About a year ago I did a deep dive on some of the economic aspects of the logging industry. There is a major study on the USA industry put out by the USDA.
What I was going to mention was that logging had a particular situation where credit was pretty cheap at a moment in time, so big expensive machines were basically the way to go.
Most logging companies went into debt buying logging machines, trucks etc and it was all managing well until FUEL became more expensive. The cost of running the machines essentially squeezed all the profits out of the business and a lot of companies were basically just squeaking by and paying loans and not much else. I think the entire usa had only about $1B in total industry profits.
This report came out BEFORE diesel doubled in price. It’s going to be like the fertilizer / farming thing where the costs of energy will absolutely cripple the industrial Timber businesses also. They could raise prices and pass along the costs only if consumers have the ability to pay.
I think it’s likely that the marginal timber companies will simply fold. Timber sales that have too great a hauling distance to a mill will just be uneconomic.
About a year ago I did a deep dive on some of the economic aspects of the logging industry. There is a major study on the USA industry put out by the USDA.
What I was going to mention was that logging had a particular situation where credit was pretty cheap at a moment in time, so big expensive machines were basically the way to go.
Most logging companies went into debt buying logging machines, trucks etc and it was all managing well until FUEL became more expensive. The cost of running the machines essentially squeezed all the profits out of the business and a lot of companies were basically just squeaking by and paying loans and not much else. I think the entire usa had only about $1B in total industry profits.
This report came out BEFORE diesel doubled in price. It’s going to be like the fertilizer / farming thing where the costs of energy will absolutely cripple the industrial Timber businesses also. They could raise prices and pass along the costs only if consumers have the ability to pay.
I think it’s likely that the marginal timber companies will simply fold. Timber sales that have too great a hauling distance to a mill will just be uneconomic.