Issue link: http://palletcentral.uberflip.com/i/1390499
PalletCentral • July-August 2021 17 Rene Harpin President Spec Wood and Marketing Solutions The market was not ready for this kind of situation. In June 2019, a 2x4x8 stud was costing half the price of a medium latté at Starbucks and last year 2/3. Was it fair? The present situation is not good, but we will probably not go back to low past prices. We did a few things to help both the customers and the mills: do longer runs of one item to produce more volumes per day, think "outside the box" with large and small mills that produced dimensions adapted to the pallet specs instead of standard commodities. We have the privilege to have access to good steady volumes of precut material. We never take our customers or the mills for granted. We earn trust and nurture relationships one load at a time. Regarding what we're telling our customers: it is important to pay fast to be on the top of the list and be flexible on the products they can use. We have been informing our customers with newsletters, emails and conversation on the lumber situation. We have graphs and documentation to support the latest increases so they can justify their pallet prices. Commodities are down – 20% dragging down some of the SPF low grades with it. There could be more adjustments until construction grades firm up again. Hardwood, SPF low grades and SYP have not yet filled the pallet manufacturers' yards. Cut stock is in high demand because of labor situation and commands a premium. The global manufacturing sector seems to have strong order files, so they will need more pallets, not less. The demand for used pallets is stronger than supply, pushing recyclers to purchase cut stock. Unfortunately, we do not see major relief for a certain time. This is a tough situation for the pallet industry. We hope it will soon go back to something more acceptable. John Lieber President Profile Technology There is no question that lumber and labor shortages will continue through 2021. These shortages are also affected by COVID, and now federal aid programs are discouraging qualified workers from returning to work. Until the supplemental federal and state income is eliminated, it will be difficult for many businesses to achieve their total capacity needs in employing workers. There will be continuing delays in many products and services. There appears to be an abundance of softwood timber in the South and Southeast. However, the current problems relate to the challenges in getting more processing equipment, mills, and labor into the region. As production rates increase in this area, timber prices would revert to more normal pricing. Unfortunately, I think high lumber prices will continue through 2021, and we hope to see a return to normalcy in the summer of 2022. Concerning our tooling business, we work longer hours and are increasing orders of certain products and steel to meet the increased requests from our customers. We continue to see manufacturing facilities ask us about more efficient tooling and tooling to turn their scrap into a profitable product, as well as anything that can help reduce their stressed need for additional hard-to-find employees. Ronnie Barrett Regional Manager Pallet Systems and Recycling Lack of supply in the market- place has caused increased cost in every sector from cores and nails, to labor and new lumber. We are seeing many customers pull away from the roller coaster ride of new lumber prices and try to maintain cost controls by switching to recycled pallets. With the ongoing government stimulus, we are finding it harder than ever to recruit labor. Customers are eager to get back to work after a year of shutdowns, COVID regula- tions, and ongoing supply chain difficulties. Pallet Systems and Recycling strives to be as "green" as possible. We are maximizing lumber yields by switching customers to other grades and sizes of recycled pallets. We have moved away from new lumber and shifted our focus to become a 100% recycled "green" operation. Pallet Systems and Recycling has been blessed to have some of the best customers in the world. We are open and up front with them with respect to lead times, costs, and any potential production delays. We are in a unique marketplace and open communication with our customer base has been instrumental in the success we have had. We see market conditions lasting throughout 2021.