Mid-America Lumbermens Association

Vol. 2, No. 3 – January 31, 2003

You're receiving this news bulletin because you've subscribed through the MLA web site. We'll send a new issue every two weeks to let you know what's happening in the industry, at your MLA, and in the world that affects your business. We welcome   your opinions and ideas.  If you have information you'd like to share with other members, we'd be happy to include it in our next issue. 

Basic Estimating Courses - Sign Up Today

“Basic Material Estimating School” and “Advanced Estimating” are just around the corner.  These courses are perennial favorites with members.   Basic Material Estimating provides excellent hands-on training for new employees, and Advanced Estimating is for the experienced estimator or outside salesperson who already knows how to estimate, but wants some shortcuts and instruction in more complicated house layouts.  Here’s the schedule: 

February 6-7 - Basic Estimating, Wichita, Kan.

February 17-18 - Basic Estimating, Kansas City

February 19 - Advanced Estimating, Kansas City

March 4-5 - Basic Estimating, Oklahoma City 

Our workshop presenter, Keith Kluis, delivers information-packed, how-to strategies you and your people can use immediately. You should have received complete information by mail. If you need another copy, please contact MLA at 800-747-6529. 

Lumber News - Quick Glimpses

Weyerhaeuser Reports Large Gain Despite Poor Wood Products Performance... Lumber giant Weyerhaeuser announced surprisingly healthy profits in the fourth quarter, contrary to predictions and company losses in the previous year. However, the company's Wood Products division was not a contributor to the positive quarter, loosing $75 million in the period. This is only a slight improvement from $107 million loss reported in the fourth quarter of last year. The company issued the following statement about their performance in its Wood Products segment:

"Depressed prices and the effects of the countervailing and anti-dumping duties continued to affect the Wood Products segment during the fourth quarter. Results also include a year-to-date reduction of $13 million in depreciation resulting from an adjustment to the preliminary purchase price allocation for the Willamette acquisition. Excluding unusual items, including the depreciation adjustment, the fourth quarter loss was $51 million compared with a loss of $18 million for the third quarter. "

"As part of the company's focus on improving the efficiency of its softwood lumber operations, Weyerhaeuser previously announced the closure of three facilities, which will eliminate 368 million board feet of sawmill capacity and associated finishing operations when they close in the first quarter. "

"The first quarter earnings outlook for Wood Products remains very uncertain due to continued oversupply in the market. Based on current prices, the company would expect losses from operations in the Wood Products segment in the first quarter to be consistent with the fourth quarter. Weyerhaeuser continues to work with the U.S. and Canadian governments in an attempt to develop a long-term solution on the softwood lumber issue. The company believes government and industry officials from both sides are making a good faith effort to reach a solution. "

Source: LBM Daily, January 23, 2003

B.C. Strategies Pay Off.. Strategies by the B.C. lumber industry may finally get credit for scaring off foreign competition. A Scandinavian lumber supplier has told its customer, Home Depot, it wants out of the North American market all together, reports the Vancouver Sun.

In B.C., aggressive cost-cutting measures by sawmillers have pushed lumber production up 40 per cent in the B.C. Interior and driven North American lumber prices down. This, along with the recent strengthening of the Euro, has created some hesitation from the European companies, and in this case, has driven one completely out.

"The B.C. strategy must have been a factor," said Madison's publisher Laurie Cater. "I don't think the Europeans ever thought prices would go this low," said Laurie Cater, publisher of Madison's Canadian Lumber Reporter.

"These giants we have created in B.C. are not going to disappear even when the whole softwood issue comes to some kind of a settlement. Once they have done it, they have done it.

"Look what Canfor is doing: They are creating two larger, more efficient operations where four existed. They are going to produce the same amount of lumber with fewer people."

Source: LBM Daily, January 27, 2003

Unions take cut at softwood... Monday, six different labor unions, comprised of organizations from both sides of the U.S.-Canadian border, joined efforts to find a possible solution to the on-going softwood lumber dispute. Although the unionists from opposing countries still disagreed on most of the softwood issues, they all agreed to being hurt by current conditions, and that a solution must be found as soon as possible.

In place of the current 27 per cent tariffs, the proposal suggests the Canadian government collect a graduated export tax on softwood lumber. The tax would vary with changing timber prices - rising with low Canadian prices, and falling with higher prices - indicative of fluctuating exchange rates.

The graduated export tax would allow each individual province to set its own specific rates for cutting rights.

The unionists also called for the creation of a bilateral panel, which would strive to develop new markets, and to further, expand the North American market.

