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TH E VOIC E O F THE HARDWOOD IN DUSTRY

H A R D W O O D M AT T E R S September 2020

US Hardwood Lumber Exports Show Significant — if Mixed — Impacts from Global Pandemic T H E O F F I C I A L P U B L I C AT I O N O F T H E N AT I O N A L H A R D W O O D L U M B E R A S S O C I AT I O N S T R O N G R O O T S . G L O B A L R E A C H . | W W W. N H L A . C O M


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CONTENTS September 2020 • Issue 215

WHAT'S INSIDE 16

feature 16

US Hardwood Lumber Exports Show Significant—if Mixed— Impacts from Global Pandemic by Mike Snow

ONLINE TOP POST OF THE MONTH at facebook.com/NHLAOfficial Anybody feeling nostalgic on graduation day? Found these gems in the ITS shed while getting ready for 192nd Class graduation!

departments 8

8 Education Spotlight Celebrating the Achievements

of the 192nd Class

10 Legislative Log Advocacy Beyond Covid-19

by Dana Cole

14 Member Spotlight Mountain Top Floors

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24 Rules Corner Edger Education Can Put

Money in Your Pocket by Chief Dana Spessert

25 Industry Insight By Henco Viljoen, Dry Kiln

http://bit.ly/ClassChalkMarks

Follow us

Specialist at Nyle Dry Kilns

reader services 4 6 26 27 W W W. N H L A .C O M

President’s Message CEO’s Message Educational Calendar Job Board S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

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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.

MISSION LEADERS

Darwin Murray McClain Forest Products President

Bucky Pescaglia Missouri-Pacific Lumber Co., Inc. Unique Services

Jeff Wirkkala Hardwood Industries, Inc. Vice President

Ray White Harold White Lumber Inc. Rules

Brent Stief Huron Forest Products, Inc. Past President 2016-2018

Joe Pryor Oaks Unlimited Industry Advocacy & Promotion

NHLA STAFF Amanda Boutwell Marketing and Communications Manager a.boutwell@nhla.com Lorna D. Christie CEO l.christie@nhla.com

ADVERTISER INDEX 5 Ally Global Logistics, LLC 21 Baillie Lumber 23 Continental Underwriters, Inc. IFC DMSi 12 TallyExpress by DMSi 7 Embry Automation & Controls, Inc.

EXECUTIVE COMMITTEE

3 King City/Northway Forwarding, LTD 14 Mountain Top Floors, Inc. IBC Pike Lumber Company, Inc. 23 Serra 11 TMX Shipping, Inc. BC Tropical Forest Products 21 Wood-Mizer, LLC

For advertising contact: John Hester, Director of Membership and Business Development at j.hester@nhla.com or 901-399-7558 or Vicky Simms, Membership Development Manager at v.simms@nhla.com or 901-399-7557

Desirée Freeman Controller Julia Ganey Member Relations Manager John Hester Director of Membership and Business Development Renee Hornsby Director of Marketing/ Communications r.hornsby@nhla.com Jens Lodholm Data Administration Specialist

Jon Syre Cascade Hardwood, LLC Structure David Mayfield Mayfield Lumber Co. Membership & Networking COMMITTEE CHAIRS Stephanie VanDystadt DV Hardwoods, Inc. Membership Rob Cabral Upper Canada Forest Products, Ltd. Promotion & Advocacy Dennis Mann Baillie Lumber Co. Convention Scott Cummings Cummings Lumber Company, Inc. Inspection Services

Carol McElya Inspector Training School Administrator

Bruce Horner Abenaki Timber Corp. ITS/Continuing Education

Roman Matyushchenko Associate Dean of Education

Brin Langmuir Falcon Lumber Ltd. Communications & Marketing

Vicky Quiñones Simms Membership Development Manager Melissa Ellis Smith Graphic Designer m.ellis@nhla.com

Joe Snyder Fitzpatrick & Weller, Inc. Rules

Dana Spessert Chief Inspector

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PRESIDENT’S MESSAGE

WHERE DID THE PAST TWO YEARS GO?

I

t seems like yesterday that I accepted the honor of serving as the President of the NHLA Board of Managers. When I consider the industry leaders who came before me, it was certainly an honorable experience. Little did I know at that time how fast our world would change. Our industry quickly became embroiled in a devastating trade war with China, and just when we felt we were finally on stable ground, along came COVID-19. I continue to have complete confidence that no matter what we face, this industry, and NHLA will always find ways to move forward. Rather than defining the past two years based on hardships, I would like to focus on what we have accomplished during those times, despite the unprecedented challenges. As I assumed office, the Board had the 2020 NHLA Strategic Plan as a guide. We made a commitment to lead the development of new member value and services based on the plan objectives. While look-alike and competing products were challenging the industry, an ongoing trade war with China, and a worldwide pandemic, NHLA continued to evolve and develop the services you need to move forward. Yield Analysis and Quality Control programs were created to help our members reduce costs and enhance profitability. NHLA also released a series of webinars designed to improve sawmill, kiln drying, and other areas of efficiencies. The Inspector Training School is evolving as well, with the introduction of a new seven-week ITS class. Another focus was the need to promote and defend the hardwood industry, so we joined a coalition of industry associations to fund the Economic Impact Study (EIS). This study is instrumental when educating Federal and State governments on our industry’s economic contributions. To further support the promotion of hardwoods, NHLA joined the Real American Hardwood Promotion Coalition, a collaborative group of industry associations working to generate ideas to promote the consumption of North American hardwoods. The coalition will soon be releasing a webinar on the results of its innovative research and plans for the future. Most of you will remember the day US Trade Rep. Robert Lighthizer mentioned hardwoods and timber products on national TV when

