October 2024 Hardwood Matters by National Hardwood Lumber Association

HARDWOOD MATTERS

EXECUTIVE COMMITTEE

Jon Syre, Chairman Cascade Hardwood, LLC

Bucky Pescaglia, Vice Chairman Missouri-Pacific Lumber Co., Inc.

Jeff Wirkkala, Past Chairman 2020-2022 Hardwood Industries, Inc.

MISSION LEADERS

Sam Glidden, ITS and ITSEF GMC Hardwoods, Inc.

Ray White, Lumber Services Harold White Lumber, Inc.

Joe Pryor, Education Services Oaks Unlimited

Rich Solano, Convention Pike Lumber Company, Inc.

Stephanie VanDystadt, Membership & Networking DV Hardwoods, Inc.

Rob Cabral, Market Impacts Upper Canada Forest Products, Ltd.

DEPUTY MISSION LEADERS

Burt Craig, Membership & Networking Matson Lumber Company

Tom Coble, Market Impacts Hartzell Hardwoods, Inc.

Dennis Mann, Convention Baillie Lumber Co.

Tom Oiler, Lumber Services Cole Hardwood, Inc.

Brant Forcey, ITS and ITSEF Forcey Lumber Company

George Swaner, Education Services Swaner Hardwood Co., Inc.

COMMITTEE CHAIRMAN

Sam Glidden, Rules GMC Hardwoods, Inc.

HARDWOOD MATTERS

THE VOICE OF THE HARDWOOD INDUSTRY

National Hardwood Lumber Association PO Box 34518 • Memphis, TN 38184-0518 901-377-1818 • 901-382-6419 (fax) info@nhla.com • www.nhla.com

THE MISSION OF NHLA

To serve NHLA Members engaged in the commerce of North American hardwood lumber by: maintaining order, structure and ethics in the changing global hardwood marketplace; providing unique member services; promoting North American hardwood lumber and advocating the interest of the hardwood community in public/private policy issues; and providing a platform for networking opportunities.

ADVERTISER INDEX

NHLA STAFF

Dallin Brooks, Executive Director dallin@nhla.com

John Hester, Chief Development Officer j.hester@nhla.com

Renee Hornsby, Chief Operating Officer r.hornsby@nhla.com

Sam Leow, Chief Marketing Officer s.leow@nhla.com

Dana Spessert, Chief Inspector d.spessert@nhla.com

ACCOUNTING

Desiree Freeman, Controller d.freeman@nhla.com

Ashley Johnson, Office Administrator a.johnson@nhla.com

Jens Lodholm, Database Manager j.lodholm@nhla.com

INDUSTRY SERVICES

Mark Bear, National Inspector m.bear@nhla.com

Tom Byers, National Inspector t.byers@nhla.com

Kevin Evilsizer, National Inspector k.evilsizer@nhla.com

Simon Larocque, National Inspector s.larocque@nha.com

Benji Richards, Industry Services Sales Manager b.richards@nhla.com

INSPECTOR TRAINING SCHOOL

Roman Matyushchenko, Instructor of the Inspector Training School r.matyushchenko@nhla.com

MARKETING/COMMUNICATIONS

Melissa Ellis Smith, Creative Director m.ellis@nhla.com

Brennah Hutchison, Junior Copywriter b.hutchison@nhla.com

Darci Shannon, Communication & Outreach Specialist d.shannon@nhla.com

Julia Ganey,

Chase Musarra, Member Services Advisor c.musarra@nhla.com

The RossiGroup has been helping customers navigate the global hardwoods industry for almost a century.

We have raised the bar with our new state-of-the-art Emporium Mill and kiln facilities, our long-term supply agreements, and our uniquely personal brand of customer service.

We deliver a world class selection of hardwoods – including the gold standard in cherry – all sorted, milled and dried to tolerances, consistencies, and yields that were not even possible five years ago. Visit us www.rossilumber.com or call 860-632-3505

“We currently run four Hurdle mills and they give us the versatility to cut cants, ties, grade, and feed our thin-kerf resaws ... Hurdle has been a big part of our success for the last 25 years. You could spend 4 or 5 million dollars building a mill to square logs for a resaw, but why?

Hurdle is the MOST cost effective headsaw, no other sawmill can produce like this and keep total capital investment this low!”

Brandon Clark, Clark Lumber Company

8hrs20,000 to 25,000+ bd/ft

A CHAIRMANSHIP MOVES PRETTY FAST

If you don’t stop and look around once in a while, you could miss it.

