November 2023 Hardwood Matters

TH E VOIC E O F THE HARDWOOD IN DUSTRY

H A R D W O O D M AT T E R S November 2023

How Technology is Revolutionizing the Hardwood Lumber Industry

CONTENTS November 2023 • Issue 250

WHAT'S INSIDE features 16

16

8 10

departments

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Chairman’s Message Educational Calendar NHLA Job Board Market Trends

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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 & ITSEF GMC Hardwoods, Inc. Ray White, Lumber Services Harold White Lumber Inc.

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One Common Ground Jack of All Trades

by Dallin Brooks, Executive Director

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Inside NHLA

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Alllied Angle The White Oak Initiative

by Jason Meyer, Executive Director, White Oak Initiative

Stephanie VanDystadt, Membership & Networking DV Hardwoods, Inc.

Membership Matters This is Your Convention

by John Hester, Chief Development Officer

DEPUTY MISSION LEADERS

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Member of the Month

Tom Coble, Market Impacts Hartzell Hardwoods, Inc.

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Legislative Log EPA Air Quality Proposal Could Hinder Expansion of Sawmills

by Dana Cole Executive Director Hardwood Federation

Dennis Mann, Convention Baillie Lumber Co.

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22

reader services

How Technology is Revolutionizing The Hardwood Lumber Industry

by Amanda Boutwell, Marketing Communications Manager

EXECUTIVE COMMITTEE

Rules Corner Navigating the NHLA Rules: Understanding the Impact of changes

by Dana Spessert, Chief Inspector

Joe Pryor, Education Services Oaks Unlimited Rich Solano, Convention Pike Lumber Company, Inc.

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

Burt Craig, Membership & Networking Matson Lumber Company

Tom Oiler, Lumber Services Cole Hardwood, Inc. Brant Forcey, ITS and ITSEF Forcey Lumber Company George Swaner, Education Services Swaner Hardwood Co., Inc. Sam Glidden, Rules GMC Hardwoods, Inc.

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H A R D W O O D M AT T E R S T H E VO I C E O F T H E H A R DWO O D I N D U ST RY 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 NH LA 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 Dana Spessert, Chief Inspector d.spessert@nhla.com

ACCOUNTING Desiree Freeman, Controller d.freeman@nhla.com Jens Lodholm, Data Administration Specialist j.lodholm@nhla.com Amber Signaigo, Assistant Controller a.signaigo@nhla.com

INDUSTRY SERVICES 23 7 19 19 IBC 7 3 11 5 IFC 13 15 21

The AGL Group A.W. Stiles Contractors, Inc. BID Group Continental Underwriters, Inc. DMSi/eLimbs/TallyExpress JoeScan King City Forwarding USA Kuehne + Nagel, Inc. Lumber Marketplace Pike Lumber Company, Inc. Showcase Equipment, LLC USNR Wood-Mizer

For advertising contact: John Hester j.hester@nhla.com or 901-399-7558 Vicky Simms v.simms@nhla.com or 901-399-7557

Mark Bear, National Inspector m.bear@nhla.com Tom Byers, National Inspector t.byers@nhla.com Mark Depp, National Inspector m.depp@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 Geoff Webb, Dean of the Inspector Training School g.webb@nhla.com Roman Matyushchenko, Instructor of the Inspector Training School r.matyushchenko@nhla.com

MARKETING/COMMUNICATIONS Amanda Boutwell, Marketing and Communications Manager a.boutwell@nhla.com Melissa Ellis Smith, Art Director m.ellis@nhla.com

MEMBERSHIP Julia Ganey, Member Relations Manager j.ganey@nhla.com

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Vicky Quiñones Simms, Membership Development Manager v.simms@nhla.com W W W. N H L A .C O M

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CHAIRMAN'S MESSAGE

IT'S TIME TO BEGIN YOUR JOURNEY OF INNOVATION

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t began with my disappointment with our sawmill’s accident frequency. Quite frankly, our sawmill was a dangerous place to work. The situation was unacceptable. The head rig off-bearer position was our highest incident position. Into the mill, I would go and watch the off-bearer work. What was he doing?

What was happening around him? How could this critical manufacturing process be handled with no incidents? Was some application of automation a solution? Indeed, it was time to innovate.

Several years ago, we replaced our off-bearer positions with a moveable belt drive with electronic linear positioners, which interface with the head rig saw scanners; incidents were eliminated, and safety was dramatically improved.

That successful innovation strategy of applying technology through automation to improve our manufacturing process was the moment we systematically investigated where automation fits into our operation and how we could manage it.

We began with a review of our current processes and where we all felt we were vulnerable to staffing challenges or the safety of our employees. We dreamt big! We are still implementing and adjusting our master innovation plan to embrace emerging technology and automation and our current employee’s ability to control and operate new processes.

application of proven technology and automation? Do your current employees have the ability to manage the new sought-after technology? What is the payback of the new technology, and how do you measure that payback?

Many questions surround this process, but the question, “Do I need to innovate?” does not come up. The perpetual thought process of never being satisfied with the current situation should always be top of mind! The application of technology may be a solution, or it may not be. Your ability to innovate but still manage and measure the results is paramount!

Everything is getting harder. Everything is getting more expensive.

Innovating is the path forward. I encourage all of you to review your processes for safety and efficiency. Create an innovation plan, then begin implementing the plan. Can the NHLA help you with this process? Yes, they can through the production yield analysis and the quality control inspection services. Give Dana Spessert, NHLA Chief Inspector a call to begin your journey of innovation!

Don’t die! Innovate!

Thank you for taking the time to read my letter. You made it to the end of yet another one; thank you! Best wishes to you, your families, and your businesses.

“Innovate or die!” -Peter Drucker To make changes in something established, especially by introducing new methods, ideas, or products, is the definition of innovation.

I am a firm believer in innovation. However, making changes to simply make changes is dumb. So is applying technology through automation simply because “We should do some automation; everyone else is!”

Jon Syre NHLA Chairman | Cascade Hardwood

What is your innovation plan? Where is your employee’s safety at risk? Where is your manufacturing process open and in need of the

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ONE COMMON GROUND

JACK OF ALL TRADES

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grew up working with my dad around the farm, the house, the cabin, and everywhere else. I have built many buildings for commercial, residential, and animal use. I have poured concrete, hammered nails, installed roofing, fixed doors, soldered plumbing, installed sprinklers, and electrocuted myself more than once. I call myself a “Jack of all Trades,” even though I grew up and mastered a locksmith trade to pay my way through university. I literally showed up to classes in my “A-Z Lockmasters” van and sat in classes with their logo on my shirt. Now, I have a Master’s Degree in Forests and Society from the University of British Columbia and encourage everybody to do a nonthesis master’s in forestry.

History doesn’t attribute the full “Jack of all trades” quote to anyone, and articles argue over the original quote being about William Shakespeare. I like the full quote, as it popularly goes, “A Jack of all trades is a master of none, but oftentimes better than a master of one.” If I know one thing, it is that the world today is losing the ability to do “jack of all trades” [anything that is needed] as systems become more complex and everyone is beginning to specialize.

