loaded onto long trailers and delivered to paper and sawmills in the area, where they’ll be processed into materials like cardboard, two-by-fours and siding.
When the pandemic hit, many of those mills slowed down production.
COVID-19 concerns limited the number of people working at a given time, and manufacturers feared demand for building materials would drop, so they cut back on production and reduced their inventory.
But demand didn’t drop, it skyrocketed.
People stuck at home wanted to renovate. Restaurants rushed to build outdoor accommodations. And low interest rates encouraged people to buy homes.
Without the supply to satisfy the increase in demand, prices for building materials jumped.
“Just last week the prices of oriented strand board went up again from 31 dollars to 40 a sheet. A year ago, we were paying about 12 dollars a sheet for it,” said Henry Schienebeck, the executive director of the Great Lakes Timber Professionals Association in Rhinelander.
“This is one of the strangest business climates I’ve ever seen in my entire history in the forest industry.”
These days, production of wood building materials is back up – at its highest point in more than a decade, according to the American Wood Council.
But it still hasn’t caught up with demand.
Meanwhile loggers, like Jensen, aren’t reaping the benefits.
“Somebody in this industry is making literally a price-gouging killing,” he said. “But as logging contractors, we’re paid less now than when that piece of plywood was eight bucks a sheet.”
When the Verso Paper Mill in Wisconsin Rapids shut down, it left a lot of loggers with nowhere to sell their wood.
This excess of raw material keeps the price of logs really low, which isn’t good for Jensen.
“They literally bring you to the brink of bankruptcy,” he said.
Mills are all about turning a profit, he said, so they’re not concerned with the success of loggers, especially when there are so many.
“Loggers are like a box of pencils, if you break one, you just grab another one,” he said.
Henry Schienebeck said all of this creates a unique situation.
“On the manufacturers’ end, they can’t produce the oriented strand and siding fast enough. And on the raw material end, there’s so much raw material that they don’t even have to think about paying more money for the raw material,” he said.
Schienebeck predicts the lumber market will self-correct as demand levels off.
But that won’t happen, he said, before forcing some loggers out of business.
Matt Jensen doesn’t intend to be one of those people.
“When this whole thing is over, hopefully I’ll be healthy enough, business-wise. I sure as hell plan on it.”