The presidential election and looming federal decisions on the economy, the debt, tax policy, and healthcare kept many hardwood business owners uneasy for much of 2012, and shelved plans for capital improvements and hiring. Even with the election over, few will make new investments before they see satisfactory tax policy and fiscal cliff resolutions.
Nonetheless, signs of economic growth now include improved housing construction and sales. In Sept, Americans bought new, single-family homes at the fastest annualized pace in 2 years, and single-family housing starts were the highest since Aug 2008. Once Hurricane Sandy cleanup is complete, rebuilding and repairing homes will provide an added boost to hardwood product manufacturers.
Export markets will also provide a substantial lift to U.S. hardwood producers in 2013 and beyond. Projected exports of 1.34 billion board feet in 2012 will break the 2006 record, and volume will only grow as the world economy and demand for legal and sustainable temperate hardwoods improves.
After 5 years of falling demand and excess production—during which time buyers more or less set the prices—it seems clear the hardwood industry is transitioning back to a “seller’s market,” which will last at least as long as it takes for producers to again become willing and able to invest in capacity expansions.
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