Thanksgiving

I’ve heard it said by some that, by nature, lumber traders are a thankful lot. I agree. Even if it seems that on some days, normal everyday stresses might upstage our ‘thankful’ disposition. The attitude of gratitude is not always at the forefront of our lives.

Now comes word this U.S. Thanksgiving week that a dose of gratitude can actually boost our health. In fact the head of the division of biologic psychology at the Duke University Medical Center tells us here that, “If thankfulness were a drug, it would be the world’s best-selling product with a health maintenance indication for every major organ system.”

Dr. Glenn Steinberg, author of The Mental Rules for Golf, explores thankfulness in the business world. “Giving thanks can fill us up spiritually with good cheer.. but can it make us more successful?” he asks. The answer is yes, says Dr. Steinberg, who presents an experience with Gary Player as evidence here.

The recent opportunity to visit with customers in a number of states certainly provided me with an uplifting reminder there is much to be thankful for. Happy Thanksgiving eh!

“Contentment is not the fulfillment of what you want, but the realization of how much you already have.”
– Anonymous

“Forgiveness and celebration are at the heart of community. These are the two faces of love. Celebration is a communal experience of joy, a song of thanksgiving.”
– Jean Vanier, founder of L’Arche, “Community and Growth: Our Pilgrimage Together” (1979)

“Instead of starting your day with all your worries and checklists, begin your day thinking about three blessings in your life.”
– Dr. Glenn Steinberg

“Thanksgiving, man. Not a good day to be my pants.”
– Kevin James

Beetle Boundaries

With 18 million cubic metres of the land base having been attacked and killed by the Mountain Pine Beetle, the unprecedented and unsustainable salvage operation in the B.C. Interior continues.
What, exactly, will the future look like? That’s what “everyone wants to know,” confirms B.C.’s Chief Forester Dave Peterson. In my conversation with Dave on Friday, I learned that “there’s no doubt we’re coming closer and closer to the point where the cuts will be reduced.” And while annual allowable cut (AAC) forecast slides were a prerequisite of any super cycle presentation, I learned from Dave that definition of beetle-killed timber supply areas is highly region-specific, shaped by a number of variables.

  • Reality is “there will be less timber”
  • While we are “forward-looking as possible” we “don’t predict future AAC.. cuts are set area by area for 5-10 years at a time”
  • Cuts are very much predicated on the area, dependent upon definitive information including site conditions and also kinds of sawmills there (“are they well-suited for cutting small dead trees?”)
  • Beetle-killed trees last longer in dry areas – in wet areas, the roots rot and the trees eventually fall over (the “tipping point” where timber is no longer economic)
  • Timber Supply Review (TSR) of the 100 Mile House Timber Supply Area (TSA) and Mackenzie TSA most recently completed and AAC adjusted
  • Williams Lake TSR will be completed within two months (“still a significant amount of dead timber in Williams Lake and West Chilcotin”)
  • Quesnel and Prince George Timber Supply Reviews to be completed in 2015 or early 2016

“It is well to remember that there are no new forests to be found. All are known. From here to eternity, Canadians must do with what they have.”
– G. Herbert Lash, horticulturist. “A Walk in the Forest” (1966),
issued by the Canadian Pulp and Paper Association

Bullish on Lumber

Export Development Canada (EDC) is bullish on lumber. That is evident in new forecasts that anticipate positive growth of 12 per cent for the U.S. economy in 2015. In concert with the National Association of Home Builders (NAHB) assessment of pent-up demand for U.S. housing, the chief economist of EDC, Peter Hall, declares here “The days of America’s housing surplus is over.”

How this demand will be met invites closer scrutiny of B.C lumber supply in the face of fibre supply constraints facing B.C. sawmills. Hall is quoted here in today’s Vancouver Sun: “In terms of fibre we have (in B.C.).. the intelligence we’re getting from B.C. companies is that this is the year it is first going to hurt.”

~Sawdust~

The NAWLA Traders Market last week in Chicago was a resounding success according to representatives from Dakeryn who attended. By all reports Keynote Speaker Scott Burrows delivered a powerful presentation. As described here at NAWLA, Scott “has transcended his circumstances to become an expert on transformational changes as well as an in-demand inspirational speaker all over the world. Employing his paralysis as a visual metaphor, Scott encourages his audiences to stand up to their challenges – regardless of circumstances – using the dynamic principles of Vision, Mindset and Grit.”

