building - western hardwood• resource studies / market research ... hardwood lumber supply...
TRANSCRIPT
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Building With Wood: Housing, the Economy and Western Hardwoods
Western Hardwood Association2nd Annual Western Hardwood
International Convention & ExpositionMay 20, 2014
Portland, Oregon
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Forest2MarketData – Experience – Expertise• Neutral‐third party (independent in ownership and structure)• Capture of transaction level data is the only way to achieve a true measure
of market price. Transaction data is the foundation of all our products and services
Client relationships• Timberland owners and log marketers, forest products manufacturing
companies, pulp and paper, bio‐energy industriesMarket Intelligence• Resource studies / Market research• Timber price forecasts and economic analysis• Proprietary transaction level sales and cost data• PublicationsHeadquartered in Charlotte, NC; offices in Eugene, OR,
Appleton, WI and Curitiba, Brazil
©2013 Forest2Market®, Inc. 3
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Today’s agenda
• Western hardwoods market share• Western hardwood timber supply• Building construction trends• Economic outlook
©2013, Forest2Market, Inc. Slide 4
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
Bill
ion
Boa
rd F
eet
Hardwood Lumber Supply Available to the US Market from All Sources
ImportsWestern ProductionEastern Production
Sources: US Census and Hardwood Market Report
Graph: Hardwood Market Report*projected
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Western hardwood timber supply
©2013, Forest2Market, Inc. Slide 6
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Hardwoods in conifer forests• Mixed species stands in
forests west of Cascade mountains; alder, big leaf maple and others
• Private and state owned forests
• OR+WA = 200 MMBF~ annually; +/‐5% of total timber harvest
• Harvest restrictions on federal forests and private lands regulation
• Furniture, cabinets, millwork and pallets
©2013, Forest2Market, Inc. Slide 7
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Irrigated Poplar plantation forests east of the Cascade Mountains
• Hybrid row crop plantations
• 12 year harvest rotation
• Irrigated desert lands• 2/3 plywood and
lumber, remainder for pulp chips and biomass
• 35,000 acres +/‐
©2013, Forest2Market, Inc. Slide 8
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Western valley hybrid plantations
• Hybrid row crop Poplar plantations
• Agricultural low‐lands
• Short rotation• Mostly pulpwood,
few saw‐logs• Several thousand
acres sponsored by paper industry
©2013, Forest2Market, Inc. Slide 9
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Conifer values drive harvest levels
©2013, Forest2Market, Inc. Slide 10
0
500
1000
1500
2000
2500
3000
3500
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
2008 2009 2010 2011 2012 2013
DF average WA harvest
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Washington Red Alder harvest
©2013, Forest2Market, Inc. Slide 11
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60
80
100
120
140
160
180
200
‐
500
1,000
1,500
2,000
2,500
3,000
2008 2009 2010 2011 2012
alder other hardwoods total harvest
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Value comparison: Alder and Douglas fir sawmill logs
©2013 Forest2Market®, Inc. 12Source: F2M Benchmarks
$0
$100
$200
$300
$400
$500
$600
$700
$800
Jan‐08
Mar‐08
May‐08
Jul‐0
8
Sep‐08
Nov‐08
Jan‐09
Mar‐09
May‐09
Jul‐0
9
Sep‐09
Nov‐09
Jan‐10
Mar‐10
May‐10
Jul‐1
0
Sep‐10
Nov‐10
Jan‐11
Mar‐11
May‐11
Jul‐1
1
Sep‐11
Nov‐11
Jan‐12
Mar‐12
May‐12
Jul‐1
2
Sep‐12
Nov‐12
Jan‐13
Mar‐13
May‐13
Jul‐ 1
3
Sep‐13
Nov‐13
Jan‐14
DF West Domestic Red Alder saw Poly. (DF West Domestic) Poly. (Red Alder saw)
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Hardwood applications: Beauty
©2013, Forest2Market, Inc. Slide 13
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Hardwood applications: Functionality
©2013, Forest2Market, Inc. Slide 14
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2013 distribution for hardwood lumber
Western hardwoods:
• 70% KD lumber for doors, millwork, cabinets and furniture
• 20‐30% pallet stock
©2013, Forest2Market, Inc. Slide 15
43%
5%17%
5%
5%
9%
13%4%
US National Hardwood Consumption
pallets furniture exports millwork
cabinets flooring RR ties mats
PalletsMillwork, flooring and cabinets 19%
Source: Hardwood Market Report
exports
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Estimates of Consumption of US Hardwoods
2005 2006 2007 2008 2009 2010 2011 2012 2013
% Change
2012
% Change
2005
Pallets 3.8 3.7 3.6 3.5 3.0 3.2 3.26 3.27 3.643 11.4% -4.1%
Furniture 1.2 1.1 1.0 0.7 0.3 0.35 0.29 0.30 0.427 42.3% -64.4%
Exports 1.3 1.3 1.2 0.9 0.8 1.07 1.2 1.32 1.462 10.8% 12.5%
Millwork 1.3 1.2 1.0 0.7 0.4 0.43 0.24 0.26 0.387 48.9% -70.2%
Cabinets 1.6 1.5 1.3 1.2 0.7 0.4 0.34 0.36 0.392 8.9% -75.5%
Flooring 1.5 1.4 1.3 0.8 0.5 0.59 0.51 0.55 0.753 36.9% -49.8%
Railway Ties 0.85 0.96 0.92 0.94 0.89 0.89 0.98 1.04 1.114 7.1% 31.1%
Board Road/Mat Timbers N/A N/A N/A 0.2 0.05 0.075 0.12 0.16 0.369 130.6% N/A
