May 2023 Hardwood Matters

May 2023

Shifting

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REGISTRATION OPEN FOR CONVENTION

BUILDING CONNECTIONS

EXECUTIVE COMMITTEE

Jon Syre, Chairman Cascade Hardwood, LLC

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

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

MISSION LEADERS

Sam Glidden, Unique Services GMC Hardwoods, Inc.

Ray White, Rules Harold White Lumber Inc.

Joe Pryor, Industry Advocacy & Promotion Oaks Unlimited

Rich Solano, Structure Pike Lumber Company, Inc.

Stephanie VanDystadt, Membership & Networking DV Hardwoods, Inc.

COMMITTEE CHAIRS

Burt Craig, Membership Matson Lumber Company

Rob Cabral, Promotion & Advocacy Upper Canada Forest Products, Ltd.

Dennis Mann, Convention Baillie Lumber Co.

Tom Oiler, Inspection Services Cole Hardwood, Inc.

Brant Forcey, ITS/Continuing Education Forcey Lumber Company

George Swaner, Communications & Marketing Swaner Hardwood Co., Inc.

Joe Snyder, Rules Fitzpatrick & Weller, Inc.

HARDWOOD MATTERS

THE VOICE OF THE HARDWOOD INDUSTRY

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

THE MISSION OF NHLA

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

ADVERTISER INDEX

NHLA STAFF

Dallin Brooks, Executive Director dallin@nhla.com

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

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

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

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

For advertising contact:

John Hester

j.hester@nhla.com or 901-399-7558

Vicky Simms

v.simms@nhla.com or 901-399-7557

Amanda Boutwell, Marketing and Communications Manager a.boutwell@nhla.com

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

Rachel Spiers Blossman, Digital Media Specialist r.blossman@nhla.com

MEMBERSHIP

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

Vicky Quiñones Simms, Membership Development Manager v.simms@nhla.com

IT'S TIME FOR THE HEAVY LIFTING!

The first Strategic planning committee meeting was held virtually on September 27th, 2022. Since that meeting, the strategic planning committee has met monthly. Discussions were mainly held virtually, with one in-person meeting during the IHLA convention in February. The commitment to the process outlined by Dallin Brooks by both NHLA staff and committee members has been impressive! Thank you to all involved. Excellent questions have been asked; old theories have been tested; new ideas have been embraced and discarded, and a new NHLA strategic plan has emerged out of the refining process!

“Be real and adjust your strategy according to honest results”

- Charles Caleb Colton

I found this quote quite accurate as I have thought back over the past several months of meetings about the strategic planning process. All aspects of NHLA have been reviewed with a critical eye. New objectives are being adopted for education services, marketing, networking, lumber services, and the inspector training school. NHLA is now better prepared to move forward, react, and adapt to the ever-changing hardwood lumber environment, all while remaining steadfast to the goal of the NHLA: grow and stabilize the hardwood industry!

While I am grateful that the plan is completed, and adopted by the board and embraced by staff, now comes the heavy lifting for every one of us!

“Strategy is a commodity; execution is an art” -Peter Drucker

I certainly think we all can relate to Drucker’s quote. Whether it is a machinery installation or a new sales idea, the written and adopted strategy for success is only realized when individuals really care about its success and have been given the necessary tools to succeed. I have NO doubt that the NHLA staff and Dallin care about the success of the NHLA. Now we all need to give them the tools to succeed!

Reviewing your commitment to the NHLA both in terms of money and time, I encourage all of you to analyze how else you would individually procure the services, benefits, and results that NHLA, the Real American Hardwood Coalition, and the Hardwood Federation each successfully provide to your company. I investigated possible alternatives long ago, and I was unable to identify an efficient and economical path with similar benefits. NHLA delivers benefits and value that are unmatched in our industry. Now with a new and updated strategic plan, NHLA is poised to further enhance and serve our industry -- provided we all step up and equip them with the tools to create the art, which is the successful implementation of great ideas and innovative services!

I encourage you all to please review your personal and your companies’ commitment to NHLA regarding your money and time. The collection of strategic planning committee members and the process we went through really showed me yet again that NHLA’s membership is the Association’s greatest asset!

Thank you for taking the time to read my letter. Best wishes to you, your families, and your businesses. I look forward to supporting NHLA, RAHC, and the Hardwood Federation together as an entire industry.

Jon Syre NHLA Chairman | Cascade Hardwood

BUILDING MORE COMMON GROUND

By DALLIN BROOKS, Executive Director

It is a great honor to be the Executive Director of the National Hardwood Lumber Association. As I often tell people, I can influence an entire industry for good or bad. Of course, I only ever want to do good. But as you know, you can’t make everybody happy. I have already heard contradictory “NHLA needs to…” from a number of companies. Our efforts to do good don’t benefit everyone equally, but just because some members will not benefit as much as others doesn’t mean we shouldn’t do it. So, I want to put forward an idea to you. Identify something that NHLA does that benefits you. Once you have found it, let us know how we can improve it, because improving it for you probably helps others too. We have far more common issues than competing issues at NHLA.

We must hear compliments and complaints to improve customer/ member service at NHLA. The only way to focus on each individual member is to listen to what helps and hinders your business and membership. Things are not perfect at NHLA or in the hardwood markets. But we will gladly try to improve what we can at NHLA and in the overall hardwood markets.

I wish everyone could hear what I am hearing and share their opinions with me. I know that isn’t possible, but together as a staff, we will work hard to get as close as possible.