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discussing trade negotiations with China. Our industry received a boost in global markets as a result of the trade agreements. This success resulted from NHLA working with the Hardwood Federation and others to communicate the unintended consequences suffered by our industry in the trade war. Due to COVID19, we are now looking forward to NHLA 2020 On Demand, the first virtual conference in our history. Once again, NHLA is evolving to current situations. NHLA has been diligently looking for new ways to serve our members. I am most impressed by the unity developed within our community. The unity of our members and collaboration with other associations has generated positive results for our industry. We must continue to unify our messages and efforts to effectively lead this industry forward. Stepping aside from this role is bittersweet. I am going to miss this job and the interaction it provides with our members. However, I am excited to pass the gavel to our incoming president, Jeff Wirkkala. I have worked closely with Jeff, and he has the motivation, passion, and creativity to be an excellent leader for our association. In closing my final letter, I want to thank the Board of Managers, NHLA Staff, and our members for all their support during my time as President. Please know this was an important job for me. We must always remember our stewardship responsibilities for one of the world’s greatest resources, North American Hardwoods! Thank you for the honor of serving you as NHLA President. This opportunity has motivated me to be more, do more, and serve more. Godspeed to All!

Darwin Murray, NHLA President McClain Forest Products dmurray@mcclainforestproducts.com

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CEO'S MESSAGE

UPDATE FROM THE REAL AMERICAN HARDWOOD PROMOTION COALITION

T

he Real American Hardwood Promotion Coalition (RAHPC) Executive Committee has made great progress in finalizing the research that will form the foundation of the hardwood industry’s promotion campaign. All of the planned research has been conducted, analyzed, and placed in the hands of the brand accelerator who will utilize the research to define the industry’s brand. The results of this research will provide the basic tenets for developing a much-needed over-arching brand identity. The research encompassed a wide audience of consumers, architects, contractors, home renovators, designers, millennials, and Gen Xers. A variety of methods were used, including in-person focus groups, online polling, and interactive bulletin boards. The RAHPC is comprised of representatives from 24 national and local associations serving the hardwood industry who contributed funds to conduct research, create and support hardwood promotional campaigns. The RAHPC Executive Committee guides the effort and provides updates to an Advisory Committee and donors on an ongoing basis. NHLA contributed $50,00 to support the effort. The research identified hardwood’s key attributes, including: • Attractiveness (#1 Attribute) • High-end Appeal • Uniqueness • Durability • Gold Standard - everyone wants the look and feel of real hardwood products.

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Barriers that influence hardwood purchasing decisions: • Cost (#1 Barrier) • Not a “Good Value”- disconnect between durable being good value • Disposable Society • “Close is Good Enough” Little importance in the decision process: • Made in America • Environmentally friendly • Sustainability of the resource RHAPC’ marketing consultants have developed a preliminary go-to-market playbook based on the research that will outline new opportunities for hardwood companies and associations to engage and guide target audiences, including influencers through the purchasing process. Once this step is finalized, RAHPC can begin to consider where we start our activities for the most effective exposure. Additionally, we will be addressing sustainable fundraising methods to support future plans. RAHPC Executive Committee

Lorna D. Christie, NHLA CEO l.christie@nhla.com

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S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

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EDUCATION SPOTLIGHT

Celebrating the Achievements of the 192nd Class of the NHLA Inspector Training School

Front Row (L-R): Caleb May, Roman Matyushchenko (Associate Dean of ITS), Rich Hascher (Instructor of ITS), Nate Jones, and Kent Beaver. Second Row (L-R): Kyatt Spessert, Edward Burgoyne, Zane Shipman, Raul Flores, Josh Van Dyke, Christian Beasley and Trevor Aplin.

T

he National Hardwood Lumber Association celebrated the graduation of the 192nd class of the Inspector Training School on Friday, July 31, 2020 after completing an advanced seven-week pilot program. The program offered an overall faster pace and was quicker to hands-on training with board grading than the traditional 12-week. The goal of the 7-week concept model is to educate more students and get them back to work sooner while increasing the students’ value to the company. Dana Spessert, Chief Inspector and Dean of Education welcomed and thanked the families, friends and employers who supported the

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students. Due to COVID-19 restrictions, graduation was held outside with a limited number in attendance. Facebook LIVE broadcast allowed family and friends nationwide to join the celebration. Steve Jones, President of Ron Jones Hardwood Sales, and himself a graduate of the School gave an inspirational keynote address telling graduates, “I am especially proud of this 192nd Graduating Class! Graduating is an accomplishment in-and-of-itself! How you all learned and applied the rules designed for a 12-week class in just 7 weeks is amazing!"

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Nate Jones with his parents, Steve and Danielle Jones.

Rich Hascher taught at the NHLA Inspector Training School for 27 years. On July 31st, he “graduated” with 192nd class and officially became an ITS graduate and alumni! The love and admiration that we have for him can never be expressed - HERE’S TO YOU RICH!! Caleb May and Class President Josh Van Dyke

A 30-year veteran of the hardwood industry and part of a family run business; Steve shared his insight on strategies for a successful career with the graduates. “Your graduation from the NHLA School is just your first step in a rewarding career. Yet any career has uncertainties and unplanned events. So how do you prepare for adversity? By building your personal SILO.” S stands for self-improvement, I for integrity, L for leadership and O for opportunity. “I challenge you to build and develop your personal SILO. You have been taught how to grade hardwood lumber provided by Rich, Roman and Dana. It is up to you how you use the skills and the foundation they have provided you.” Class President Josh Van Dyke spoke to his fellow students during the ceremony saying, “Today, we start a new chapter of our lives as lumber inspectors and we set out into the industry as an exclusive group.” He went on to say, “With this certificate, we have a bright future ahead of ourselves and the tools needed to be a cut above. We leave our graduation with our heads held high, the grading rules held higher, and will strive for nothing but the best.”

