The state’s wood products industry is on the mend, paying higher wages to workers and more for logs to keep up with a slow increase in demand, a new University of Montana study has found.
The Bureau of Business and Economic Research released its findings Friday for the first half of 2014, showing a 20 percent increase in workers’ wages over the same period last year.
“What stood out, the wages were up a good bit from the same period last year,” said Todd Morgan, director of forest industry research with BBER. “There’s this steady, gradual improvement, and we haven’t seen that for a while.”
Through the first half of this year, Morgan said, the industry has recorded its strongest run since 2009, one of the worst years since the close of World War II.
He said production workers were up 3 percent this year and lumber production has increased 4 percent over last year. Annual lumber production is up nearly 40 percent since 2009.
“Most mills in Montana are still operating below full capacity and have not yet added additional shifts,” Morgan cautioned. “Log supply continues to be the key issue limiting products.”
Morgan said production remains below levels seen in 2007 and 2008 before the Great Recession. During the first half of 2014, nearly 294 million board feet of lumber was produced in Montana, compared with 283 million board feet over the same stretch in 2013.
Just 264 million board feet were produced in the first half of 2010 and 2012.
“New home construction is driving up the demand for lumber,” Morgan said. “It’s not as strong as predicted, but it’s increasing year over year.”
For the state’s wood products industry to return to 2007 levels, Morgan said, the housing market would have to return to its long-term average of roughly 1.4 million new homes a year.
But mills are paying more for logs, suggesting a slow increase in demand. Morgan said log prices increased 10 percent from the first to second quarter in 2014 and are up 15 percent over the second quarter of 2013.
“It’s good for western Montana,” Morgan said. “Production and associated employment and wage increases have been somewhat stronger on the West Coast, with more timber available for harvest and better access to Asian markets.”