First, I must say that if you are not fully engaged with NHLA, you get less out of NHLA. That has been made clear in the limited time I have been in this position. Companies who use NHLA services all tell me, “There is value in each of them.” Second, if you reach out to any NHLA staff member, they will provide you with good customer service. Share and see that we care, we will be more flexible, we will work hard to help your business grow, and we will work to stabilize the hardwood markets. Finally, I would like to say that giving your BEST benefits everyone. It is easy to see that a mill fire impacts everyone else’s insurance premiums, and the same for truck accidents, but it’s harder to see that the markets you develop help everyone too.

A member once asked, “Why are you working to develop the guardrail post-market? I don’t sell guardrail posts, and this project costs the association a lot of money.” My reply was simple. What will it cost you to have the mill 50 miles away stop selling guardrails posts and start selling lumber? I know it is not your market, but it keeps your competitor out of your market, which is worth protecting. The same is true for all other work that we do. It might not benefit you directly, but helping one market develop products will help your other markets too. We all start on a single common ground of milling hardwood lumber. Where it goes from there is what makes each of you valuable and profitable. So, the work we do for one does benefit everyone.

Your common issues are common ground, but what makes you different is also common ground, and NHLA is here to help everyone do everything they can to build that common ground higher so we can all benefit.

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

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S c a n t o R e q u e s t a Q u o t e

INSIDE NHLA

UPCOMING FREE WEBINARS

NWFA: HARDWOOD FLOORING INDUSTRY UPDATE

Wednesday, May 17, 2023, at 12 Noon (Central time)

Hosts: John Forbes and Michael Martin with NWFA

Join NHLA and NWFA for a webinar that will provide you with a better understanding of where the hardwood flooring market is, where it is going, and the major influences and trends affecting it. You can learn about the NWFA resources available to you and your team, including how the newly developed wood flooring Environmental Product Declarations (EPD) clearly position wood flooring as the least impactful flooring material and wood products in general as the most significant potential mitigator of climate change.

You will also learn about the newly launched NWFA Engineered Refinishable program, which differentiates real wood products from look-a-likes, encourages the use of longer-life products, and brings clarity to the wood flooring channel.

Who Should Attend? Owners, salespeople, marketing folks, and all who have an interest in learning more about the wood flooring industry, NWFA, and their newly developed environmental tools and programs which benefit the entire wood products industry.

Register online at https://nhla.com/nwfaupdate

HARDWOOD MARKET UPDATE AND OUTLOOK

Wednesday, May 31, 2023, at 12 Noon (Central time)

Host: Dan Meyer

Join Dan Meyer with the Hardwood Review for this webinar that will cover recent hardwood market movements (prices, domestic/ global demand, supply, etc.) and the near-term outlook.

Specific attention will be given to European markets for North American hardwoods and to the results of a May survey of North American industry contacts.

Who Should Attend? Buyers and sellers of hardwood lumber, production planners and managers, and others interested in hardwood market trends.

Register online at https://nhla.com/hardwoodmarketupdate

NHLA IN KENTUCKY!

NHLA attended the Kentucky Forest Industry Association’s Annual Meeting on March 28-30. It was an excellent opportunity for NHLA to network with our members and industry friends. MAY

FIND NHLA AT THESE UPCOMING EVENTS

Above: Ray White, Jason Goodman, John Hester, and C. B. Goodman.

Left: Troy Jamieson with Merrick Hardwoods, Inc. and John Hester.

USNR

Member Since 1974

USNR is the largest supplier of equipment and technologies for the wood processing industry. It is also the longest-running sustaining member of NHLA, joining in February of 1974. USNR’s history dates back to the 1850s, and since then, it has brought together some of the most respected names, innovative new technologies, and designs. With hundreds of patents to its credit, USNR has continually pushed the industry forward with investment and innovation. NHLA is proud to recognize USNR as our Member of the Month! Thank you for your 49 years of membership!

monthly 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

catalog advertising our equipment

monthly catalog. Call

and

We also have a 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

BUILDING CONNECTIONS

By JOHN HESTER, Chief Development Officer

Many of you would agree that the first quarter of 2023 has been a whirlwind of travel. One of our primary goals at NHLA this year is to see as many Members and industry peers as possible. It’s impossible to get an authentic feel for what’s going on in the industry if you don’t get out and talk to the industry. An excellent way to stay informed, connect with others, and keep up with the latest developments is to attend industry events and conferences. I may be a little biased, but it is tempting to tell you that the only event you need to attend is the NHLA Annual Convention and Exhibit Showcase, but we all know that’s not true. There are so many events that are well worth your time and effort.

Most recently, I had the pleasure of attending the Hardwood Manufacturers Association’s (HMA) convention in Nashville, Tennessee, and the Kentucky Forest Industry Association’s (KFIA) annual meeting in Lexington, Kentucky. At the HMA conference, I was struck by the positive energy. The program Linda Jovanovich and Ian Faight put together was incredibly educational, from Mike Snow’s insights into the export markets to Judd Johnson’s analysis of the domestic market and market trends. Steve James, CEO of Frank Miller Lumber Company, gave one of the best presentations on effective leadership and communication that I’ve heard, and the networking opportunities were exceptional. Visiting with our Members is my favorite part of the job. Gaining their insight and knowledge firsthand is invaluable.

At the KFIA meeting, there was no shortage of valuable takeaways. I was equally impressed by the caliber of presentations and the quality of networking opportunities. Bob Bower and Michelle Brewer did an outstanding job of creating an environment that was both

welcoming and informative, and the nearly 400 attendees made for a dynamic and engaging event.

More than anything, what stands out about these conferences is the sense of community and camaraderie they foster. It’s heartening to see so many people who are passionate about the hardwood lumber industry come together to learn from one another and build meaningful connections.

