"Things Are Out Of Control": Supply Chain Collapse Leads To Lumber Frenzy, Soaring Home Prices

But it is lumber's soaring prices that have the most widespread impact: long-standing labor shortages are limiting efforts to boost inventories in places like the southern U.S., home to half of the country’s production. Many of the industry’s jobs are relatively low paying, require physical labor, and can sometimes be dangerous, which keeps people from filling open slots even when unemployment is high (the government's universal basic income programs only make this worse).

Yes: believe it or not, but the government's attempts to solve the labor problem crisis have sparked an entirely new crisis: one of even more unaffordable housing.

The number of people working in U.S. sawmills and doing wood preservation is down roughly 30% from 20 years ago, with the number of loggers dropping almost 40%, U.S. Bureau of Labor Statistics data show. While automation has reduced the number of workers required and increased efficiencies, analysts view current employment levels as below demand.

"The chronic labor shortage is a significant piece of the puzzle,” said Paul Jannke, principal of Forest Economic Advisors LLC, a wood product analysis company near Boston. “In the U.S. South, you don’t have the sufficient skilled labor to run all of the new capacity that is needed to meet demand.”

Of course, as with most commodities, the simplest solution to a surge in demand is to boost supply, and that's what is happening in the lumber market, although according to Bloomberg, lumber supplies aren’t expected to return to normal until late 2021, after this year’s peak in homebuilding. By then, demand could start to abate. But more importantly, output gains will help rebuild stockpiles. In the U.S. South, record production is expected this year, according to Mendell of Forisk.

That said, not all companies are facing worker issues. West Fraser said it’s not experiencing any labor supply challenges at its U.S. sawmills, and major OSB and siding producer Louisiana-Pacific also said it’s not seeing labor constraints. But the shortages are posing a hiring challenge for Sherwood Lumber, a wholesaler based in Melville, New York.

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