Locks aren’t just about springs, tumblers, and keys anymore; they are about sidebars, high security, and electronics. Trades are getting high-tech and have a specialized tool for everything now. People no longer change their own lightbulbs, let alone fix a leaking toilet.

Hardwood products need trades. We need floor & cabinet installers, locksmiths, and window contractors; we need artisans and craftsmen to create value-added furniture.

Hardwoods are not consumer or do-it-yourself (DIY) friendly because ordinary people don’t know how to sand, chisel, glue, stain, maintain, or repair wood. Do you see a market problem here?

I have a sign in my garage that says, “Close enough construction.”

My daughter Eliza gave it to me for Christmas; it makes me cry because it is accurate. I build, fix, and repair, but I don’t beautify, spruce up, or take the time to finish something perfect. I can sand,

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chisel, glue, stain, maintain, or repair wood, but often I choose not to because I don’t have time or the wood is not worth it (typically not solid).

Even though Hardwoods are contractor, repairman, and handymanfriendly, it is expensive and time-consuming for them to work with wood. Do you see a market problem here?

What does it take to be a woodworker? A hammer, nail, and saw. Or a screwdriver, screw, and saw. How about glue, a saw, and a sander?

Add more tools if desired. How rewarding is it to build something?

I still have the loony bin (piggybank) I made in high school. But it is rare for a high school to have a shop class now. What are we going to do about it?

Can I suggest we start teaching woodworking classes at our facilities, not just NHLA but all sawmills, concentration yards, and distributors? Let’s teach people how to use our products, expose them to our products and their potential, and build our market one class, one trade, one Jack at a time. We should create a short curriculum on how to build an end table or a simple piece of furniture and how to use simple handheld tools to do it. Then, offer it to everyone: employees, students, community members, etc. Then we can all be on one common ground or Jack of all Trades.

Dallin Brooks NHLA Executive Director dallin@nhla.com | 360-823-3898

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THROUGH THE YEARS A.W. STILES CONTRACTORS HAS DONE EVERYTHING IMAGINABLE TO LUMBER DRY KILNS. FROM COMPLETE NEW GREEN FIELD FABRICATION AND INSTALLATION PROJECTS TO MINOR REPAIRS. DRY KILN REPAIRS WE DO ROUTINELY: • • • • •

COMPLETE ENERGY EFFICIENT REBUILDS ROOF REPLACEMENTS DOOR REPLACEMENTS, EXISTING DOOR REPAIR ELECTRICAL CONTROLS & UPGRADES NEW COIL/ STEAM PIPE REPLACEMENTS

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INSIDE NHLA

NHLA SPANISH CLASSES NHLA Industry Service Sales Manager Benji Richards and NHLA National Inspector Mark Bear took a road trip to teach an in-house three-day spanish lanuage Intro to Hardwood Lumber Grading Course at TriState Hardwood Company in South Milford, Indiana!

Remember to call on our team of experts to help with your training needs, quality control issues and more. For 125 years, the National Hardwood Lumber Association has stood beside our members to advance their businesses and we will be here for another 125 years! www.nhla.com/services/national-inspectors

Secure Your Spot at the 2024 NHLA Annual Convention & Exhibit Showcase in St. Louis!

CALLING ALL EXHIBITORS There’s no better place than The Show Me State to showcase your products and services to the hardwood lumber industry's elite. Here's your chance to choose the prime location for your booth.

Act now and: Select the Best Location: First come, first served!

Be at the heart of the action with premium booth choices.

Network and Build Connections: Forge valuable relationships with industry leaders, potential clients, and partners.

Explore St. Louis: Discover all that the vibrant city has to offer as our event takes place in the gateway to the west.

Ready to secure your booth? Log in now to make your selection! Don't wait – spaces will fill up fast.

For more information, visit https://nhla.com/ convention or contact Vicky Simms at v.simms@ nhla.com.

Let's make the 2024 NHLA Annual Convention & Exhibit Showcase in St. Louis an unparalleled success together!

Stay tuned for more updates.

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SCHEDULE ■ Arrival Mon., December 11th, for a BBQ dinner at NHLA ■ Tue., December 12th • Morning session: Silviculture, The Art of Managing Forests and Concepts of Timber Inventory with Dr. David Mercker, UT School of Natural Resources • Afternoon session: Lumber Grading & Upgrading with Mr. Roman Matyushchenko, NHLA Instructor and Associate Dean of ITS ■ Wed., December 13th • Morning session: Sawmill tour, and Log Grading and Impact on Grade with Mr. Mark Bear, NHLA National Inspector

NEW OFFERING!

HARDWOOD PROCESSING 101 December 11–14, 2023 NHLA HEADQUARTERS IN MEMPHIS, TN

NHLA will host a workshop to broaden the knowledge of hardwood processing for those industries and people who support sawmills and mill operations. The 3-day workshop will explore the process path from tree to kiln and includes a tour of a local sawmill and concentration yard.

Housing and meals are included.

• Afternoon session: Optimizing Operations - Sawing, Trimming and Edging for Yield with Mr. Dana Spessert, NHLA Chief Inspector ■ Thu., December 14th • Morning session: Concentration yard tour with Q&A with Mr. Dana Spessert, NHLA Chief Inspector • Afternoon session: "Drying Lumber Concepts" with Mr. Geoff Webb, Dean of NHLA Inspector Training School, followed by "Grading KD, Net, and Gross Tally and the NHLA Sales Code" with Mr. Dana Spessert

Register at www.bit.ly/hardwoodprocessing101

Price: $1,995 members $2,995 non-members

For more information and to coordinate hotel stays, contact Geoff Webb at 484.695.9029 or g.webb@nhla.com

Price includes: Hotel room & tax (4-nights), meals, and transportation to/from NHLA-hotel and for tours

ALLIED ANGLE

The White Oak Initiative: Safeguarding the Future of America’s Mighty White Oak

By JASON MEYER, Executive Director, White Oak Initiative

Unfortunately, white oak is not regenerating at historical levels. Unless this trend is reversed, we will risk a decline in its many ecological and economic benefits over the next few decades. This may have significant implications for the American hardwood industry.

Understanding the Decline in White Oak A combination of factors is contributing to the decline of America’s white oak-dominated forests. Shifts in land management and ecological changes, for example, have resulted in competing tree species, most notably maples and beech, establishing themselves in the understories of oak-hickory forests. These competing species are shading out white oak seedlings and preventing them from successfully growing into saplings that can survive such intense competition. Challenges such as climate change, invasive insects and diseases, and human behavior change also impact white oak.

be classified as “mature,” while populations of young white oak trees are limited.

A Coalition for Change Established in 2017, the White Oak Initiative is a national coalition of partners — from universities and federal agencies to nonprofits and private landowners — working together to leverage our collective wisdom and resources to ensure the long-term sustainability of America’s white oak-dominated forests.

In 2021, the White Oak Initiative released a report, “Restoring Sustainability for White Oak and Upland Oak Communities: An Assessment and Conservation Plan,” emphasizing the need for action to protect white oak. The report warned that without active forest management, the American white oak population could face significant declines within the next 20 to 30 years and more extreme declines over the next several decades.

