Could Tariffs bring back the PNW Lumberjack ?

[red]

www.kuow.org yesterday had an article titled
Could Trump's Tariffs bring back the Pacific Northwest Lumberjack ? 

I would appreciate it if someone could Link the article

[doc henderson]

There are about a dozen articles regarding the Trump tariffs and are leaning negative (left) so take this article for what it is worth.  part of npr.

KUOW - Could Trump's tariffs bring back the Pacific Northwest lumberjack?

[doc henderson]

It is a very interesting article and fun video.  Thanks Red!

[Ron Wenrich]

think the article made a pretty good point on forest mgmt.  Instead of massive clearcuts that throws more wood on the market than mills can handle, a cut that would be comparable to mills in the area that would sustain both the forest and the lumber community.  When a mill depends on public lands for resources, it can be a boom or bust type of operation. 

I took a grad level course in resource planning about 55 yrs ago.  This was before widespread computer usage.  We were using punch cards and our lab calculators had 2 memories.  We were supposed to balance the cut with the production.  We didn't have all the variables that are present today & it was a 10 wk course.  I should have paid more attention.

If the govt could provide sufficient resources on a continual basis, then they could do better planning at the industry level.  The tariffs throws a bunch of other variables into the mix.  Will the tariffs lower demand for lumber in the US?   How much room is there to raise prices (equilibrium price point)?  How long will the tariffs last?  But the key is at the available resource level.

[longtime lurker]

All the same and different here Ron. In my state native forest logging - hardwood or softwood is managed differently to the plantation resource. 

All native forest harvesting is selective cut.
New sales are put up by the state via a tender process but rarely. However existing sales permits are renewed subject to performance and log availability, and generally speaking if you perform they'll find you some more country somewhere. It may not be where you want to go or close to home, my potential sale zone is about 300 miles long by 100 wide, toss in a few ranges and rivers and we can end up dragging logs a long way to the mill.

Sales permits are transferable... if I wanted out I could offer the permit with the business. Not that I regard a sale permit as a valuable item because while it's a licence to harvest state owned timber its also an obligation to harvest state owned timber, and the state determines what is or isn't a log in accordance with a published schedule that is designed to maximise log utilisation  ( ie we get lots of low grade log as part of it if that's what the sale area yields). Stumpage rates are generally low to compensate for the quality variables. I've been in difficult to impossible logs for the last decade, when I cut out my current area maybe the next patch will be better but maybe not too.

As a permitee it gives me a somewhat reliable resource, in that I've got a guaranteed quota per annum. If markets tank it can be a millstone because I have to cut regardless. If markets boom too bad, my sale quantity is capped and I cannot exceed it by more than a little bit in any year.  With each sale extension I get pro rata  tonnage but if I exceed my total tonnage allowance the sale is regarded as finalised with no more extension applicable.... its not open season by any means.

The downsides include that it can be a handbrake on progress.... how much money can you invest into improvements based on a 2 year sale extension? Not a lot right,  it takes more than a couple years to pay off new equipment.
Also for the smaller permitee it forces you to spread yourself thin/ overcapitalise. I could find a logger to cut my quota but the only way it would work for the logger is to cut my total annual volume in one go. I may not want them all in one go so the only option is to be my own logging contractor... nearly all the native forest mills own their own logging plant and none of us can justify new equipment for the volumes concerned. Y'aint paying off a new tigercat working it only ten days a month.
Another thing is that with supply being controlled by the state it can be subject to politics, I get really nervous around state election times because the next lot of politicians might be industry unfriendly. The goalposts seem to shift all the time anyway, but only closer together never apart... every change to my permit has made life tougher, but the stumpage is indexed to inflation and goes up regardless.
Lastly sometimes sales permits go to individuals or organisations who straight up shouldn't get them.  The state often seems reluctant to enforce the use it or loose it clauses even when they should.

So the system isn't perfect, but then no system ever is. When I first got a sale I thought the utilisation provisions were impossible but I've learnt to live with them and it does prevent high grading of stands and the bad images from trees felled and left to rot because they aren't perfect.
On the other hand my quota which once seemed enough now isn't and I'm not seeing any avenue to increase it.   The lack of flexibility around annual harvest volumes may smooth out supply but it also artificially enhances market fluctuations.

So same... nothing government controlled ever works properly. But different... we've got a supply system and  it's still not going to enhance jobs in sawmill towns or encourage investment in the industry.

[nativewolf]

No, in fact we have more negotiated duties coming online soon.  We import cheap Canadian lumber.   They sell it below our cost.   The new negotiated duties on Canadian lumber willl be higher than any tariff.   I bet we still import a ton. 

Would you honestly invest 100mln in a factory that was totally dependent on political whim?  Then where do you find labor?  The whole forest industry workforce is aging badly. 

I predict we will see more manufacturing investment in mills like the Weyerhaeuser plant in Arkansas that uses shredded fiber to make beams and timbers.   

I would be very worried about someone building such a mill in Brazil using eucalyptus and achieving a mechanical process to create timbers that can be graded.  Or blending with Paraguay and Uruguay lob.

Anyway, no. We undoubtedly need better forest management in our national forest so that the forest industry can invest and we can create healthier forests.  It should be done in congress with changes in law. 

[Ianab]

And they are competing with wood from NZ and Chile that's plantation grown, more like you farm corn, just a longer harvest time. Sure you can put a tariff on the imports, but will the local wood be cheaper? NZ Radiata pine milled at 25 years is perfectly good for holding up a wall. So in the time it takes to grow a 1/2 decent redwood (~100 years), we have 4 harvest and replant cycles. 

[Riwaka]

Having a quick look at the LSL, laminated strand lumber.  us$500 million for a 10 millon cubic feet/ year plant in Arkansas. Using Southern Yellow Pines.

Looks like the Brazilians could potentially get an acceptable LSL (laminated strand lumber) product out of Eucalyptus alone. 
The cost & performance etc of the adhesives in engineered wood products is always a consideration.
Brazilan P & P is tariff sights?
https://www.resourcewise.com/blog/what-the-us-50-tariff-on-brazil-could-mean-for-pulp-and-paper-markets

LVL (laminated veneer lumber) looks to have a few slight benefits over LSL (laminated strand lumber)

Even Nz still has 5% of its plantation forest as Douglas Fir (a cute little 260K acres). 

My understanding there were still plenty of PNW loggers just the ageing logging machinery (for some) and ageing loggers to a certain extent were likely to be issues going. New cable yarders or even overhauling old yarders (swing and towers, swing yard-excavators) is a very expensive exercise now. Probably daily D & D testing if enlarging the forest workforce.

[ppine]

For the last 30 years the USFS has approved a tiny fraction of the timber sales it used to have every year.   The supply of logs coming off public lands has dried up.  The annual  cut is around 1.5 billion board feet, while the annual allowable cut is more like 12 billion board feet.  Mills can only open if the supply of logs is steady and dependable. 

Tariffs might make our timber supply more competitive with Canada.  We have a hard time competing with them because they subsidize their timber industry.