With a great deal of excitement, I will pass the NHLA Chairman’s gavel to Bucky Pescaglia on Friday night at the end of the St. Louis NHLA Convention. “So I got that goin’ for me, which is nice.”-Caddyshack 1980.

I am humbled and thankful for all the support and guidance I have received over the past four years serving as the Vice-chair and Chairman of the NHLA board.

It has been a great honor to serve. The last four years have gone quickly, for sure. It was like the tale of two opposite industries! During my first two years serving under Jeff Wirkkala as Vice-Chair, the industry was surging. We worked on the Sales code and Rustic grades. We also began and implemented the new strategic plan for the NHLA!

In the last two years, the Hardwood industry has suffered, but the NHLA charged forward under new leadership from Executive Director Dallin Brooks! Providing industry-leading support to the Real American Hardwood Coalition. Designing a new membership dues structure and successfully earning grants to help with membership and marketing. The NHLA continues to provide membership value and leadership!

As I fade into the immediate past Chairman role and work to identify new board members on the nomination committee, I am pleased that under Bucky’s leadership, the NHLA will continue to charge forward, generating membership value. Working to grow and stabilize the hardwood industry, as outlined in the strategic plan!

The Inspector Training School will continue to be a focus of the board, looking for ways to adapt the curriculum to how and where students are currently learning. Grants will still be a focus of how we can leverage our membership dollars and create more opportunities.

The new board committee structure is more adept at identifying hardwood industry issues and working to provide solutions through the market impact committee. In addition, I am very pleased to see the new associate and sustaining board member representatives join

the board and provide valuable input. The NHLA has morphed into a very nimble and innovative association, embracing change and adapting to the needs of the membership. These changes are not without challenges; the NHLA staff has been up to the task, and I commend them!

Without the staff working in harmony and without a unified goal, major changes at the NHLA and the adoption of the strategic plan would have been a struggle. Instead, they all pulled together and worked for the common goal of supporting membership. The NHLA staff have also embraced my rather dysfunctional leadership style, putting up with perpetual pop culture references, etc. I am grateful for their support and assistance, even if there were a few “Did Jon just say that?” moments!

Along with the NHLA staff, the board members were instrumental in supporting my leadership. Board members were always eager to embrace their charge of putting the NHLA membership needs before the needs of their specific company. Board members spent time on their own preparing for meetings so they could jump right in and provide meaningful, efficient input regarding the topics at hand. The board is a diverse group with many different opinions; respectfully, they listened to each other and acted with the goal of growing and stabilizing the hardwood industry. I am indebted to their leadership and friendships!

Thank you for allowing me this growth opportunity to lead the NHLA for the last two years! May God bless you, your family, and your businesses in the years to come. Take care, my friends.

“You’re still here? It’s over. Go home. Go.”-Ferris Buehler 1986

Jon Syre NHLA Chairman | Cascade Hardwood

Beyond Cartoons and Into the Forest

Many so-called environmentalists—those whose credentials are based more on social movements than expertise—want to protect forests and animals from human impact. They don’t understand that conservation isn’t about keeping everything untouched but involves responsible management. Harvesting trees, managing wildlife, and changing landscapes can improve ecosystems rather than degrade them. Yet, these environmentalists often view forests as static, believing trees, animals, and everything else should live forever in an untouched paradise.

I blame cartoons, personally. When you have seven kids, you watch a lot of them. Kids’ cartoons are altruistic and one-sided. They avoid themes of death and harsh realities, focusing only on “saving.” Naturebased cartoons often portray heroes rescuing animals and forests from humans or other animals. In one episode I watched, a hero saves a small animal from a large carnivore—but they didn’t show the carnivore starving to death afterward. These shows omit the circle of life, emphasizing only the act of saving everything from everything else.

A neighbor recently asked how I liked “The Lorax” by Dr. Seuss. I replied that it’s a noble book, but it doesn’t teach the basic concept of business: supply and demand. Every business needs a continuous supply to stay afloat, and every business produces what’s in demand to survive. Environmentalists who criticize us should scrutinize their consumption more than our production because, while we plan for long-term sustainability, their demand seems endless. To be fair, I haven’t read the book or seen the movie in years, so maybe I’ve softened a bit over time.