Today, the White Oak Initiative is working to catalyze better management of white oak-dominated forests through public education and outreach, on-the-ground efforts and networks, and policy and

Courtesy of White Oak Initiative

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merican white oak is a vital, foundational tree species that occupies over 104 million acres of public and private forestland across much of the eastern and central United States. Its value transcends ecology as it is the most commercially important timber oak, infusing billions of dollars into the economy annually through industries like furniture, flooring, cabinetry, wine, and spirits.

As a result, older white oak trees are not being replaced by younger white oak trees at a pace that will support long-term sustainability. In fact, about 75% of all white oak trees across the eastern United States can currently

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advocacy activities such as supporting the bipartisan White Oak Resilience Act recently introduced in the U.S. House of Representatives.

Looking Forward While there are plenty of mature white oaks in our forests today, we must address the regeneration problem now, as it takes decades for oaks to grow to maturity. We have a limited window to be proactive and are working hard to address the sustainability of this critical resource. This requires collaboration and support from individuals and organizations that can align knowledge and resources behind proven forest management practices, and the White Oak Initiative is positioned to lead this effort.

Current partners and friends in the hardwood industry — like Appalachian Hardwood Manufacturers, Inc. and the National Hardwood Lumber Association — have been instrumental in our efforts to protect America’s white oak-dominated forests. We would like to encourage even greater involvement from the hardwood industry and others as our momentum to bring sustainable forest management back to our forests grows.

The first step is learning more. We encourage interested parties to familiarize themselves with our work on the White Oak Initiative’s website (whiteoakinitiative.org), subscribe to our e-newsletter, and engage with us on social media.

The looming decline of white oak-dominated forests extends beyond environmental concerns, presenting future social and economic challenges that necessitate a collaborative, multi-industry response. By standing together, we can chart a course toward sustainable solutions and ensure that white oak-dominated forests survive and thrive for generations to come.

Jason Meyer Executive Director White Oak Initiative With a background in conservation, environmental education and nonprofit management, Jason brings a diverse set of skills and experiences to the White Oak Initiative. Prior to serving as the top leader of two nonprofit nature centers, he was a Registered Professional Forester in California, working as a forester with the California Department of Forestry and Fire Protection (CAL FIRE). He has significant organizational leadership, planning, fundraising and board development experience, and is excited to use this to move the White Oak Initiative forward into its next chapter.

Jason has been recognized with numerous awards for his accomplishments during his career and holds a Certificate of Fundraising Management and Certificate in Nonprofit Executive Leadership from Indiana University. He is a member of the Society of American Foresters and the Association of Fundraising Professionals.

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NHLA EDUCATIONAL WEBINARS Visit www.NHLA.com to find our online learning portal. In this area, you will find and access live online courses and webinar replays.

Webinar replays are FREE to NHLA Members.

Non-members can view for a fee.

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MEMBERSHIP MATTERS

THIS IS YOUR CONVENTION!

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all me biased when it comes to our Convention. I know it, you know it, we all know it. But if you were unable to (or chose not to) attend the Convention in Louisville last month, you missed a phenomenal event. I’m not exaggerating when I say this was my favorite Convention in the 13 years I have been with NHLA. What other Convention would have the bugler from Churchill Downs drawing everyone into the Opening Session, followed by powerfully performing the National Anthem, to kick off the day’s events? Eric Traupe was probably the best keynote speaker we have ever had, even though his message was a little (what’s a better word for terrifying?) concerning at times. I’ve heard nothing but great reviews of the educational sessions, and the feedback from our exhibitors was incredibly positive. I hope you’ll go ahead and make plans for 2024 in St. Louis, October 2-4.

So many things go into making our Convention unique, year in and year out. Time, location, topics, and activities are all factors when planning our event and working to achieve the specific goals of educating, informing, and entertaining you, the NHLA Member. I hope you feel that we delivered again this year. And I use the word “we” loosely. Everyone on staff plays a role in making the hardwood highlight of the year successful, but it absolutely could not be pulled off without the blood, sweat, and tears (literally) of a handful of people.

Dana Spessert and I have a running joke. He and I tend to be in the public eye more than others, and people come to us and say, “You guys really did a great job!” or, “You out did yourselves with this one!” we immediately accept 100% of the credit. But sincerely, we give credit where credit is due. Renee Hornsby and her team of two, Amanda Boutwell and Melissa Ellis Smith are basically a crew of magicians. A whole year of planning, brainstorming concepts, floating ideas, switching gears, circling back, and every other cliché you can think of goes into making the finished product that we all get to enjoy. Everything from the presentations we hear, the décor and design we see, to the food and drink we put in our mouths are

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thoughtfully planned by our Marketing Team. So the next time you see Dana or me, feel free to tell us how awesome we did, and we’ll happily pass that along to them.

Here’s the takeaway. This is YOUR Convention, and we want to hear from you. You’ve probably received a Convention Survey by now. If you did not fill it out, please do it today. We need to know what we’re doing right and what we could do better. But more than that, let us know what we should be doing that we’re not. We LOVE not being the predictable show of the year. We’re always going to be in a different city. Let us know where you’d like to see us go. We’re always going to have a high-level Keynote Speaker. Tell us the topics that are important to you. Mark Twain said, “Continuous improvement is better than delayed perfection.” At NHLA, we strive to continuously improve so we can serve you better. We look forward to your feedback.

Have a great day!

John Hester NHLA Chief Development Officer j.hester@nhla.com | 901-399-7558 W W W. N H L A .C O M

MEMBER OF THE MONTH

NEWMAN LUMBER COMPANY Member Since 1975

Newman Lumber Company has been providing exotic hardwoods in the US and overseas for over 76 years. This family business, based in Gulfport, Mississippi, has been with NHLA since 1975. To learn more about Newman Lumber, call (228) 832-1899 or visit www.newmanlumber.com.

NHLA is proud to recognize Newman Lumber as our Member of the Month for November! Thank you for your 48 years of membership!

We are a Forestry Related company! We have years of experience under the belts of our staff!

In Stock: •mills •debarkers •chippers •resaws •edgers (and much more) •We can help with complete layout/blueprints for your setup •We can rebuild existing equipment to like new specs •(Coming soon) Brand New Equipment ~log decks ~green chains ~rollcases ~lumber carts

We also have a monthly catalog advertising our equipment and we will list your equipment to sell in our catalog and also on our website! We have room to advertise your business in our monthly catalog. Call Gaylord to get a free quote!

Need your equipment shipped or delivered?

We can help find a truck for you! Call Benny for a free quote!