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GRADUATES OF THE 192ND CLASS WERE: • Trevor Aplin, Allard Lumber Company • Christian Beasley, Oversees Hardwoods Company • Kent Beaver, W.M.Cramer Lumber Co., Inc. • Ed Burgoyne, Snowbelt Hardwoods • Raul Flores, Oversees Hardwoods Company • Nate Jones, Ron Jones Hardwood Sales, Inc. • Caleb May, Independent • Zane Shipman, Hartzell Hardwoods, Inc. • Kyatt Spessert, Independent • Josh Van Dyke, Independent

Enrollment is now open for the 194th class, which begins at NHLA headquarters in Memphis, Tennessee on January 4, 2021. To enroll or learn more about the program please visit www.nhla.com. S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

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LEGISLATIVE LOG

ADVOCACY Beyond COVID-19 by DANA COLE, Executive Director Hardwood Federation

F

rom the onset of the COVID crisis, the Hardwood Federation has focused our advocacy efforts on policy actions related to pandemic-related economic relief for small and medium- sized businesses. Securing essential designations for hardwood companies was a priority early on. We pivoted to working on specific programs like the Paycheck Protection Program and Economic Injury Disaster Loans to help power hardwood businesses through current economic headwinds. There are other pre COVID priorities. One of which is the federal forest management reform.

tion” claims in six states. In the same time period, the Forest Service received at least thirty-two notices of intent to sue raising Endangered Species Act “new information” as an issue on land management decisions.

In the first week of August, Republican Senator Steve Daines (MT) joined with California Democrat Senator Diane Feinstein to introduce the Emergency Wildfire and Public Safety Act of 2020. This bi-partisan proposal pairs provisions promoting forest management with a demand side component in the form of biomass energy grants, with a goal to help move harvested forest material to sawmills and other end-users of woody biomass.

On the demand side of the bill, the proposal establishes a Biomass Energy Infrastructure program within the Department of Energy to stimulate and sustain markets for woody material generated on federal lands. Specifically, the bill would authorize grants of up to $750,000 to site or upgrade a “biomass conversion facility” or expand and improve infrastructure at an existing facility to accept woody material. The proposal defines “biomass conversion facility” as any operation that is converting biomass to generate heat, power, biobased products and/or advanced biofuels. The bill makes clear that these grants would only be allowed to move material for which higher value markets do not exist.

On the forest management side, the legislation would streamline the approval process for forest thinning projects, including limiting the ability of environmental groups and others that oppose timber harvesting from preventing these projects through litigation. The bill would also relax a requirement imposed by a court case known as the Cottonwood decision requiring the Forest Service to reinitiate environmental consultation with the U.S. Fish and Wildlife Service whenever new information emerges about potentially endangered species in project areas. According to the Forest Service, this “new information” variable continues to be a significant litigation issue for Forest Service activities. Since January 2016, there have been eighteen lawsuits involving Endangered Species Act “new informa-

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Another notable provision in the legislation would expedite reforestation on wildfire sites by allowing the Forest Service to declare those areas as emergencies that do not require extensive environmental reviews prior to restoration efforts commencing.

The Hardwood Federation is monitoring this and other proposals that are pending in Congress to improve the way our federal forests are managed. With lawmakers focused on COVID and the November election looming, we do not anticipate meaningful movement in the short term, but perhaps there will be a window of action at year’s end before the 116th Congress gavels out. However, many of these efforts could continue into 2021 when a new Congressional session starts . . . and new players come to town.

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and snap the pictures when the lumber is still on the forks. Boom. Boom. Boom. In 10 minutes, you have a truckload of lumber tallied up. Sometimes changing technology can be tricky. How was the transition with TallyExpress? Tim: Very smooth. Anna at DMSi walked us through every step of the program. It took about 30 minutes and we were off and running. My guys never looked back. For a company to start new software and in one week they are 100% confident and running it full time….that’s very impressive. I don’t think we ever needed any more support. The equipment has run perfectly. How has your staff responded? Tim: Actually, they kind of enjoy tallying now, it’s so easy. The learning curve is very simple. It takes about 15 minutes to show somebody for them to tally all day - and their tallies are accurate! So that means we can stay up to date with all our daily production, even if our main tally guy isn’t there. So TallyExpress has been a good move for your business? Tim: Oh yeah. If you’re going to make money in production, you have to be efficient in every job. I’ve been looking for years to make the end tally process much more efficient and I found it in TallyExpress.


MEMBER SPOTLIGHT MOUNTAIN TOP FLOORS

Mountain Top Floors

K

nowing when to change course is a key component to success for any business. Mountain Top Floors provides a great example of a company with the keen insight to know when to refocus the direction of their business.

Mountain Top Floors, a company based in Naperville, Illinois, began in 2015, suppling wholesalers (such as Home Depot) with hardwood flooring. However, it was growing harder to make a good profit margin due to heavy antidumping duty on wood floor related products. So, in 2018 they changed course. Now they source logs and provide related supply chain solutions to their customers from North America to China and other Asian countries. It was a good move too – their total export volume was approximately 4,200 forty-foot containers of logs and lumber in 2019. Mountain Top sources logs and lumber from suppliers from all over North America. Their export covers major U.S. and Canada ports and rail ramps. The company has an interesting concept when it comes to helping others understand what they do. They call it TAAS, “Trading As A Service.” They define TAAS by the way they connect and deliver what their customers need. They source the type of logs and lumber that are

