TIMBER PRODUCTS July 2017 Newsletter Volume: 07/28/2017

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As a responsible partner TP delivers to clients, employees and the industries we serve the confidence to drive value through the effective use of our diverse professional team. 

Business Notes

Yesterday West Fraser announced plans to purchase operations of the Gilman Companies, which includes 6 sawmills representing nearly 700 mmbf of capacity and a finger-joint mill in Florida and Georgia. Once the deal is finalized, West Fraser, will have over 7 billion board feet of capacity and represent 10% of North America’s softwood lumber industry with 43% of that capacity located in the US South.

From FEA’s Sawmill Profile 2017Q2 update:

*Pending Gilman Companies acquisition

(Forest Economic Advisors/Forest Business Network)

According to the Forest Products Association of Canada (FPAC), the duties for Canada’s major lumber companies are 7.72% for Canfor Corp. (TSX:CFP), 7.53% for Tolko Industries, 6.76% for West Fraser Timber (TSX:WFT) and 4.59% for Resolute Forest Products (TSX:RFP). Other Canadian producers will have to pay 6.87%.  Combined with the countervailing duties of around 20% announced in April, the combined duties amount to an averaged total of 26.75%.  The biggest impact of the combined duties will be felt in B.C. – Canada’s largest producer and exporter of lumber to the U.S.  The full effects of the combined duties remain unclear. The industry is currently weathering the U.S. penalties thanks to high lumber prices driven by the low Canadian dollar and strong demand in the U.S. for housing construction.  The U.S. still remains Canada’s largest export market, but it’s now shrinking as Canada begins to look toward other export markets like Asia. The U.S. represents about 50% of B.C. lumber exports; 30% goes to countries in Asia, mainly China and Japan.  (Sean Yoon / Business Vancouver)

Wages and benefits paid to U.S. civilian workers grew more slowly in the second quarter. The Labor Department said Friday total compensation was up 0.5 percent in the April-June period, compared to 0.8 percent growth in the first quarter.  Wages and salaries, which account for 70 percent of compensation costs, also rose 0.5 percent. Benefit costs, which cover pensions and health insurance, increased 0.6 percent.  In the past year, salaries and benefits have risen 2.4 percent. That matches the increase for the 12 months ending in March 2017, but is below the roughly 3.5 percent generally considered consistent with a healthy economy.  Compensation for state and local government workers grew 0.5 percent, compared to the previous quarter's gain of 0.6 percent.  Among private sector workers, compensation also rose 0.5 percent, compared to 0.8 percent in the first quarter. Private industry workers employed in maintenance, technology, financial and insurance fields saw the strongest wage and benefit growth.  (Matt Ott / Associated Press)