Intermediaries in the U.S. Hardwood Lumber Market: Comparing and Contrasting Sawmills and Distributors

Abstract

The objective of this study was to better understand changes in the hardwood lumber supply chain from the perspective of lumber producers and distributors and to assess the degree of judgmental convergence between suppliers and buyers of hardwood lumber. Results from two nationwide surveys conducted in 2008 and 2009 were used for the analysis. Findings confirmed a decline in demand for red oak and an increase in species diversity in the market, although a majority of sales were dominated by five species. Results also showed an increasing importance of markets for lower grades of lumber, such as pallets, containers, and railroad ties, and a decline in demand for higher-value products such as furniture and kitchen cabinets. The importance of the lumber distributor role in the hardwood supply chain also has increased. Both sawmills and suppliers have increased their offerings of customized products and services in response to market demand. The customer base is changing, with smaller, more customized orders being sold to smaller businesses. Some of the trends and changes identified are structural and long-running in nature and are not expected to change in the short term.

Challenges and Opportunities for North American Hardwood Manufacturers to Adopt Customization Strategies in an Era of Increased Competition

“…This has important ramifications for hardwood lumber firms that are competing in this ever-changing business environment. For example, Espinoza et al [86] found that hardwood sawmills and distributors were providing more product-related services in recent years in response to increasing customer demands, including quicker delivery, just-in-time orders, certified products, and more lumber sorting for color and width. The numerous certification programs that currently exist for forest management and manufacturing processes can provide opportunities for companies to leverage green-compliant performance in their product promotion.…”

U.S. Hardwood Sawmill Log Procurement Practices

“…Since the 1990s, the primary forest products supply chain in the United States has been continuously adjusting to changing market conditions (Buehlmann et al 2007(Buehlmann et al , 2012Espinoza et al 2011;Woodall et al 2011). Economic globalization has brought considerable market share losses for U.S. manufacturers in the primary forest products supply chain Bumgardner 2006, 2013;Buehlmann et al 2007Buehlmann et al , 2011Buehlmann and Schuler 2009).…”

“…For this study, 40% of responding hardwood sawmills were small, processing less than 2 mmbf annually. Such small mills tend to offer more customized services and products than do their larger competitors (Anderson 2008;Espinoza et al 2011) as they are targeting custom and contract sawing jobs and serve niche markets. Thus, their log consumption is limited (Anderson 2008;Espinoza et al 2011), which may explain the persistence of many small sawmills disagreeing with statements of procuring logs on a consistent basis and providing stable markets for loggers.…”