The demand for maintenance-free products—ones that don’t shrink or swell, are cost-effective, and appear eco-friendly—has ironically led to more environmental harm. This consumption mindset, aimed at conserving trees, increases resource depletion instead. These consumers prioritize short-term utility over longevity, without considering the broader environmental impact. Concerns about foreign labor, carbon emissions, and waste disposal are overlooked in favor of saving a tree—a mindset rooted in childhood, when saving everything seems like the ultimate goal.

I once had a young Washington State Department of Natural Resources employee tell me he preferred using metal because it was “zero risk.” I explained that there’s no such thing—everything has an environmental impact. This oversimplified view of conservation, focusing on the elimination of perceived risks, is prevalent even among those in environmental roles. A recent visit to a sawmill revealed a stack of metal chairs in the corner, reminding me that we’re all guilty of falling into these traps.

The truth is, everything requires maintenance. Every material expands and contracts with changing temperatures. Repeatedly buying cheap, disposable products is a false economy compared to investing in something durable. If people truly want to save trees, they should use wood responsibly. But how do we convey this message? Maybe we need a cartoon where wolves kill for sport, bears reject cubs that aren’t their own, and humans cut down trees but plant new ones in their place. It’s absurd, of course—but sometimes it takes a jarring contrast to shake people out of their romanticized views of nature. In the meantime, we can all take action in our own lives. A 2016 study from the Hardwood Federation reports that the hardwood industry employs over 2 million individuals. Following national trends, that gives us close to 700,000 kids (I’ve done my part with seven of them). We can start by educating our children, neighbors, and coworkers on the importance of using wood. By practicing what we preach—choosing solid hardwood over concrete, plastic, steel, and composites—we not only sustain our industry but promote true environmental responsibility.

Dallin Brooks NHLA Executive Director dallin@nhla.com | 901-377-0182

Some see wood, we see purpose.

With hardwood lumber, we enhance our customers' business's and the health of the planet. From responsible harvest to fabrication and installation, from use and re-use, hardwood lumber enriches and sustains the places we live, work, and play. As North America's leading distributor of hardwood lumber, we are proud to partner with you to bring unique products to the market through the untold possibilities of hardwood lumber.

What you need. When you need it. By people that know and care.

• Shorter Drying Cycles

• Qualifies for Carbon Credits

• Saves Up to 80% of Lost Heat

• Increases Boiler Capacity

Welcome

New Members

(May, June & July)

ACTIVE MEMBERS

Hull Timber LLC, Pomfret Center, CT

Walnut Specialists Inc., Monticello, KY

Moravia Hardwoods, LLC, Moravia, IA

Revelation Woodworks, LLC, Cameron, MO

TBM Hardwoods, Inc., Hanover, PA

Beaam Hardwoods LLC, Black River Falls, WI

Coplin Valley Hardwoods LLC, Munfordville, KY

Edrich Lumber, Inc., Windsor Mill, MD

Fox Lumber Sales, Inc., Hamilton, MT

G.L. Beaumont Lumber, Ramsey, IL

JD Logging LLC, Orwell, OH

Triple Y Sawmill, Hill Point, WI

ASSOCIATE MEMBERS

reSAWN TIMBER Co., Telford, PA

Thermory LLC, Tallinn, Estonia

Tilo Industries, LLC, Lewisburg, PA

SUSTAINING MEMBERS

QEIS Inc., Simpsonville, SC

Voice Directed Tally Systems, Inc., Belleville, Ontario

HMC Corporation, Contoocook, NH

Cottingham and Butler, Dubuque, IA

Hanchett Mfg, Big Rapids, MI

Jartek Invest Oy, Lahti, Finland

Jozana Grant Services, Big Rapids, MI

Renken Services LLC, Butternut, WI

Milestone Members

Congratulations to these companies who are celebrating significant milestone anniversaries with NHLA.

5 YEARS

BXS INSURANCE

Sustaining | September 2019

FARM CREDIT EAST

Sustaining | August 2019

JOESCAN

Sustaining | July 2019

NOVUM UNDERWRITING PARTNERS

Sustaining | September 2019

PORTER ENGINEERING

Sustaining | September 2019

SORRELLS SAWMILL, INC.

Active | July 2019

10 YEARS

SYSTEM TM A/S

Sustaining | September 2014

THE AGL GROUP

Sustaining | September 2014

25 YEARS

KENNEBEC LUMBER CO Active | August 1999

PRIMEWOOD

Active | August 1999

SONOKING CORP. Active | August 1999

50 YEARS

CORLEY MANUFACTURING CO.