"Our proposal offers the best way to restore stability to lumber prices while allowing each country to expand their markets in North America and overseas," said Rod Kelty of the International Association of Machinists and Aerospace Workers, which represents 28,000 lumber workers in the United States.

Source: LBM Daily, January 28, 2003

New U.S. Bill Proposes Doubling Tariffs... Just days before lumber meetings are set to start in Washington D.C. between the U.S. and Canada, the U.S. senate has introduced new legislation that would nearly double current softwood lumber duties to 45 per cent.

According to the Globe and Mail, U.S. Senator Larry Craig demanded the necessity of the proposed law because, "Canadian lumber companies are cheating on the duty regime and flooding the U.S. market with cheap wood."

Craig alleges Canadians are allocating a disproportionate amount of timber in the B.C. Interior as "bug kill timber," resulting in logs being sold for as little as 1/100th of the market price to local mills.

"Recent blatant moves by the Canadian government and timber industry reveal their true desires to continue to flood the U.S. market with softwood lumber and their unwillingness to find a resolution that provides security for both U.S. and Canadian jobs," complained Mr. Craig, of Idaho, co-sponsor of the Senate version of the bill.

Sébastien Théberge, Canadian Trade Minister Pierre Pettigrew's press secretary, expressed that the U.S., in desperation, is "looking for ways to increase the price of wood because the duties have backfired."

Source: LBM Daily, January 30, 2002

Jenna Morgan's Softwood Update 

We received this report on Friday, January 31, from Jenna Morgan, NLBMDA's Director of Government Affairs: 

1) Yesterday, there was a buzz in the marketplace over a bill introduced by Senators Larry Craig and Max Baucus that would supposedly jack up the tariff on softwood lumber to 45%.  Don't believe the hype.  Yes, as structured, the bill would jack up  the tariff to 45%, but no, the bill will never be acted on in Congress.  It was introduced with the full understanding that it has no shot of ever even getting a floor vote, never mind the president's signature.  The bill was introduced, plain and simple, in order to 'scare' the Canadians into negotiating a quick deal.  If any of you saw the Globe and Mail article written yesterday be Barrie McKenna, you saw how the Canadians don't understand how the US system works.  Barrie indicated that the bill could be in force by May...and nothing could be farther from the truth. 

2) "Negotiations."  Is it a negotiation, or is it collusion?  Hmm.   Little bit of both.  A couple of weeks ago, the Department of Commerce got a big idea to invite 12 Canadian forest product company CEOs, and 6 US CEOs to Washington for "informal talks" about how to resolve the softwood issue.  We then contacted Commerce, with a request to be included in the meeting--if only as observers--because the idea of 12 Canadian and 6 US CEOs sitting in a room talking about how to 'fix' the marketplace for softwood lumber in the US, is one that strikes fear into the hearts of consumers--we were told, essentially, "yeah, keep dreaming."  Because, again, they can keep any and all consumer groups from being involved in the process because US consumers do not have the "legal standing" that mandates they be included.  Next thing we hear is that, yesterday, the Canadian CEOs are alerted that a number of the US CEOs would not be coming to the meeting, that they were instead sending their 'seconds.'  When prodded by the Canadians as to why the US CEOs were so interested in the softwood issue that they've spent millions filing legal cases over 23 years, but not quite interested enough to attend the talks, Commerce essentially responded that the US CEOs had two main reasons: 1) they don't really know what's going on, they have Vice Presidents who do;  and 2) (And I am not making this up) they were too elderly and didn't want to get on the airplane to come to Washington. 

The second excuse sparked the comment from a Hill staffer yesterday: "so, you're saying that these guys are competent enough  to be the Chief Executive Officers of billion dollar companies, but they can't quite get on the big, bad airplane to come to a meeting that has billions of dollars of impact on the industry?"  Again, not my words. 

Additionally, one of the major requests the Canadian CEOs had apparently had was the insistence that, specifically, John Ragosta (attorney for the producers' coalition) not be included in the conversations between the CEOs. As one Canadian said a   couple of days ago, "Ragosta has become such a focal point for hatred, that we just don't even want to deal with him.  If we're going to talk to US companies, we want to talk to the companies.  We're tired of asking a question of a US company and having Ragosta jump in to answer for them."  To no one's surprise (okay, maybe those Canadian CEOs were a little surprised), Mr. Ragosta is in the room with them during these talks.  Upon being notified that Ragosta would attend, several within the Canadian delegation questioned why they were bothering to show up, and one or two tossed around the idea of telling Commerce they were too old to make the trip to DC. 