As we move forward into the rest of the year, I’m excited about new opportunities. Whether through conferences, participating in webinars, or connecting with individuals at their businesses, I know there is always more to learn. I look forward to seeing you on the road soon.

John Hester NHLA Chief Development Officer j.hester@nhla.com | 901-399-7558

Priming the Pump for an Ongoing Supply of Talent

By ALLISON DEFORD, Executive Director North American Forest Foundation .

The wood products industry today is vibrant, engaging, doing valuable work, and filled with good people, yet as we look to the future, it needs more trained professionals and leaders to fill many roles.

The health of the industry—and the planet—demands that we close the skill gaps and attract the energy, talent, and ingenuity of a new generation.

That’s a big part of our mission at the North American Forest Foundation (NAFF). We are driven to inspire interest and cultivate a passion for the industry. Education is our primary approach, knowing that today’s youth will become tomorrow’s industry leaders.

Kids are curious, and young minds are receptive to learning about the world, how things work, and where things come from. We want to ensure that what they learn about wood and its role as a renewable resource is balanced and based on science, not slogans.

Grasping complex truths and concepts of sustainable forestry requires dedicated teaching and detailed explanations. So, we use classroom education tools to plant seeds of understanding about trees, wood, and sustainable forestry in children’s hearts, minds, and imaginations with a goal of reaching 1,000,000 children by 2030.

NAFF provides classroom teachers of grades K-3 with free “The Truth About Trees” educational kits. Age-appropriate interactive materials tell children (and teachers) the true story of wood. Science-based truth about trees dispels myths and reaffirms the concept of trees being a renewable resource. As of the end of 2021, NAFF provided over 1,200 kits, reaching an estimated 300,000 kids.

The Forever Forest Children’s Museum Exhibit that travels around the country is another endeavor we support. Established in 2017, the exhibit will travel to 30 states in ten years, reaching more than 630,000 children and adults, teaching the lumber journey, and exploring the value of sustainable forestry.

The overwhelmingly positive response to the Forever Forest Exhibit and free classroom kits has led us to the beginning stages of designing an app for junior high students (grades 6-8), which is expected to launch in 2024.

The more game-ified educational program will reinforce awareness and learning about sustainable forestry and wood products through age-appropriate topics and help kids see the potential for careers in the industry. A corresponding website will make them aware of all the companies, schools, and career paths available to them.

Accomplishments have been significant since we embarked on this adventure. It’s a journey, one we’re happy to share with those interested in partnering with us:

• Donations. Purchase kits at any time. Partner with us as a matching sponsor for our Back-to-School Kit Drive in August or for Giving Tuesday, November 28.

• Corporate sponsorship of the Junior High app. Become a $10K or higher sponsor (total estimated cost is $250,000). We expect the app to be in constant use for five years before needing an update, giving sponsors broad exposure and an active role in expanding awareness and education across a vast population of young people.

• Start the conversation. Meet kids where they are–request a kit and volunteer to teach it in your area.

We’re very optimistic about the future. Together we’re stimulating awareness and interest in the next generation to keep a steady stream of talent flowing into the industry for years to come.

For more information about NAFF or how you can support our educational endeavors, email adeford@northamericanforestfoundation.org or visit https://northamericanforestfoundation.org/.

Allison DeFord is the Executive Director of North American Forest Foundation (NAFF).

Like a Bad Penny, Tax Increase Ideas Keep Surfacing in Washington

By DANA COLE, Executive Director of the Hardwood Federation

Submission of the President’s budget to Congress is an annual ritual that typically occurs this time of year and officially kicks off the Congressional appropriations process. And in keeping with tradition, the Biden Administration unveiled its proposed Fiscal Year 2024 budget on March 9. As expected, the proposal includes billion-dollar+ increases for most federal agencies and departments. What attracted our attention, though, is it also contains some hefty revenue raisers on small and medium-sized Main Street businesses. Among the more egregious provisions is a proposal to expand the Net Investment Income Tax (NIIT) to include the active income of pass-through business owners. Recall that the original NIIT purposefully excluded the business income of active owners because it was perceived as a tax on small businesses. The Administration is proposing to reverse course on this front by characterizing this exclusion as a “loophole.”

The proposal would increase the NIIT’s rate from 3.8 percent to 5 percent. That would raise the top rate paid on all S corporation income to 42 percent, or twice the current rate on large public companies structured as C Corporations. When tax rates are slated to increase in 2026, the top S corporation rate will rise to nearly 45 percent. The Joint Committee on Taxation scored the NIIT expansion as raising $252 billion over ten years. Combined with the scheduled rate increase on S-Corporations in 2026, it is estimated that it would result in a tax increase on small businesses that exceeds $300 billion. The Hardwood Federation, joining other association representatives of the broader business community, signed a letter to Congressional leaders opposing this proposal.

Also included within the U.S. Department of Treasury’s General Explanations of the Administration’s FY2024 Revenue Proposals, colloquially known as “The Greenbook” (a document to explain the revenue proposals included in the President’s Budget) there are other proposed revenue raisers that are worth flagging. While there is no proposed elimination of the “stepped up in basis” that was floated during the Build Back Better legislative exercise, the Administration is

come recognition event, meaning that the assets would be considered income and be taxed at fair market value. Under current law, taxpayers may transfer wealth at death without triggering income taxes.

The proposal would also impact the flow of wealth into or out of a grantor trust. Under the President’s budget, any deposits or withdrawals from a grantor trust would be considered a “sale” for income tax purposes and trigger a capital gains tax. Currently, these transactions are tax-free.

On the corporate side, the proposal would increase the corporate tax rate to 28 percent from the current 21 percent rate.