Ph: 260.633.4047 ~Wayne or Jerry (sales): ext 1 or 2 ~Gaylord (advertising): ext 3 ~Benny (trucking): ext 4 206 E Vine St Wolcottville, IN 46795 W W W. N H L A .C O M

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LEGISLATIVE LOG

EPA Air Quality Proposal Could Hinder Expansion of Sawmills

By DANA COLE, Executive Director of the Hardwood Federation

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n September 19, the American Forest & Paper Association and American Wood Council, representing the forest products industry, testified before a House Energy & Commerce panel, outlining reasons why the EPA should use its discretionary authority to reject a proposal that would reduce concentrations of fine particulate matter (PM 2.5) to levels found naturally in the environment. PM 2.5 is a broad descriptor for fine particles, such as dust from unpaved roads or fields, that may become airborne and inhaled. Sources of PM are myriad and include construction and logging sites, manufacturing operations, vehicle exhaust, and wood burning. In January, the EPA proposed tightening the current PM 2.5 standard (which regulates fine particles equal to or less than 2.5 microns in size) from the present 12 micrograms per

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cubic meter to somewhere in the 9-10 micrograms per cubic meter range. During the September 19 hearing, the industry also pointed out that moving forward with an unnecessary, new standard would further complicate the “permitting gridlock” currently plaguing the agency and impose more red tape on paper mills operating in or near counties currently in non-compliance with current rules. The congressional testimony is consistent with messages expressed in a letter to EPA from the Hardwood Federation and 33 allied groups, warning federal regulators that stricter air quality regulations would threaten nearly one million jobs nationwide.

On September 7, the Hardwood Federation joined the U.S. Chamber of Commerce and 32 other industry groups in a letter to W W W. N H L A .C O M

EPA chief Michael Regan urging the Administration to retain the current standard. The trade groups point out that while the current standard continues to be implemented, fires and unpaved roads have surpassed industrial sources, such as sawmills and power plants, as major drivers of air pollution. Industry states that the economy, already in a fragile state, should not assume the burden of compliance costs, especially for discretionary rulemaking, as opposed to statutory or court-driven, on the part of the Administration. In a nutshell, the business community is concerned that EPA’s action would hinder the ability of manufacturers to expand operations or otherwise conduct commercial activity in areas the agency designates as being in nonattainment of a stricter standard.

standards are set and are almost immediately under EPA review again, creating uncertainty for the regulated community. Capito’s bill would change the mandatory review period from five to ten years and authorize EPA to consider technological feasibility when reviewing air quality standards. Her bill is pending in the Senate EPW Committee and has eight Republican cosponsors.

The Federation will continue to monitor, comment, and advocate on behalf of the industry on these and other issues impacting the U.S. hardwood sector.

The above letter followed comments submitted by the Federation to EPA in late March advocating against the new standard. The Federation’s petition cites a study by AF&PA and AWC, underscoring that many forest products facilities are located in areas where background PM 2.5 concentrations approach the current regulatory limit of 12 micrograms per cubic meter. Because of the narrow gap between naturally occurring levels of PM 2.5 and the limits proposed by EPA, the industry evaluated the potential impacts of a lower PM 2.5 standard on the forest products sector.

The study shows that the difference between background levels of PM 2.5 and the levels imposed by a stricter standard would become narrower and make air quality modeling analysis even more difficult. This narrowed gap, described by the industry as a “lack of headroom,” would “increase the burden on facilities that would like to expand operations” primarily because they would have to conduct tests and analysis to assure regulators that the operational changes would not alter the attainment status of their area of operation.

Fortunately, federal lawmakers are getting the message. In June, Senate Environment and Public Works (EPW) Committee Chairman Shelley Moore Capito (R-WV) introduced the National Ambient Air Quality Standards Act (S. 2125) that seeks to address some of the underlying issues that have led to the current PM 2.5 challenge. Under the Clean Air Act, EPA is required to review air quality standards every five years for six so-called “criteria” pollutants—of which particulate matter is one. This has resulted in a situation where W W W. N H L A .C O M

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How Technology is Revolutionizing The Hardwood Lumber Industry

By AMANDA BOUTWELL

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Case Study 1: Cascade’s Leap into CT Scanning he hardwood lumber industry has long been a cornerstone of the North THE PROBLEM American manufacturing landscape.

Jon Syre, the president of Cascade Hardwoods, identified a lack of skilled labor as a looming threat to the business. The rising cost of The industry has traditionally relied on human skill, labor, and innovation. However, logs without a corresponding increase in lumber grades also posed challenges. Cascade needed a way to make smarter, more efficient in recent years, hardwood companies have beuse of its resources. gun turning to technologies like automation and Jon explains, “I was looking at safety and other threats to our artificial intelligence (AI) to solve some of their business. The biggest threat was a lack of skilled workers, from most pressing issues. graders to sawyers. As I looked around the mill, I noticed they all

At the 2023 NHLA Convention, an education panel titled “Automation to Ale: Exploring AI Over Drinks” was held. The panelists included Susan Coulombe, General Manager of JD Irving Limited; Jon Syre, president of Cascade Hardwoods; and Josh Green, Operations Engineer at Middle Tennessee Lumber. Garner Robinson, CEO of Robinson Lumber, moderated the panel. Each panelist shared their unique experience to help other hardwood companies who might be interested in making investments in technology. Let’s delve into some firsthand accounts from these industry insiders who have embraced technology at their lumber mills.

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had gray hair. No one else was coming up behind them. Meanwhile, log expenses were constantly increasing. Facing these threats to our business, I was forced to ask myself, “How can I utilize automation and AI to alleviate these stresses on the business?” We looked at all the business’s different aspects and did a few small projects. The real breakthrough came about four years ago when I was in the exhibit hall at the Annual NHLA convention.”

THE SOLUTION Jon continued, “Microtec was exhibiting, and they said they could see inside the log and tell me how to saw the log for maximum profit with their CT Scanner. To me, it was like magic, quite candidly. Cascade had to maximize every single log on the carriage; we had to be more innovative in consuming the fiber we had in place. The CT scanning technology can detect everything within the log, and it works. The main drawback was the cost of such equipment is significant. So, before spending a lot of money, we tested the CT Scanner in detail to see the increase. For example, we took a truckload of logs to a CT scanner about an hour’s drive from our facility. We ran our logs through and created solutions for all those

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Above: Garner Robinson, Susan Coulombe, Josh Green, Jon Syre, and Rick Barrett. segments, mapping out each log. Then, we put those logs back on that truck to return to our facility. Not telling our seasoned sawyer the solutions the CT scan gave us, we compared his best effort to the machine’s best effort, and there was a significant uptick in the one from the machine. Then, we ran a return on investment and discovered that the CT Scanner was worth it.

Case Study 2: Middle Tennessee Lumber’s Tilt Hoist Transformation THE PROBLEM Middle Tennessee Lumber, a hardwood flooring manufacturer, struggled with its tilt hoist. The hoist is not just a piece of machinery; it’s an essential component that drives operational efficiency.

Josh Green, the Operations Engineer at Middle Tennessee Lumber, says, “When COVID-19 hit in 2020, everyone panicked that the market would fall, but it did the exact opposite. Suddenly, we couldn’t keep up with our sales orders. That’s when we realized we were buying a load of drying sticks every month. We had a $296,000 stick expense at our mill over the two years before replacing the tilt hoist. That’s ridiculous. The incredibly high stick expense was because most of our sticks were getting broken at our tilt hoist. We had about a foot difference between the edge of the

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pack and the tilt hoist, causing the sticks to slide out 12-18 inches and break the first 6-12 inches off the front of the stick.”

