By Rose Braden
​This article appeared in Softwood Buyer and the Wood Products Import/Export News

Countries that are open to international trade grow faster, are more productive, and provide higher income and greater opportunities for their citizens.  Being part of the global economy through two-way trade has been proven to drive economic growth and reduce poverty – locally and globally.  Likewise, companies who export know that having international and domestic customers can help them survive market downturns. In the U.S., these downturns are not uncommon, particularly in the building products industry.  Over the past several decades the U.S. has experienced a recession nearly every eight years while housing starts have plunged every six and a half years.

When the 2007 global recession hit, bringing with it a collapse in the U.S. housing market, U.S. forest products exports reached $5.2 billion - $698 million of which was softwood lumber.  U.S. softwood lumber exports continued to increase in subsequent years while domestic lumber consumption declined 33%.

While exports account for a small share of U.S. lumber production, for the hundreds of small, often family-owned lumber mills and wholesalers across the country, exports meant they could continue to operate in the black, retain employees, and outlast the downturn.  

Exports are also important for large corporate lumber producers. As corporate forest products companies expand to the U.S. South to capitalize on Southern Yellow Pine resources, these companies must look beyond the U.S. to maintain their massive new mills. This means creating new international markets – both geographically, and in terms of developing new innovative ways to expand consumption. For example, the U.S. industry is teaching builders overseas how to incorporate less frequently used U.S. species in certain framing applications to improve performance and lower costs.  The U.S. industry is also training builders in areas prone to high winds how to build safe and durable wood structures in lieu of concrete and steel.
Skyrocketing structural lumber prices have made it much more challenging to compete in the export market, however opportunities do exist. Specifically, in higher grade clears, which have not seen price increases to the degree that structural grades have. From North Africa to the U.K., demand is buoyant for clear Douglas fir and cedar, thanks to demand from high-end builders and an increase in detached home offices.

Exports to Canada, while down slightly this year, reached $127 million and continue to be stable as Canada’s housing market has defied COVID. Canada is a great market for U.S. suppliers as shipping is relatively inexpensive and Canadian buyers are accustomed to standard U.S. lumber dimensions and grades. However, analysts predict a possible bubble as immigration – the top driver of growth, has stalled and the short-term rental market has vanished.   

U.S. softwood lumber exports to Mexico declined 18% this year, yet the U.S. remains Mexico’s leading softwood lumber supplier accounting for 38% of its total imports. Mexico buys massive volumes of low-grade lumber, which is in tight supply this year. However, Mexico is well positioned to consume large volumes of U.S. lumber when prices return to normal levels. Tariffs on goods from China have contributed to more nearshoring to Mexico and U.S. demand has boosted imports of goods and agriculture products. In August, U.S. imports of goods from Mexico returned to March 2020 levels after a precipitous drop in April and May. U.S. phytosanitary requirements, which require that all incoming pallets be heat treated, helps support demand for U.S. species, particularly by pallet producers and customers in northern Mexico, who report that they value the quality of U.S. softwood lumber.    
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The 2020 housing market has been incredibly strong and, thanks to low mortgage rates, an increase in repair and remodeling work, and housing shortages, lumber demand is projected to remain strong through the coming year.  However, if COVID tells us anything it is that interrupting events can come out of nowhere. Companies who are well diversified are best equipped to survive market uncertainties.
 
 
 

In the final months of 2017, SEC hosted two groups of incoming delegates from Mexico and Thailand. The Mexican representatives visited Seattle before attending the NAWLA Traders Market in Chicago, and shortly thereafter we hosted the Thai group in Portland for a comprehensive tour of the softwood industry in Oregon & Washington. While appealing to different markets, both of these missions focused on innovation at the mill and in construction, highlighting sustainability, efficiency, and the symbiotic relationship of these two properties. 

 These tours are at the heart of SEC's mission: to build relationships through more personal outreach. Hosting delegates is a strategic way to get importers from different markets to begin thinking about American softwoods, first because of the connection we've built, and finally because of the quality of our wood and the examples we have illustrated by examining creative end-uses. In demonstrating how and why the U.S. consumes wood, we join others to our cause, as our sites speak for themselves: wood is transformed for visitors into an exciting material that brings light and warmth into corporate spaces, character into homes, and carries enormous long-term benefits for the health of our planet. 

