U.S. hardwood industry disintegrates from trade war with China – By Jean Lotus (UPI) / Oct 17 2019
Oct. 17 (UPI) — A possible trade deal with China announced last week might not be broad enough to save U.S. hardwood timber companies from layoffs, cutbacks and closings, industry sources say.
Chinese tariffs slapped on exports of red oak, walnut and other hardwoods have cut almost 50 percent of the revenue in the industry since 2017, according to the American Hardwood Export Council. Lumber companies have responded by closing sawmills and eliminating shifts.
“When China slapped a 25 percent tariff rate on red oak logs and lumber, it cratered the price producers can get for red oak. That’s a huge chunk of demand that’s disappeared,” said Tripp Pryor, the council’s spokesman. “This drop is larger than if all of Europe and all of Southeast Asia just quit buying U.S. hardwoods overnight.”
Tacoma, Wash.-based Northwest Hardwoods will close their Mount Vernon, Wash., and Maury River, Va., mills in November, laying off 100 employees, the largest U.S. hardwood supplier said.
The decision was made “as prospects dimmed for a quick resolution to the U.S. and China trade dispute,” the company said in a statement.
The hardwood industry employs about 2 million people in the United States, according to the Hardwood Federation. Hardwood sawmills usually are family-owned and situated near timber forests in the Northeast, South and Pacific Northwest.
Hardwoods exported from the United States include ash, beech, birch, cherry, hickory, maple, red oak and walnut. Hardwoods are used for flooring, furniture, cabinets, doors and decorative trim.
Tariffs have been like a “buzz saw” through Appalachian hardwood businesses and the families that own and operate them, Frank Stewart, executive director of the West Virginia Forestry Association in an opinion piece sent to various publications.
“There is no other market to absorb 32,025 shipping containers of American Red Oak that sold to China in 2017. The tariffs have taken all profits from U.S. hardwood exports to China,” he wrote. “It will drive mills out of business this year, losing jobs and outlets for landowners to sell their timber.”
Since the United States’ trade war with China, the value of exports of U.S. hardwood lumber dropped by almost 57 percent to $54 million in August 2019 from $124.8 million in August 2017, according to the export council. All lumber exports to China fell by $615 million compared to the previous year.
Even if the trade dispute is close to resolution, as the White House announced Friday, the damage already might be done, the council’s Pryor said.
Buyers in China are turning to Russian birch and aspen providers, as well as West African illegal exports of endangered kevazingo wood from Gabon, which leads to extreme harvesting deforestation, Pryor said.
“Once [buyers] have those sources of hardwoods, they will be awfully hard to get back,” he said. The U.S. hardwood industry buys timber from private landowners and practices “sustainable forestry” Pryor said.
In 2018, after soybeans, hardwood lumber was the largest export product to China by value.
But when the U.S. Department of Agriculture passed an emergency $1.6 billion trade aid package, hardwood producers had to share a meager $5 million with producers of softwoods and plywood.
Multigeneration family hardwood companies in New England are feeling the pain, said U.S. Rep. Annie Kuster, D-N.H. The trade dispute is “ravaging this industry,” endangering the livelihood of mill workers, craftsmen, loggers and foresters, Kuster said in July in a letter urging more support from the USDA and co-signed by 37 other members of Congress.
Tariffs and the damage to hardwood companies are hotly discussed topics at monthly meetings of the 50-year-old Los Angeles Hardwood Lumberman’s Club, said Stephen Ondich, CEO of Commercial Forest Products, a hardwood distribution company.
“If you’re a mill that strongly depends on Chinese purchases, you’re really sweating bullets right now. There’s no other market that will pick up the slack for what the Chinese are not buying,” Ondich said.
He added: “The most troubling thing is the loss of infrastructure. When sawmills close down, the loggers go into other industries and they’re not going to come back.”
Tacoma, Wash.-based Northwest Hardwoods will close two sawmills because of financial strains caused by Chinese tariffs on hardwood exports, the company said. Photo courtesy of Northwest Hardwoods