Sustaining | August 1974

MCDONOUGH

MANUFACTURING CO.

Sustaining | August 1974

Thank You to my Colleague and Friend, Renee Hornsby

As we gather for this year’s convention in St. Louis, it’s only fitting that we take a moment to recognize someone who has been at the heart of NHLA’s success, Renee Hornsby. Over the past 16 years, Renee has not only been a trusted colleague but also a close friend. For 14 of those years, I’ve had the absolute pleasure of working alongside her, and her influence on our association is undeniable.

Renee is the reason this convention—and every convention we’ve held over the past 14 years —is such a success. Her meticulous planning begins years in advance, ensuring that everything comes together seamlessly. From securing the best venues to curating top-notch speakers and coordinating the entire experience, Renee has made these events the highlight of the year for our industry. If you’ve ever marveled at the smooth flow of a convention, the credit belongs to her. And trust me . . . it wasn’t smooth! She just has the rare ability to make it look that way.

Beyond the convention, Renee’s leadership has touched nearly every aspect of NHLA’s work. From her involvement in the RAHC to planning every meeting we attend, she’s been the backbone of so much of what we do. If there was an industry event, you could count on Renee being there, planning everything, and being ready to speak on behalf of NHLA at the drop of a hat. Her attention to detail and ability to pull everything together is nothing short of extraordinary.

And for those of us who occasionally struggle to get our thoughts on paper (myself included), Renee has been our go-to editor, always making sure our articles make sense and reflect the professionalism NHLA stands for.

While it’s hard to imagine NHLA without her steady hand guiding these efforts, I couldn’t be more proud and excited for her as she steps into her new role as Executive Director of the World Millwork Alliance. I have no doubt she’ll bring the same dedication and excellence to her new position that she’s shown here, and I know she’ll be incredibly successful.

Though we’ll miss her immensely at NHLA, I’m grateful that she’ll always remain a friend. Renee, thank you for your incredible contributions over the years. Your work has made a lasting mark on NHLA and our conventions, and we’ll be cheering you on as you embark on this exciting new chapter.

John Hester Chief Development Officer

WThe Hardwood Industry’s Federal Advocate

By DANA COLE, Executive Director of the Hardwood Federation

elcome to St. Louis! The Hardwood Federation is excited to be a part of this wonderful event. Congratulations to the Board of Managers, Board President Jon Syre, Executive Director Dallin Brooks, and the entire staff of the National Hardwood Lumber Association for putting together what promises to be another successful, exciting, and inspiring Annual Convention.

The Hardwood Federation has fought for you, your companies, and your employees for twenty years. We remain steadfast in our mission to strongly advocate for U.S. hardwood businesses and their employees to federally elected officials regardless of party. We are on the political frontline for you, fighting daily so you can succeed tomorrow.

2024 is an election year. While it is certain there will be a change in the White House, what that change will be is very uncertain. The political dynamics of the House and Senate are also very much in play. Regardless of the outcome, the Hardwood Federation will continue to represent the Hardwood industry in D.C., leveraging the voices of NHLA leaders to make sure the White House, Administration Officials, and Congressional Leaders clearly understand the valuable contributions the production of hardwood timber and products can make on multiple levels of the U.S. economy.

In 2024, the Hardwood Federation’s top goal was to ensure legislation was introduced and regulations were considered to recognize and support the hardwood industry in meaningful ways. We are making progress.

• The House and Senate draft Farm Bill language includes several hardwood industry priorities, including doubling funding for

USDA export promotion programs, increased dollars for Wood Innovation and Community Wood Grant Programs, and support for accounting for the stored carbon in hardwood products in U.S. Forest Service initiatives. The House version of the Farm Bill reauthorizing legislation also includes workforce development language specific to the forest products sector.

• The Hardwood Access Program for consumers, architects, designers, and hardwood educational funding legislation continues to add sponsors to the House version of the bill, and we are actively pursuing Senate leads for a companion bill. While passing this legislation in 2024 will be difficult, it is an excellent vehicle for educating lawmakers about our industry and our current challenges. It will be a top priority in 2025.

• The General Services Administration approved U.S. Red Oak for use in U.S. military truck beds in late 2023. We are working with both House and Senate leaders to push the U.S. Department of Defense to make the switch from endangered and imported apitong to domestic and sustainable Red Oak; this includes spearheading a letter signed by nine members of the Senate Appropriations Committee’s Defense Subcommittee as well as Senate Armed Services Committee to the Department of Defense Secretary. Recognition of Red Oak for truck beds is the first step. There are opportunities to expand demand for other domestic hardwood products in government procurement specifications on the horizon, and we are exploring options.

