RE: RE: RE: RE: RE: MR 1derful It was the suggestion that lumber had a great advantage going forward. They are actually quite equal. Lumber does the basic framing but the rest of the building process or closing in so to speak is done with sheeting. OSB is fast replacing plywood in most areas. It is a strong product cheaper and does just as good of job. At first builders were leery if it would stand up. Today all the exterior walls and roofing is done with OSB. And as was just mentioned it is being used to laminate floor joists, I beams and supports and other items which used to be the exclusive domain of lumber planks. I believe before it is over they will be manufacturing dementional pieces that do not need to be laminated. Both sectors lumber and sheeting are important. The weakest if there is one in my opinion will be the Plywood mills. As the Fiber supply dwindles. The premium logs which go for plywood also make top grade high priced dementional lumber.
The pine beetle has destroyed a lot of timber When they talk of running out of logs because of it. They mean Lodge pole pine trees. There are other species the bug does not affect. Fir, Spruce, Larch, Hemlock, Cedar, and they also cut Yellow pine for some applications. And there are others I have not mentioned.
There is more than enough timber to see us through this super cycle we are entering.
As to saying the shutting down of those mills will cause a shortage of manufacturing facilities. Not true ! ! A few of those mills are being refurbished and brought back on line. But even that is not necessary. The advancement in technology and automation in the lumber industry has been mind blowing. It used to be a good sized sawmill would manufacture 100,000 board foot measure of lumber a day. Today good mills can do a Million FBM per shift .
The mills that shut down did so because they were inefficient with outdated equipment or lacked proper management and could not compete. When that happens in order to hang on to their cutting rights. They have to log and manufacture the total quota they have been allotted for each year over a five year period. They do not have to be balanced every year. But the five year total cut must be completed by the end of each five year period. If they do not meet those conditions regardless of economic conditions. The Government retracts the unfinished portion and will allot it to other mills who will. They cannot over cut the quota or they face stiff penalties. Under those conditions the Government can forecast their own income from forest industry royalties.
The Quota rights the mills have alone is worth millions of dollars so they guard it dearly.
To put some perspective on it. A logger who holds an evergreen contract with a sawmill to log and deliver 25 truck loads per day for 10 months of each year. Without including his equipment. Only the rights to the job is worth a half a million dollars or more. The next time you see a new logging truck going down the road. Think just under 1/3 of a million dollars right there .
In this cycle those companies who were strong enough to get this far are going to do well going forward. whether it's lumber or OSB WEF is lagging a bit but those who hold it will do just fine as will those here, at Canfor or any others. like IFP. or even American companies. This is not a Canadian super cycle, it is going to be world wide for the next 3 to 4 years. The weak have been weeded