Page 14 - Georgia Forestry - Fall 2017

$53.34
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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Data courtesy of Timber Mart-South in Athens, GA.
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fourth-generation tree farmer. “They can’t take the trees back to Canada. They see a good thing down here and they are investing money.
“It’s a global economy now. It’s not a United States economy. I have shipped logs from down the road all the way to China.”
West Fraser, a British Columbia company, bought Georgia softwood lumber mills in Dudley, Blackshear, and Fitzgerald from the Gilman Foundation, as part of a $430 million deal that was announced in July. Interfor, which also is in British Columbia, opened a U.S. head- quarters in Peachtree City. It has acquired seven soft-wood mills in Georgia since it started making deals here four years ago.
In July, European-based DS Smith purchased 80 percent of Interstate Resources for $920 million. Interstate makes, among other things, corrugated boxes for shipping. The company has four facilities in Riceboro. E-commerce is booming and Amazon needs to get its boxes from somewhere, right?
There have been nine other deals the last several years involving Georgia’s most precious commodity: wood.
In the meantime, Canfor, a British Columbia firm which has operations in Thomasville and Moultrie, closed a sawmill in Quesnel, B.C. West Fraser closed its operation in Houston, B.C. The mountain pine beetle is decimating some forests in Canada and the wood supply is diminished, which has forced the closings. On top of that the Canadian government, which owns the majority of the country’s timberland, is placing
restrictions on more timber harvesting. There is displacement in the Canadian wood industry and Georgia stands to gain because Georgia, after all, is the king of timber in the United States. The inventory here is mostly privately owned and landowners have been good stewards, with harvesting almost always
followed by replanting.
The state is green, maybe too green,
Rhodes said. He’s pessimistic about prices. That’s why he welcomes the new investors and the chance to spin his green into gold.
“I think we have an oversupply of timber right now. We’re still in a small recession,” he said. “Until things get ironed out I don’t think there is going to be much of a demand for timber. I would love to have another sawmill come to the region. Competition builds healthy markets.
“If I had $80 million I might do it myself. There’s an available site in Washington, with a rail line.”
Rhodes shakes his head from side to side in dismay. There are mills for shavings and pallets near him, but just one high-end conventional lumber mill in Morgan County. That mill can be besieged by requests from landowners to buy timber. That is not a healthy market in his opinion.
Now you understand why Rhodes welcomes the neighbors from the north. In 2006, soft wood timber sold for $50 a ton. Now it’s $20, he said.
“I saw a number recently that we have 15 billion trees in this state,” Rhodes said. He wants to get down to business.
Brooks Mendell, an Athens-based forest products consultant, agrees with Rhodes about the large inventory of wood on the ground, pointing out that there is certainly no sustainability issue in the state.
“We have so much wood. It’s a magnet for those companies to come here,” Mendell said of the spate of mergers and acquisitions.
The issue is the housing market. Will it come back? Investors are trying to read the intentions of Millennials. Will they buy houses, or crowd into steel and concrete urban areas?
“We have been recovering, but in terms of the housing market to get back to normal level we still have 25 percent more growth in the system,” Mendell said. “We have a long way to go, as amazing as that sounds. This is a housing and lumber story.”
All that wood has created a buyer’s market to some degree, but there is much upside to the buyers coming south and trading their Canadian loonies for American dollars. One, they bring some different methodology and science to the industry. Two, they are starting fresh here and need people/labor.
“I don’t care who owns the saw mills, I have not heard about forest product com- panies new to Georgia firing anybody,” said Bob Izlar, the director of the Harley Langdale Jr. Center for Forest Business at the University of Georgia. “They’ve mod- ernized the mills. They brought in better technology. They are producing better products. They brought know-how and kept all the people, which is rare.”
Izlar has a point. The existential threat
12 | GEORGIA FORESTRY
Pine Saw Timber prices Quarterly from 1996-2017
Average Dollars Per Ton