• The Hardwood Federation has actively engaged the Biden administration by providing written and verbal comments on a wide range of

regulatory proposals, including those impacting the management of old-growth and mature forests, recognizing the low-carbon benefits of wood building materials, forest-based solutions to reduce atmospheric carbon, the carbon storage value of hardwood products and establishing guardrails around private carbon markets. We will be equally active with the next Administration.

• Tax Reform impacting small and medium-sized businesses will be a key issue in 2025, regardless of election outcomes. Supporting restoration of key Trump-era tax benefits, including 100% bonus depreciation, total business interest deductions to the EBITDA, 199A small business deduction, and the R&D tax credit, will be a significant focus for the Federation. A total of $4.6 trillion in business tax benefits will expire at the end of 2025 without Congressional action.

These and other issues will keep us more than busy in 2025.

The Hardwood Federation is proud to partner with and represent NHLA and their members in our nation’s capital, Washington, D.C. Having a coordinated, consistent, and united voice in Washington is critical for the U.S. hardwood industry. It is more important than ever in election years when incumbent Members retire (voluntarily or not), and new Members take their oath of office. Our job of educating those in public office is never done. Although making our message heard can feel almost impossible, we must continue to reach out, communicate and advocate. Failure is only assured by inaction. NHLA and their members are significant and highly valued contributors to our efforts.

The NHLA provides crucial financial and advocacy support to the Hardwood Federation. Still, at the same time, the direct participation of the NHLA’s membership cannot be underestimated, and we are grateful. NHLA members:

• Come to Washington to meet and discuss policies impacting the industry with Members of Congress;

• Educate Members of Congress by hosting them in mills, yards, and facilities to give them a first-hand look at the industry;

• Write letters to, email, and call Congressional offices to share concerns about lousy policy and applaud good policy; and

• Contribute financial resources, both on an individual and company basis, to the Hardwood Federation’s Political Action Committee and Administrative Operating Fund, both essential to our continued success. Please support us at www.hardwoodfederation.com.

The Hardwood Federation staff will be at the NHLA convention and look forward to meeting you and discussing our efforts in Washington. Have a wonderful convention!

Hurst biomass systems lead the alternative energy boiler market with innovative solid-fuel-combustion design

Hurst is a custom manufacturer of engineered packaged steam and hot water boilers and integrated boiler systems, renewable fuel fired gasification/ combustion/heat recovery systems, biomass & hybrid boiler systems, CHP/ co-generation systems, PLC-integrated boiler controls, parts & boiler room accessories. Fire-tube, water-tube & feedwater equipment for all industrial heating & process applications. Low NOx modular boilers & burners available.

Hurst Biomass Systems lead the alternative energy boiler market with innovative solid-fuel-combustion design.

Complete modular construction for easy low cost installation.

Hurst has specialized in custom design of biomass steam plants and cogeneration systems since 1967.

High Efficiency Integrated Control Systems

Offering integration and scalability, the new, high efficiency Integrated Control Systems from Hurst Boiler for boiler room monitoring and communications provide advanced supervisory boiler controls for all new and legacy Hurst products.

Exports Remain Vital to the US Hardwood Industry, but Challenges and Uncertainty Around the Globe Continue to Grow

By MIKE SNOW, Executive Director of the American Hardwood Export Council

It is no secret that the US hardwood industry is going through one of the most challenging periods in its history. Production of hardwood lumber in 2023 fell to its lowest levels since 1950, and so far, 2024 has remained at historically low levels. These levels of supply are ultimately the result of declining demand. A combination of inflation, high interest rates, trade tensions, sluggish GDP growth, and simultaneous wars in Europe and the Middle East have all conspired to restrict consumer demand, particularly in the housing sector, in the US and around the globe. At the same time, new and costly regulations such as the EUDR and similar legislation under consideration in other markets like Japan and Australia threaten to further disrupt existing trade. These headwinds matter because more than half of all grade US hardwood lumber and veneer production is exported. Prior to the trade war and COVID disruptions, more than half of that—roughly 25% of total grade production--was destined for China. For reasons explained below, that market has now fallen to half its 2017 level. Yet, China remains by far our single largest export market and the largest hardwood importer in the world.