It is important to keep in mind that Administration budget proposals are generally messaging documents to signal to Congressional appropriators the President’s policy priorities. The divided nature of this Congress, with each party maintaining slim majorities in one chamber, means these proposed revenue raisers will face stiff headwinds on the Hill. The Federation will, however, be tracking these proposals closely for any traction they may find in the 118th Congress.

In response to the President’s budget priorities and input from their constituents, Congressional leaders are taking tax-related actions of their own. Rep. Tracey Mann (R-KS) is leading a resolution in the House to highlight the importance of maintaining a stepped-up basis for preserving small businesses. The resolution notes that eliminating a stepped-up basis would threaten the ability of small business owners to make generational transfers of their operations. Rep. Adrian Smith (R-NE), a member of the House Ways & Means Committee, has also lent his name to the resolution.

Earlier this month, a bipartisan group of Senators led by Senators Maggie Hassan (D-NH) and Todd Young (R-IN) introduced

legislation to extend the research and development tax credit that expired last year to apply to more startups and small businesses. Specifically, the bill would roll back a provision of the Tax Cuts and Jobs Act (TCJA) of 2017 law that (starting in 2022) requires companies to amortize their R&D costs over five years rather than the year in which they are incurred. It would also expand the eligibility for the refundable research tax credit and would gradually raise the cap for that credit for small businesses and startups. Other co-sponsors of the bill are Senators Cortez Masto (D-NV), Barasso (R-WY), Sinema (D-AZ), Tillis (R-NC), Feinstein (DCA), Daines (R-MT), Kelly (D-AZ), Hagerty (R-TN), Murray (D-WA) and Moran (R-KS).

Extending the credit is a top priority of the business community and was in the mix as part of omnibus appropriations bill negotiations late last year, but an agreement could not be reached. Also in that mix, and arguably more important for our sector, is extending the 100 percent bonus depreciation benefit of the TCJA. Recall that full expensing ratcheted down to 80 percent at the beginning of this year and will decrease by 20 percent each year until fully phased out in 2027. Legislation has yet to be introduced to extend this benefit retroactively to January 1, 2023, but we know this issue is a priority for House Ways & Means Committee Chairman Jason Smith (R-MO). Advocating for a retroactive extension of this critical tax benefit will be a centerpiece “ask” during our fly-in in mid-June.

The Hardwood Federation is also working to push for legislation that will restore the industry’s ability to take full advantage of a tax break, known as the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) deduction, for interest incurred on business loans, a provision which expired last year. Again, this is a broader tax issue of concern to business associations, large and small. Sawmills and other capital-intensive operations rely on tax breaks directed at financing costs to raise capital, hire new workers, and expand operations. During the past year, interest rate hikes have led to higher financing costs and are taking a bite out of revenues. Sen. Shelley Moore-Capito (R-WV) is expected to lead the charge on legislation in the near future.

As always, the Hardwood Federation team is close to the action on Capitol Hill and will continue to educate lawmakers about the need to preserve these key tax benefits and our concerns with any tax proposal that may affect our businesses or the ability to transfer them to future generations.

TV6000 TWIN VERTICAL SAW

MR6000 GANG SAW

cautiously optimistic

Hardwood Markets: Cautiously Optimistic

By AMANDA BOUTWELL, Marketing Communications Manager

Domestic markets for hardwood lumber have seen significant shifts over the past five years due to Covid-19, supply-chain issues, and global politics. It’s been tough for the hardwood industry, but there is a silver lining. As NHLA has traveled across the globe to attend industry trade shows, the two words that keep coming up regarding the outlook for 2023 are “cautiously optimistic.”

The biggest driver of hardwood demand is the housing market, which is on shaky ground. In January (the most recent data available at press time), housing permits, completions, and new sales were positive (month-over-month), which resulted in rising demand. Nevertheless, housing starts have suffered due to increasing mortgage interest rates (which have more than doubled in the last 12 months) and artificially inflated home prices. However, people with older homes continue to remodel rooms like kitchens and bathrooms, which has positively affected domestic hardwood markets. Home remodels are expected to grow modestly in 2023, increasing as much as 10.2 percent from 2022.

One of the primary challenges facing the hardwood lumber industry is look-alike products. To combat this, NHLA is involved with the Real American Hardwood Coalition (RAHC), donating 5% of all

member dues to further the Coalition’s mission of promoting the benefits of real American hardwood lumber to consumers.

NHLA has also received a grant to work with the U.S. Forest Service to promote the use of hardwood lumber. Dallin Brooks, Executive Director of NHLA, explains, “Since the 2008 housing crash, the hardwood market has struggled to rebound. The markets for graded hardwood lumber dropped from highs above 6 billion board feet and remained around 2 billion board feet for over 14 years. Meanwhile, the US economy’s GDP, housing starts, and repairs and remodeling expenditures have all grown over that same length of time.”

Brooks continues, “The objective of NHLA partnering with the Forest Service is to grow and stabilize the hardwood lumber market and industry. The first goal to accomplish this objective is to create and distribute content with hardwood information targeted for architects, specifiers, designers, structural engineers, and other hardwood users. The second goal is to enhance communication with hardwood sawmills about optimization and education services provided by the Forest Service, NHLA, and other organizations to improve their business operations.”

Some hardwood sectors have positive outlooks for the coming months. For example, the market for hardwood cabinets is experiencing market growth. The NKBA/John Burns Kitchen & Bath Market Index (KBMI) predicts a 6.5 percent increase in the cabinet market (on average) in 2023 compared to 2022. This expected growth comes primarily from smaller projects, with KBMI reporting that significant home improvement projects are now being broken down into smaller, more affordable undertakings by homeowners. At press time, KBMI claims the outlook for the first quarter of 2023 is a 2.7 percent increase from the fourth quarter of 2022.

