Economy cutting into profits of timber industry
Friday, June 26, 2009
The timber industry has struggled before but never like in today's economy, said Natalie Sprink of East Perry Lumber Co.
"It's been a rough year," said Sprink, whose grandfather, Marvin F. Petzoldt, founded the company in 1945. "There have been sawmills across the country that have shut down, but we haven't done so yet. We've had to learn to adjust and try to be flexible."
Sprink said the slowdown has been gradual for the Frohna, Mo.-based company. Though none of the 80 employees has been laid off, Sprink said production hours have been reduced by 25 to 30 percent.
"This has changed our way of thinking," Sprink said. "We're now in survival mode, but we're OK and still running. We have enough sales to keep us going, and that's what we're trying to pursue."
East Perry Lumber Co. is a reflection of what is happening to lumber companies throughout the state.
Brian Brookshire, director of the 315-member Missouri Forest Products Association, said the timber industry has been directly affected the most by the housing industry, which has seen a drop in new home construction and sales. He said when the demand for new homes is low, the need for higher quality lumber is also lower. In this recession, demand has declined 25 to 30 percent.
The association is sponsoring the Midwest Forest Industry Show that starts today at the Show Me Center.
Brookshire said that in the past 18 months Missouri's timber industry revenue has fallen by 25 percent to about $4.3 billion a year.
"The people who produce the material are operating at a loss right now," Brookshire said. "A lot of our mills at a best-case scenario are break-even. When demand for the products is decreased the way it has, the profit margin has gone away."
Brookshire said the hardest-hit area of the state has been in the south-central Missouri, whose communities depend on the timber industry.
"The bulk of people that work there are dependent on the forest industry," Brookshire said. "Even if they don't work at a mill, they may drive a truck that transports materials or some other type of related job."
Betty Price, who has helped manage Price Sawmill in Piedmont, Mo., since her family first began the operation in 1969, said their production schedule has been cut in half for the past two months. Customers cut down on their orders, reducing the mill's workload, she said.
"A lot of people have been affected in the same way in this area," Price said. "But we've been very fortunate because we're not in debt."
Steve Foster, president and owner of Missouri Fibre Corp. in Scott City, said business is 10 to 20 percent slower than normal, particularly in its wood chip products. Contracts for those products are normally on a two- to three-year basis, Foster said, but his customers have requested their orders be reduced by 25 percent.
Despite the slowdown, Foster said he is cautiously optimistic about the future. In the company's 76-year history, he said, the corporation, which employs six people and is part of the larger company Foster Brothers Co. of Columbia, Mo., has never laid off an employee. He said he doesn't expects that to change.
"That makes me proud," Foster said. "We try to look for new markets, anticipate downturns and position ourselves to succeed in the future rather than cut back."
Others, too, are optimstic.
"Many of those in the forestry products industry are family-owned operations that have generation after generation running them," Brookshire said. "They've built these businesses from the ground up and are resourceful people.
"They may have had to cut back on staff, but they'll bounce back," he said. "They're very resourceful and resilient people."
Sprink echoed the thought.
"I hesitate to make a prediction how long this will last, but I do feel the industry will eventually come back," Sprink said. "It will come back when the housing industry bounces back, and that will light the fire for us. We'll come back because wood and wood products are essential to the U.S. and the world."
Want to go?
What: Midwest Forest Industry Show
When: 8 a.m. to 4 p.m. today and Saturday
Where: Show Me Center, 1333 N. Sprigg St., Cape Girardeau
Details: Exhibitors from the forest industry will showcase products at the event, sponsored by the Missouri Forest Products Association. Those attending the show will also have an opportunity to attend sessions on the pallet industry and the forest industry's goals to optimize trucking efficiency while improving air quality, highway congestion and public safety