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LUMBER PRICES: A MATTER OF SUPPLY AND DEMAND, WITH A NUMBER OF PLAYERS INVOLVED

Submitted by Christine Whelan

MAY 27, 2021 VOL. 2 ISSUE 20

“Lumber prices are the highest they have ever been”, according to Paul Jannke with Forest Economic Advisors

(FEA) in a CTV News story.

Some of the most common building materials for projects like decks and fences have tripled in price over the past year.

WHAT IS GOING ON?

Many experts in the lumber and forestry fields say, in a nutshell, it’s as simple as looking at the law of supply and demand, not enough lumber to cover the need, jacking the price up. However, when

you take a closer look, there are several factors at play.

DEMAND: FROM CITY TO SMALL TOWN AND A PANDEMIC INSPIRING DIY.

The trend to move from city living to small town living started years before the start of the pandemic. However, there has been a real upswing in movement in the last twelve months. This has created a larger need for the contractors building residential homes.

City News 610 says lumber prices are up because home renos are up 26 percent in the last twelve months since the year before.

Many people stuck at home during the pandemic have decided to renovate their houses inside and out and lumber yards are running out of wood, making many projects a lot more expensive.

SUPPLY: THERE IS A SHORTAGE, BUT NOT JUST IN LUMBER.

In a 610 CKTB article, where lumber

is referred to as “the new toilet paper’, Chuck McShane with the Niagara Homebuilders Association is quoted to say there are a number of factors that have led to the lumber shortage, including a railway strike, blockades, big box stores in the

U S contracting with Canadian suppliers for wood and, of course, the pandemic Some sawmills had to shut down during the pandemic disrupting supply chains. The Ontario Forest Industries Association (OFIA) said mills are doing what they can to catch up. Ian Dunn, President of the OFIA admitted, “Lumber mills are running as hard as they can and over time pricing will ease, but the reality is, in Ontario you can’t just flip a switch to increase lumber production.ยท

Joe Vaccaro, CEO of the Ontario Home Builders Association, tells CTV News in Barrie, the building industry has never faced supply chain issues like this before. “We’re not just talking about lumber, doors, windows. It’s across the spectrum. Builders are doing the best to manage it, but they are also managing it by letting consumers know the impact is going to be reflected in the price of a house.”

A HIDDEN SHORTAGE

According to Ontario Forest Industries Association, one of the other challenges facing Ontario’s forest industry is the labour shortage. “Addressing this issue will be critical for sustaining economic recovery in the future, given that one-third of the forest sector is set to retire by 2030.”

Project Learning Tree (PLT) Canada is working to bridge the labour gap through a new certification program.

Jessica Kaknevicius, Vice President of Education for the Sustainable Forestry Initiative (SFI) and PLT Canada spoke about this project at a conference.

“The challenge is connecting with more students earlier on, particularly those who have never considered a career in forestry. The answer to this problem may be experiential learning.”

Teachers in Ontario are being asked to give students more real-world experience to increase their employable skills, which means they are looking to employers to provide those opportunities, Tara Topping, Former Manager of Career Education with PLT Canada explained. “It’s an opportunity to test drive a career,” Topping said.

“For students, it can be a spark, and for employers, it can help address shortages of workers.”

Through this program, students who don’t have a background in forestry can gain perspective, engaging with staff virtually through Zoom panel discussions.

“Without sector professionals driving that content or putting pressure on school systems, the skills development that

is needed isn’t necessarily being met,” Topping stressed.

The goal is to get students who might not have considered forestry as a potential career, a way to get involved and give forestry employers the opportunity to engage with those students.

During the Montreal Wood Convention

in April 2021, an event consisting of a panel discussion among four CEOs, Cees de Jager, CEO of the Softwood Lumber Board spoke about the issue.

“The sector will still face a labour shortage, even as unemployment comes back to pre-pandemic levels”, de Jager said.

“The sector struggles with recruiting in its entirety. To engage those populations, we first have to recognize what it is about our industry that is not attractive, and we have to make sure there is discovery

of opportunities. It is an education and engagement process.”

Under the latest stay-at-home order, construction activities or projects and related supporting services, including demolition and land surveying, are allowed.

A write up out of Wasaga Beach about the lumber prices was hopeful in looking forward. “If provincial restrictions lift, it could bring more people out of the home and away from renovations, meaning a price drop later on towards fall or early 2022.

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