By Bill Virgin
SEATTLE _ Like the bearded curbside prophet warning passersby
of the impending end of the world, the Pacific Northwest forest
products industry has for the last several years been telling all
who will listen that the apocalypse is coming.
Environmental restrictions on cutting timber on government and
private lands, combined with resurgent domestic and foreign
economies (creating stronger demand just as supply is
decreasing), will bring a firestorm of closed mills, laid-off
workers, soaring log and lumber prices and wood-frame houses
priced far beyond what consumers can pay, the industry has
Indeed, there have been some hard times in the woods, but
doomsday has not arrived. Prices retreated from peaks set early
in the year. The pace of lumber and panel mill closures wasn't as
brisk in 1993 as it was during the previous four years in the
Pacific Northwest, according to data compiled by industry
consultant Paul Ehinger. Home sales were influenced more by
falling interest rates.
Has the cataclysm been postponed again?
"I think we're still a year away from a real crunch," said
Stephen Ericson, a partner in Shelton Structures International
Inc., a manufacturer of glued laminated beams. "We'll be able to
sneak through next year."
"It's a question I haven't been very good predicting," added
James Geisinger, president of the Northwest Forestry Association
in Portland, Ore.
But Geisinger said the remaining federal timber (source of 55
percent of saw logs in Oregon, 23 percent in Washington) already
sold will be cut by the middle of 1994.
And what then? "I don't think it'll happen with a big bang _
mills will close a shift" as they deplete what timber they have,
The market is already sending signals it sees supply problems
ahead. Even though December is a relatively slow period in the
industry, prices in Random Lengths' framing lumber composite
price index hit $506 per thousand board feet last week, just
below the record highs set last spring in the midst of a buying
"Here we are in the dead of winter and we're having record
prices," Geisinger said.
No one factor contributed to easing the supply crunch in the
Pacific Northwest last year. Export volumes dropped sharply as
the Japanese tried to cut inventories of logs, freeing up wood
for domestic consumption. Private landowners, worried about
future restrictions on cutting trees on their land, accelerated
sales of their logs. In Oregon the estimated sustainable harvest
from private lands not held by timber companies is 600 million
board feet a year; Geisinger said the cut has been running 400
million board feet a year higher than that.
More logs were available from state-owned lands in Washington
because of an export ban. Some logs also came from federal
forests east of the Cascades. And companies worked their way
through inventories of logs cut on federal lands before the
But there's a danger that many of those factors could be
absent in 1994. The Japanese, for example, could start buying
logs again. "The Japanese have a propensity for buying in herds,"
"If (the Japanese economy) should ever pick up, a lot of
currently available logs will not be available," Geisinger
Meanwhile, mills with federal timber under contract can
stretch that supply only so long. Geisinger said the inventory of
federal timber under contract in Oregon and Washington is about
1.1 billion to 1.2 billion board feet. Five years ago, Geisinger
said, the figure was 12 billion.
"Most companies kept two to three years of usage under
contract," he said. "Now we're down to a twelfth of that. …