May 8, 2020
We are now in the middle of a one-week shutdown as we match our plywood production levels to the sales that are available in the marketplace. COVID- 19 and the subsequent shutdown of economies around the world have wreaked havoc on wood products markets. There was still optimism in February, as panel prices and veneer prices enjoyed long awaited increases. We sold out all inventories in our warehouses and were backlogged on some veneer and plywood orders. The abrupt changes in the marketplace in such a short period of time could not be more pronounced.
We have persisted through almost 6 weeks of plywood order files barely reaching 15% of our weekly production levels. Our inventories slowly grew and orders across all product lines that were once consistent disappeared rapidly. We finally reached the point where a one-week shutdown is prudent as we reevaluate the marketplace and see where the opportunities lie.
It may be hard to believe that markets could recover rapidly from such a devastating blow to economic activity. However, we have a firm belief in the virtue of the American people to survive, persist, and eventually to prevail. The American people want success and prosperity and will work hard to attain it. We have faith that all the pessimistic projections are inaccurate and that brighter days are closer than they currently appear.
Plywood and Veneer
There are indications that economic improvement is on the horizon as stay-at-home orders are lifted across the country. Last week our plywood orders were the strongest they have been since the virus reared its head. The orders were close, but not quite enough to cover a full week of plywood production. Orders are still hard fought and even harder won, but they are becoming available.
Veneer sales maintained adequate levels in most areas to maintain production on a limited basis. We will continue to match production to the sales that are available to us. There are positive signs in veneer markets as our customers begin to take additional orders as well. Overall, the trend is improving, and we hope that this week of downtime will be the only one the company needs to take as we crawl our way out of this tragedy. We understand the effect this has on your lives and the stress it can place on families.
The co-gen plant and the new Mass Ply facility are largely unaffected by the downtime we are taking this week. The co-gen plant benefits from a long-term power purchase agreement from the utility which allows its operation certainty during uncertain times. Obviously, electricity production is considered an essential activity. Thank you to everyone at Plant 5 for working consistently throughout this downturn.
Mass Ply Projects
The Mass Ply plant is showing its potential to be an integral part of our production. We have four structural projects delivering this month that have been a year in development. While these are not large from a volume standpoint, each project is proof that we can deliver exceptional products to unique structures. We are working towards massive projects by the end of 2021 and even larger projects going into 2021. We will announce these projects as they are confirmed and implemented. In addition we are aggressively working to develop unique industrial products which no other producer has the capability to manufacture. Look for more news as our panels are deployed on bridge projects across the country.
While these seem to be extraordinary times, we have experienced world changing events over our 98 years of operation, and our existence today proves that we have survived them all. Most recently, during the Great Recession of 2009, we took multiple weeks down as the financial markets recovered. Like that trial, this too shall pass. We intend to be an even stronger company moving forward. Our best to you and all your families, we send our best thoughts and wishes to you and all your loved ones.
Tyler Freres, Vice President of Sales
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