Timber shortage causes closings, concerns about lumber industry

 

When the announcement came in late March that Neiman Enterprises, who has been operating in the Black Hills since 1936, was shuttering its Hill City sawmill, it was met with concern not only for the employees that would be losing their jobs but dismay about the future of the timber, logging and wood products industry.

In their announcement, President and CEO Jim Neiman said, “If given the opportunity to purchase timber to keep the mill running, we would have done that. Keeping the Hill City location running would be in the best interest of the forest and communities over the long term. The Hill City location employs 120 people along with 12 contract crews.”

Neiman, who is the third generation in the company, continued, “Lumber markets have been exceptionally high for the past year and have broken all-time record highs. The problem here is purely the lack of timber available for purchase in the Black Hills and we rely on the U.S. Forest Service for approximately 80 percent of that supply.”

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Neiman, who owns cattle and has a range management degree, said he looks at the carrying capacity of a forest just like ranchers do regarding grazing and AUMs, “We get the majority of our lumber in the Black Hills from the Forest Service. Some people want to take it back to the historic highs of 1999 levels which is what caused the bug infestation and major fires when you allow the forest to get overstocked. The Black Hills has always grown more here—historically 120-140 million board feet, and in the last few years we haven’t even averaged removing 100 million feet. Our company’s question is what level of inventory should we have here to maintain a resilient and healthy forest? And that is where the debate is at. Some want to take it back to the 1999 historic levels and then guess what you’re going to have–major fires and bug epidemics come along in the next 10-15 years.”

He noted that if they don’t keep the cut up to the sales quantity to what they have agreed to put up, it will affect other mills. There won’t be enough logs. “We have a commitment to reach a certain level for this year, but there is a new forest plan going together in the next three years and we’re very concerned with where that ends up.”

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Nieman added that it’s essential to keep thinning the forest and continue livestock grazing in the national forest. “You take cattle out of the forest and the shrubs, forbs, oaks and brush take over and you have less production for grasses and then the trees can’t regenerate and have a ladder fuels that reaches up into the pines and causes a higher fire danger. It’s critical this country realizes how important timber harvesting and grazing is.”

Neiman Enterprises supplies lumber to Menards, Home Depot and major window companies. Items they produce in the Black Hills have jumped over 100 percent in a year, with housing lumber such as 2’ x 4’ and 2’ x 6’ boards increasing even more. Housing starts are over 1.5 million nationwide.

“It depends what you measure that, to, though,” Neiman explained.

Last March, prices had collapsed due to COVID and everyone was restricting the supply and cutting back thinking this was going to shut down the economy; but all of the sudden people have realized they can work remotely, so they’re moving to rural areas and building homes, or staying home and doing home improvement projects.

“Now you have a supply chain that is short but the demand keeps going up, resulting in very high prices,” Neiman noted.

“The cost of building a home has increased $25,000-$30,000. That will affect the lower-income homes, but there are people moving out of urban areas who sold their houses way more than what they are buying here, so and have the cash. Currently, there remains a very strong market heading in to the fall. After fall, it’s hard to predict. However, if regulations, interest rates and taxes increase, housing starts will deteriorate.”

Successful businesses roll their investment into both infrastructure and their communities, and Nieman Enterprises is doing just that. They are putting tens of millions of dollars into their equipment to get more efficient. In addition, plans are being developed to start a forestry program under Range Management at the University of Wyoming; they setting up funding for a professor in forestry at Black Hills State, and are helping Gillette College set up maintenance and electrical programs. In addition, the company is funding in Hulett for a medical clinic.

Bryan Lorengo handles onsite safety training for membership as well as handling federal policy for the Montana Logging Association. He explained reasons for the skyrocketing lumber prices: many mills took down time during COVID and cut shifts, but are now looking to ramp up again, but that poses challenges; secondly, about 10-years ago, the U.S. imported about a third of their softwood lumber from Canada, but those imports have dramatically declined due to beetle kill and wildfire.

“Canada salvaged a lot of that timber, so now instead of the U.S. getting roughly a third of the softwood lumber, they are getting less than 20 percent. so that’s becomes a driving factor for supply,” Lorengo explained. “Take those two factors and combine them with the fact that people are building new homes or remodeling their homes—spurred on by low interested rates, so demand for lumber is up. Those factors have created the perfect storm.”

In spring 2020, RY Timber Mill in Townsend closed “indefinitely” citing timber supply problems, and is currently sitting idle. “They’d open it if they had a consistent log supply,” said Lorengo. “In addition, yjr labor market is out there, but we are competing with the construction industry, so having the labor to run the mills is a challenge. Saw mills are putting in significant capital investments. They don’t want to reduce jobs, but they have to be lean. They aren’t laying off people, but they’re transitioning folks to other areas.”

He admits to being frustrated with the politics of natural resources. “In our association, we work with both parties. Forest management is part of the solutions on national forest lands. The 2014 farm bill had key tools for forest management and we’re seeing those developed today. I have optimism about the Good Neighbor Authority which says that states have the ability to manage federal lands. Included in that is a Forest Advisory Committee which was put together under Montana Governor Bullock, and what’s come out of that is 3 million high-risk acres in the Montana Forest Action Plan. That consists of deemed at risk for fire, mortality and tree disease. You put those tools together and then you have our legislature and governors supporting in forest management with Governor Bullock and now Governor Gianforte. I believe this works because it’s been bi-partisan decisions on these lands.”

Lorengo explained that agencies to be staffed appropriately, and there is a real need for litigation reform. “There are fringe groups who won’t sit at the table and discuss common sense solutions to manage federal lands. But we can mitigate those issues and move the dial forward on forest management.”

I believe there is broad support for active forest management on federal lands. That starts with working with our stakeholders including local, state and federal agencies, conservation groups and industry partners. He explained that at least in Montana, the Forest Service personnel has been receptive to visiting with the Montana Logging Association and their members. “We all want wood products, and the agency is starting to understand that the choice is down to having a sustainable timber harvest versus losing it all in a wildfire. In addition, why import lumber products when we have plenty of sawmills and we can produce wood in a sustainable way?”

–Rebecca Colnar

Cutline: Timber harvest, like this one from several years ago, has declined due to a myriad of reasons including less logging on public lands, higher demand and a reduction in imports from Canada.