Expert says housing costs could go up 10 percent this year

By TIM HEARDEN

Capital Press

REDDING, Calif. -- Having endured two of their industry's worst years since World War II, timber experts say things are looking up -- very slowly.

Forest products businesses still face plenty of challenges, not the least of which is a recent glut of exports of raw wood to China that's driving up domestic prices.

But the hint of a housing recovery and a federal focus on creating jobs could mean more opportunities in the woods, industry advocates said Feb. 11 during a logging conference seminar here.

Financial and economic advisories publisher Kiplinger has suggested that nationwide housing starts could increase by as much as 10 percent in 2011, said Steven A. Brink, vice president of public resources for the California Forestry Association.

And the Republican-led U.S. House of Representatives and the Obama administration's focus on creating jobs could lead to a few more federal timber contracts this year, said Tom Partin, president of the American Forest Resource Council.

"We didn't used to be able to talk about jobs," Partin said. "Now jobs matter, and this administration is wanting to get people back to work."

The panel discussion was part of the 62nd Sierra Cascade Logging Conference, which is held in conjunction with the Forest Products and Construction Equipment Exposition.

The event, which features logging sports exhibitions, truck-driving competitions and other activities, was mostly held at the Redding Convention Center and nearby Turtle Bay Exploration Park. The conference was held Feb. 10-12.

Federal timber contracts this fiscal year have totaled 350 million board-feet, below a target of 409 million, Brink said. Meanwhile, private operations last year yielded 745 million board-feet, about half the normal yield, he said.

The good news, he said, is there's about $100 million in fire suppression funds still in the U.S. Forest Service's account.

By September, Brink expects about 350 million board-feet to have been sold in fiscal 2010-11, which is about the same as last year, he said. While there's talk of a modest increase in housing starts, most experts don't expect the market to pick up significantly until at least 2013, he said.

"There's a 23-month supply out there" of homes lost in foreclosures and short sales, Brink said. "That's not good."

The "800-pound gorilla" in the industry is exports to China, Partin said. With limited domestic timber resources available, China's importation of logs and wood chips reached an all-time high in 2010, the Seattle-based Wood Resources International LLC reported Feb. 14.

In the western U.S., log exports are greatly impacting supply for domestic processors, Partin said. This creates a "mismatch" between what processors are paid for their products versus how much they're paying for saw logs, he said.

However, a recent survey of timber-related retail businesses found that more than 60 percent are optimistic that the industry will rebound, said Ken Dunham, executive director of the Lumber Association of California and Nevada.

"It is coming back," he said, "and it is coming back slowly."