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“We want to build a strong network so when a crisis like COVID-19 arises, we can make it through, remain calm, and help each other. It is our honor to be in the prestigious network of NHLA.” — Tomoko Kato needed from North America, then they connect the goods to customers through their expanded network in China and other Asian countries. At the same time, with the help of logistic suppliers, they ensure goods are delivered to customers in a safe and timely manner. Once the goods have arrived at their destination, Mountain Top also provides assistance in customs clearance and inland trucking. Like other NHLA members, COVID-19 disrupted their business, making it an unusual year. Buyers in China slowed down during the first quarter when the outbreak was limited to China. However, when the virus turned into a worldwide pandemic, the whole supply chain was affected. Tomoko Kato, a manager for Mountain Top Floors told us of the struggle, “Some log yards were closed due to lock down, some terminals and ports had limited access. It was a challenging time. That being said, we were fortunate to have trusting customers and we were surprised to discover that our export volume in the first two quarters of 2020 grew 50 percent compared to the same period from the prior year. Forwarders, ocean carriers, truckers and fumigators were also supportive. They stayed informed, resilient, and above all, strong. Many logs and lumber suppliers had skeleton crews during this time but managed to keep the workflow extremely efficient. They communicated with us and adjusted the work schedule to fit W W W. N H L A .C O M

our needs. We are very grateful to them. Overall, we believe that COVID 19 has forced many of us to revisit our business model, make it further evolve; plus, it provided a much different perspective for the future, in which flexibility and resilience will be essential.” Kato continues, “Being a member of NHLA plays an important role for us because of the networking opportunities membership provides. We heard about NHLA through salespeople who work with NHLA members, so joining was natural for us. We want to build a strong network so when a crisis like COVID-19 arises, we can make it through, remain calm, and help each other. It is our honor to be in the prestigious network of NHLA. Our membership gives us a perfect channel to implement TAAS as mentioned above. Our goal this year is to have a total volume of 10,000, forty-foot containers of logs and lumber combined.” You can reach Mountain Top Floors by calling (630) 445-8999, emailing info@mountaintopfloors.com, or visiting their website, www.mountaintopfloors.com.

S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

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US Hardwood Lumber Exports Show Significant—if Mixed—Impacts from Global Pandemic by MIKE SNOW, Executive Director American Hardwood Export Council

T

here is no question that so far, 2020 has been a year to remember—or better yet, to forget. What began with such promise for our industry early in the year when Chinese tariffs were lifted on American hardwoods has quickly collapsed into a period of uncertainty and disruption not seen on a global level in nearly a century. The impacts on hardwood lumber exports have been dramatic and difficult to predict as supply chains around the world were seemingly subject to the whims of a microscopic virus. Through June 2020, exports of lumber are down 17% globally from the same period last year and totaled just

over $859 million. (See Graph below) Yet, as we enter the third quarter, there are some signs of life in many overseas markets. Barring a serious global “second wave” of the pandemic in the fall, AHEC sees many opportunities as well as danger signals for the remainder of 2020 and into next year. Below is a market-by-market snapshot put together by AHEC’s global team on where things stood at the halfway point of 2020:

China:

As recently as 2017, China imported nearly $1.6 billion of American hardwood lumber, making it by far our industry’s largest trading partner. In fact, that year, more than 50% of all hardwood lumber exports from the US were destined for China. Due to the impact of Chinese tariffs imposed on US hardwood products from 2018-2020 and the outbreak of COVID-19, the Chinese market for American hardwood products was impacted on a scale never before seen in any other market. From 2017 to 2019, the exports of US hardwood lumber to China were cut in half (from over $1.5 billion in 2017 to $760 million in 2019), reducing them to a level not seen since 2012.

Total Volumes Down Across All Major Regions Thousands (m3)

January-June US Hardwood Lumber Exports, m3 1,400 1,200 1,000 800 600 400 200 0

East Asia

North America

Southeast Asia

2015

2016

EU27+UK Middle East

2017

2018

2019

2020

Oceania North Africa

2020 began with high expectations for our industry when China announced the elimination of

Source: U.S. Census Bureau Trade Data

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Tariffs and Monthly Exports of Hardwood Lumber to China (m3) 2017-209 250,000

200,000

150,000

100,000

50,000

0

Blue – Before Tariffs

Yellow – Initial Tariffs

Red- Full Tariffs

Green – Tariffs Removed

Source: U.S. Census Bureau Trade Data

tariffs as high as 25% on American hardwoods. Unfortunately, that announcement came in the midst of China’s COVID 19 outbreak, which was soon to become a global pandemic. China’s economy ground to a virtual halt in the first quarter of the year but rebounded very quickly. In the second quarter, China saw GDP growth of over 3% compared to the same period in 2019, the only major economy in the world to do so. This growth has impacted US hardwood lumber exports, which increased dramatically in April and May, where monthly totals were 74% higher than January-March. Even with a slight dip in June, through two-quarters exports of lumber to China were down “only” 12% from the same period last year, an encouraging sign given the

Thousands (m3)

US 120

100

almost complete shutdown of the Chinese economy for more than two months (See Graph above). Nevertheless, on a dollar basis, total lumber exports totaled just over $403 million through June, nearly half of what they were that same period in 2018.

Europe:

Exports of U.S. hardwood lumber to the EU27 +UK for January to June 2020 have seen a drop of 16% in volume compared to the same period last year to 142,495m3. (See Graph below) A significant reduction but perhaps not as severe as it could have been considering the impact of COVID-19 “lockdowns” on trading and manufacturing activity, especially in the second quarter. The length and severity of the economic Hardwood Lumber Exports to Europe shutdowns has varied from country to country, 6 Month January-June 2015-2020 and so has the impact on US hardwood exports with some countries fairing much better than others.

80

60

40

20

0

UK

Germany

Italy

Spain Portugal Estonia Ireland Sweden Belgium Denmark France 2015

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2016

2017

2018

2019

Shipments to the UK were down by 30%, a fall in volume of over 16,500m3 to 39,766m3, with most of the drop coming in the second quarter. But the UK is still the single most important market, accounting for 28% of total exports for the period. White oak, tulipwood, ash and walnut all saw decreases of more than 30%. Whereas red oak shipments were up slightly on the same period last year to 3,412m3. Germany, on the other hand, S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

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Hardwood Lumber Exports to SE Asia 6 Month January-June 350,000

300,000

250,000

Philippines Cambodia

200,000

Malaysia 150,000

Indonesia Thailand

100,000

Vietnam 50,000

0

2015

2016

2017

2018

2019

2020

Source: U.S. Census Bureau Trade Data

Sweden, mainly for flooring and moulding manufacture, saw exports for the period increase to 6,915m3 (+18%) with white oak at 4,873m3 (+22%) and red oak 1,135m3 (+10%).