Jerry Howard in the house..

One of many highlights from an invigorating week on the road was the opportunity to listen to Jerry Howard, CEO of the National Association of Home Builders (NAHB). What a speaker. LMC Expo 11-12-14And with more than 25 years of lobbying and association experience in Washington DC, to suggest that Howard is ‘in the loop’ is to state the obvious. It’s evident the overriding concerns surrounding polarized political views continue to plague Congress. Some takeaways from Jerry Howard’s speech at the LMC Forest Products & Building Materials EXPO in Philadelphia November 11th:

  • Adaptation is what’s kept builders alive (remodeling, light commercial) – “those who survived the recession were the most adaptable”
  • NAHB had 250,000 members prior to recession; 130,000 today
  • Large, publicly-traded home builders only account for 25-30% of housing market activity – rest of the builders account for 70%
  • Those publicly-traded companies were most concentrated in the hottest markets –  the hardest hit markets in the recession
  • Since World War II, housing has led the economy into recession and housing has led the economy out of recession – but the financial sector collapse of 2008 was unprecedented
  • Policies of the Federal Government aimed at promoting home ownership are to blame for the collapse – “banks found creative ways to get people into housing” – underwriting mortgages = “good policy taken too far”
  • Now “unbelievably restrictive to get a mortgage”.. as result there are “no first-time home buyers in the market”
  • Inability of first-time buyers to get a mortgage is what’s impeding the market
  • Production will only come back when mortgage policy is loosened – Need to search for and find compromise in face of inability of representatives of government to solve differences on issues
  • Availability of credit also big challenge for builders
  • There is pent up housing demand historically that needs to be met – “1.4-1.6 million housing starts = organic demand” – owning a home “still part of the American dream”
  • Millennials want urban living but when they have a family they still want a single family house with a backyard in a good school district
  • Biggest thing home builders want from suppliers is consistency: consistency of product availability, quality, and price
  • “Recession took us for a loop” but “business people who survived the recession will have the wherewithal to see us through”
  • Emergence of “co-located” trade shows post-recession; NAHB International Builders Show and Kitchen & Bath Industry Show combine in January
  • Forecast for “1.2 to 1.4 million” U.S. housing starts in 2015 raised a few eyebrows!

On the Road Again

“Who’s gonna patronize a little bitty two by four kinda store anymore?”
– “Rock Island” lyrics from The Music Man

Willie Nelson’s On the Road Again is a reminder that in some industries – like the music industry – travel remains a big part of the job. As for wholesale lumber traders – not so much anymore. The evolution of communication tools has reshaped the marketing mix for lumber distributors. It has contributed to the shifting channels of distribution in play.

As a kid, I recall playing the role of Winthrop in a local production of The Music Man, in which professor Harold Hill made his personal sales pitch, travelling Iowa, with pronouncements of “You gotta know the territory!”. Today, annual conferences such as the NAWLA Traders Market in Chicago, the COFI Convention in Prince George/Kelowna, and the Global Buyers Mission in Whistler are experiencing a resurgence in attendance. Packed halls are where lumber buyers and sellers meet face-to-face. Even so, the personal customer visit offers uncommon opportunity. It’s why I’m looking forward to getting on the road again, to re-connect on the ground with Midwestern and Northeastern customers next week.
leo-cullum-do-you-need-anything-from-toledo-dear-new-yorker-cartoon

Efficiencies

There was a time (not that long ago I’m told) when lumber used to be loose-loaded, hand-bombed, into single-door box cars. It’s suggested that sometimes there were even claims borne out of dimension loads arriving at destination in a state of intolerable jumble of random lengths, adding exorbitant unloading costs. No doubt these were forerunners in the call for efficiencies such as unitized packages, paper or poly under top tier, or paper-wrapped shipments that are still the flatcar standard for most rail shipments today.

Technological advances have also shaped new efficiencies in lumber production that have revolutionized the industry – resulting, in most cases, in significantly reduced labour costs. The implementation of efficiencies represents creative energies that have shaped progression of development in the woods industry. Not surprisingly, the question of how many lumber traders it takes to change a light bulb is largely obsolete these days, when light bulbs themselves are more efficient.  From the following YouTube video, it’s evident that even the answer of how many guys it takes to load a bobcat onto a truck without a ramp might surprise. (HT: Ernie Harder)