Their other issue was an 80-second transition time going from the end of one pack to the start of the next, which required a long accumulation deck between where they started loading and where it came off their tilt hoist. Josh explains, “We were looking for a solution to make up for that 80-second difference when we’re not dropping lumber onto our chain. One of the ways we look at the efficiency of our rough mill is by measuring the percentage of lugs they are filling. So, at full speed on eight-foot lumber, we ran 25 lugs a minute; we were getting a low fill rate of 80%, which meant we were getting 20 boards a minute as opposed to the potential 25 that our line was capable of running.”

THE SOLUTION The fix to this issue was a new $280,000 project that would replace the tilt-hoist and introduce automation to reduce the cycle time between the end of the previous pack and the next pack by at least 20 seconds. Josh continues, “Basically, we learned that we would never run out of room between packs if that transition were limited to about 60 seconds. Since it took about 80 seconds, there were about 20 seconds when there wasn’t enough material to replenish the line. Twenty seconds cost us ten boards, which would add up to 38-40 packs a day. We wanted one extra board per minute, which

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17

MiCROTEC's CT Log allows optimization of the lumber breakdown: significantly increasing both value and volume recovery and essentially automating the grade sawing process.

Left: Cascade's CT Log

was worth about $150,000 a year, and we wanted to reduce our stick loss by half; we wanted to go from spending roughly $12,000 a month on sticks to $6,000, which would be a savings of $74,000 per year (for the extra board a minute and the reduction in stick expenses). The entire project would pay for itself if we could accomplish both goals. It was a slam dunk, so we went for it.”

Josh says they decided to go with a new tilt hoist and system automation from TS Manufacturing because of its many automatic features and the fact that the entire portion on the tilt hoist that the lumber lays against was a sheet of steel. So, there was nowhere for the sticks to go – and no breakage. Josh was happy to say, “We had the new setup installed in August 2021, and we achieved all our targets and more.

We went from 20 lugs a minute to 21.3 lugs a minute, which equates to an efficiency gain of about 5%. We had a $120,000 process allocation improvement. That’s real money. We haven’t bought a load of sticks since we put in the TS Manufacturing tilt hoist. So, we’ve experienced an actual 100% reduction in stick replacement costs. Add it all up, and that is a $290,000 savings, which was virtually the exact same cost of the system altogether.”

Case Study 3: Robinson Lumber’s Concerns About the Hardwood Industry Being Slow to Adopt Machine and AI Opportunities THE PROBLEM Garner Robinson, CEO of Robinson Lumber, shared his concern over machine limitations and opportunities at his mill, saying, “Our

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lumberyard was built in the late 80s, and if you look at it today, we have some equipment that has been there for 30-plus years as well.

Even so, we’ve continued to invest in new things. So next to an old chain, you’ll see a brand-new Vision Tally, as an example. We’re particularly excited about our new container loading system from CombiLift. I believe it is ground-breaking.” At the 2023 Annual NHLA Convention, Robinson offered a tour of their yard and showed everyone how the Combi-Lift works. It received rave reviews.

Garner continued, “I’ve been coming to the NHLA Convention since I was a kid; I grew up in the industry. A lot has changed, but a lot hasn’t. I’ll go out on a limb and say that our industry probably hasn’t kept up with the pace of change around the world. And technology is changing faster than ever before. If you’ve been reading about what’s happening with artificial intelligence, it’s just the beginning. Yet we’re an industry that’s proud of its traditions; we celebrate old companies, we celebrate family businesses, and we celebrate the grit and tenacity required to make a living doing this.

Technology? Not so much.”

THE SOLUTION Garner recommends embracing the change and improved efficiency that Automation and AI bring to the industry and notes that any changes to the settings of a mill’s machines or AI software be made collectively, underscoring the machine’s power and potential risks.

Garner concluded, “This multi-person decision-making system ensures a balanced and thoughtful approach to machine adjustments.”

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Left: Middle Tennessee Lumber’s old tilt hoist. Notice that the sticks are already falling out. On the right is the new tilt hoist with a sheet of steel along the back.

Case Study 4: Achieving Employee Buy-In at Cascade Hardwood

people traditionally started, which often involved hard labor, had a constant turnover, and many injuries were happening.

THE PROBLEM Rick Barrett, the Sales Manager at Cascade Hardwood, noted that the initial challenge to incorporating AI was technological and cultural. Cascade’s veteran employees were hesitant to accept AI, fearing job loss.

THE SOLUTION Susan Coulombe, General Manager of JD Irving Limited, believes they solved their turnover problem by switching to AI, which has experienced rapid growth at its mills. Susan says, “We have had automated grading systems in our softwood mills for a long time. In hardwood, our first automated grading system was installed in 2014. In 2018, we piloted our first two-axis robot (one that will only go in two directions, up/down and forward/back) so we could lift an entire layer of lumber at a time. By 2019, we felt more confident in AI, so we did another installation of a bigger system, and then in 2020, we installed our first six-axis robot, which moves in six different directions. Finally, in 2022, we installed two large six-axis robots at our hardwood mill. That was a big project for us, and it took us about three months to get back up to our post-installation production.”

THE SOLUTION Barrett said, “Once we decided to go with the CT scanner, the fun really started. Cascade has a lot of 30 and 40-year-old employees with multiple decades of experience. Convincing them that technology would come in and play a role in what we were doing - and not take their jobs - was a huge part of what we had to do. We worked hard to get buy-in from all the people that are involved. And that ended up being one of the most satisfying parts of the project; the sawyer with 17 years of experience who was worried about his job is now the head guy who runs the CT department. Another benefit is we now have two younger guys on staff because we’re presenting them with solutions that appeal to young gamers who are very good with their hands and feet. But now that we have a solution, we can make them leaders in about three months. In the end, we now have buy-in everywhere, from purchasing to our machinists to our electricians; they all played a big role in it, and we made a big deal of the role that they play. As a company, we have changed the culture from resisting technology to embracing technology.”

Case Study 5: AI and Robotics Provide Labor Solutions for JD Irving, Limited THE PROBLEM JD Irving Limited employs over 19,000 people, and one of the biggest challenges they face is finding a workforce. Jobs where

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While Susan was highly impressed with the many things AI could do, it was not without a learning curve. But once they overcame the hiccups, they became indispensable. Susan is happy to report that “They work great. They worked without breaks, they didn’t complain, and they didn’t have bad days. We are very happy that we moved to AI. Now, we are getting ready to install the first CT scanner in Canada at our hardwood mill in February of 2024. So, we’re excited.”

Susan admits that AI doesn’t come without drawbacks, saying, “To share a little bit from our learnings, AI (and robots) are 100% repeatable, and that can be a very good thing because they do the same thing over and over again. You program it with the specs for that grade. But it can be a very bad thing. Because if you make a mistake or tell it to do something that doesn’t make sense, it will do it over and over again. We’ve learned that you can’t be completely W W W. N H L A .C O M

Susan continues, “One of the things we’ve found is that we can get about 95% of what we had with humans, but we can automate for a reasonable budget cost. Automation can make jobs safer and make jobs much more interesting for operators.”