US Lumber Exports to Mexico Millions

Lumber to Mexico from Jan-June each year in $USD $70 Birch

$60

Ash

$40 $30 $20 $10

2015

2016

2017

2018

2019

2020

actually saw an increase in exports for the six months up by 4% to 22,189m3 boosted by a 14% increase in white oak to 10,892m3 and a 21% increase in tulipwood shipments to 6,162m3. Walnut exports were down by 36%. Exports to Italy continue to slide and this has been accelerated this year with a further drop of 24% to just 16,253m3. Tulipwood shipments were 6,899m3 (-30%) and white oak 4,486 (-17%) and red oak increased by 4% to 1,773m3. Lumber exports to Spain were maintained at similar levels to last year with a small increase of 3% to 17.528m3. White oak accounted for 75% of the total at 13,283m3 (+5%) and red oak shipments continue to rise up 15% to 2,283m3. A significant increase in oak shipments to

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As a region, total American hardwood lumber exports to Southeast Asia in 2019 were roughly Cherry $281 million. Vietnam represented the vast Walnut majority of that total at $224 million. (See Graph Yellow Poplar above). The Vietnamese market so far has perhaps Western Red Alder White Oak been the biggest beneficiary of the US-China Maple Trade War, and as their economy and furniture Red Oak Hickory production sector continues to expand, US Other Temperate hardwoods are well positioned to capitalize on the growth. Over the past two years we have even seen some Chinese companies opening new factories in Vietnam to produce furniture and other wood products for export. This is not only as a way of getting around US-China trade tensions, but also part of a longer-term strategy trend that is taking advantage of Vietnamese labor cost which is now considerably below that of China. Tropical

$50

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Southeast Asia:

Beech

| S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S

Vietnam has weathered the COVID-19 storm very well so far, with one of the lowest infection and death rates of any major country. Nevertheless, the country’s export-dependent wood processing industries faced severe contraction as pandemic lockdowns in major trading partners reduced demand for Vietnamese furniture to a W W W. N H L A .C O M


trickle. As a result, US exports declined in the first half of the year to just over $94 million, a 19% decline from the same period in 2019. Other Southeast Asian countries with smaller, yet growing furniture and handicraft industries saw similar results this year. Indonesia imported just under $9 million, a drop of 12% from 2019 and Malaysia with a decline of 15% to just over $6.3 million. The lone growth market so far this year is Thailand—the region’s second-largest market for American hardwoods—which saw an increase of 8% over last year and imported just over $9 million.

India: 6 month 2016-2020

Latin America:

US hardwood lumber exports to Latin America are dominated by Mexico, the fourth largest market after China, Canada and Vietnam. In 2019 Mexico imported more than $117 million worth of hardwood lumber from the US, a healthy 7% increase from the previous year. The region’s second largest market for US hardwood lumber is Brazil, which saw a significant jump of 76% in 2019, although the total pales in comparison to Mexico at just over $5 million. With the recent finalization of the successor to NAFTA, the USMCA, Mexico may be poised to become a major beneficiary of the postCOVID global economy due to its geographic location on the southern border of the world’s largest economy and labor costs which are now significantly below China. In fact, there have even been reports of Chinese furniture and flooring manufacturers expanding into Mexico. Before Mexico can fully benefit from these advantages, however, the country has some significant hurdles to overcome, not the least of which is the country’s disastrous response to the COVID 19 pandemic, which the Mexican government has largely ignored. Other issues to confront include an extremely weak Peso which has devalued by nearly 25% against the Dollar this year, and crumbling infrastructure in need of an upgrade. Against this backdrop, it is not surprising that Mexico has seen its lumber imports in 2020 decline 26% through June (See Graph bottom left page 18). Similarly, Brazil has seen its economy take a tremendous hit so far this year, largely through its own dysfunctional response to the pandemic and US hardwood exports have followed suit, down 36%.

India:

The market for imported hardwoods in India has been significantly affected by the pandemic and resultant lockdown measures, with importers and end-users adopting a wait and see approach to placing orders for new material. During the first half of the year, U.S. hardwood lumber exports to India fell by 45% in volume to 1,081 cubic meters and by 45% in value to $634,000 (See Graph above right). Having shown its most promising year yet in 2019 for W W W. N H L A .C O M

demand for American hardwoods, it is particularly disappointing to see such poor performance this year. However, market commentators report that this negative situation will change quickly and that there is pent up demand for imported hardwoods, including U.S. hardwoods. In fact, during the past few months, AHEC has had a lot of contact with the furniture manufacturing sector in India and a lot of interest has been shown in American hardwoods. It is expected, therefore, that the decrease seen in the first half of this year will be reversed fairly quickly, although much will depend on the severity of the impact of COVID-19 during the coming months.

Japan:

Japan, the 6th largest global market by value for American hardwood lumber, has historically been a strong, high-value partner for hardwood lumber trade. In recent years, a continuing economic slump and the migration of many Japanese manufacturing industries to the low wage countries of Asia has curtailed the growth of direct exports to Japan. Because of COVID-19 reduced export values to Japan can be expected for 2020. Economic forecasts issued in early 2020 for Japan, which projected stagnation for the year in GDP and business activity in sectors critical to the timber industry, such as construction and furniture, will need to be completely revised. The results so far are not promising as Japan’s GDP for the first half of 2020 declined by 7.8%, the largest contraction on record. The Japanese response, however, has been expedient in shutting down the spread of COVID-19 and there is hope that development and manufacturing will increase through the second half of the year. For American hardwood exports, the market has remained surprisingly stable so far this year, declining only 3% through June to just over $27 million. There is no question, however, that the postponement of the Tokyo Olympics was a large blow to the country. S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

19


Australia: 6 month 2016-2020

and doors. It is not eating into the existing market for white oak and it represents a new market opportunity for American hardwoods. In New Zealand the story was very different. Despite an early and by most accounts, effective lockdown early in the crisis, New Zealand’s GDP is expected to decline by as much as 5% this year, and through June US hardwood lumber exports are down more than 40% compared to 2019 levels to just over $1.7 million.

