We are approaching the shortest days of the year, but things are looking brighter for Freres Engineered Wood. In case you missed it, our patented Mass Ply Panel won the Oregon Business & Industry and Here is Oregon “Coolest Thing Made in Oregon” contest; beating out some big and respected names in Oregon business. It is amazing that mature industries like the timber industry can still make waves with new products, and even more amazing that people can rediscover the environmental sustainability of what we do daily. It was quite an honor.
We finally finished repairs to our boiler system over Thanksgiving, fixing lingering issues after the June fire that burned through our fuel storage bins. It was an arduous task hand-feeding the boiler while the conveyors were being repaired and we truly appreciate those who put in the extra time. We now have sprinklered conveyors and fuel bins, so we will hopefully never experience an extended recovery like this again.
The plywood market is surprisingly resilient as we approach the end of year and winter weather. Prices have been stable and volumes have been consistently strong every week. Christmas and New Years Day both fall on Mondays this year, so there will be minimal disruption to our production schedules over the holidays. We don’t have any large projects over the holidays which would necessitate prolonged downtime. We are thankful the calendar lends itself to additional runtime considering our extended order file and positive panel sales outlook.
The last quarter has been the best of the year for veneer sales. LVL plants seem to have a bit more confidence in their order files going into 2024. There is still a reluctance to increase production by adding shifts, but most facilities seem to be running at current shift capacities. Demand has increased, veneer pricing has been stable to higher, and we are running overtime hours at our green ends and dryers. You wouldn’t know this if you tracked Random Lengths’ ridiculous recent downtrend in veneer prices, but you can’t fix stupid.
Mass Ply sales entered December with a solid order book and some very cool projects delivering at the end of this year — and even cooler projects breaking ground in 2024. We are currently completing the last batches of material requested of us for the Portland Airport T-Core project. We have been delivering product on the project for the past three years, but you need security clearance to see it in place. T-Core is anticipated to open to the public in May or June of 2024. Plan ahead to travel during that time, it should be an amazing experience.
The two challenges for business right now are residual prices and log prices. Chip prices are currently rock bottom due to a couple of paper plant closures in Washington. Residuals are contributing very little to return to the log right now, so we need our primary products to carry the weight of log costs. Log costs are going up as we see seasonal supply reduction. Very few of our federal or state timber contracts allow us to operate during the winter, instead preferring a very limited operating window in the Spring and Summer. Recent timber sale contracts have also been extremely expensive as producers see reduced contract offerings in the future due to the Private Forest Accord and the Habitat Conservation Plan. There is going to be a very painful time approaching us as lumber, panel, and engineered wood producers try to balance elevated log costs with finished product prices in the global marketplace.
We are thankful for everyone working with us this Christmas season. From all of us in the Freres family, blessings to you and your families.
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