There are other markets, however. While the 6-month 2024 export stats show an unimpressive overall 3% growth rate in hardwood lumber exports through June (from relatively low 2023 levels), a closer look reveals that if we remove the 9% loss to China, exports to the rest of the world grew just over 10% (see Graph 1). Conditions around the world vary considerably, and a short recap of selected major markets follows:

EU + UK

Over the past year or so, uncertainty over the implementation of the EUDR has become a major concern for the industry. While Europe accounts for only around 10% of direct US hardwood lumber exports, the EUDR also regulates the trade in furniture and other manufactured wood products that are produced in third countries such as Vietnam, Turkey, or India using American hardwood and are then shipped to the EU (see Graph 2). AHEC has been closely monitoring political developments surrounding the EUDR as trade organizations, politicians, and the media wade in with concerns that the law can’t be rolled out effectively as planned for the start of next year. There is also growing evidence that it will wreak havoc on some commodity sectors, including the EU’s own forest products industries.

Meanwhile, having conducted a pilot study and invested a significant amount of time and effort trying to develop a fully “EUDRconformant” satellite-based solution, AHEC has concluded that

certain obligations in the legal text as currently written are, to all intents and purposes, impossible for the US hardwood sector. In addition, any solution to provide an analysis of every harvest site in individual real estate properties in the US hardwood context would be so expensive and unaffordable. In effect, the current legal text, alongside the interpretative guidance so far issued by the EC, has the potential to act as a de facto ban on EU trade in most US hardwood products. This is in a sector where the risks of illegality and commodity-driven deforestation are practically zero.

As a bloc, the EU has always punched above its weight as Europeandriven design trends impact timber flows to third countries. As far as direct US exports, the latest USDA export data shows that after six months of the year, US hardwood lumber exports to Europe were similar to the same period last year at just over 166,000m3. However, shipments to most of the major EU markets--Spain, Germany, Italy, and Portugal-- were down; the UK is once again propping up overall exports to the region. For this period, US hardwood lumber exports to the UK were up 30% last year, accounting for nearly 40% of total shipments. Most of the increase was white oak, up 74%, which itself is more than the volume of all shipments of all species to the next two most significant EU markets of Italy and Germany.

Spain saw the biggest decline (30%), most of which was white oak. Also, over this six-month period, Italy was down 12%, Germany

Graph 1

17% and Portugal 17%. On the other hand, some of the smaller European markets saw exports bounce back, with Ireland up 16%, Sweden up 50%, Norway up 86%, and the Netherlands up 55%. In most cases, these increases were due to higher shipments of white oak and tulipwood.

CHINA

While China remains the largest single market for US hardwood exporters, sales have dropped off considerably over the past several years. In 2023, the market declined 8% by volume and 20% by value, illustrating the low demand and falling prices. That trend continues into 2024 when the 6-month data shows a further drop of 9% from last year’s already anemic levels. Cumulatively, the declines over the last five years have left the Chinese market for US hardwoods at less than half of its 2017 peak. At the same time, American hardwood log exports have been accelerating, and through the first six months of the year, log export values now exceed lumber values for the first time ever. Many of these log exports are feeding sawmills, so Chinese-produced US hardwood lumber is now competing with our industry not only in the local market but in third countries as well.

The declining hardwood market in China can be explained by increasingly weak consumer spending and the near collapse of the property sector, which accounts for roughly a quarter of the entire

country’s GDP. The housing construction boom from the early 2000s until the COVID lockdowns in late 2019 shows no signs of picking back up despite government policies targeting an economic boost. The Chinese housing sector not only has implications for the larger economy but also directly impacts the import of wood products to produce furniture, cabinets, flooring, and various interior design products. Although China is the largest furniture exporter in the world, market surveys and trade analysis show that roughly 80% of all furniture produced in China stays in China for domestic consumption. This incredible volume of home goods was filling out the interiors of hotels, private homes, and commercial buildings that have sprung up throughout the country in arguably the largest construction boom in the history of the world. The future looks much less certain, but China will remain a large market moving forward, although growth is likely to be at a much slower pace.

