Plywood mills enjoy renaissance

  • Associated Press
  • Tuesday, May 11, 2004 9:00pm
  • Business

The plywood economy was in free fall. The county had served the mill with foreclosure notices for failure to pay $800,000 in back taxes, and rumors of bankruptcy were rippling through the lunch room.

“One out of three of you will be let go,” Killgore, the president of McKenzie Forest Products, told the men in the cafeteria, steadying himself against the door.

Six months later, Killgore’s company is out of the red, one of 34 mills in the Pacific Northwest that has been revived by an unprecedented increase in plywood prices.

In May 2003, the price of 1,000 square feet of plywood sold for $392, according to Random Lengths, a trade publication in Eugene, Ore. A month later, prices took off “like a rocket,” said Jim Enright, general sales manager at Rosboro Lumber, another plywood manufacturer in Springfield.

By June, the same product sold for $435, and in August, prices topped $500. Prices reached an industry high of $650 in November – a record that was broken month after month in the first part of this year, with the latest peak at $735.

“That’s the highest price in the history of this publication. It’s the highest in the history of the industry,” said Shawn Church, editor of Random Lengths, which for 60 years has tracked weekly price averages for different forest products.

Lumber prices are so high, said Michael Carliner, an economist with the Washington, D.C.-based National Association of Homebuilders, that they are tearing the profit out of new construction.

“There’s 300 wood panels in an average home. The wholesale price used to be $6. Now it’s $17,” Carliner said.

The plywood renaissance is a direct result of the booming housing industry, which represents 70 percent of the plywood market. Last year, builders broke ground on 1.5 million single-family homes, a building industry record. Houses are also bigger than they used to be, Carliner said, from an average of 1,600 square feet in 1973 to more than 2,300 square feet in 2003.

“That translates into more wood,” he said.

For many in the plywood industry, the dramatic recovery is not a time to brag but an opportunity to recover.

Since 1989, 35 of Oregon’s 60 mills have been shuttered, and 6,000 jobs have been lost – a decline brought by the listing of the spotted owl as an endangered species, which resulted in the closure of vast reaches of Northwest forests to logging.

But the turnaround has allowed Killgore to pay the Lane County assessor, replace broken machinery and recoup $3 million in environmental cleanup costs.

The resurgence has hit all aspects of the timber industry, but plywood has seen the most pronounced recovery.

While the industry as a whole grappled with the spotted owl, it was plywood alone that suffered from the introduction of oriented strand board, a composite product made primarily from Canadian aspen. Introduced in 1980, the cheaper board has taken a sizable chunk of the plywood market, said Jack Merry of the Engineered Wood Association in Tacoma.

Still, many caution that the wave is about to crest.

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