THE CHINA QUESTION

By Tripp Pryor, AHEC International Program Manager

After three years of the strictest nation-wide lockdowns on Earth, China has finally ended their “Zero-COVID” policy. Quarantine requirements have been lifted, and travel into and around the country has become significantly easier for both international visitors and Chinese nationals. Just in time for Lunar New Year, families will be reunited, business can worry less about lockdowns, and the country can start to look forward to something more “normal”. There’s that word we’re all sick of hearing at this point – “normal”. What can normal possibly look like in a country that has been in a self-imposed bunker for the last three years?

In the immediate future, normal looks a little rough. The Director of the Henan Health Commission noted at a press conference on January 6th that the infection rate in his province was 89%. That’s over 88 million people in Henan province alone who have been infected just weeks after the zero-COVID policy was lifted. Lunar New Year holiday means millions of travelers will return to visit family in the countryside, and elderly people in rural areas are the least vaccinated demographic in China. The Chinese government has committed to opening the country, but time will tell if they hold that line or go back to targeted lockdowns in the face of large-scale outbreaks.

Even after the short-term obstacles with COVID are sorted out, there’s no guarantee that China will come roaring back. The Chinese housing market is still cause for concern. Beyond that, there have been tectonic shifts in global supply chains since 2019. More and more industries have diversified their operations outside of China to produce goods in SE Asia,

India, and Mexico. China is acutely aware of this, and as they open up for business they hope to re-establish these trade links before it’s too late.

In our industry, we’ve seen a dramatic drop in exports to China since 2017. With the trade war and now COVID, our lumber exports have stayed at roughly half of the pre-trade war level since 2019. The featured graph here shows exports of US hardwood lumber to China compared to exports to all other markets combined. China went from buying well over half of all US lumber exports to only accounting for 37% as of 2022. This is their lowest market share in a decade. Encouragingly, total exports are up in spite of reduced Chinese demand. Over the last two years, growth in places like Mexico, the UK and Europe, SE Asia, and Japan have brought us back over $2 billion and 3 million m3 in lumber exports, even though China has remained flat.

The changes in COVID policy in China are encouraging, but may not be an immediate boost to US hardwood exports. How do we continue to develop other regions and grow our markets without once again becoming over reliant on China? The American Hardwood Export Council has a full schedule of events in 2023 that will be a cost-effective way for your company to connect with international buyers. Some upcoming events include pavilions in New Delhi, India; Dubai WoodShow; Interzum Cologne, Germany; TechnoMueble in Guadalajara, Mexico; VietnamWood; Intermob in Istanbul, Turkey; and our annual AHEC Asia Convention in Kuala Lumpur, Malaysia this June. For more information on export markets and AHEC activities, please reach out to me at tpryor@ahec.org

Honoring Tradition While Incorporating Growth Tactics

By Nate Irby, Ph.D., Railway Tie Association

The Railway Tie Association (RTA) was organized in 1919. Predecessor groups, dating back to the late 1800s, that included The National Association of Railroad Tie Producers, were formed to support the railroad tie industry and to preserve the forest through conservation. The purpose of the RTA is to promote the economical and environmentally sound use of wood crossties. The Association is involved in research into all aspects of the crosstie industry and ongoing activities dealing with sound forest management, conservation of timber resources, timber processing, wood preservation, industry economics and statistics, and safety of industry workers. RTA works to keep wood crosstie markets strong and sustainable.

We also provide in-person meetings throughout the year to collaborate, educate, enlighten and inspire our membership (and each other): Tie Grading Seminar, Member-only Field Trip, and Annual Technical Conference & Symposium. Our presence in the industry is well-known, especially for the facets aforementioned, but our growth catalysts are not yet clearly defined. It is my belief those sustaining outlets will materialize through expansion of education, technical services and governmental affairs activities to propel the RTA into the future. However, we will maintain our current host of offerings through good stewardship of what is working and is our foundation.

To foster a full paradigm shift in these growth areas is not proper tact. Incremental and impactful advances on each front will be key to learning, adapting, and then forging ahead. As you venture out into the world and find a place to join in an RTA event, or by simply viewing the rta.org website or RTA social media content, please provide us feedback on how we can potentially better serve our constituency, and perhaps be more inclusive to capture a broader membership base, all-the-while honoring tradition.

www.hmr.com

The HMR Demand Index (HDI) is a feature in HMR Executive® that illustrates monthly trends in reported demand from 10 major domestic markets for hardwood lumber. Components of the index are color coded with various shades of blue when demand is slow, they transition to gray when demand is fair, and then to light red and deep red when demand moves from good to strong.

Index for January which is published the first week of February.

Cabinets

Residential Flrg.

Truck Trailer Flrg.

Upholst. Furniture

Wood Furniture

Moulding/Millwork

Wood Components

Board Road

Pallets

Railroad Ties www.nwfa.org

At the time of the NWFA/Hardwood Floors magazine 2023 Industry Outlook survey, which was taken in the summer of 2022, more than 86 percent of all NWFA members reported continued supply chain disruption. They had experienced business impacts including lost sales, longer lead times, increased inventory holdings, increased pricing, and increased back orders. To combat supply chain disruption, NWFA members reported plans to source from new suppliers, as well as improve communication with current suppliers.