Shortages ahead

By Ric Morrison Incoming President* Wood Moulding & Millwork Producers Association

AnP we crying "wolf' again? No, Il don'r think so! Expect shortages of western softwoods in the first quarter of 1992.

The preservationists are having success in tying up timber harvests and many western sawmills are closing or reducing production due to a lack of timber. These twin problems bode ill for a normal availability.

Most of us are aware of the court battles and reduced timber for sale, but the number of permanent plant closures and reductions are not quite as publicly heralded. As closely as our people have been able to determine, approximately 35Vo to 45Vo of the pine lumber has been pulled out of production due to short falls in harvesting and other market conditions.

Most remanufacturing operations have inventories at capacity to protect against shortages or delayed deliveries. Historically, demand slows down by November and picks up sometime in February or March. This means many distributors will be lulled into thinking there is plenty of supply when there is only a thin buffer of inventory. These factors create the environment for an artificial or "psychological" market of runaway prices and then a big downturn. This time we do not expect the big drop off afterward.

Most mills are cutting pine logs now due to the poor market on fir dimension. Log decks could dwindle further by February when stormy weather can keep the crews out of the woods. Because demand is down now and inventories are fairly strong, I don't expect fir or pine prices to go up too dramatically until late January or mid-February. If demand picks up in late January just as inventories are running lower at the reman and sawmill levels, there could be significant price increases: 25Vo to 40Vo doesn't seem impossible.

Large wood window companies capable of making block purchases of pine shop without affecting the cost of their window to the same degree as other products will also contribute to the puzzle. Watch for first quarter commitments from this segment of the industry to throw us a curve.

Story at a Glance

Preservation ist-blocked ti mber harvests and closed sawmills cut into softwood availability...thin inventories may cause significant Price increases...close supplier relationship and use of alternate species can keep availability and price in line.

What can you do to protect your source of supply? Align yourself with quality suppliers who have sufficient volume to get the job done. Buy from suppliers that can provide a wider mix of your needs rather than depending on a supplier forjust one product line. Work with your suppliers to set up programs and commit to deliveries over a longer period of time. Work with your suppliers to investigate alternate species to keep availability and price in line.

*The opinions expressed here are those of Morrison and not necessarily those of the entire WMMPA membership.

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