Pandemic impact on forest industry a ‘mixed bag’
A number of industry professionals report being in a 'state of limbo'
MADISON, Wis. -- The effects of the coronavirus pandemic are rippling through the forest industry in Wisconsin, with some sectors benefiting and others hurting. Elsewhere, those who work in the woods say they are in a state of limbo.
“It’s a mixed bag at this point,” said Scott Bowe, a UW-Madison professor and wood products specialist with the Wisconsin DNR.
Paper makers are thriving, for the most part, as people can’t seem to get enough toilet paper, he said. But other segments of the forest industry, such as those that supply home builders, are already feeling the pinch.
For its part, building materials company Louisiana-Pacific announced earlier this month that it would trim production of oriented strand board (a type of engineered wood similar to particle board) by 100 million square feet, or about a third of its total capacity through a combination of curtailments and reduced schedules.
Companies that sell hardwood to China are also being hit.
“The pandemic is global, so there is a slowdown abroad as well,” Bowe said. “Prior to the coronavirus, we were hoping to see the export market pick up because of the new trade deal with China. But then we stepped into the pandemic, which is going to have a negative impact for months to come.”
Troy Brown, head of Kretz Lumber in Antigo and president of the Hardwood Manufacturers Association, said the millwork industry - which makes casing for homes and windows - is doing OK so far.
But he said orders for cabinet makers are starting to slow and companies that make flooring have been hard hit, with some plants only producing at half capacity.
“Pallet manufacturing is also way off, because the supply chains are messed up,” he added. “A lot of food and milk that needs to be distributed is being dumped while people are lining up at food banks in need. Something is not connecting.”
He said slowdowns in vehicle manufacturing also have hurt this sector because it uses pallets.
“An awful lot of material is moved on pallets to make cars,” he said. “And I think John Deere and other plants are having shutdowns and disruptions. When that happens, it affects sawmills and us on the supply side.”
“Our mill is doing OK and we haven’t had to lay anyone off so far. But each day I tell everyone everything could change by 3 p.m. We just don’t know. The thing that gives us anxiety is that there is so much uncertainty. A customer could call any minute and cancel an order.”
Nancy Bozek, executive director of the Wisconsin Woodland Owners Association, said many of her members are in a holding pattern because they can’t meet foresters.
“So they are doing some tree planting, looking for invasive plants, clearing and other normal spring work. The DNR can’t list their seedlings, so people have to make a choice whether to suspend those orders, reorder for next year or find another provider if they want to plant trees.”
She said some markets were already depressed due to big storms that hit the Northwoods last summer and flooded mills with damaged trees.
“Now this pandemic has slowed activity significantly, but things haven’t entirely stopped,” she said. “We all sort of feel like we are in a time warp. We are hoping for the best, but there is a lot of uncertainty about the future. No ones knows quite what to think, and it could all change tomorrow.”
Hilary Markin, a spokeswoman for the Chequamegon-Nicolet National Forest, said agency employees are continuing to conduct field work that focuses on managing vegetation, restoring ecosystems, reducing hazards and maintaining forest health. But she said they are currently limiting meetings to what is needed to ensure safe operations.
Markin said the Forest Service has offered to extend contract deadlines on certain timber sales, sale of property stewardship contracts and forest product permits awarded or issued before April 1, 2020.
Extending these deadlines supports the long-term viability of the timber industry in markets where conditions have been significantly disrupted, especially in rural, forest-dependent communities, she said.
Individual purchasers of the timber sales contracts may request extensions – up to two years in the lower 48 states and up to three years in Alaska – or continue to work to meet their obligations.
The deadline extension offered relief to businesses scheduled to make timber sales payments on April 15, she added. Without the extension, firms and individuals who bought timber sales from the Forest Service may have been in default from late payments.
She said her agency is continuing to administer timber sales on active timber sale contracts and is preparing prospectuses for timber sale packages. Information on timber sales out for bid can be found at https://www.fs.usda.gov/resources/cnnf/landmanagement/resourcemanagement.
Henry Schienebeck, executive director of the Great Lakes Timber Professionals Association (GLTPA), said the announced slowdowns at some mills does not portend well for his members.
“The big picture outlook for this region is a little bit difficult to forecast at the moment because we are in spring thaw,” he said. “But long term, we’re going to see some negative impacts from it.”
“Probably the biggest effect we are seeing is in the home building products. L-P, for example, has a couple of mills that have taken quite a bit of down time for the month of April.”
“Normally they would be full of pulp wood now and still be running. But because of the lack of orders, they aren’t taking any wood. Other customers aren’t taking delivery right now. They are going to wait a bit and see what happens.”
He said mills that produce specialty writing papers have slowed down, as have others that produce paper for magazines and newspapers that are cutting page counts because their advertising has collapsed as a result of pandemic closures.
He mentioned that the Sappi Fine Paper mill in Cloquet, Minn. (20 miles west of Duluth) had closed temporarily and informed members of his group that it would not be accepting deliveries until at least June 1.
“They were doing pretty good until covid,” he said. “This will affect us because they buy a lot of hardwood and aspen, especially from northwest Wisconsin.”
Schienebeck said the majority of GLTPA enrollees are smaller operators, with 735 of the group’s 1,000 members located in Wisconsin. Many are worried about their livelihoods, he said.
“They have a lot invested in equipment,” he mused. “How hard this will hit them financially depends on how long this lasts. It could be six months or a year.
“We are telling our guys to work with their banks. We’ve been pumping out a lot of information on the federal Payment Protection Plan, U.S. Chamber of Commerce grants and things like that so they can ride this out.”
On a positive note, Scott Suder, president of Wisconsin Paper Council, said many of the organization’s members are operating at peak capacity, “especially those that make personal hygiene items products like bathroom tissue, diapers, wipes and other household products.”
In addition, mills that produce cardboard and other packaging are busy because of the huge demand by companies like Amazon to ship orders to homes. Others are converting their operations to produce masks and other essential medical needs.
He said his industry, which employs 30,000 workers in the state, “is doing everything it can to make certain that the supply chain is continuous” while ensuring that its employees and their families remain well.
One of the few downsides, he said, are reductions at mills producing paper products for schools and offices that have been closed as a result of the pandemic.
Brian E. Clark is a contributor to Forest Business Network. He formerly was a business writer for the San Diego Union-Tribune and also wrote for newspapers in Washington state. He's also a regular contributor to the Milwaukee Journal-Sentinel and the Los Angeles Times.