After recent earthquakes in Haiti and Chile, interest in building for earthquake resistance is high in Mexico, reports American Softwoood representataive Roberto Torres.  As a result, Roberto and Fernanda Vale, who also represents AMSO in Mexico, are coordinating a seminar in Guadalajara to help educate the area's architects, engineers and builders on how wood can be used to construct earthquake resistant buildings. The seminar, titled "Lumber Construction in Earthquake Sensitive Areas," will be conducted the morning of April 15 by a staff member of APA - The Engineered Wood Association

Mexican softwood importers and manufacturers are also looking for new suppliers because the Chilean earthquake seriously disrupted a major supply of lumber products to Mexico.   Roberto and Fernanda are arranging trade servicing visits between U.S. suppliers and Mexican softwood importers and users on the afternoon of April 15 and throughout the day on April 16. 

In his State of the Union Address, President Obama noted that: "...we need to export more of our goods.  Because the more products we make and sell to other countries, the more jobs we support right here in America.  So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America.  To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security."

Source:  http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address

A renewed emphasis on exports and export competitiveness should come as good news to the forest products industry which has been battered by the collapse of the US economy over the last three years.  The past year in particular has been devastating for the forest products industry, both in the US and the Pacific Northwest, as housing starts fell from 906,000 in 2008 to 554,000 in 2009 (their lowest level since 1945).  In response, US production of softwood lumber plummeted from 40.5 billion board feet in 2005 to just 21.2 bbf in 2009.  In the US west, softwood lumber production declined from 19.3 bbf in 2005 to just 9.5 bbf in 2009 while the number of sawmills operating in the western region fell from over 240 in 2006 to below 175 in 2009. With anemic growth in the US economy expected for the next two years, it would indeed be wise for forest products manufacturers to look offshore for growth opportunities.

The President's call to expand US exports will benefit from the renewed weakness of the US dollar, Figure 1.  Between 2002 and 2008, the dollar weakened substantially against both the Canadian dollar and the Euro, resulting in a resurgence of US forest products exports from $4.9 billion in 2002 to $6.5 billion in 2008.  The dollar strengthened briefly between March 2008 and March 2009, before continuing its decline through the remainder of 2009.  The last 9 months of 2009 saw the dollar weaken 17% against the Canadian dollar, 14% against the Euro and 8.1% against the Japanese yen.  The persistent weakness of the US dollar has dramatically improved the competitiveness of US wood products in international markets and provides an excellent opportunity for US forest products exporters to explore new opportunities in international markets.  This observation is reflected in the trade data which shows that US exports of all wood products increased by 14%   in January 2010, with log exports up 9% and lumber exports up 23.

Despite the economic crisis that has crippled the economies of most developed countries, there continues to be strong economic growth in a number of developing countries.  Recent economic projections suggest that the Chinese economy will grow 9.6% in 2010 and again 8.1% in 2011. economic growth in India is projected to be 7.7% in 2010 and 8% in 2011, and in Vietnam it should reach 5.3% in 2010 and 6% in 2011.  Each of these countries is highly dependent on imported wood, suggesting that there are good export opportunities for US wood products in these off-shore markets.

The competitiveness of US wood products is further enhanced by the continued imposition of a 25% tax on Russian log exports.  Russia, which just a couple of years ago provided over two-thirds of the softwood logs and almost half of hardwood logs traded globally, has seen its share of global exports decline substantially in recent years.  This is particularly true in Japan and China where Russian log exports declined by 65% and 32%, respectively in 2009.  Furthermore, recent legislation in the US, the EU and Japan requiring that imported wood products be produced from legally harvested logs should further bolster demand for US wood products, particularly in the export oriented economies of China and Vietnam.  The most recent export data shows that exports of US logs to China and Vietnam were up by 77% and 69% in January 2010 while lumber exports to these countries jumped by 75% and 93%, respectively. 

Clearly, the bottom line is that more small and medium-sized forest products need to become engaged in export markets.  Not only do export markets provide a strategy to diversify a company's market portfolio and reduce their exporsure to risk,but ehy also provide an opportunity to imrove producttivity and develop new products. For companies and managers who are new to the export market and hesitant about doing business overseas, numerous programs exist to help.