STEEL FABRICATION • STRUCTURAL STEEL
WELDING & PRESSURE WELDING
1-800-573-5048
glendale@atomjet.com
1520 Charles Ave., Brandon, MB
Kovach says that when a mill loses two to six weeks of produc-tion,
there is no way to make it up. They can’t run more than they’re
built for and equipment requires regular maintenance.
“We are still seeing shortages on the OSB side and that’s a big
issue for framing residential homes, especially now as folks want the
work done before winter hits. I’ve heard that the prices of gypsum
and insulation are also going to go up. I haven’t been able to verify
this, but all supply chains have been affected by the pandemic, so
it only stands to reason. They are also running into system supply
issues and this is definitely going to have an impact on their ability
to fulfill commitments,” she said.
Now factor in transportation. The majority of the lumber that is
transported across the country and to the U.S., is done by rail. Back
in March, the rail industry had to furlough about 4,000 employees
due to the lack of work. Nothing was moving and there was no
demand for lumber products. Once they were called back to work,
collective union agreements gave employees 15 days to respond.
When they did come back, they had to go through safety training
all over again. All this added to the time it took to get back up to
speed. So even though the mills were increasing their production
levels, the transportation industry couldn’t keep up because they
didn’t have enough people.
Almond notes that 85 per cent of Canfor’s mills operate on rail
tracks and are now almost back to transportation levels seen before
COVID-19 hit. “We’re still selling production five or six weeks out,
but at least now as soon as we produce it we can ship it out.”
Let’s build a deck
Inventory was already short going into the year and with the pro-duction
curtailment it got even leaner. As the pandemic progressed,
and people were spending more time in their homes, they began
thinking about making improvements to increase both the value
and comfort. Once the building suppliers and hardware stores were
deemed essential services and were able to remain open, DIY proj-ects
exploded and demand for building supplies soared to totally
unexpected heights. Meanwhile, in the construction industry, hous-ing
starts were also in high demand – about 245,000 in Canada, and
1.5 million in the U.S., which is above the five-year average.
COVER STORY
Kovach knows that
no business wants to
increase their pricing,
but at the same time
they need to run their
operation and keep
the lights on.
For any commodity, low supplies and high demand are going to
impact the price and lumber is no exception.
“We are at extraordinary price levels today,” said Almond. “We
don’t expect them to stay there as certainly supply will meet up with
demand and the market will cool off. But we’re running late into
the year now and a lot of these trends don’t appear to going away
anytime soon. As long as we continue in the COVID-19 environ-ment,
this could be something we will see from the demand side
until at least into 2021.”
Kovach knows that no business wants to increase their pricing,
but at the same time they need to run their operation and keep the
lights on. “They cannot afford to take a hit when paying 30 to 40 per
cent higher for lumber – maybe even more.”
What’s next?
“No one could have predicted this happening,” said Kovach. “Most
of our members were looking forward to 2020. With the increased
housing starts and basing their projections for 2020 on past years,
everyone was confident they could fill the demand. This year has
made it very difficult to have any prediction for next year. If you
order too much product and it doesn’t move, it has to sit in the
yard. So many factors go into decision-making. It’s very tough
for everyone.
“Right now, at WRLA, all we can do is try to provide infor-mation,
debunk myths and personal opinions with facts that we
can back up. Because we know that despite all the negativity and
strained relationships, by working through this together and pro-viding
education, understanding the supply chain and all the many
factors that go into it, our members will be able to build some
bridges and prepare for the future.” n
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