Bulletin Board Magazine 2020, Volume 2

THE COVID-19 Lumber Cost Crisis

THE COVID-19 Lumber Cost Crisis by Michael Kurpiel, CGA, CGP Carter Lumber, Business & Development & Industry Relations Director

Michael Kurpiel

“Yes,Virginia, lumber pricing will come down.”

5. When it was deemed “safe” to have employees return, a large percentage declined and opted to stay on unemployment. 6. Construction became red hot throughout the summer and the supply was no where near the inventory levels needed due to points 1-5. That, ladies and gentlemen, is a very condensed, but factual, summary of the Covid-19 Lumber Cost Crisis. As of now, the viable mills that were closed are reopening. Unemployment benefits are ending for most who can return to work and workers are slowly returning to their jobs in harvesting, production, and transportation. As you read this article take solace in the fact that lumber prices have started their descent to some sense of reasonable dollar amounts. We most likely will not see lumber numbers return to its post Covid levels until February at some point, barring any resurgence of Covid which will throw many wrenches into the works. Let us all hope that we will soon be out of this nightmare and that this “new normal” was just a “temporary reality.”

Building departments did not know how to deal with inspections so builders had to work through inspection delays and permit delays. But the worst was yet to come. Covid-19 affected operations within product warehouses and manufacturing plants causing delays and greatly increasing lead times in acquiring items necessary to build homes. Kitchen cabinets, appliances, windows, plumbing fixtures, lighting fixtures, and many other items were deeply affected by the “new normal” of operations. Now to lumber and sheet goods: 1. The mills took to heart the economists deeply revised projections. 2. They laid off personnel and, in some instances, closed entire plants. 3. This set off a chain reaction where layoffs occurred in trucking and rail. 4. The mills that remained opened would need to close if any employee tested positive for Covid so sanitizing measures could be applied. This is not like a 7-11 closing for a few hours as it would take at least 72 hours to sanitize the mill so employees could return causing a delay domino effect, stressing an already heavily depleted inventory.

But when? Well, lumber is starting its downward trek after hitting historic heights in September where lumber and sheet goods were, depending on the product and on average, 180% up from March. March: when Covid-19 shut down a mighty nation, our United States. The lumber price increase was directly due to Covid-19. Let me give you a brief explanation… When all of us realized that Covid-19 was going to cause a shutdown, well respected economists from our industry almost unanimously declared that new construction would fall of by as much as 75% from last year’s projections in 2019. In most states, construction was stalled due to state governments and in a few states shut down completely. Here in New Jersey we had a few uneasy weeks of stalled construction but through the work of the New Jersey Builders Association lobbyists, and our volunteer builder and associate leadership, we were able to have construction deemed an essential service and we made the Murphy Administration’s cut for Phase 1 of reopening. It was a great advocacy win for our members and our state industry. However not all was great nationwide for the building industry. Don’t misunderstand, housing was red hot, sales were jumping, but we had the Covid roadblocks to face.

Bulletin Board | 51 | www.shorebuilders.org