Wood products firms see business boost

Eugene is among the areas where production is rising
Employees at Lanz Cabinets in Eugene April 18 in the building where they produce cabinets for multifamily buildings, apartments and condominiums. The company is building a new 18,000-square-foot building to keep up with the demand.AP

EUGENE — Inside three adjacent buildings at Lanz Cabinets in west Eugene, workers are churning out hundreds of cabinets a day for apartments and homes, from Seattle to San Diego.

Cabinet orders, especially for apartments, are growing, so the 300-employee company is growing, too. The company is hiring, and it recently broke ground on an 18,000-square-foot addition.

Lanz is just one of Lane County's wood products companies that is seeing business pick up again because of stronger demand in the U.S. housing market and relatively steady exports.

These companies have survived the depths of what many in the industry called a "depression," not just a recession, and they say they're looking forward to several years of steady growth.

Kevin Binam, president and chief economist at the Western Wood Products Association in Portland, forecasts three "very good years" for the wood products industry — 2013 through 2015. Then in late 2016, growth will turn down again as inflation sets in and the Federal Reserve raises interest rates, which could cool down the housing market, he predicts.

But for now, there is much to celebrate.

"All in all, (these are) the best times the building products industry has seen since maybe 2006," Binam said.

"It's been a robust start to the year, for sure," said Shawn Church, editor of Random Lengths, an industry newsletter based in Eugene.

"U.S. lumber production is up about 12 percent," so far this year, he said.

After climbing steadily since late last year, lumber prices just have begun to moderate, Church said.

Employment in wood products, which is still Lane County's largest manufacturing industry, is on the rise again after years of decline.

Wood products manufacturing employed 3,300 people in Lane County in February, up from 3,100 in February 2012. And mining and logging employed 800 people in February, up from 700 in February 2012.

Those are the latest available figures from the state Employment Department.

The department lumps logging and mining jobs together, but labor economist Brian Rooney said that logging accounts for the vast majority of jobs in that sector.

Employment in both wood products manufacturing and logging are still below pre-recession levels of 4,500 in manufacturing and 1,000 in mining and logging in 2007. And they are far short of the industry's peak in the 1970s.

In 1979 in Lane County, 11,900 people worked in wood products manufacturing and 2,400 worked in logging, according to Employment Department figures.

Many local wood products companies are scheduling more hours for their existing workforce, and some are hiring.

The jobs are welcome in Lane County, which had an unemployment rate of 8.3 percent in February.

Lanz is advertising for 30 openings, including assemblers, forklift operators, truck loaders, sawyers and production supervisors.

Before the recession struck, Lanz had 360 employees. Employment sank to a low of 180 people in 2010 and has been rising slowly since then.

The company now has 300 employees and anticipates reaching 340 by the end of the year, owner Brent Lanz said.

"That's not quite where we were at pre-recession, but it's pretty close," he said.

Lanz has three production divisions: cabinets for single-family homes; those for multifamily units; and European-style "frameless" cabinets, which are popular in high-rise apartments.

In the depths of the recession, orders for cabinets for new homes slowed, so the company shifted workers from that line to the multifamily line, which churned out cabinets for apartments and condos. It added the frameless division three years ago.

"Our diversity is the thing that got us through the rough times," said James Cowles, director of manufacturing operations at Lanz.

Today, all three lines are busy — so busy that employees routinely are working an hour or two of overtime every day. And the company needs more people, he said.

The Swanson Group, which is based in Glendale but operates a plywood mill in Springfield, also looks forward to improved markets this year.

"Everything is better across the board," president Steve Swanson said. "We saw pretty substantial increases last fall.

"We weren't convinced then that they were going to hold through the spring. Frankly, I expected things to get a little soft in December through April, but that didn't happen."

The Swanson Group has been adding workers gradually since its workforce hit a low of 500 employees in 2009, Swanson said. Today, the company has about 800 workers, which is down from a peak of 1,270 in 2007.

The Swanson Group produces studs in Roseburg, green dimensional lumber in Glendale and plywood in Glendale and in Springfield. It has fewer facilities operating now than it did before the recession because it sold a sawmill in Noti to Seneca Sawmill in 2011, and it still owns, but has closed, a mill in Glide, Swanson said.

The market is recovering from very low levels, so even though it's improving, it's nowhere near pre-recession levels, Swanson said.

"We're (at) less than 1 million (U.S. housing) starts," he said. "By historic standards that's very, very low. The reason we have good markets is demand has outstripped current production levels."

Which direction the market heads now "really is a matter of how fast production comes on compared to how fast consumption increases," he said, adding that he expects production to increase gradually to meet rising consumption.

"The only thing that could kill it is if production comes on (too) strong ... Then we could overshoot the market."

"But I don't see that happening," he added. "I'm hopeful that we in the industry are a little smarter than in the past and will contain ourselves and be happy with making a little money without running so darn hard."

Others agree that log supply is the biggest challenge producers are facing in today's market.

"Log supply, that's the biggest 800-pound gorilla in the marketplace," said Binam, of the wood products association.

That is just the latest challenge for manufacturers, who have faced much worse in recent years. They will approach it and other challenges with the lessons they've learned while keeping their operations afloat during the recession.

Swanson said his company is certainly "more cautious" coming out of the recession.

"I hope my memory is long enough where I don't make some of the same mistakes I did before," he said.

"We've been a growth company for the last two decades," Swanson said. "From the late '80s to 2007, we went from 200 employees to 1,200. We were on a pretty rapid growth cycle.

"We may have grown longer than we should have, and we've had to retrace our steps a bit. That was a learning experience."

But all in all, the companies that have survived are stronger for it, he said.

"If you look around the industry, particularly in the Willamette Valley, you'll see most of us are family owned companies with a remarkable resilience," Swanson said.

"People have really hung in there, and I think they'll get rewarded for it."



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