Middle East/North Africa (MENA):

Middle East: 6 month 2016-2020

Oceania:

Having reacted quickly to the pandemic by closing borders and implementing other measures to prevent the spread of the virus, both Australia and New Zealand fared much better than many other countries. However, recently the situation in Australia has deteriorated and the State of Victoria is particularly badly affected, but at no point during the crisis has either country faced the same severity of turmoil as experienced in many other developed countries. Nonetheless, the economic impact of the pandemic has already been significant and worse may be to come. Perhaps surprisingly, demand for American hardwoods in Australia has remained buoyant through the first half of this year and market commentators report thriving business activity and sales for the moment, despite the worsening situation and a lockdown in Victoria. Exports of U.S. hardwood lumber to Australia grew by 19% in volume to 12,442 cubic meters and by 17% in value to USD 9.0 million during the first half of this year (See Graph above top). This increase was almost entirely accounted for by imports of red oak lumber, which is beginning to be pushed by one or two Australian importers as an alternative to native Victorian ash for stairs, windows

20

| S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S

The first half of this year saw a 35% year-on-year decrease in the volume of U.S. hardwood lumber exports to the region to 34,330 cubic meters and a 47% decrease in value to $24.8 million. (See Graph bottom left). The biggest market in the region - the United Arab Emirates - posted a 50% decrease in both the volume and value of hardwood lumber imported directly from the United States over the period and this is in line with significantly reduced construction activity during the past five months or so. It is also widely anticipated that this situation will worsen over the coming months, as so many potential construction projects have been canceled or put on hold temporarily. Dubai was set to host the World Expo this year, but this has also been postponed until late 2021 and, along with it, the race to get the site and all related infrastructure finished on time has slowed down. With hotel and F&B projects being major users of American hardwoods in the Gulf, demand is not anticipated to pick up again for many months, if not years. Market drivers for American hardwoods in Saudi Arabia are similar to in the UAE and during the January to June period of this year, exports from the United States to the kingdom were down 33% in volume and 39% in value. At the same time, U.S. hardwood exports to Pakistan were down by a more modest 15% in volume and 23% in value over the period. This is primarily because many businesses have continued to operate more or less unabated during a time when total or partial lockdowns have been in place in other countries in the region. One MENA market, which showed some surprising resilience in demand for American hardwoods over the period was Egypt. Shipments to the market actually increased by 7% in volume, while remaining unchanged in value. Rather like in Pakistan, many businesses did not shut down during the peak of COVID-19 infections. We would like to encourage you to sign-up for NHLA 2020 On Demand and join Mike Snow in an Educational Webinar entitled Covid-19, Tariffs, Trade Wars and US Hardwood Exports in the Age of Uncertainty On Thursday, September 24 at 3pm cst W W W. N H L A .C O M


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WEBINAR EDUCATIONAL SEMINARS

JOIN US For The First Virtual Event In Our 122-Year History

DAY 1: SEPTEMBER 22, TUESDAY 10-11:30am | Opening Session/ Membership Meeting NHLA will hold an opening session featuring the State of the Association address followed by Board of Mangers Elections and more

DAY 2: SEPTEMBER 23, WEDNESDAY 10-11:30am | WEBINAR ED SESSION 1 Advocacy in the Time of COVID by Dana Cole of the Hardwood Federation Sponsored by Hardwood Industries

Noon – 1:30pm | WEBINAR ED SESSION 2 Are You Operating Effectively? 4 Metrics to Track Operational Efficiency by Dana Spessert Sponsored by TRN USA Forest LLC

3:00-4:30pm | WEBINAR ED SESSION 3 Guiding Your Sales Team During and After a Crisis by Bob Graham Sponsored by King City Forwarding USA, Inc.

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23


RULES CORNER

Edger Education Can Put Money in Your Pocket. What Are You Losing? by Chief Inspector Dana Spessert

O

ver the last few months, NHLA has hosted a webinar series discussing different manufacturing processes. The outcome has been very successful. Our latest webinar as of this article, was on the topic of improving edging and trimming practices during the sawmill process. The tips discussed during the webinar were consistent with issues discovered by the NHLA Inspection Services team while conducting NHLA Quality Control checks at various sawmills over the past few years. During the Improving Edging and Trimming Practices webinar, Dr. Eugene Wengert made some important insight that I would like to share with you. 1. An edger is in the sawmill to make money, not boards! 2. All lumber going through an edger should target half the length of wane on both edges if there is not a stipulation on the purchase agreement with the customer to do otherwise. 3. If there is a stipulation on the purchase agreement, the sawmill manager should make sure that the loss of fiber on the boards for over edging is sufficiently compensated at an increased price.

over the US and Canada, and we invite you to look at our website for upcoming classes. Additionally, NHLA National Inspectors can perform in-house classes at your sawmill with your employees, just reach out to your area inspector to line-up a visit. 2. Educate the sawyer to turn the logs correctly to ensure less lumber is sent to the edger. Many times, we witness sawyers turning a log 90 degrees instead of 180 degrees, causing more boards that need edging on one side rather than both, also increasing the number of boards that need to be edged from the log. 3. Ensure maintenance is performed on the edger as often as necessary to keep all laser lights or shadow lights properly aligned. 4. Keep sharp saws on the edger to keep the boards running straight through the machine. 5. Make sure that the edger and trimmer operators are working together to make the correct choice of whether to edge, trim or both to the boards for the highest grade and volume. Allow the lumber inspector to return boards that are under edged. Once it is removed from the board, it cannot be put back on.