Total Estimated Consumption 11.55 11.16 10.32 8.94 6.64 7.01 6.94 7.26 8.55 17.7% -37.1%
© 2014 Hardwood Market Report
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Building with wood
©2013 Forest2Market®, Inc. 17
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Residential construction value MM $ in place
©2013, Forest2Market, Inc. Slide 18
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
New single family New multi‐family Residential Improvements
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Changing demographics of housing
©2013 Forest2Market®, Inc. 19
0
500
1,000
1,500
2,000
2,500
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
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1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Total starts Single family Poly. (Single family)
Single family=66 % in 2013
1993 87%
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Percent of new homes 4 bedrooms +
©2013, Forest2Market, Inc. Slide 20
25
27
29
31
33
35
37
39
41
43
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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Hardwood applications: Style
©2013, Forest2Market, Inc. Slide 21
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Trends in multi‐family housing
©2013, Forest2Market, Inc. Slide 22
10
15
20
25
30
35
40
45
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
<1000 ft² >1400 ft²
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Hardwood applications: Efficiency
©2013, Forest2Market, Inc. Slide 23
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Commercial construction MM $ in place
©2013, Forest2Market, Inc. Slide 24
100,000
200,000
300,000
400,000
500,000
600,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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Hardwood applications: Utility
©2013, Forest2Market, Inc. Slide 25
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Economic Outlook – 2014‐2015
Slide: 26
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How does this recovery stack up?
©2013 Forest2Market®, Inc. 27
0
500
1,000
1,500
2,000
2,500
‐5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
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1998
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2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
GDP percent change % unused industrial capy % average annual unemployment Total housing starts
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Dwindling labor participation
©2013 Forest2Market®, Inc. 28
‐6
‐4
‐2
0
2
4
6
8
10
12
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
% annual unemployment rate % labor participation rate change
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College graduates in minimum wage jobs
©2013, Forest2Market, Inc. Slide 29
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2005 2006 2007 2008 2009 2010 2011 2012 2013
260,000
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Sluggish employment and salaries; the new reality?
©2013 Forest2Market®, Inc. 30
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General Economy: Gross Domestic Product
• OK general economy• Sluggish growth in
2014 and 2015• Post WW2 expansions
=58 months avg. • 78 months at the start
of 2016• Downturn in 2016• Drivers:
– End of expansion cycle– Fed’s scaling back of
QE
Slide: 31
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General Economy: Industrial Production
• Forecast increased production in 2014– Less increase than 2013
• Anemic growth likely for 2015
Slide: 32
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General Economy:Manufacturing/Non‐Manufacturing
Slide: 33
3035
4045
5055
6065
2008 2009 2010 2011 2012 2013 2014
Inde
x
Manufacturing
Non-Manufacturing
Breakeven Line
Source: Institute for Supply Management
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General Economy: Non‐Manufacturing
Slide: 34
3035
4045
5055
6065
2008 2009 2010 2011 2012 2013 2014
Inde
x
Non-Manufacturing
Breakeven LineAfter steady increase, the service sectoris declining
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General Economy: Jobs and Income
• >50% of new jobs added = low wage jobs
• Average weekly earnings down:– Shorter work week– Part‐time/Temporary
• 25‐ to 54‐year olds ‐ 25% of net jobs gained
Slide: 35
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Housing: Prices and Mortgage Rates
Slide: 36
• Home prices are up
• Mortgage rates are up
• Affordability is down0
1
2
3
4
5
6
7
100
110
120
130
140
150
160
Mortgage Ra
te
Hom
e Price Inde
x
Case Shiller30‐yr mortgage
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Housing: Annual Starts
Slide: 37
0
200
400
600
800
1,000
1,200
Thou
sand
Units
HistoricForecast
• 2014 = 1,045
• 2015 = 1,143
• 2016 = 1,032
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Housing: Annual Starts
Slide: 38
800
850
900
950
1,000
1,050
1,100
1,150
1,200
1,250
1,300Th
ousand
Units
HistoricForecast
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Enjoy the ride; but be wary of what’s around the bend!
©2013, Forest2Market, Inc. Slide 39
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Forest2Market®1200 Executive Parkway, Suite 255Eugene, Oregon 97401
www.forest2market.com
©2013 Forest2Market®, Inc. 40