Happy New Year. We have all heard the expression “what a difference a year makes,’ but I have new expression for the recent economic downturn that our country has experienced. It goes like this: “What a difference a prolonged recession makes.” Look around the area to see how many builders, construction companies, framers, lumber yards and wholesalers are not around anymore. The landscape has also changed dramatically in the truss and component manufacturer’s industry. Over the past five years, it is estimated that one out of every three truss manufacturers has gone out of business or closed down one plant or more. Think about the ripple effect throughout the country. This has affected lumber mills, builders and lumber dealers.
Of course, this is not all bad news. Opportunities have been created for companies like Zeeland Lumber & Supply who have been diligent about emerging from this recession in a good position. Over the last several years Zeeland Truss & Component has made several moves to expand production capacity and ensure the construction of quality trusses and wall panels for our customers. First of all, we moved the truss plant from Hamilton, MI to Wyoming, MI. This gave us more than double the production space and we now have covered sheds for lumber as well as a fully blacktopped facility in Wyoming along US-131. We also have added two more production lines, both with state of the art set-up technology. The first one has automatic jigging tables which form the contour of the truss for the lumber to fit into; the second has laser heads that project the image of the truss onto the table. Both of these speed up the set- process and ensure quality trusses on the construction site. We have also added more saws, delivery trailers and wall panel equipment to ensure our ability to meet your jobsite demands. Another new venture for us is floor truss production. In the past we relied on other truss suppliers to build floor trusses for us. We now have floor truss production in our plant and have been building a lot of floor trusses for both residential and multi-family projects.
With all the changes and additions at the truss plant, our goals continue to be focused on high-quality components, on-time delivery and the cost leader in the marketplace. At the truss plant, the doors are always open and we would like to show you what we are doing here. Give us a call at 616-8791185 to schedule a tour to what is happening at the new Zeeland Truss & Components.
Since my previous letter OSB prices have moved up considerably. It appears to me that any lumber production in the U.S. is being sold into whatever market is willing to pay the most. For example, a mill in Grayling, Michigan is shipping cars of OSB as far as the West Coast and Colorado even though those markets have facilities that are closer. This is happening because the mill is making a better return when it ships over longer distances. The railroads have made the process of getting cars easier and the speed of transit has continued to increase. Additionally, with the cost of truck freight, rail becomes more competitive the further the market is away from the mill. So the process of seeking ‘out of area markets’ by the mill operators is happening where ever OSB is made. What does this mean for you? I believe price structures will eventually become uniform across the various regions. With the supply and demand of product in a precarious balance, prices will move up in lower paying regions due to the ability to move product to the highest paying region.
As I said in previous letters, we should see the highest prices in the first half of the year. Hopefully by the third quarter some of the new mills coming on line will moderate the prices by the middle of 2013. In the end, however, expect to pay more than you did last year. Don’t expect the return to six or seven dollar OSB, and please do notbid jobs based on the averages of 2012.
Lumber prices also have gone up in the last month. By early December, many mills were able to sell past the normal winter shutdowns and into 2013. Along with a serious upward push on the future board, dimensional lumber has gone up significantly. This is true for almost all major species. As of this writing, lumber has stalled in pricing, but it is still at a higher price than any time last year. I will go out on a limb and say we should see a pull back in prices in February before we return to these levels later this spring.
The leading contributors to the increase in prices are the narrow 2×4’s and 2×6’s. They have gone up significantly. Part of the reason is they are used extensively by multi-family builders and are big export items. The ‘wides’ have also gone up but not as much in percentages as the ‘narrows.’
I would also expect to see some increases in engineered products this spring as they contain OSB and narrow wood products in some cases. Demand for these as a floor substitute has increased in many parts of the country, ours included.
As a substitute product I believe you need to look at LSL to take some of the cost of beams and LVL out of your homes. In most cases they will work wherever LVL works and are considerably less in cost. Please call your salesperson form more information.
Happy New Year to everyone. It is my hope and wish that you have a successful, prosperous and blessed 2013. I recently read an article from the Home Builder’s Association of Michigan stating that it was forecasting new residential building starts to increase 39% in 2013. Whether or not that is exactly what happens, I believe we are looking at some uptick in demand this year, and we are preparing for that with our team at Zeeland Lumber and Supply.
As you are already aware, our Pro Contractor Showcase is just a few weeks away. After much discussion, we changed the location to the Eberhard Center in downtown Grand Rapids. After a number of shows at the Doubletree conference center in Holland, we believe this change of venue to a more centrally located conference center will be a benefit to all. We will have over 40 supplier partners showcasing new and existing products and services. Our sales staff will also be there to assist with any inquiries that you may have and to network with you.
Of special note, we have Paul Isely speaking on the state of the housing industry at 4:00 p.m. Paul is a professor at Grand Valley State University and is very knowledgeable on the housing industry. I have heard him speak before and I believe you will not be disappointed to hear his economic outlook. I encourage you to sign up for the show and the seminar. Thanks and all the best in the New Year.
Feel free to call our marketing manager, Tony Huver, at 616-879-1106 to register.
We have compiled all of the links we featured this month and posted them below. We found them to be helpful and informative, and we hope that you do too.
Decking Done Right by My Fix it Up Life.
Grand Rapids and Detroit Rebound by MLive
Homebuilder Confidence at a High by Time
Social Media and Construction by the Construction Marketing Association
Housing Starts Hovering Near a Four Year High by INMAN News
Top Ten Kitchen Remodeling Tips by Divine Caroline