2020: A Year We Won’t Forget

By Nick Smith

From a global pandemic to devastating wildfires, 2020 was a year we will never forget, and it will impact the forest products sector for years to come. But as the saying goes, where there are challenges, there are opportunities.

A Global Pandemic and an Essential Industry

For much of 2020, we all grappled with the many effects of COVID-19. In some respects it was an opportunity to demonstrate the importance of our industry. The shortage of toilet paper, medical supplies, and other wood- and paper-based products showed how forest products are truly essential during a national emergency.

The pandemic also contributed to a historic market run on lumber products. When the economy effectively shut down in the spring, lumber inventories quickly depleted as sawmills reduced or suspended production. Market analysts did not expect a surge in lumber demand as Americans increasingly turned to home improvement projects during quarantine. Prices skyrocketed as producers and sellers scrambled to meet unexpected demand. Analysts also underestimated a resilient housing market supported by low mortgage interest rates.

Lumber prices have since cooled a bit, though key links in the supply chain have struggled. According to the American Loggers Council, virtually all raw material delivered by loggers and truckers experienced price drops greater than five percent in 2020 compared to 2019, resulting in nearly a $2 billion loss in revenue. Reduced demand for some wood- and paper-products, combined with major mill closures and curtailments throughout the country, inflicted severe financial pain, especially on many of our small, family-owned forest contractors.

Even manufacturers of high-demand wood products have not been immune to COVID-19, as mills have worked to scale up production while navigating through a patchwork of state and local workplace rules. Some mills have also experienced difficulty retaining and bringing back workers after curtailments in the spring.

Industry Grapples with Devastating Wildfire Season

If a global pandemic wasn’t enough, we are now dealing with the aftermath of a wildfire season that will have profound impacts on our industry in the years ahead. Millions of acres burned in California, Oregon, and Washington in what is being called a “generational event” that has cost lives, destroyed thousands of homes, and scorched many productive forestlands, not to mention many scenic wonders, wildlife habitat, and other natural resources.

The industry is still estimating the damage, but we are beginning to grasp the short-term impacts. In Oregon, Matt Hill of Douglas Timber Operators figures the fires burned 15 billion board feet of wood, enough to build one million homes. And this year’s fires burned an unusual amount of private timberlands, including 400,000 acres in Western Oregon. Federal lands, as usual, were heavily affected, consuming 60 percent of total acres and burning through current and future timber sales on lands managed by the U.S. Forest Service and Bureau of Land Management.

Rex Storm, executive vice president of Associated Oregon Loggers (AOL), says the 2020 wildfires disrupted or displaced an estimated 360 million board feet of harvest capacity. Storm also estimates forest contractors suffered an economic impact of over $100 million due to burned assets, idled operations, remobilization, and other costs. Unfortunately some forest contracting businesses will never recover.

Current capacity is now stretched thin as many loggers shift from “green” timber harvest to post-fire restoration efforts on private lands, including road hazard clearing, recovery of black logs, and other activities. Private lands will soon be replanted, though a shortage of seedlings and labor may delay reforestation efforts for years. A short-term glut of black logs will eventually give way to a shortage of green logs, and many are wondering where logs will be sourced five to 10 years from now.

The Future Brings Challenges and Opportunities

If there is any good news to come from this catastrophe, AOL’s Rex Storm believes the impacts to logging capacity will lead to new reinvestments and rebuilding in labor, technology, equity, and compensation in the contracting sector. Our industry has many entrepreneurs who are accustomed to innovating and adapting during changing times.

Demand for wood products is as strong as ever, and market forecasts for a range of products from paper products to furniture are upbeat. The need for home construction continues to be exceptionally robust as we reach the second year of COVID-19. And the development of advanced wood products, such as cross-laminated timber, is encouraging as architects and developers increasingly turn to sustainable and renewable building materials.

Policymakers are increasingly interested in active forest management as a solution for bending the curve of catastrophic wildfires, as well as for responding to the impacts of climate change. We will continue to educate elected officials and the general public about the need to actively manage our federal lands, both to restore the health of our forests as well as to contribute to our regional woodbasket. Promoting active forest management and wood products are both key to achieving stronger markets across the supply chain.

2020 was a year we won’t forget, and we are all looking forward to 2021 in hopes of better days ahead. By working together, we can overcome the many short-term challenges while positioning our entire industry for a stronger future.

Nick Smith is Executive Director of Healthy Forests, Healthy Communities and provides public affairs services to the American Forest Resource Council in Portland, Oregon.