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Hard times in the wood industry
Along with many other parts of the economy, the forest products industry is suffering. Demand for wood products is tightly linked to housing activity, so the housing crash created ripples that are negatively affecting loggers, sawmills, flooring and cabinet manufacturers – almost all wood manufacturers – across the state.
Even before the recent economic troubles and the bursting of the housing bubble, there were challenging conditions for wood products producers. Globalization has introduced new sources of competition from around the globe. This has suppressed prices for wood and wood products. In fact, a recent analysis by an economist at the University of Michigan suggests that lumber is cheaper than it has ever been (after accounting for inflation). In addition, the most prevalent species in Tennessee (the oaks) are currently not as fashionable for many applications as they once were. This ‘double-whammy' is resulting in a forest products market in Tennessee that many experienced industry folks are calling the worst ever. A number of mills have closed and many more are operating on reduced schedules.
The longer-term outlook is more positive, for those mills that can survive until the market picks up. Tennessee has an abundant, high-quality, sustainable forest resource and American hardwoods are well-regarded in the world market. Demand for wood products is expected to increase in general and fashion may change again to favor darker woods like oak.
The forest industry is a large part of Tennessee's economy. Like other parts of the economy, the wood industry is suffering badly but, although the timing of the recovery is uncertain, we can look forward to a better future for the wood business.
For more information, contact Adam Taylor at 865-946-1125 or AdamTaylor@utk.edu .
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