4. The boards being edged are not the low-grade boards, they are the boards from the outside of the log where the higher grades of lumber originate.

6. Perform regular checks at the infeed to the chipper to monitor the edger and trimmer operations.

All too often, when the NHLA National Inspectors are performing the Edger Test with our Quality Control program, they discover over edging losses of more than 150 board feet per hour.

The NHLA National Inspectors have the proper tools and skills to perform Quality Control checks on many aspects of a sawmill operation and are very happy to visit your sawmill today to get your operation on track to capitalize on your sawmill’s potential!

The loss of 150 board feet is not just fiber, it equates to a substantial loss in revenue for the sawmill operation. We have performed a number of Edger tests at sawmills and have recorded edging losses from $150,000 to $500,000 annually. This is a rather large sum of money and should not be taken lightly. There are many things that a sawmill manager can do to mitigate some of these edging losses. 1. Educate the edger and trimmer operators on the NHLA grading rules. NHLA regularly holds Intro to Hardwood Grading classes all

If you do not measure it, you cannot manage it! We would like to encourage you to sign-up for NHLA 2020 On Demand and join Dana Spessert in an Educational Webinar entitled Are You Operating Effectively? 4 Metrics to Track Operational Efficiency On Wednesday, September 23 at Noon cst

To see a full list of national inspectors, visit nhla.com/nhla-services or call me, Dana Spessert, Chief Inspector at 901-399-7551.

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


INDUSTRY INSIGHT

Did you know that it makes a difference where you place your sample boards? by Henco Viljoen, Dry Kiln Specialist at Nyle Dry Kilns

W

e are often confronted with the question of why a kiln load continuously measures higher moisture content than what the sample boards were indicating. On closer inspection, we found that without exception, sample boards at these sites have been placed inside the dunnage gaps. The answer from the operator is often, “. . . but we have always done it this way!� During an airspeed test inside these kilns, we found that air exit speeds in the dunnage gaps were, on average, at least 2x or more the speed of air between board layers. In kilns with air exit speeds on board layer level of 250 fpm, the airspeed in the dunnage gap would be 500+ fpm without exception! Not only are sample boards exposed to a lot more airflow inside dunnage gaps as opposed to boards inside bundles, but the air will also be less saturated, meaning it can take up more moisture.

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

In a perfect world, sample boards need to be exposed to the exact same conditions as the rest of the load - meaning the sample needs to come from the center of the bundles. In a track kiln, this is slightly easier, but not practical in sideloading kilns. In side-load kilns, we found that moving the board onto a short extended sticker mid-bundle level gave much better results. S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S |

25


NHLA PROVIDES EDUCATION AND TRAINING TO IMPROVE YOUR BOTTOM LINE Register for classes at www.bit.ly/NHLAcalendar.

PRESIDENT’S MESSAGE

SEPTEMBER

COVID-19 IMPACT:

At the time of publication, these educational courses are being offered. However, due to the unknowns of the COVID-19 pandemic please visit nhla.com for the latest information or call NHLA headquarters at 901-377-1818 to confirm that these courses are taking place.

OCTOBER

14 Finished Goods Webinar Series 10am cst Rough Mill: Yield Improvements

Learn ways to obtain more usable product from the raw material to increase profits.

OCTOBER

!26-29

New

Complete Kiln Drying Lumber Workshop

From fundamentals to advanced: students will learn not only what to do but how and why. New kiln operators, trainees, supervisors and managers can advance their skills by attending.

Presenter: Gene Wengert – “The Wood Doctor�

Venue: NHLA Headquarters Memphis, TN

Register At: www.nhla.com/education/ webinars/

Instructor: Gene Wengert – “The Wood Doctor�

26

Sponsored by

| S E P T E M B E R 2 0 2 0 H A R D W O O D M AT T E R S



OCTOBER

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Finished Goods Webinar Series 10am cst

Finished Goods Webinar Series 10am cst

Gluing Wood: Tips for Great Gluing Results

Machining: Defects and Cures

Better gluing translates into improved customer satisfaction with improved profits.

Increase productivity and yield by understanding proper techniques.

Presenter: Gene Wengert – “The Wood Doctor�

Presenter: Gene Wengert – “The Wood Doctor�

Register At: www.nhla.com/education/ webinars/

Register At: www.nhla.com/education/ webinars/

OCTOBER

JANURAY

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4-March 26

Advanced Kiln Drying Lumber Workshop

Inspector Training School 194th Class

New

This class is designed for people who have some experience running drying equipment. Basic procedures such as measuring moisture content are NOT covered. Students should bring real-life problems to the instructor for evaluation, discussion and resolution. Venue: NHLA Headquarters Memphis, TN Instructor: Gene Wengert – “The Wood Doctor� Sponsored by

Traditional 12-week hands-on training to achieve the certificate of completion in Hardwood Lumber Inspection. Venue: NHLA Headquarters Memphis, TN Instructor: Roman Matyushchenko, Associate Dean of the Inspector Training School