Robinson Lumber displaying their new CombiLift-CSS Container Slip-sheet, designed for fast loading freight containers. hands-off; you need to monitor it and constantly check and calibrate the AI, so it’s doing exactly what you want it to do. You can’t eliminate the human element because, to my second point, it’s artificial intelligence; it doesn’t have judgment, it doesn’t know what you meant to say, while a good operator or grader will let you know if you ask him to do something that will yield bad results. The AI will just go, ‘Okay,’ and do whatever you say. So, they’ll never replace a good operator and a good, skilled person, but AI is there to enhance and increase the flexibility to let us do things at a speed we just can’t get with humans.”

From embracing CT scanning technology at Cascade Hardwood and JD Irving to saving hundreds of thousands of dollars at Middle Tennessee Lumber, AI is proving to be a game-changer for hardwood lumber mills. As the hardwood industry continues to explore this promising frontier, it’s vital to approach it with a balance of caution and optimism, ensuring that the industry is maximizing benefits while recognizing limitations. The future looks promising, as AI can help the hardwood lumber industry become more efficient, sustainable, and prepared for the challenges ahead.

By weaving AI into the fabric of their operations, these hardwood lumber mills are not just adopting new technology; they’re evolving their business models and, in some cases, even their company culture.

The stories of Cascade, Middle Tennessee Lumber, Robinson Lumber, and JD Irving serve as compelling testament to the transformative power of technology and AI in the hardwood lumber industry.

A video of the Education Session “From Automation to Ale, Exploring AI Over Drinks” from the 2023 Annual NHLA Convention is available at www.NHLA.com/speakers.

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RULES CORNER

NAVIGATING THE NHLA RULES: UNDERSTANDING THE IMPACT OF CHANGES

By DANA SPESSERT, Chief Inspector

T

he NHLA Rules have gone through several changes over the years; sometimes, the Rule that gets added/changed can impact another as an unintended consequence. In this month’s article, I will review one of these Rules.

As the limitation states, for 4” & 5” Selects, the wane cannot exceed 1/2 the length when both edges are added together and cannot exceed 1/3rd the width. This limitation on the 4” & 5” applies to both faces.

As most in our industry know, the Standard grade of FAS has 6 defect limitations. The wane limitation is on page 14, paragraph 57of the 2023 NHLA Rules Book:

Now to the interesting part: a few species exceptions and some color sorts allow for 4” & 5” FAS & F1F provided they meet the requirements listed, the most common being 100% clear, as in the case of White Maple as an example. On page 24, under FAS, it states:

“Wane shall not exceed on either edge of the piece over one-half the length in the aggregate.”

“FAS: Standard, except: Widths: 4” and wider. Pieces 4” and 5” wide shall be clear.”

This Rule is straightforward, stating that there can be up to ½ the length of wane on either edge. This can be ½ the length on both edges and can be in small patches or all one piece.

With this being the case, there is no need for a wane limitation on the 4” and 5” pieces; confusion may come in when the better face meets the requirements for FAS (100% clear in this case) and the reverse side is 1 Common. For F1F White Maple, it is Standard, meaning that the requirement on the better face is clear (in this case), the reverse side meets 1 Common requirements, then it must not exceed the Standard F1F wane limitation of ½ the length on both edges and 1/3 width.

For the Standard grade of F1F (FAS 1 Face), the wane limitation is like FAS in the length of wane, with the addition of a width of wane parameter. On page 16, paragraph 64, under F1F, it states: “Wane on the No. 1 Common side is limited to the following: the width of wane from both edges, when added together, cannot exceed 1/3 the total width of the piece. The total length of wane on either edge cannot exceed 1/2 the length.”

As you can see, this is like FAS, allowing wane to be half the length on both edges with a 1/3rd width restriction.

The Standard grade of Selects, when 6” and wider, also mimics the F1F limitations for wane, whereas the 4” & 5” Selects have a stricter requirement. On page 16, paragraph 69, under the Selects heading, it states: “In pieces 4” and 5” wide, wane on either face is limited to the following: the width of wane from both edges when added together, cannot exceed 1/3 the total width of the piece. The total length of wane on both edges, when added together, cannot exceed 1/2 the length.”

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The Selects for White Maple states that it is Standard; as it is listed on page 24, it states: “F1F, SELECTS, NO. 1 COMMON, NO. 2A COMMON: Standard” So, this means that a Select White Maple, in this example, is a stricter requirement board than an F1F White Maple regarding the wane limitation.

I hope this clears this up and that someday someone will submit a Rules change that could clear this up for future generations.

As always, please send your hardwood lumber grading questions to Dana Spessert at d.spessert@nhla.com or call 901-399-7551.

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ITS CALENDAR

NHLA PROVIDES EDUCATION AND TRAINING TO IMPROVE YOUR BOTTOM LINE Register for classes at www.nhla.com/Education.

NOV

JAN

Nov. 27-Dec. 8

Jan. 8-March 1 2024

Inspector Training School Online Training Program MODULE 1 Two weeks of hands-on training.

Venue: NHLA Headquarters Location: Memphis, TN Module 2: Online study Module 3: Three weeks hands-on training and final testing at NHLA headquarters.

Instructor: Roman Matyushchenko, ITS Instructor

DEC Dec. 11-14

Hardwood Processing 101

NHLA will host a workshop to broaden the knowledge of hardwood processing for those industries and people who support sawmills and mill operations. The 3-day workshop will explore the process path from tree to kiln and includes a tour of a local sawmill and concentration yard.

Housing and meals are included.

Inspector Training School 205th Class

Traditional 8-week hands-on training to achieve the certificate of completion in Hardwood Lumber Inspection.

Venue: NHLA Headquarters Location: Memphis, TN Instructor: Roman Matyushchenko, ITS Instructor

MAR March 20-22 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.

Venue: NHLA Headquarters Location: Memphis, TN Instructor: Roman Matyushchenko, ITS Instructor

Venue: NHLA Headquarters Location: Memphis, TN

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APR April 8-19

August 28-30 Intro to Hardwood Lumber Grading

Inspector Training School Online Training Program MODULE 1 Two weeks of hands-on training.

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

Venue: NHLA Headquarters Location: Memphis, TN

Venue: NHLA Headquarters Location: Memphis, TN

Module 2: Online study Module 3: Three weeks hands-on training and final testing at NHLA headquarters.

Instructor: Roman Matyushchenko, ITS Instructor

Instructor: Roman Matyushchenko, ITS Instructor

SEPT

AUG

Inspector Training School 208th Class

August 12-23

Inspector Training School Online Training Program MODULE 1 Two weeks of hands-on training.

Venue: NHLA Headquarters Location: Memphis, TN Module 2: Online study Module 3: Three weeks hands-on training and final testing at NHLA headquarters.

Sept. 9-Nov. 1

Traditional 8-week hands-on training to achieve the certificate of completion in Hardwood Lumber Inspection.

