The late-pandemic supply chain crisis never smelled quite as good as it did on Wednesday morning in Searsmont, Maine. The air on the 80-acre campus of Robbins Lumber was thick with the scent of eastern white pine—the tallest trees in the Maine forest—being sliced into boards. Yet the warehouse, a cavernous hangar designed to store pallets of finished lumber for shipment, was virtually empty. The company cannot keep wood on the shelves.
“Traditionally, these tiers are about four deep with lumber on both sides—you can hardly get a unit of lumber down the middle,” said Alden Robbins, the company’s vice president. “Look at it now. We’re running at about a quarter of our inventory, and we’re running at full speed, that’s how much demand there is. And if we produced 10 times as much as we produce, we could sell it all right now.”
That morning, the price of lumber futures on the Chicago Mercantile Exchange surged above $1,500 for the first time, a 300 percent rise from this time last year. Two-by-fours are suddenly very, very expensive, sending the cost of building a new home up by about $36,000 on average, according to the National Association of Home Builders. Lumber companies are reporting record profits.
At Robbins Lumber, the price run-up has been more modest, since the company’s product—wide, handsome boards of eastern white pine—is not structural lumber. It’s a bit of a niche compared with the two-by-fours and oriented strand board (a plywood alternative) used in the typical construction of the American subdivision. Nevertheless, Robbins says, it has been a bizarre experience to open Random Lengths, the industry’s price guide, and find that his wood is worth twice what it was last year.
Inside the mill, pine logs are stripped, cut, and sanded into lumber over a production line that spans hundreds of yards of belts, chains, and band saws spinning at 100 miles an hour. The machinery roars and whines, and the planks turn and tumble from one stage to the next with the deep, constant clattering of a supersized bowling alley.
As the empty warehouse attests, the lumber run-up is great news for the sawmill, which the Robbins family founded on the St. George River in 1881. Alden Robbins runs the company with his brother and sister; he went to high school with many of his employees, and the sawmill manager’s mom was his babysitter.
“It’s going to allow mills to reinvest,” Robbins said of the price surges. But it’s also been tough to see shortages irritate the company’s longtime buyers and force locals to bail on a new deck or even a new home. “I get asked that from customers who say, ‘Why can’t you get me more product? Why don’t you just build another sawmill?’ ”
Lumber is not the only thing America is short of right now. Semiconductors. Boba tea. Houses. Shipping containers. Supply chains snarled by the pandemic are having trouble leaping back to meet record-breaking demand.
On the demand side, the lumber issue is relatively straightforward: Americans are flush. Interest rates are low. Wealthier households are buying pandemic-proof second homes or diving into long-awaited renovations. Younger families are trying to buy starter homes and settle down. Many multifamily builders have turned to timber as well, which is now commonly used to frame five- or six-story buildings. All that has created enormous demand for wood.
But the case of lumber supply is a little more perplexing. True, shipments from Canadian forests, which contribute about one-third of U.S. lumber consumption, have been constrained by tariffs, beetle infestations, and wildfires. But there is plenty of wood on both sides of the border, and fast-growing pine in the U.S. South is actually cheaper than it’s been in two decades.
The lumber-timber differential is similar in the Northeast. Consider the case of Samuel Andrews, whose firm Andrews Timber Company is a member of the Maine loggers trade group. “We’re cutting logs for less than we got for pulp five years ago,” he said, describing an ongoing, secular decline in the logging trade. “My stuff ain’t worth nothing because the markets are so bad.” The logging season in Maine is in the winter, when the frozen ground can support trucks and other heavy machinery. Andrews used to work 5 a.m. to 5 p.m. every winter, warmed by heated cabs or sweating over a chainsaw. Now he has cut his hours back. This year, he stopped logging a month early and says he will start a month late in the fall. At 67 years old, he could still buy his own saw and try to vertically integrate, but that would cost thousands of dollars, and he’d be lucky to produce in a day what a relatively small mill like Robbins can produce in five minutes.
Andrews’ son and son-in-law, meanwhile, are homebuilding contractors struggling to fit expensive wood into their budgets.
Instead, the culprit is the decade of instability and low prices that followed the Great Recession, when America stopped building homes, leaving the lumber trade out to dry. The stunted recovery stripped the industry’s crucial middlemen—the mills themselves—to the bone. Building a new deck is expensive now because mills can’t ramp up to meet the demand surge—or won’t, nervous they’ll get caught with millions in underused machinery when prices crash back to earth.
Nowhere more so than Maine, the nation’s most forested state, where wood and paper make up about 10 percent of the economy. The long-term decline of New England paper mills has taken the bottom out of the timber market here. Lumberjacks like Andrews have nowhere to go with anything that’s not a grade-A saw log; sawmills have nowhere to send the scraps that remain when a cylindrical log is cut into rectangular boards.
Last spring, for example, a digester that processes wood pulp at a paper mill in Jay, Maine, exploded—robbing both Samuel Andrews and Robbins Lumber of a buyer for chips, branches, knotty wood, and the narrow, tapering tops of the tree trunks. The mill’s Pennsylvania-based owners have decided not to replace it, and laid off more than 150 workers. The story is a typical one in Northern states, where slow-growing trees produce higher-quality fiber that goes into dying products like printer paper, newspapers, and phone books. (In the South, where trees grow twice as fast, scraps are better-suited for booming, lower-quality uses like cardboard and toilet paper.)
This symbiosis is important to the sawmills. Eric Kingsley, an industry analyst in Portland, Maine, recently helped a large company study the possibility of putting a sawmill in Maine. “The big constraint wasn’t workforce, it certainly wasn’t log supply, it was ‘What do we do with all these chips?’ Because if another paper mill closes, are we going to be able to move these in 20 years?”
Robbins Lumber has a solution, but it wasn’t cheap. Two years ago, the family committed $30 million to an on-site biomass power plant that uses the mill’s waste chips to generate power for thousands of local homes—and enough heat to dry its own white pine boards in a massive kiln building before they are shipped to market. The expense of that project is part of the answer to the question: Why not build another sawmill?
The other lies inside the mill. Step inside and see the bewildering array of technology that’s required to turn a log into lumber. A metal detector, for one thing: Maine’s eastern white pines may be a century old by the time they are felled to make boards, so a tree might contain hooks, nails, or bullets that can gum up the works. More expensive are the computer scanners that make instantaneous decisions about how to slice a plank into marketable boards for maximum value, based on the location of cracks, knots, and other imperfections; the calculations and the cut are made in a fraction of a second. There are 30-pound saws that shape the planks.
Here and there, as we duck, twist, and climb our way down the production line, the ruddy-faced Robbins snatches a board from a conveyor like a grizzly bear pawing a salmon from a stream, to show me up close the work of all his machines. It’s this technology that marks the real impediment to a quick expansion to meet lumberyards’ big offers. A new sawmill could take years to be completed—and the last lumber price spike, in 2018, came and went in half that time.
I was lucky to visit when I did: Next week the plant will shut for maintenance. Yes, in the middle of an all-time spike in lumber prices. “You need good times to reinvest to keep yourself competitive,” Alden Robbins says. New blades, new belts, new gears. That’s what a good year of sales makes possible. But a new sawmill? For an industry that’s been in the dumps for 10 years, that will take more than a run on Home Depot.