Amanda Conger, the Executive Director of the Cabinet Makers Association, says, “Speaking on behalf of the industry’s smaller shops who handle custom projects, both residential and commercial, I can tell you that they are busier than ever. Lead times are pushed out six months or more. Although business is booming, they struggle to meet customers’ demands while managing the continued stress on the supply chain.”

Betsy Natz, the CEO of The Kitchen Cabinets Manufacturers Association (KCMA), has plans to release the results of a survey that speaks to domestic markets later this month (May 15). NHLA will share the results of the KCMA survey in the future.

The hardwood flooring sector is also optimistic. According to the latest Industry Outlook survey by the National Wood Flooring Association (NWFA), the wood flooring industry is hopeful for 2023, with 39 percent of NWFA members reporting they expect sales to be up three to eight percent and 40 percent of respondents expecting sales to be flat from 2022.

NWFA President/CEO Michael Martin urges temperance, saying, “Challenges remain, including supply chain disruptions, labor shortages, economic uncertainty, and competition from look-alike products. NWFA is helping to address competition from look-alike

products with its Real Wood Real Life consumer campaign and its participation in the Real American Hardwood Coalition.”

The post-pandemic era has not been as kind to the furniture market. A new survey by Smith Leonard (a furniture industry consultant firm) shows that the furniture industry is still experiencing a slowdown. Year-over-year stats aren’t relevant because of the spike in purchasing due to the COVID-19 pandemic. Furniture Today quotes Ken Smith (the co-founder of Smith Leonard) as saying, “77% of our (survey) participants reported negative growth in orders compared to January 2022.” However, this negative growth is being compared to January 2022, when furniture markets were riding high on the wave of remodeling brought on by the pandemic. According to Statista, furniture markets are expected to rise annually by 3.98% (CAGR 2023-2027).

Other segments of the hardwood lumber market are faring much better. Nate Irby, the Executive Director of the Rail Tie Association (RTA), is looking forward to a strong 2023, saying, “Due to current low inventories of railroad crossties and timbers on hand, we postulate demand for hardwood tie and timber products will remain high for the next 12 to 18 months. We remain supremely hopeful that sawmill operators can find a sustainable sawing solution based on current market dynamics. Ties will continue to help carry many mills for the foreseeable future.”

Irby also points out, “We cannot afford to lose any more capacity and repeat the 2008 Great Recession scenario of mass permanent closures of sawmills. As aforementioned, overcoming the low volume of ties that have been produced over the last two years will take time to recover, while our supply chain constituents of all varieties are facing sustained labor inconsistencies and parts/equipment shortages, which are preventing them from operating at higher production levels.”

The hardwood lumber industry anticipates seeing expansion throughout 2023. Yet, it’s critical to remember that the hardwood industry is competitive, making it crucial for mills to be informed on trends and prepared for market changes. John Hester, the Chief Development Officer at NHLA, encourages a positive outlook. “As someone who has traveled extensively across the country this year,” Hester says, “I’ve noticed a pervasive feeling of hopefulness within the industry. Despite waiting for prices to rebound, businesses are keeping busy, and market trends suggest that we may see even more growth this year.”

Sources:

1. National Association of Home Builders, https://www.nahb.org/en/news-and-publications/press-releases/2021/06/us-housing-starts-expected-to-reach-14-million-in-2023.aspx

2. Hardwood Floors Magazine, https://hardwoodfloorsmag.com/2022/11/04/hfm2023-industry-outlook/

3. Virginia Tech, Virginia Cooperative Extension, and the U.S. Forest Service, https:// woodproducts.sbio.vt.edu/content/dam/woodproducts_sbio_vt_edu/housingreports/2023-housing-report/casa-2023-01a-january-main.pdf

4. MarketResearch.biz, https://marketresearch.biz/report/hardwood-lumber-domestic-market

5. Global Market Insights, https://www.gminsights.com/industry-analysis/hardwoodlumber-market

6. Grand View Research, https://www.grandviewresearch.com/industry-analysis/ hardwood-lumber-market

7. Fortune, https://fortune.com/2023/02/08/lumber-prices-housing-market-fastmarkets-5-wood-predictions-2023/

8. Furniture Today, https://www.furnituretoday.com/financial/economy-and-furniture-industry-continue-in-a-state-of-flux-says-this-industry-analyst/

9. Statista, https://www.statista.com/outlook/cmo/furniture/united-states

“Speaking on behalf of the industry’s smaller shops who handle custom projects, both

I can tell you that they are busier than ever. Lead times are pushed out six months or more.”

THE EARLY BIRD GETS THE WORM, BUT IS IT SOUND?

By DANA SPESSERT, Chief Inspector

The NHLA Rules have evolved to accommodate the natural characteristics of many hardwood species. These variations sometimes have similarities that cause some confusion. In this month’s article, I will discuss a few Rules that get combined and how they should be handled.

Soft maple is a species that has variations based on the geographic regions in which it grows. For example, in the Appalachian and Northern territories of the US and Canada, soft maple tends to be separated on a color sort, mainly Sap or White, referring to the sapwood content in the Cuttings. In the South and Midwest regions, there may be WHND (Worm Holes No Defect), and WHAD (Worm Holes A Defect, standard) sorts that the facility may utilize and sell the lumber accordingly.

I would like to focus on the WHND and Sound Wormy Rules. First, let’s distinguish between WHND and Sound Wormy.