SOUTHEAST ASIA

For the first half of 2024, Southeast Asia was one of the few bright spots for US hardwood lumber exports. Bouncing back from a very poor 2023, which saw an overall decline of 33%, through June of this year, Vietnam has posted a growth rate of 34%. At the same time, Indonesia is up 58%, Thailand is up 59%, and Malaysia is up 48%. Nevertheless, all four countries are significant exporters of wood furniture and other products, and slowing international demand and uncertainty related to EUDR implementation pose

Graph

significant impediments to short-term growth in US exports to the region (see Graph 3)

Southeast Asia has seen rapid economic development and a growing population over the last two decades, but much of the growth for the American hardwood market has been the result of demand for furniture exports from the region. More than 85% of the total value of Vietnam’s wood and wood products exports, for example, is shipped to just five markets: the US, China, Japan, the EU, and South Korea. Labor rates are still much lower in Southeast Asia than in China, allowing large furniture companies to build cost-competitive products for primarily export demand. However, with a population of nearly 700 million people, a growing middle class, and a rapidly expanding tourism infrastructure, Southeast Asia also holds long-term promise as end users of high-end American hardwood products.

MEXICO

Perhaps no country stands to gain more from the trade tensions between the US and China than Mexico. Supply chain woes and the growth of “nearshoring” make the country, with its unfettered access to the US market and relatively low-cost labor, an attractive magnet for manufacturers seeking to remain close to the US market. While political uncertainties and an ailing economy do present challenges to growth, the long-term potential of this market is significant.

After growing by more than 22% in 2022, US hardwood lumber exports to Mexico in 2023 saw sluggish consumer demand, leading to a nearly 10% decline compared to the previous year. The first half of 2024 saw relatively stable trading conditions, with exports down about 2% from last year. A recent visit by AHEC at the TecnoMueble furniture show in Guadalajara provided strong evidence of renewed global interest in Mexico as a growing number of Chinese and Taiwanese companies were in attendance.

JAPAN

One of the most important markets for American Hardwoods in Asia since the 1980s, Japan has undergone a consumer shift in line with its aging population and movement away from direct laborintensive manufacturing sectors. Even though the end consumer market in Japan has remained strong, direct exports of US hardwood products to Japan have been limited over the last 20 years by offshoring of manufacturing to low-wage countries in Asia. These countries, Vietnam in particular, produce furniture for the middleincome market in Japan, while the high-end products are still made in Japan. The American hardwoods exported to Japan typically have the highest grade of walnut and white oak and go to small furniture makers, often producing 100 pieces per month or fewer. These consumers of American hardwood products are global design leaders, as these collections will sell all over the world and, in turn, inspire other designers to use similar forms and materials. This

means the importance of Japanese specifiers and Japanese-owned manufacturing companies is felt far beyond the country’s borders and far beyond the total direct market sales.

Recent years have seen significant change. After a sharp reduction in trade during the COVID-19 pandemic, the Japanese market roared back in 2022 to a trade level not seen since 2014. US hardwood lumber exports to Japan were $75.5 million, led by strong consumption of walnut, white oak, and red oak species. Unfortunately, due to softened global demand as well as severe depreciation in the Japanese Yen against the US Dollar, exports of US hardwood lumber to Japan dropped by 30% in 2023 and totaled just over $53 million. This market softening is accelerating at least through the first half of 2024, with US exports down an additional 42% from 2023 levels. One silver lining is the performance of red oak, which increased by more than 18% through June and is now second only to white oak.

INDIA

India imported some $140 million worth of hardwood lumber from all sources in 2023, making it the world’s 7th largest importer. The main suppliers were Malaysia, the European Union, the United Kingdom, and various West African and South American countries, from which significant volumes of plantation teak are sourced. However, the United States ranked as the 8th most important supplier last year, taking only around 5% of the total market for imported hardwood lumber. There is clearly room for more growth.

After several years of steady growth, total US hardwood lumber exports to India totaled 5,672 cubic meters through June of 2024, down 14% from last year as exports of ash and maple to India dropped considerably. On the positive side, Significant increases were seen in shipments of red oak, walnut, and hickory (see Graph 4).

While the volumes of US hardwood lumber shipped to India remain relatively small in comparison to market size and potential, there are clear indications of a genuine market shift towards American species. The Rajasthan furniture and handicrafts sector is certainly a developing end-user sector for American hardwoods, especially for No 2 and No 3 Common red oak, but there is also room for all US hardwood species at all grades across India. There are manufacturers of high-end furniture and joinery for the domestic market dotted all over India, and we are likely to see real and long-term growth in the coming years. Disposable incomes in India are increasing, and the huge middle class is rapidly expanding. Tastes are changing, and there is increasing demand for “exotic” (imported) looks, materials, and finishes.