Venue: NHLA Headquarters Location: Memphis, TN Instructor: Roman Matyushchenko, ITS Instructor

Instructor: Roman Matyushchenko, ITS Instructor W W W. N H L A .C O M

NHLA JOB BOARD Here you will find our current job listings.

To see more details of the job or to post a job, visit www.nhla.com/resources/careers-center MANUFACTURING DIVISION MANAGER

REEDSBURG, WI Midwest Hardwood Corporation is one of North America’s largest manufacturers of hardwood lumber. We produce and trade high-grade hardwood lumber, logs, and value-added wood products for clients that span the globe. We are committed to the latest proven technologies in equipment and procedures, assuring consistently high-quality products for our customers.

We own our own sawmills, dry kilns, national and international sales organization, distribution centers, and we produce the very finest hardwood products and excellent service. We are seeking to hire a Manufacturing Division Manager to manage sawmill and kiln operations in the areas of safety, production, maintenance, profitability, and quality. Division Manager Responsibilities include: • Strive to continuously improve all areas of mill performance.

• Establish and monitor overall plant performance for safety, production, profitability, and quality standards for a workforce of 250 employees.

• Oversee mill activities to ensure the total manufacturing objectives are accomplished in a timely and cost-effective manner.

• Ensure the safe operation of all mills. Be aware of OSHA regulations and maintain all mills in accordance with all local, state, and federal rules and regulations.

• Manage capital asset maintenance for the division.

• Partner with senior management to establish and execute capital improvement projects.

• Control and minimize labor overtime and repair expenses at each location.

• Ensure that the plant facilities and equipment are maintained, replaced, and upgraded to meet high industry standards.

• Provide leadership and training to accomplish the company goals and objectives.

• Provide direction, development, and leadership to our managers.

• Encourage and foster a sense of high, positive morale among the workforce.

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• Coordinate and communicate with other division managers and senior staff to achieve corporate goals.

HOW TO APPLY Send your resume to: markerickson@midwesthardwood.com

Midwest Hardwood Corporation 9540 83rd Avenue North | Maple Grove, MN 55369 608-768-4912

LUMBER GRADER

ONALASKA, WISCONSIN NWH is seeking to hire a new lumber grader whose key functions would include: • Grading lumber according to the NWH proprietary grades • Maintaining grading accuracy in a fast-paced environment • Working with QC on current grade guidelines • Evaluate log characteristics and determine grades using established criteria.

• Identify logs of substandard or special grade so that they can be returned to shippers, regraded, recut, or transferred for other processing.

• Measure felled logs or loads of pulpwood to calculate volume, weight, dimensions, and marketable value using measuring devices and conversion tables.

• Paint identification marks of specified colors on logs to identify grades or species, using spray cans or call out grades to log markers.

HOW TO APPLY Send your resume to: sarah.devries@nwh.com

NWH 718 2nd Ave SW | Grand Rapids, MI 54650 616-741-6848

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25

MARKET TRENDS

HARDWOOD MARKETS

MATTER

Hardwood Markets Matter, and it is important for NHLA to share market details of the entire Hardwood Industry. We appreciate the support of allied associations and publishers in gathering and sharing this important market information that can help you understand the complete hardwood industry picture.

KD 4/4 Sap/Btr Soft Maple Prices $3,600

Upper-Grade

www.hardwoodreview.com

$/MBF Gross Tally

$3,100 $2,600

#1 Com $2,100

$1,600 Production cuts and extended sawmill downtimes #2 Com have finally allowed the prevailing prices of KD 4/4 #2/Btr Sap/Btr Soft Maple to stabilize or even rise $1,100 slightly this fall. In 14 months, Northern and Appalachian gross tally prices declined an average of *Prices Averaged Across Regions $600 $2,015 (57%) for FAS/1F, $1,335 (58%) for #1 Common, 11/1/2019 11/1/2020 11/1/2021 11/1/2022 11/1/2023 and $705 (50%) for #2 Common. Since mid-September, however, reported prices for Appalachian KD 4/4 FAS/1F and Northern common-grade Soft Maple have shown a bit more strength, though proWhile prevailing Red Oak, White Oak and Poplar prices are close ducers say the modest price upticks are still largely supply-driven. to or above their pre-runup levels, average prevailing prices for KD 4/4 upper-grade, #1 Common and #2 Common Soft Maple are Owing to reduced global consumer demand, the rapid declines $250, $170 and $95 below their October 2020 levels, respectively. in KD 4/4 Soft Maple prices after June 2022 failed to generate Sawmill production will remain low for the remainder of this additional interest from Canadian or Mexican lumber buyers in year, lending to modest additional price increases. However, with the second half of 2022. Soft Maple shipments to Canada did consumer demand for finished Soft Maple goods depressed by grow in the first quarter of this year, but have trended lower since, inflation and substitute products—and expected to worsen into with July shipments the lowest in three years. Likewise, Mexican next year—significant price gains are not likely until at least the demand has trended slowly lower since January. On the upside, second half of 2024. shipments to Vietnam were up 13% through August, despite a sharp July drop-off.

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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.

Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23

Index for September, which is published the first week of October.

Cabinets Residential Flrg.

Truck Trailer Flrg.

Upholst. Furniture Wood Furniture Moulding/Millwork Wood Components Board Road Pallets Railroad Ties Quite Slow

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Slow

Fair/Steady

Good

Quite Good

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www.rta.org

KEY TRENDS AND ISSUES IN THE MARKETPLACE

By Nate Irby, Railway Tie Association (RTA)

On the wider horizon, railroads are preparing their capital budgets/tie programs for next year as we speak. Sources indicate robust track maintenance/improvement plans and high investment in all things safety and reliability. Plus, beyond the Class Is, our short line and regional railroad friends have been able to secure federal grant money (CRISI grants) to help update their networks with ties being a large part of that effort/spend.

More granularly, the wood tie flow is up over 20+% from this time last year, yet railroad tie inventories are low. We are on a path for that to remain status quo for the next 12 months at current rates of production, usage, and “all things considered” remain level.

WOOD TIE PRODUCER 2023 SUMMARY At the sawmill level, ties are price king, yet they (sawmill operators) have depressed pricing availability for most of the other products they render from a log. This creates a disequilibrium for their output, and causes angst when deciding “how much” to produce overall as the theory of a “diminishing rate of return” comes into play.

Wood tie producers are processing ties as fast as they can right now, again, as flow is heavy, but due to current high railroad demand, are having to artificially season volumes of ties for immediate use rather than naturally air-season and place into drying inventory. This is occurring at roughly 20-30% of annualized usage, which creates a trough in inventory appreciation, and tie flow will need to exponentially “gain” at least that much to overcome that draw. This will take time.

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WOOD-TIE MARKET OUTLOOK Logging of the raw material is vastly deficient and is an existential threat. Our friends at Forisk consulting are mapping this, and quote in the U.S. south, logging employment has experienced a decline for the last 13 consecutive quarters. Other regions bode likewise, and the overall capacity for logging is contracted to the point it is critical - on the brink.