Sound Wormy is a Standard Grade defined on page 19 of the 2023 NHLA Rules Book, under the heading of “Sound Wormy” paragraph 87:

“Sound Wormy shall grade not below No. 1 Common except that the natural characteristics of worm holes, bird pecks, stain, sound knots not exceeding 3/4” in diameter are admitted. Other sound defects which do not exceed in extent or damage the defects described are admitted in the cuttings. Unless therwise specified, Sound Wormy shall include the full product of the log in No. 1 Common and Better Sound Wormy.”

WHND can be found on the same page (page 19) under the heading “WHND”:

“When lumber is purchased under specifications combining the term “worm holes no defect” with the names of standard grades

such as “FAS, worm holes no defect,” “No. 1 Common & Better, worm holes no defect,” the required yield shall be the same as specified under Standard Grades, except that worm holes, bird pecks and streaks are admitted without limit.”

As you can see in the Sound Wormy grade, stain and up to ¾” sound knots are admitted, along with many other sound defects. In the WHND sort, only worm holes, bird pecks, and streaks are admitted.

On page 25 of the Rules Book, under the Soft maple heading, you will find:

“Note: When Soft Maple is sold WHND (worm holes no defect) knots or their equivalent, not exceeding 1/4” in their greatest dimension, sound or containing unsound centers not over 1/8” in diameter, shall be admitted in the cuttings.”

With this note added to soft maple, any Standard Grade of soft maple, when it includes WHND (sometimes shortened to ND), would be allowed to have in the Clear Face Cuttings, worm holes, bird pecks, streaks, and knots or their equivalent, not exceeding 1/4” in their greatest dimension, sound or containing unsound centers not over 1/8” in diameter.

Nowhere in the description of WHND does it allow stain that would not surface off to Standard Surfaced Thickness in the Cuttings.

I trust that has made things clear; if you have any questions about WHND, Sound Wormy, or any other species exception.

If you have any questions please reach out to me at d.spessert@nhla.com or 901-399-7551

65th NHLA Annual Convention

NHLA PROVIDES EDUCATION AND TRAINING TO IMPROVE YOUR BOTTOM LINE

MAY

May 8-12

Intro to Hardwood Lumber Grading plus Log Scaling/Grading

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

Location: Glenville, WV

Instructor: Mark Depp, National Inspector

JUNE

June 5- July 28

Inspector Training School

202nd Class

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

Venue: Venango Technology Center

Location: Oil City, PA www.nhla.com/PAsummer

JUNE

June 5- July 28

Inspector Training School

203rd Class

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

Venue: Northcentral Technical College

Location: Antigo, WI www.nhla.com/WIsummer

June 12-15

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: Yoder Lumber Co., Inc. Location: Millersburg, OH

Instructor: Mark Depp, National Inspector

AUG

Aug. 21- Sept. 1

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

SEPT

Sept. 6-8

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

Sept. 25- Nov. 17

Inspector Training School

204th 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

OCT

Oct. 23-27

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: Wood-Mizer, LLC Location: Indianapolis, IN

Instructor: Kevin Evilsizer, National Inspector

NHLA JOB BOARD

YARD SUPERVISOR SALAMANCA LUMBER COMPANY, INC.

The Salamanca Lumber Company hardwood concentration yard focuses on the export of hardawood lumber and is seeking a reliable individual to fill a full-time position. Responsible for overseeing daily operations, which include performance and maintenance of all production and department personnel and corresponding administrative duties.

Skills & Experience Required

• Experience in Kiln-Drying Lumber REQUIRED

• Bachelor’s degree preferred or equivalent experience

• NHLA Lumber Inspector/Grader Certificate or equivalent experience

• Leadership with the ability to drive a team of up to 50 employees

• Computer Skills, including all MS Office

• Driver’s License

Salary & Benefits

• Competitive Salary Starting at $70,000+ based on experience.

• 401(k)

• Dental Insurance

• Employer-sponsored Health insurance

• Employer-sponsored Life insurance

• Paid Vacation

• Paid Holidays

• Paid Sick/Safe Leave

• Paid Maternity/Paternity leave

• Paid Bereavement Leave

• Schedule: Day shift, Monday to Friday, No weekends

How to Apply

Send your resume to: info@SalamancaLumber.com

The Salamanca Lumber Company, Inc. 59 Rochester Street | Salamanca, NY 14779 716-945-4810

LUMBER PROCUREMENT MANAGER SALAMANCA LUMBER COMPANY, INC.

The Salamanca Lumber Company is seeking a Lumber Procurement Manager. The position is responsible for purchasing all green lumber. They do not oversee personnel. This is a full-time, hybrid position. Some of the work will require travel, and some in-office; otherwise, the work may be completed remotely. Key responsibilities:

• You report directly to the Owner/General Manager of the Company

• Purchase lumber within strategic guidelines

• Help maintain target inventories

• Prepare and issue purchase orders and change notices, ensuring the inclusion of required specifications, prices, terms and conditions, and other relevant purchasing information.

• Maintain open order report

• Ability to source material and suppliers

• Is authorized to select and approve new vendors (Required to make decisions regarding a supplier’s ability to meet company requirements)

• Manage and promote positive supplier relationships

• Travel (Drive) to meet with vendors and inspect material

• Miscellaneous requests – handle sales to some domestic customers, compare grade reports, minimal data entry, emails, etc.

Skills & Experience Required

• Bachelor's degree preferred or equivalent experience

• NHLA Lumber Inspector/Grader Certificate preferred or equivalent experience

• Driver’s License Required

• Computer Skills, including all Microsoft Office applications (Word, Excel, Outlook)

• Capable of working both with others and alone with little supervision

Salary & Benefits

• Office space is available, but remote work is possible. A company cellphone and company vehicle will be provided for your exclusive use.

