NEW HAVEN, Ind. (WANE) – A perfect storm of low supply and high demand has been weathered by lumber suppliers this year. The cost companies like Do it Best Corp. and New Haven’s Home Lumber have been paying for wood has been described as ‘record breaking.’
As concerns of COVID-19 spreading across the country began to grow and businesses started cutting back staff and operations, many industries were affected, including sawmills. Lumber companies anticipated a drop off in business, but it didn’t take long to realize that wasn’t the case.
“People started staying at home and wanted to do projects,” Do it Best Corp. Division Manager for Lumber and Reload Operations Joshua Ratcliff explained. “They were going into the big boxes, the home centers and the members of our chain.”
Paul Mills, the general manager of Home Lumber told WANE 15 his business anticipated cutting back hours and cancelling inventory, but discovered in just a few days that those moves were not needed. His business was deemed essential.
Home Lumber locks in their wood supply for the year during the previous October. The price that is paid, however, can still change.
“I think the industry would say this is record pricing,” Mills said. “We had a significant price increase back in mid 2005, but these prices are higher.”
According to Mills, the price his company is paying for lumber is nearly triple from last year. Ratcliff added that 2018 was a record breaking year, and 2020 has far surpassed that amount.
“Mill curtailment with no supply being made and demand was increasing, our housing starts are way better than anyone thought and it created a huge problem for us,” Ratcliff said. “Now there is this demand and no supply, so lumber prices continue to rise at a faster pace than they ever have in the history of lumber pricing.”
According to Ratcliff, a tariff on lumber coming into the country from Canada has also restricted the supply, with wood that would normally shipped to the United States being kept out of the country.
Both Ratcliff and Mills suggested that lumber costs may have started peaking, but the supply chain may be weeks or months behind schedule.
“We are seeing it be a little toppy right now, so it’s kind of reached that peak,” Ratcliff added. “However, if you look at the supply chain, you can’t go into stores and find a huge amount of lumber. Distribution is still pretty thin.”
The supply and demand situation hasn’t just impacted lumber, other home improvement supplies and secondary items have become scarce and mills have been making adjustments to meet as many needs as possible while turning a profit.
“The mills can produce a lot of OSB (oriented strand board) and right now make a lot of money doing it, so products like siding – some of those ship dates have turned into 12 or 14 weeks,” Mills explained. “Interior doors are primarily made in Michigan. Michigan has been shut down for several weeks. We’ve seen extensive lead times on those products, but because we’ve got really good relationships with a number of different manufacturers, we’ve been able to get material in. It may not always been the same material we’ve always had but we’ve been able to keep jobs moving forward.”
Both companies acknowledged that some industries, like restaurants, have been struggling and people have been having a tough time making ends meet, but they’re business has been keeping people working.
“Fortunate for us business remains strong and we continue to have material to sell to our builders,” Mills said. “When we knew we were going to keep our doors open and continue to operate, we started looking forward and it’s been a great year. Very challenging, but certainly, our people make the difference.”
“We’ve worked with the mills in increasing our inventory.” Ratcliff added. “We know that we have to be there for our members, so not once did we stop the flow of product whatsoever. We kept it coming in and we continue to get it out. It’s not slowing down for us.”