Sawmill production is stunted due to insufficient value proposition for lumber, flooring, pallet stock, etc.. Although red oak 2A lumber (comparative of ties) price has stabilized now versus 6 months ago, it’s still supremely subordinate to ties, plus highpriced logs counteract margins and complicate production/sales optimization scenarios.

The primary hardwood commodity threat (to ties) right now is crane mat timbers. A rougher quality product than crossties, i.e. less stringent grade, makes for a more convenient substitute to ties, since current demand is heavy.

Inflation is still prevalent in much of our sector, albeit not realized as soon as in other industries, remains. Furthermore, part shortages and supply chain disruptions are lingering, thus limiting flexibility.

Our industry is an inter-connected web of allies and competitors, all experiencing peaks and valleys, with few plateaus, and none lasting long. Our relationships with industry entities both upstream and downstream are critical to mutual and collective survival. Railway Tie Association is the membership organization representing all those delightful players, and is a conveyance of networking, engagement, and information. Please consider joining, attending our events, and being a part of the RTA community.)

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WHAT IS YOUR VIEW OF CROSSTIE COMPETITIVE POSITION RELATIVE TO OTHER HARDWOOD PRODUCTS?

REGARDING YOUR ABOVE ANSWER, PLEASE PROVIDE CONTEXT FOR MARKET, WEATHER OR OTHER CONDITIONS.

EASTERN US LAKE STATES Minnesota, Iowa, Wisconsin, Michigan, N Indiana, N Illinois: September has been wet - made up for 4 months of drought in about 2 weeks.

Sawmills are very concerned about the lack of log supply - fewer logging crews and high prices making log availability and inventories very low.

ATLANTIC West Virginia: A lot of mills have low log decks, some because of rainy weather others because of market conditions.

Virginia: Flooring, pallet, and poplar markets have all slowed down. Ties are the best market for mills right now, but they can't carry all the load for the mills to remain profitable.

NEW ENGLAND New England 1: Log prices are too high for mills to pay, and loggers cannot drop prices. Extremely wet conditions have most logging stopped. And going into Fall, conditions are going to become worse.

Also, hunting season will continue to slow logging production. Some of the larger mills in my area have already shut down due to low log supply.

Other mills are looking at certain shutdowns over the late Fall and Winter months.

MIDSOUTH E Texas, NW Louisiana: CrossTie's is holding the Sawmills up again the other markets is just taking enough for them to move their products but breaking even is hard to do. The weather on the other hand is continuing to stay dry so if mills want logs they should be able to get them.

SE Missouri, N Arkansas: RUNNING about the same SOUTHEAST Kentucky, Tennessee: Grade lumber mills are struggling with current lumber prices, labor shortage and demand. Rumors of quitting and selling out are becoming more and more common.

Alabama, Florida, Georgia: Log inventories are beginning to improve but it may be too little too late going into fall.

Mississippi: Crossties retain a strong competitive position in relation to other competitive markets. Demand remanis strong.

Pennsylvania: Some up tick on grade lumber.

W W W. N H L A .C O M

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www.nwfa.org

According to the National Wood Flooring Association/ Hardwood Floors magazine’s 2024 Industry Outlook, competition from wood-look products such as LVT, WPC, and laminate continue to have a negative effect on real wood sales. Further, about 72 percent of respondents reported LVT/WPC/SPC to be the biggest threat to real-wood products in 2023.

While the industry may be seeing some improvements with supply chain disruption, some NWFA members are still seeing extended lead times or unpredictable supply for raw materials such as hardwood, finishes, and adhesives. The areas least affected by supply chain hurdles were tools and softwood.

3 0 | N O V E M B E R 2 0 2 3 H A R D W O O D M AT T E R S

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SLUGGISH VIETNAM AND SURGING MEXICO

By Tripp Pryor, AHEC International Program Manager

www.ahec.org

Millions of Board Feet

US Lumber to Vietnam and Mexico 250

200

150

100

50

0

2009 2010

2011

2012

2013

2014

2015

Vietnam

2016

2017

2018

2019 2020 2021 2022 2023*

Mexico

Source: USDA GATS. 2023 Annualized based on August data

In 2010, during the early aftermath of the Global Financial Crisis and in the middle of a massive wave of offshoring, Vietnam imported over 100 million board feet of lumber from the US, passing Mexico and moving into the top 3 markets for American hardwoods. Over the last decade, Vietnam has remained our third largest market by volume, and in 2020, imported over 223 million board feet of lumber from the US. That year, the Vietnam market was more than double the size of our market in Mexico, which was only 108 million board feet.

Since 2020, reduced demand from the Vietnamese wood products industry and a high level of investment in Mexico has brought these markets near parity. Vietnamese imports of US hardwoods are down 27% between 2020 and 2022, and Mexican imports of US hardwoods are up 46% during that same time. In 2022, Mexico

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imported roughly 158 million board feet of US hardwood lumber, and Vietnam had dropped to 163 million bf. So far in 2023, these two markets are projected to once again be very close in total demand at around 140 million bf, with a slight edge to Vietnam.

Vietnam and Mexico are both low-cost, re-export focused producers of value hardwood products.

They have similar labor rates (both lower than Chinese manufacturing labor rates), and both are heavily influenced by consumer demand in the United States. Future growth in Mexico will likely continue to be driven by “nearshoring” pressure and foreign direct investment from companies looking to be closer to their American end market. Vietnam can grow back to larger levels of trade, but will require stronger end consumer demand in Europe, China, and the rest of Asia to do so.

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PINNACLE LEVEL NWH ALDER LEVEL Cascade Hardwood, LLC WALNUT LEVEL UCS Forest Group of Companies CHERRY LEVEL The AGL Group Baillie Lumber, Co. BID Group Technologies LTD Breeze Dried, Inc. Cole Hardwood, Inc. Continental Underwriters, Inc. DMSi Software Forestry Systems, Inc. King City Forwarding USA, Inc. Pennsylvania Lumbermens Mutual Insurance, Co. SII Dry Kilns USNR TMX Shipping Co., Inc.

MAPLE LEVEL Granite Valley Forest Products Hurst Boiler & Welding Co., Inc. Kuehne + Nagel Matson Lumber Co. MO PAC Lumber Co. Nyle Dry Kilns BIRCH LEVEL Ressources Lumber, Inc. RED OAK LEVEL A. W. Stiles Contractors, Inc. AHC Hardwood Group Alan McIlvain Co. American Wood Technology Cersosimo Deer Park Lumber, Inc. Delta ERC EFM Transportation Eagle Machinery & Supply, Inc. East Ohio Hardwood Lumber Co. Equipment Depot Falcon Lumber, Ltd.

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ITSEF GOLF TOURNAMENT SPONSORS Abenaki Timber Corporation Alan McIlvain Co. Allegheny Wood Products Baillie Lumber, Co. Brenneman Lumber Brewco, Inc. Classic American Hardwoods Cole Hardwood Forestry Systems, Inc. Hardwood Market Report Hartzell Hardwoods, Inc. IDI Indiana Dimension Kittrell Appraisals Kittrell Sawmill Brokers McRae Lumber Co. Messersmith Wood Boiler Systems.

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