• Competitive Salary Starting at $60,000+ based on experience.

Benefits:• 401(k)

• Dental Insurance

• Employer-sponsored Health insurance

• Employer-sponsored Life insurance

• Paid Vacation

• Paid Holidays

• Paid Sick/Safe Leave

• Paid Maternity/Paternity leave

• Paid Bereavement Leave

• Schedule: Day shift, Monday to Friday, No weekends

Work Location: Hybrid remote in Salamanca, NY

How to Apply

Send your resume to: info@SalamancaLumber.com

The Salamanca Lumber Company, Inc.

59 Rochester Street | Salamanca, NY 14779 716-945-4810

NHLA JOB BOARD

WOOD SCIENCE INSTRUCTOR NORTHCENTRAL TECHNICAL COLLEGE

• Facilitate learning through classroom activities, distance learning experiences, workforce development, out-of-classroom activities, and the mentoring of students and peers.

• Support and maintain collaborative relationships with business & industry, community-based organizations, and K-16 partners.

• Assess and evaluate student performance in alignment with the College assessment plan in a timely manner.

• Conduct assigned classes for the scheduled length of time.

• Submit final grades by the scheduled due date identified on the academic calendar.

• Post and maintain office hours.

• Maintain accurate records of student attendance and achievement for up to one semester after the semester end unless requested for a longer period of time.

• Furnish written evaluations as requested by students.

• Coordinate instructional support services to meet individual student accommodation and modification needs.

• Please visit the posting on our careers page to view an extended list of job duties and responsibilities: https://www.schooljobs.com/careers/ntc/jobs/3682249/facultywood-science-instructor?pagetype=jobOpportunitiesJobs

Skills & Experience Required

• Must have a minimum of two years (4,000 hours) full-time or equivalent demonstrated relevant wood industry occupational experience, one of which must be within the last five years.

• Bachelor’s degree in Wood Science and Technology or related field, or an Associate’s degree with the agreement to obtain a Bachelor’s degree upon hire.

• Willing/able to meet Wisconsin Technical College System (WTCS) and Higher Learning Commission (HLC) requirements, accreditation standards, and/or licensing standards where applicable.

• Experience in teaching and working with diverse populations is preferred.

Salary & Benefits

• Salary: Depends on qualifications

• Our Comprehensive benefits package includes the following:

• Health and Dental Insurance

• Vision Insurance

• Life and Long-Term Disability Insurance

• Short Term Disability (voluntary)

• Wisconsin Retirement System

• 403(b) Pre-Tax Retirement Savings

• 457 Deferred Compensation Plan (Pre-tax & Roth Option)

• 529 Plan

• Accident & Critical Illness (voluntary)

• Paid Holidays & Sick Leave

• Professional Development

How to Apply

Send your resume to: hr@ntc.edu

Northcentral Technical College

312 Forest Ave. | Antigo, WI 715-803-1483

HARDWOOD LUMBER INSECTOR

ETT FINE WOODS

ETT Fine Woods is seeking a full-time lumber inspector for our Donalds, SC, location. This position will initially be for our incoming green chain, inspecting all green lumber purchased from local sawmills while being put on sticks. But in time will lead to inspecting kiln-dried lumber coming off of sticks on our production line. The individual will also be inspecting various imported hardwoods and be willing to learn to grade and inspect new species. The position will also include supervising a small crew and ensuring the workflow is handled properly.

Skills & Experience Required

The position will require a well-established knowledge of the NHLA grading rules for domestic North American-grown hardwoods. We would consider a newer inspector without extensive experience, but the individual will need to have a basic knowledge of the rules. The position will consist of inspecting a wide range of species, so a willingness to learn new things and work in different departments will be a must. The job may also require end tallying lumber at times.

Salary & Benefits

Salary will be determined based on experience and knowledge of the rules and applying them. The full-time position will also come with company health, dental, vision, and life insurance. The option to join the company 401K program will be offered after six months of employment. The company also offers holiday pay for many of the main holidays and will also offer vacation benefits.

How to Apply

Send your resume to: nhascher@ettfinewoods.com

ETT Fine Woods

1106 Drake Rd. | Donalds, SC 29638 864-378-0258

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 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.

www.hardwoodreview.com

Cherry prices have turned higher since early February, with Appalachian KD 4/4 90/50 Red prices for FAS/1F, #1 Common and #2 Common up $265, $130 and $65, respectively, through the end of March. With the exception of #1 Common, percentage gains in KD prices have exceeded green increases. The price uptick ends a downward trend that started late last spring, and tracks closely with trends in Cherry lumber exports to China, with roughly a four-month lag between export trend shifts and price reactions.

U.S. Cherry prices fell last summer and fall as demand from China declined, with exports shrinking to a nine-month low in September. Shipments to China rose in Q4 2022, however, and January volumes reached a six-year high of 7.9 million board feet. For several years, sawmills had avoided sawing Cherry in favor of species that were more profitable and had broader-based demand—even more so when Chinese demand slumped last June through October. That lack of production

Cherry Prices vs. Export Volumes to China

contributed to higher prices once Chinese demand increased. Exporters now believe Chinese purchasing will remain strong at least through late-spring. Canadian demand for U.S. Cherry rose steadily in 2022, but the unit value ($/MBF) of 2022 shipments was 23% lower than in 2021, reflecting lower second-half prices and likely a downward shift in the grade mix, as well. That trend continued into January 2023, leaving China as both the largest (89% of January exports) and one of the highervalued global Cherry markets.

