Hardwood Trade and Consumption Trends for the U.S. and Ohio

Transcription

1 Hardwood Trade and Consumption Trends for the U.S. and Ohio Matt Bumgardner U.S. Forest Service Northern Research Station Ohio Forestry Association Annual Meeting March 10th, 2016

2 Background themes Period of relatively low demand for many hardwood products (esp. at the higher end) Continued strong global competition Gradual improvement Scale and industry changes Small firms Customization Exports

3 Aggregate price index for green No. 1 Common Appalachian hardwood lumber (inflation-adjusted and indexed, = 100) (4 th Qtr 2015) W. Luppold, U.S. Forest Service

4 Prices for green 1C Appalachian hardwood lumber Species July 2009 July 2014 %-change Mar 2016 %-change Cherry % % Yellow-poplar % 515-6% Soft maple % 850-1% Red oak % % Hard maple % % Walnut % % White oak % % Data: Hardwood Market Report

5 U.S. hardwood lumber production W. Luppold, U.S. Forest Service

6 Major markets for hardwood lumber Appearance-based: Furniture Cabinets Flooring Millwork Exports Photo: AHMI Industrial: Pallets Railroad ties Photo: 2010 Ohio Hardwood Furniture Market Photo: USDA Forest Service Southern Research Station Archive, USDA Forest Service, SRS, Bugwood.org

7 Percent U.S. hardwood lumber consumption by sector Appearance-based Industrial Percentage of Appearancebased that was Exports: 16% 16% 17% 21% 25% 37%

8 Single family starts (000) No. of employees (000) Housing market s importance to hardwood industries Year Single family housing starts No. of employees - Cabinets No. of employees - Millwork

9 Billion $ Value of private U.S. construction, (19% of SF + MF) Single family housing Residential improvements Multi-family housing Nonresidential construction

10 p Thousand employees Employment trends furniture vs. cabinets Wood Household Furniture Wood Kitchen Cabinets Data source: Bureau of Labor Statistics

11 , 2002, and 2009 = 100 Employment indexes for last three economic expansion periods Millwork Pallets Cabinets WHF

12 2000 and 2007 = 100 Employment indexes for last two economic recession periods Millwork Pallets Cabinets WHF

13 Top 5 states for pallet employment Wood Containers and Pallets Rank State Percent State Percent State Percent State Percent 1 OH 12.9 CA 8.3 CA 9.6 CA CA 8.8 OH 8.2 OH 7.5 TX TX 6.2 TX 7.8 TX 7.4 OH PA 5.1 PA 5.8 PA 5.8 PA NC 4.9 NC 5.1 NC 5.2 NC 5.3 For Ohio, about 3,600 employees in 2014

14 Top 5 states for cabinet employment Kitchen Cabinets Rank State Percent State Percent State Percent State Percent 1 CA 9.8 CA 8.6 TX 8.8 IN TX 8.6 TX 8.4 CA 8.2 TX PA 6.8 PA 6.3 IN 6.6 CA OH 6.0 IN 5.8 PA 6.3 PA IN 5.4 OH 4.9 OH 5.5 OH 4.7 For Ohio, about 5,000 employees in 2014

15 Top 5 states for furniture employment Nonupholstered Wood Household Furniture Rank State Percent State Percent State Percent State Percent 1 NC 20.6 NC 13.2 NC 11.4 WI CA 12.5 CA 10.3 CA 9.7 OH VA 10.4 VA 10.1 VA 8.9 NC NY 5.8 NY 7.0 WI 8.8 CA WI 4.5 WI 6.7 NY 7.2 NY 7.1 For Ohio, about 3,500 employees in 2014

16 Billion $ Major U.S. import sources Household & Institutional Furniture & Cabinets (NAICS 3371) % 61% 59% China Vietnam Canada Mexico Total Data source: International Trade Administration

17 Market share estimates of imports in the U.S. Consumption = value of shipments + imports exports Import share = imports/consumption Data sources: U.S. Census Bureau; International Trade Admin.

18 Why makes the Holmes County furniture cluster a viable model? Customer driven... Customers select style, stain, and species, making each order unique - - customization Like the U.S. cabinet industry! Extremely fluid production process... Production of specific products (e.g., tables, chairs). A dining room group could be constructed by multiple producers - - specialization Supply chains... Finishers receive pieces from multiple shops Many operations use the same set of 15+ stains Outsourcing components locally = aggregate productivity

19 Market changes for hardwood lumber distributors, Customer size Order size % Smaller Larger About the same Not sure Orders sizes and customer sizes were decreasing The distribution function thus becoming important in the hardwood industry

20 # of employees Employees per establishment Wood kitchen cabinets Wood household furniture 0 Data source: U.S. Bureau of Labor Statistics