3) Talks are ongoing.  They have been talking all day, and will likely continue to talk through the weekend.  Several  Commerce officials had eloquently noted last week that they "had other things to worry about starting in mid-February, and wanted this over with ASAP."  Take with that the renewed vigor being expressed by some US producers (let's not forget that a lot of their incentive to support the tariff itself has gone away now that WTO has officially shot down the Byrd Amendment which would have forwarded the tariff monies to them) for a quick, quick deal, and what you have inside the room today and through the weekend is intense pressure on Canada to cut a quick deal.  Any 'deal' cut will likely include a significant export tax...a tax paid by consumers and collected for the Canadian coffers. 

4) Reportedly, Commerce will be making an official request during these talks (if it hasn't already) for the Canadians to immediately drop all of the cases it has pending at NAFTA and WTO.  Keep in mind that Canada is so far winning in the cases, which makes it all the more important from the US producers' perspective to make sure those cases get dropped. 

This is the general update as of Friday afternoon.  As I said, they are now scheduled to be talking all weekend, and the somewhat open secret is that Commerce wants it all done...signed, sealed, and delivered...by Wednesday, February 5.  The Canadians, so far, have not indicated that Commerce's wishes will be fulfilled. 

NAHB Press Release

HOUSING MARKET TO REMAIN STRONG IN 2003

WASHINGTON, Jan. 13 - One of the few bright spots in the economy last year, housing is expected to continue its strong performance throughout 2003, the nation's home builders said today.

"2002 was a banner year for housing, with record new home sales and the highest number of housing starts in 16 years," said NAHB Chief Economist David Seiders. "Based on the first 11 months of the year, we expect to see an all-time high of 976,000 new home sales and 1.69 million housing starts for 2002."

The market will slow somewhat in 2003, but will still perform well, Seiders added. "Basic market fundamentals such as strong household formations, low interest rates and solid house-price performance should continue this year. As a result, we're predicting that 2003 will be the second best year for new-home sales in history."

In terms of the actual forecast, NAHB expects a total of 942,000 new-home sales in 2003, a 3.4 percent decline from last year. Housing starts should decline about 3.5 percent to 1.63 million - 322,000 multifamily and 1.31 million single-family units.

"Even though the totals will be down a bit, in a historical context, they're excellent numbers," Seiders added.

ABOUT NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 205,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the more than 1.6 million new housing units projected for 2003, making housing one of the largest and most powerful engines of economic growth in the country.

Lockout/Tagout: Control the energy sources

The unexpected start up of equipment or the release of stored energy can cause injury to you and your co-workers. Your company’s lockout/tagout program can prevent exposure to accidental, injurious, and even life-threatening situations from energized equipment.

Many energy sources require lockout/tagout procedures to protect employees from the release of hazardous energy. Some of these include: electrical, mechanical, pneumatic, hydraulic, chemical, and thermal sources. Some of the problems an accidental release of hazardous energy could cause are: (1) accidental start-ups, (2) electric shock, and (3) release of stored, residual, or potential energy.

These accidents often occur when someone takes a shortcut during machinery servicing, or when workers don’t understand the equipment or the lockout/tagout procedures for the job.

What is Lockout/Tagout?

Lockout is the process of turning off and locking out the flow of energy from a power source to a piece of equipment or a circuit, and keeping it locked out. Lockout is accomplished by installing a lockout device at the power source so that equipment powered by that source cannot be operated.

Tagout is placing a tag on the power source. The tag acts as a warning not to restore energy—it is not a physical restraint. Tags must clearly state: Do Not Start. Both locks and tags must be strong enough to prevent unauthorized removal and to withstand various environmental conditions.

For electrical controls, equipment, and circuits:

·         Tag all controls that are to be deactivated during the course of work on energized or deenergized equipment or circuits;

·         Render equipment or circuits that are deenergized inoperative and attach tags at all points where such equipment or circuits can be energized; and

·         Place tags to plainly identify the equipment or circuits being worked on.

For mechanical equipment:

·         Do not allow employees to perform maintenance or repair activity where the inadvertent operation of the equipment could occur and cause injury, unless all potential hazardous energy sources have been locked out and tagged; and

·         Use tags that read Do Not Start or similar language so the equipment is not operated.

A good lockout/tagout program will control or eliminate the unexpected energization or start up of machines or equipment, or release of stored energy that can cause injury

Source:  SafetyClicks(TM), The Ideas Edition, published by J.J. Keller, January 2003, Volume 2 Number 4 

"If you don't like something, change it. If you can't change it, change your attitude. Don't complain."  -Maya Angelou

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