To prepare these inbound missions, our itineraries are carefully crafted to exhibit a holistic system that allows a burgeoning market to understand the advantages of American softwoods, and what it would take to replicate our best-practices. Our itinerary for the Thais is a great example: it included tours of a forest, multiple mills, a CLT exhibition, and construction sites that exemplified the possibilities of mass timber, while also demonstrating the opportunities for efficiency in construction that wood can provide. Likewise, our Mexican delegates visited finished sites where mass timber meets sustainability in public and corporate spaces. The seminars we arrange are supplementary, offering an opportunity to delve deeper and ask questions about what the visiting groups have seen. This technical training privileges structural lumber and construction sectors: when you teach people how to build with wood, they buy wood. And, of course, we include networking opportunities for our members, and exposure to our industry. 

There are upcoming inbound missions planned for 2018 that will use these same systems-based tenets. A delegation from China in January will focus on mass timber engineering systems, while an incoming Pakistani group in July will focus on sourcing. Ensuring our programs meet the needs of the markets they're designed to inform is crucial, as these are countries in different stages of development. Pakistan is an early-market  distribution area, while China has the infrastructure to handle mass timber and will be excited about the opportunities U.S. softwood can bring their growing skyline. 

In 2016, SEC partnered with the Cochran Fellowship Program to host groups from Egypt, Pakistan, & Peru, utilizing other FAS funds outside our core MAP and FMD programs. The Cochran Fellowship Program provides short-term training opportunities to agricultural professionals from middle income countries, emerging markets, & emerging democracies.
 
Cochran fellows come to the United States, generally for 2-3 weeks, to work with U.S. universities, government agencies and private companies. They receive hands-on training to enhance their technical knowledge and skills in areas related to agricultural trade, agribusiness development, management, policy and marketing. 

Of these three groups, Pakistan is currently the largest market and the best immediate opportunity for U.S. softwood products. Pakistani demand for wood products has increased significantly in recent years, reaching 370,000 cubic meters in 2015. U.S. exports to this market are strong, reaching record levels and growing at an average annual rate of 47%. Pakistan has become the seventh largest market for U.S. softwoods and has set themselves up to be a major distributor in the Middle East region.

As China's economy continues to struggle, it becomes increasingly important to create ties with wood industry representatives in the East in order to understand their perspective on the downturn and the opportunities for growth during a strained period of trade. This is precisely why three Chinese delegates traveled to Los Angeles this March to participate in Western Wood Product Association's annual meeting, providing insight into the Chinese economy's impact on wood imports. 

During their trip, the delegates (alongside a Chinese reporter) were able to visit Portland, where they toured four U.S. construction sites, each exemplary models of softwood construction that highlight the structural integrity and interior beauty of U.S. softwoods:

1. Clay Creative  72,000 square feet and six-stories tall, this wood-framed office building is built with timber beams, glulam, and flooring assemblies and expected to achieve LEED Platinum standards, becoming one of the most energy efficient buildings in Portland's central east side.
2. One North A two-building project surrounding 14,000 square feet of courtyard space, One North features a cedar-paneled exterior, interior Douglas Fir beams and columns, light-frame dimension lumber walls, and timber decking. 
3. Albina Yard This office space is the first example of domestically fabricated CLT used in a building-wide structural system in the United States! The CLT panel floors were installed on site in under three hours and allow the structure to span longer distances with fewer beams.
4. The Hudson (Vancouver, WA) With its heavy timber structure and 15' high ceilings, each room in The Hudson has a unique floor plan that alludes to the open warehouse spaces that predominated the area in the early 1900s. 

After touring Columbia Vista and Sierra Pacific Industries in Aberdeen, WA the next day, our Chinese visitors  have a better understanding about our West coast softwood lumber species, their availability, and production. 

Leading the charge in market education overseas, Brian Court of Seattle-based Miller Hull has given seminars in Guadalajara and Beijing on Green Building during August and October, using the award-winning design for the Bullitt Center as a case study. In addition to a waterless composting toilet system, rainwater harvesting system, and rooftop solar panels that yield an annual net zero energy use, the six-story office building features warm softwood interiors made up of glu-lam Doug Fir columns and beams.