21 Percent Percent Sources of hardwood lumber (by volume) - Large firms Direct from sawmills 39 Distributors & concentration yards 16 Brokers / Other Sources of hardwood lumber (by volume) - Small firms Direct from sawmills 59 Distributors & concentration yards 13 Brokers / Other

22 Services requested from hardwood lumber suppliers Double-end trim Certified products Color sorting Just-in-time orders Special grading Imported species S4S Break bundles Width sorting S2S S S S Large firms Small firms Percent

23 Percent Year-over year changes in sales volume: Secondary manufacturers 81% lost volume in % lost volume in % lost volume in % lost volume in % lost volume in % lost volume in Much worse (off by 20% or more) Somewhat worse (off by 10%) Slightly worse (off by 5%) Slightly better (up by 5%) Somewhat better (up by 10%) Much better (up by 20% or more) Unchanged 2008 to to to to to to 2014

24 Number of establishments Cabinets (NAICS 33711) Millwork (NAICS 32191) Year-over-Year Cabinets Millwork % -5.8% % -6.4% % -5.5% % -3.1% % -2.4% % -1.5% 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3, Data source: Bureau of Labor Statistics

25 Million $ U.S. hardwood lumber exports (Top 5 destinations) % ~ 74% of total Canada China Mexico 1000 Italy Vietnam 500 Total to World Japan and the UK were slightly higher than Italy starting in 2012, dropping Italy to 7 th 106 other trading partners account for the remaining 26% Data: USDA Foreign Agricultural Service

26 Relative export scores* for hardwood lumber (NAICS ) for (OH = +3.6) (TN = +0.7) * Score = Percentage of export volume Percentage of employment

27 Relative export scores* for furniture and cabinets (NAICS 3371) for (OH = +3.4) * Score = Percentage of export volume Percentage of employment

28 Importance of coastal locations to hardwood lumber exporting Port Regions (incl. all port types water, land, air) % of U.S. Hardwood Lumber Exports East Coast* 63 West Coast 20 Great Lakes 12 Gulf of Mexico 5 * 70% of hardwood lumber leaving East Coast ports was destined for East Asia and Southeast Asia USDA Foreign Agricultural Service 2015

29 Top ten U.S. Customs Districts for exports of all temperate hardwood species, oak, and maple, 2013 Total hardwood lumber exports (value) Total hardwood lumber exports (rank) Oak lumber Maple lumber Customs District exports (rank) exports (rank) Norfolk, VA 325, New York, NY 282, Savannah, GA 184, b Charleston, SC 151, Los Angeles, CA 139, Seattle, WA 137, Baltimore, MD 103, Buffalo, NY 70, Charlotte, NC 62, San Diego, CA 61, Mobile, AL 45, Ogdensburg, NY 45, Duluth, MN 43, Detroit, MI 40, Pembina, ND 30, Laredo, TX 27, El Paso, TX 15, Portland, ME 14, USDA Foreign Agricultural Service 2015

30 Top five hardwood lumber-exporting countries* 1990 % 2000 % 2011 % United States 34.3 United States 23.6 United States 22.8 France 12.1 China 13.0 Belgium 8.9 Yugoslavia 11.8 Canada 11.5 Russia 7.2 Canada 7.8 France 5.3 Romania 7.1 Germany 5.8 Romania 5.2 Germany 5.9 Top Top Top * Temperate Region

31 Market share (by value) of specific hardwood products exported by the United States Product Percent --- Lumber Logs Veneer Cooperage Flooring Plywood Chips Other

32 U.S. hardwood product* exports and imports, * Includes hardwood logs, lumber, veneer, cooperage, molding, siding, plywood, and flooring

33 thousand cubic meters U.S. hardwood lumber exports by species Red oak White oak Y-poplar Maple Ash Walnut Cherry Yellow-poplar = +112% (from 2000 to 2015) Ash = +150% Walnut = +299% Data source: USDA Foreign Agricultural Service

34 Top five hardwood lumber-producing countries* 1990 % 2000 % 2011 % United States 33.2 United States 50.8 China 41.5 USSR 17.1 China 5.4 United States 24.9 China 11.2 France 5.0 Russia 4.0 France 5.1 Russia 4.3 Turkey 3.5 Japan 4.4 Turkey 4.1 Romania 2.4 Top Top Top * Temperate Region

35 Million cubic meters Worldwide hardwood lumber production, 1995 to UN FAO 2014

36 Global hardwood lumber consumption Year % change Country Cubic meters consumed per 1,000 people U.S % India % Brazil % China % Indonesia % Malaysia % Russia % Japan % France % Germany % Italy % Vietnam %

37 Summary Industrial markets fared better than appearance-based markets through the recession/housing downturn Improvement in appearance-based markets since 2012 Surviving companies have seen steady improvements in sales volume since 2009

38 Summary Per capita hardwood lumber consumption declining in many major markets (incl. the U.S.) Secondary wood manufacturing employment has started to improve, but the overall number of firms is still declining (but at a much slower rate)

39 Thank you