Issue link: http://palletcentral.uberflip.com/i/1099303
26 PalletCentral • January-February 2019 palletcentral.com were having trouble finding labor. It hit a whopping 87% in 2017. It surely went higher in 2018, but the survey results are not available yet. A similar story applies to land supplies. Labor Supply Because the constraints are not going to get any better in the next few years, the revised forecast reflects strong demand, but supply constraints. Housing starts are likely to remain near in the 1.3-1.4 million range for several years. The good news for the wood products industry is that a major decline appears unlikely even if interest rates move up another 1%. Housing Start Outlook But the primary reason prices are going to remain relatively stable is the large wave of lumber capacity coming on in the U.S. South. Lumber production in the South was about 15 billion board feet (bbf ) in 2013. It was up to 19 billion bf in 2018 and should push up to 22 billion bf in 2019. The lumber industry was so profitable that capacity is growing due to the expansion of existing mills plus about 12 new scale greenfield mills reaching full production levels this year. The growth production will continue into 2021. U.S. Lumber Capacity Bottom Line: With demand fairly flat, the softwood lumber industry operating rate will remain near or below 90%. If so, lumber prices will hover near the cost of production for several years. PC MARKETS Lynn Michaelis is president of Strategic Economic Analysis, a company which assists business managers in thinking about the future. Although the primary focus of his firm is housing and wood products, the compa- ny stays current on over all economic activities in the USA and globally. Lynn may be reached at stratecon@icloud.com or (206) 434-8102.