March 2021 Message from the CEO

When it rains, it pours!

A truckload of Columbia wood showing up at a customer’s location might seem like a pretty cut-and-dry event…the logical, straightforward conclusion of an order placed with us a few weeks earlier.

But every truck is like a little miracle that comes together.  And 2021 is already indicating that we will need many more miracles to keep coming together.

Of course, it’s not just hardwood plywood.  Every industry and institution has been disrupted by this pandemic, but the building materials market is the one I want to discuss with you here.

What’s happened over the last year goes like this:

• Pandemic begins; shutdowns take place; fortunate employees converted to work-from-home status.
• “Two weeks to flatten the curve” morphed into “could be months,” and people settled in and set up more productive and comfortable work zones (for themselves and for their school aged children).
  • The “Desk Shortage of 2020” occurred, and mulch, pavers and paint became hard to find at home centers.
  • More significant remodeling projects were initiated when people realized they wouldn’t be spending money on travel and vacations.
    • 24 hours a day under same roof, for weeks on end, gave people time to catalog the many repairs and improvements they had been putting off.
  • New housing starts rocketed back from a temporary low point in April and hit 10-year highs, as people took advantage of low mortgage rates and sought properties that could better support combined living and working arrangements.

• Against this sustained burst of unanticipated demand, the global manufacturing supply chain (with many of its taproots in China) had the rug pulled out from under it. Locked-down factories immediately led to cargo activity at ports dropping 20% in the first quarter – just as it needed to be ramping up…
  • From commodity materials to critical electronic components and chemicals, Chinese-made goods are now embedded into countless downline products across the globe.
    • Manufacturing Tomorrow magazine reports that 75% of businesses have at least one primary supplier in China, and over 93% of Fortune 1000 companies have secondary suppliers there.
  • When Chinese manufacturing sneezes, the world catches the cold.

Meanwhile, the domestic building materials supply chain has been geared to just-in-time, lean supply strategies which have done away with a lot of traditional inventory pockets that used to keep pipelines full during spikes.

All this this added together equals a situation where the thread between building materials demand and supply has never been stretched tighter.

In the wood market, this has resulted in skyrocketing pricing for things like OSB and framing lumber, adding thousands of dollars of cost to the price of a new home.  But as the chart above shows, new housing activity just kept going…

Now back to hardwood plywood. Columbia has been hyper-focused on keeping up with our customers’ needs and trying to anticipate what lies ahead in 2021 (and beyond).  See Nick’s article in this issue for more on that.

Right now, we have our own bouquet of disruptions to deal with – and it’s not due to Chinese supply lines… In our case, it’s Mother Nature who’s giving us our first challenges of the year.  East coast log procurement has been dramatically hampered by rain, snow, ice and thus, MUD, which is preventing loggers from getting into the woods and getting their job done.

In addition, the availability of composite core materials (in particular, thin grades of MDF) has been a significant challenge for our entire industry.  Additionally, we’ve also seen market gaps in Knotty Pine and Alder face veneer… 

And it’s only March!

Rest assured, though, that the Columbia Team is calling in every favor and blessing possible to keep our orders satisfied.  We advise all our customers to keep in closer-than-normal contact with us, and with our valued Distributors, as we move into the Spring and more businesses emerge from COVID-19 shut-downs and put even more stress on the system.

The Columbia Family knows we have a lot to be thankful for, and we will continue to put every effort into the keeping our products moving to you.  These are unprecedented times for us all, and it’s our true honor to serve you. 

Thank you as always, for your understanding, patience and business.