With new softwood lumber mills popping up all over the U.S. South, the industry is experiencing its largest growth in more than four decades according to news reports. Biewer Lumber in Newton, MS, Two Rivers Lumber in Demopolis, AL, Rex Lumber in AL, Canfor in GA, Klausner 1 and 2 in FL and NC respectively – the list goes on. A dozen new softwood lumber mills to add to the five announced over the past two years to be constructed or invested in for increased productivity and capacity purposes. What does all of this mean?
To put it simply, a housing boom is expected in the near future. Over the next five years, the increased Southern lumber capacity is expected to reach almost 24 BBF (billion board feet), which is a 17% increase relative to the softwood lumber industry’s size at the height of this boom.
In the past independently owned, smaller sawmills made up the lumber industry in the South. During the mid 2000s only about a fifth of the South’s lumber mills were larger than 200 million board feet in size, while approximately 33% were smaller mills of less than 100 mmbf. Today, not only are the number of lumber mills in the U.S. South expanding, these mills are bigger with many managed and owned by large companies rather than independent owners.
Forest Economic Advisors (FEA) predicts the tide will change by 2022 with larger sawmills expanding to more than a third of the capacity while smaller mills drop to less than 20%. Additionally, a larger segment of the volume is being concentrated in bigger companies controlling numerous lumber mills. A decade ago, about half of the softwood lumber capacity in the South was controlled by the 10 largest companies in the region. Today these companies account for almost 66% of the South’s volume.
Over the next 10 years it is expected that log demand at sawmills in the South will surpass the peak levels of the mid 2000s because of the substantial increase in lumber production anticipated in the region. Industry authorities believe there will be an increase in the portion of lumber sourced from managed pine plantations due to the rise in production taking place at large-scale mills intent on boosting productivity and recovery.
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