#8216;Perfect storm#8217; hits timber industry
Published 12:00 am Saturday, April 12, 2008
Ohio’s timber industry is caught in the middle of a perfect storm.
That statement comes from John Dorka, the executive director of the Ohio Forestry Association, who said the perfect storm is the result of high gas prices, a weak U.S. economy, changes in the global market and unusually wet weather throughout the state this year.
Dorka said that few people are aware of the extent of the timber industry in Ohio.
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“Most people don’t even know that Ohio has a surprisingly large wood industry,” he said, adding wood is one of the state’s major agricultural products.
According to statistics from the state, the wood industry puts $15 billion into the economy annually with 119,000 people employed as loggers, saw millers, equipment suppliers and product makers and generates $4 billion in payroll.
According to a fall 2007 survey by Ohio State University and the Ohio Division of Forestry, export markets are stable, the domestic market is “fair to poor to bad and getting worse” and general market is “slow although some niche markets do exist.”
It added the overall market for hardwood usage is declining and “business is very tough, every day is a new challenge.”
One local company that is feeling the effects of the weakened market is Muth Lumber, an Ironton company that takes cut hardwood lumber from sawmills and bakes it in kilns for other companies to make into wood products. Hardwoods are used for furniture, doors, trim, flooring and many other products.
Dick Muth, who owns the third-generation business along with his brother Tim, has been in the business for four decades.
He thinks this is one of the toughest times they’ve seen in the industry in part because the common red oak isn’t in demand and because manufacturing companies have taken their operations overseas.
One of the most commonly harvested trees in Appalachia is the Red Oak, which is a hardwood. He said the demand for Red Oak is minimal.
“That is dead as a doornail out there, I’m talking about all over the world,” Muth said, adding that some of the forests in the region are half Red Oak. “When that’s the case and it’s not sellable, that’s why there is such trouble in the industry.”
The Ohio State University and the Ohio Division of Forestry survey backs up Muth with reports that the market for Red Oak market is “almost non-existent in flat cut” and that “Red Oak is moving slowly.”
Trees to China
Muth said he buys wood from sellers in Ohio, Kentucky and West Virginia, but that the buyers for his products are from overseas because the majority of the wood business isn’t existent in America anymore.
“The biggest portion of our sales is overseas,” Muth said.
Muth Lumber kiln dries about 12 million board feet of wood annually. Some is custom for an area company, but the majority goes to the Chinese market.
He said a sales representative goes to China about three times a year to merchandise their product. He said after a recent trip, the sales rep came back discouraged.
“The Chinese market depends on the U.S. economy and when our economy is off as far as it is, then the purchasing of raw material is off too,” he said. “It was not the most fruitful trip we’ve ever made.”
Muth Lumber’s products are shipped to Chinese companies that turn them into wood products for the American market.
The trouble for American sellers is that the Chinese workers get paid much less than U.S. workers. He said, in round numbers, that a Chinese worker gets paid $88 a month and works a 72-hour, six day work week. Muth said they get paid about the same for a month as an American worker gets in a day.
“That’s why there are no manufacturing jobs in this country,” Muth said.
He estimates that in the 40 years he has been in the wood industry, 60 percent of the manufacturers went overseas.
“The manufacturing part of our industry chases cheap labor,” he said. “But look at the numbers … that’s why. I’m not saying that people over here are overpaid by any stretch of the imagination. It’s just that people in the rest of the world work so much cheaper.”
“I have a lot of empathy for people in the sawmill industry, they are worse off than I am,” Muth said. “At least with what I do, I go out in the market place and can pick and choose what I want to buy predicated on what I think I can sell.”
Dorka said that the hardest hit in the timber industry is the logging and sawmilling sector.
“The wet weather itself is keeping many loggers out of the woods, some only working a few days a month,” he said. “But it’s fuel prices that could put them out of business.”
There area lot of fuel costs for timber to get from the forest to the home. Heavy machines are used to cut trees and put them on trucks, which haul timber to the sawmill.
The boards are cut and then transported to places like Muth Lumber to be kiln baked. Then it is sent to companies all over the world to be turned into consumer goods.
Dorka said diesel fuel tends to run higher than regular gas prices.
“It is significantly higher than it was even a couple of years ago,” he said.
Dorka said some mills have shut down for a couple of months at a time for lack of raw materials.
He said one thing that could help is legislation on axle weight limits.
“A trucker can be under gross vehicle weight limits, but still be cited because one axle is over the limit. It’s hard to guess log weights on an axle,” Dorka said. “Over a long period, it leads to more truck hauls, higher fuel costs and more runs on the roads.”
Dorka added that he understood the issues of safety and road maintenance.
“But with the price of gas the way it is,” he said, “we are looking for as much relief as we can get.”