MIDDLE EAST and NORTH AFRICA (MENA)

Despite the ongoing conflicts in the region, exports to the Middle East remain relatively stable through the first half of 2024. By volume, total US hardwood lumber exports to MENA & Pakistan reached 45,492 cubic meters, almost exactly equal to the same period in 2023. In terms of value, hardwood lumber shipped to the

A COMBINATION OF INFLATION, HIGH INTEREST RATES, TRADE TENSIONS, SLUGGISH GDP GROWTH, AND SIMULTANEOUS WARS IN EUROPE AND THE MIDDLE EAST HAVE ALL CONSPIRED TO RESTRICT CONSUMER DEMAND, PARTICULARLY IN THE HOUSING SECTOR, IN THE US AND AROUND THE GLOBE.

region was $37.8 million, up by 5.5% from last year’s levels. Red oak accounted for 56% (22,893 cubic meters) of total shipments to the MENA region.

While liquidity problems continued to temper market activity in Egypt and Pakistan, and high inflation slowed the Turkish economy, there were also some rising stars. Exports of American hardwood lumber to the UAE showed an increase for the fourth year in a row, with January-June imports reaching 10,200 cubic meters, up 27% over the same period in 2023 and a full 70% over 2022. At the same time, shipments to Saudi Arabia grew by 8% in volume to 4,447 cubic meters. This trend is in line with expectations, as the Saudi construction sector is currently experiencing an unprecedented boom, which should continue for many years to come. While much of the rest of the world is currently experiencing an economic slowdown, the Arabian Gulf is profiting from high oil prices. This is leading to substantial inward investment in Saudi Arabia, in particular, while the UAE is benefiting from an influx of people and funds from many less stable countries, including Russia and Ukraine. Construction activity in the region is extremely buoyant, and this is expected to continue for some years ahead, leading to high demand for materials, including American hardwoods.

Increasing Yield for a More Profitable Future

By DANA SPESSERT, Chief Inspector

As someone who grew up in the hardwood industry, I have personally lived through many ups and downs throughout my career. The sawmill equipment when I started was antiquated at best, but I could still produce lumber used to make beautiful furniture, flooring, millwork, and other fine hardwood products. The pay scale was low but sufficient for the average, hardworking people I grew up with.

Today, technology is available to enable the processing of hardwoods to have a greater potential for profitability. Unfortunately, lumber prices have remained relatively low for most species, primarily due to competition from substitute products for lumber. This is further compounded by higher log prices, which have seen recent export surges.

At the NHLA, our team comprises seasoned hardwood professionals with extensive experience across the entire hardwood industry, from logging with horses to producing finished goods. Drawing on their vast and diverse experiences, the NHLA team embarked on a mission to help the hardwood industry reevaluate its practices and

identify opportunities for growth, shifting from merely surviving to truly thriving in the market.

The trend over the years has been to increase production to lower manufacturing costs; while this is a good strategy to increase profits, it should not be the only consideration. With the average sawmill’s operating costs for their logs being close to 75% to 80% of the total, a slight increase in yield will produce a much greater return than simply lowering the manufacturing costs.

One challenge to improving yield is the lack of resources needed to make it happen. In any manufacturing process, several factors can reduce the efficiency of converting raw materials into finished goods— especially when working with round materials and trying to produce rectangular products. Another hurdle is that measuring yield can be complex; instead of focusing solely on volume, the emphasis should be on maximizing value.

The NHLA worked with the US Forest Service to secure grant funding to offset the costs of evaluating sawmill yields to make it more affordable. Through these studies, the team at NHLA has helped identify many opportunities for changes that have made many sawmills more competitive and profitable, even in today’s markets. Our focus will be to shed light on the opportunities within your sawmill that might otherwise be hidden.

For more information on our programs, please contact me at d.spessert@nhla.com.

EDUCATIONAL OPPORTUNITIES

OCT

October 15-17

Intro to Hardwood Lumber Grading Intro class to gain a basic understanding of the NHLA hardwood lumber grading rules and how the rules affect the value of lumber.

Host: New Hampshire Timberland Owners Association

Venue: UNH Sawmill Location: Durham, NH

Instructor: Tom Byers, National Inspector

October 21-24

Effective Safety Management & Leadership Strategies

A 3-day safety leadership course focusing on safety and creating a culture of safety at your site. The seminar will be taught by EHS Support LLC, a new NHLA member company. EHS Support is a US company that originated in 2005 and has expanded globally. The trainers have over 25 years of experience in environmental, health and safety training.