JAPANESE MARKET FINALLY SHOWING GROWTH

By Tripp Pryor, AHEC International Program Manager

Exports of US hardwood lumber to Japan increased 10% by volume and 21% by value in 2022 as the country continues a post-COVID surge. Encouragingly, this growth is being led by increased consumption of oak, including a 25% increase in red oak imports. Japan is one of the most discerning global markets for hardwoods, with one of the highest average value per cubic meter prices of any country. The Japanese market demands high grade material, and additional processes like color sorting are frequent requests. When a Japanese customer specifies oak, they typically expect a bright, clear board with little to no character marks. For years, AHEC has been challenging the Japanese market to consider a variety of US hardwoods outside of the traditional species and local material that have dominated the market for decades. Our annual “Eco Interior” design showcases at the IFFT Interior Lifestyle furniture and design

show in Tokyo have worked to highlight red oak, hickory, and maple in particular as alternative species of American hardwoods. More information and photos of past Eco Interior projects are available on the AHEC Japan website: www. ahec-japan.org. US exporters have focused on adapting their products to the Japanese consumer mindset, and with broader recognition of red oak and US companies’ willingness to take additional steps like color sorting, there is a growing market segment of high-grade red oak that has become very popular in Japan. Red oak lumber exports to Japan increased by 25% in 2022, and are up 55% since 2020, representing a $5 million increase in exports over the last two years. Exports of other underutilized species have also increased, such as maple (up 38% volume in 2022) and hickory (up 103% volume).

US Hardwood Lumber to Japan, m3

Source: USDA GATS

RTA ONGOING WOOD CROSSTIE RESEARCH

By Nate Irby, Railway Tie Association

Railway Tie Association (RTA) members recently visited Mississippi State University’s Department of Sustainable Bioproducts to review the collaborative ongoing wood crosstie research and development study and discuss the potential for adding an additional construct. The project is labeled Alternative Wood Preservative Research Project (RTA-AWPRP) and encapsulates wood crossties treated with multiple preservative systems in stand-alone and dual treatment configurations. The original project was founded in 2008, with a second phase added in 2012 with maturation in 2034 and 2043, respectively. Wood crossties were installed in two field sites for exposure: at Dorman Lake just outside of Starkville, MS, and in the south part of the state near McNeill, MS. All original program participants as well as new potential collaborators were invited to visit MSU and the Dorman Lake field site on March 1, 2023 to view and discuss study progress and outline schematics for future wood crosstie research needs.

The current study is the largest of its kind, with the unique robustness of the simultaneous duplicative alternative preservative experimental groups, and with the utilization of full-size wood crossties rather than small-scale representative samples. The two primary objectives aspire to 1) assess the relative performance of new preservative systems in

direct comparison to existing creosote and borate/creosote systems in both refractory and non-refractory species, and 2) concurrently duplicate the research in a location where the Formosan subterranean termites are active (McNeill, MS site).

Program participants in attendance ranged from wood preservative suppliers to wood processors/treaters to railroad end users to ancillary entities engaged in advancing the science. In brainstorming current and future needs, multiple approaches were hypothesized, some including:

• Accelerated testing of small samples in a laboratory setting

• Encompass an array of experimental designs simultaneously: small sample, large sample, test plot & in-track considerations, etc.

• Include additional alternative wood species beyond the original scope

• Examine existing methodology for analyzing wood protection techniques and models and likewise preservative systems in use today

RTA’s tact in distilling those ideas down and potentially expanding the partnership with MSU are being formulated and will be discussed with each program participant, historic and new, individually before unveiling to the larger cooperative. Please stay tuned for more information and do not hesitate to contact your RTA with questions, comments and/or concerns.

Field simulations and in-laboratory testing work in concert to provide valuable data to advance the science.

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: Cants and pallet material are in low demand. Plup markets are pretty much shut down in WI & MI. Road restrictions are on everywhere making logging prohibited. 6x8 production is getting stronger.

ATLANTIC

Virginia: Markets for Pallet material and flooring are still slow. With low grade lumber prices low, some mills canot move their side lumber off the ties therefore slowing tie production. Chips and Pulpwood are slowing. Logging weather should start improving soon.

NEW ENGLAND

New England 1: Pallet prices and demand continue to drop. Lumber prices are still low, but demand is startign to trend upward. Maple lumber is not moving at all. Timber Mat demand is starting to increase with Spring projects starting. Several large Mat projecds ramping up in the New York area. Mud season has arrived and will affect logging.

New England 2: Looks like a dry spring, hopefully that's the case.

Pennsylvania: Winter mud still making logging difficult. Some upper grade lumber prices increasing. Mat material is trending up.

MIDSOUTH

E Texas, NW Louisiana: The mills are struggling to say the least to move all products except the tie so it makes it hard to produce and also logs are still not moving in my area on top of this.

SOUTHEAST

Mississippi: Spring rains have log inventory low. Crosstie orders remain strong.

According to the NWFA/Hardwood Floors magazine’s 2023 Industry Outlook, 45 percent of retailers expect sales of wood flooring to be about the same in 2023 as 2022. Nearly 44 percent expect sales to be up. NWFA retailers see their top opportunities this year as improvements to operations, product diversification, value-added services, end-market diversification, and geographic expansion. About 59 percent of retailers report that wood-look products such as LVT, WPC, and laminate have had a negative effect on their real-wood product sales.

www.nwfa.org

www.hmr.com

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

Index for March which is published the first week of April.

Cabinets

Residential Flrg.

Truck Trailer Flrg.

Upholst. Furniture

Wood Furniture

Moulding/Millwork

Wood Components

Board Road

Pallets

Railroad Ties

Keynote Speaker, Eric Traupe (Former assistant director of the CIA)