Forest Products: COVID-19 Hangover Impacts Wood Products.

AuthorHayes, Steven
PositionMONTANA ECONOMIC REPORT

During 2021, new home starts rose to their highest level since the Great Recession, even as gains in home prices continued. New construction and remodeling fueled unusually high lumber prices during 2020, which turned into record-shattering prices during the first half of 2021 before returning to more normal levels in the fall and winter (Figure l).

Montana mills, like many around the country, were limited in their ability to boost production because of labor shortages and supply chain disruptions. However, sales from Montanas wood products industries during 2021 are expected to nearly double those of recent years--with the increases resulting solely from higher prices, not higher production levels (Figure 2).

Timber harvest volumes in Montana, as well as lumber and other wood product outputs during 2021, were estimated to have changed very little, decreasing slightly from 2020. Private and state land harvests during 2021 changed little. National forests in Montana fell short of their annual timber sale target by 30% despite the strong national demand for wood products and modest gains in delivered log prices paid by Montana mills (Figure l).

The closure of two larger sawmills--R-Y in Townsend during 2020 and the Idaho Forest Group mill in St. Regis in late 2021--contributed to overall lower lumber production in the state. Likewise, total forest industry employment in Montana is estimated to have dropped during 2021, with the two mill closures and other facilities challenged to keep full shifts or find additional people willing and able to work.

The outlook for 2022 is fairly positive, with more typical market conditions and federal policy changes that should benefit the forest industry. But there are lingering questions about log and labor availability. The recently signed Infrastructure Investment and Jobs Act provides additional funding and federal authorities that are anticipated to boost forest management and timber-related activities on federal, state and private lands in Montana and throughout the western U.S.

Over the next five years, $3.3 billion is being allocated for wildfire risk...

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