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 or to post a job, visit www.nhla.com/industry-services/job-board. HARDWOOD LUMBER INSPECTOR – LEITCHFIELD, KY Baillie Lumber is in search of a Hardwood Lumber Inspector for its Leitchfield, KY facility. If you have experience as a hardwood lumber inspector/ grader, this could be a great fit for you. This is a full-time opportunity working for a world-class hardwood lumber manufacturer. SKILLS & EXPERIENCE REQUIRED • NHLA certified or equivalent experience • Minimum of one (1) year experience grading green and kiln-dried domestic lumber JOB RESPONSIBILITIES • Visually inspects green and/or dry hardwood lumber according to species, grade, and dimension. • Grade at production rates, while maintaining the required grading accuracy. • Work safely and help maintain a safe work environment SALARY & BENEFITS Competitive Pay, Full-Time Hours, Overtime Hours, and Pay Full Plan of Benefits, Monday-Friday First Shift HOW TO APPLY Send your resume to: llandahl@baillie.com Baillie Lumber 279 Shaw Station Rd. | Leitchfield, KY 42754 716-649-2850 | www.baillie.com LUMBER INSPECTOR, BRENTWOOD, NH Highland Hardwoods is currently looking for a hardwood lumber inspector to work at our Hardwood Distribution Yard in Brentwood, NH. Must be a highly motivated self-starter looking for a good long-term future with a quality company. SKILLS & EXPERIENCE REQUIRED The applicant must have past experience with lumber grading as well as competent math skills. Fork Lift experience preferred. SALARY & BENEFITS Excellent working conditions as well as competitive wages and benefits. HOW TO APPLY Send your resume to: rlang@highlandhardwoods.com Highland Hardwoods 407 Route 125 | Brentwood, NH 03833 603-679-1230 | www.highlandhardwoods.com

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

LUMBER INSPECTOR – LATROBE, PA Gutchess Hardwoods, Inc. has a career opportunity available on 2nd shift at their hardwood processing plant in Latrobe, PA. The work environment is non-climate controlled and the inspector position is of a physical nature. SKILLS & EXPERIENCE REQUIRED • High School diploma or equivalent. • NHLA lumber inspection certification required, as well as 2-5 years NHLA inspection including green and dry lumber. • Must be dependable, safety-conscious, and team-oriented. • Must have positive work and attendance history. • Meets all quality standards, with the ability to work in a fast-paced process. JOB RESPONSIBILITIES • Inspects green and dry lumber according to NHLA grading rules for each species with thorough knowledge of charts and key definitions. • Prepares grade audits daily and works with the inspection team to maximize accuracy. • Coordinates the speed of lumber flow with machine operators. • Develops knowledge and skills at contributing machine centers. • Works with team members to ensure production goals are met while maintaining quality. • Meets all safety requirements and works effectively within a strong safety culture. • Requires safety glasses, hearing protection, hard hat, and steel-toed work boots to be worn at all times; and other protective equipment including face mask as required. SALARY & BENEFITS Excellent training and mentor programs. Exceptional benefits program. Hourly rate and 20% differential for 2nd shift. Health, dental, and vision insurance. 401k eligible upon hire, and company match 50% up to 8%. ESOP company with full vesting at 3 years. Company-paid life insurance and short-term disability insurance. Supplemental life and long-term disability available. Employee referral program. HOW TO APPLY Send your resume to: mekalning@gutchess.com Gutchess Hardwoods, Inc. 185 Devereux Drive | Latrobe, PA 15650 724-537-6447 | www.gutchess.com (Continued on page 28)

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27


PRESIDENT’S MESSAGE

NHLA JOB BOARD

Here you will find our current job listings. To see more details or to post a job, visit www.nhla.com/industry-services/job-board. (Continued from page 27) LUMBER INSPECTOR – SALAMANCA, NY Salamanca Lumber Co. is seeking a lumber inspector to grade both green and kiln-dried lumber. SKILLS & EXPERIENCE REQUIRED NHLA grading experience preferred. SALARY & BENEFITS Competitive salary, life insurance, low deductible health insurance, 401k, PTO, Attendance bonuses, weekly payroll frequency, paid vacation. HOW TO APPLY Send your resume to: nickskudlarek@salamancalumber.com Salamanca Lumber Co. Inc. 59 Rochester St. | Salamanca, NY 14779 716-474-5632 | www.salamancalumber.com LUMBER GRADER – ALICEVILLE, AL Buchanan Hardwoods is in search of a full time Lumber Inspector to grade KD lumber (predominantly Red Oak, White Oak, Ash, and Poplar.) SKILLS & EXPERIENCE REQUIRED • NHLA Inspector Training School Graduate is preferred, but not mandatory. SALARY & BENEFITS • Competitive wage. Health, dental, and life insurance. 401(k) retirement plan. HOW TO APPLY Send your resume to: johnh@buchananhardwoods.com Buchanan Hardwoods PO Box 424 | Aliceville, AL 35442 205-779-7050 | www.buchananhardwoods.com

LUMBER INSPECTOR - NEW LONDON, WI Granite Valley Forest Products in New London, WI is seeking a full-time lumber inspector. SKILLS & EXPERIENCE REQUIRED • High School Diploma or GED • NHLA certification preferred EXPERIENCE REQUIRED • Previous experience in the hardwood lumber industry preferred. • Basic math skills • Understanding of NHLA standards and markings • Ability to quickly solve problems JOB RESPONSIBILITIES Accurately inspects the lumber for quality and color to ensure the products are meeting customer needs. ESSENTIAL FUNCTIONS The duties identified below are the essential functions of the position. Employees must be able to fulfill these functions in a consistent state of alertness and in a safe manner. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. • Conduct activities in a safe manner, follow corporate safety guidelines and requirements, use personal protective equipment, and proactively address any unsafe conditions observed. • Maintain housekeeping and safety compliance, inspection ready at all times. • Inspects lumber using NHLA and proprietary grading rules and standards. • Ensures customer specifications (length, width, grade, etc.) are being met. • Operates the remanufacturing saw. • Maintains production flow so customer orders are completed in a timely manner. • Keeps workspace and surroundings clean and neat to foster productivity and efficiency. • Other assignments as made by management. SALARY & BENEFITS Medical, dental, and vision coverage along with additional voluntary benefits including STD, LTD, insurance. We offer a 401(k) plan, paid holidays, and vacation. HOW TO APPLY Send your resume to: bsather@granitevalley.com Granite Valley Forest Products 500 Co Rd S | New London, WI 54913 920-250-5425 | www.granitevalley.com

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


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