A Meeting of the Minds: Why Lumber Buyer Communication with Lumber Suppliers Is So Important

Okay, quick review of some pivotal dates in the history of the structural components industry:

Only time will tell if the last item on that timeline proves to be as transformative and positive as the rest, but it’s hard to dismiss how monumental the gathering was in the short term. “I think this meeting will go down as an historic turning point in building relationships between the components industry and lumber suppliers,” said Jim Thomas (President/COO, Trussway Holdings).

Historic? Absolutely. Let’s look at how the summit happened in the first place, why it was judged by the participants as a success, and what promise it holds for the component manufacturing industry going forward.

Lumber Design Values

Everyone in the components industry understands that not all 2x4s are created equal, and that some 2x4s are much more valuable than others. For component manufacturers, it all comes down to the strength properties, or design values, of each piece of lumber. Whether you’re talking about the combination of bending and compression, or tension, or compression/MOE and buckling, etc., the various properties of wood are vitally important when they become part of a highly engineered product such as a roof rafter system or roof/floor truss. Obviously, any framing end user is buying lumber design values.

Since the components industry started in the 1950s, component manufacturers have relied on the lumber grade, as designated by the grade stamp, to indicate the design values that will be used to resist applied loads. These design values are created by a species-specific lumber grading agency. Then, values are reviewed and approved by the American Lumber Standards Committee (ALSC). For most of the past 60 years, this model has worked fairly well. One of the biggest problems for component manufacturers was that lumber production operated on a top-down approach, for the most part. Lumber producers generated the sizes and used the standard visual grades of lumber that netted them either the highest quantity of output, or the highest overall sales revenue. Component manufacturers, in turn, bought the lumber that was offered, and figured out how to make it work in their truss designs.

This model has worked ‘fairly well’, and, given the way that design values are developed for visually graded lumber, is typically conservative. In the 1980s, and again in 2011, the design values attributed to the visual grades assigned to each stick of lumber were found, through testing, to have changed, based on how the global design values are derived. Dimensional lumber is made from an organic source, so it shouldn’t be too shocking that, as the process of growing and harvesting trees changes over the years, so too the properties of the wood being turned in to lumber could change.

While the component manufacturer’s attention is focused almost exclusively on buying lumber design values, the lumber manufacturer is not as focused on properties, given that visual grades establish general design values that the market has become used to. The key to lumber manufacturing is yield from the logs that are purchased, and generating good quality lumber that is marketable. There is generally not much thought with respect to how the design values produced match up with current design values that are truly needed in the marketplace. 

That explains, in part, why there was such uproar when the Southern Pine Inspection Bureau (SPIB) announced it was recommending immediate, across-the-board reductions in Southern Pine lumber, and why lumber producers were initially surprised their customers would be so vehemently unhappy.

Fortunately, there was a silver lining in the chaos that ensued. Through the leadership efforts of SBCA and the association's work with other affected parties, a coalition of lumber users was successful in communicating with the lumber industry how important design values were, and how drastic and immediate changes would have disastrous down-stream consequences. Through those lines of communication, relationships were formed that paved the way for SBCA’s first customer/supplier-focused Lumber Summit.

“Our family has been in the component manufacturing business for a long, long time,” said Scott Ward (Secretary-Treasurer, Southern Components). “SBCA’s summit was significant in that it gave us a first-time opportunity to sit down across the table with a large cross-section of the lumber industry and begin to talk about our common problems and possible solutions.”

SBCA’s Lumber Summit & Relationship Building

At the inaugural summit, 71 participants, including key lumber industry leaders, the top five lumber producers in North America, and component manufacturers representing approximately 700 million board feet of U.S. structural lumber purchases, attended. “Conversation is the first step toward mutual respect and understanding,” said Stan Sias (National Manager-Plated Truss Industry, Simpson Strong-Tie). “I think the summit accomplished that goal successfully.”

To kick off the summit, attendees focused on getting to know one another during a component manufacturing tour at the local Builders FirstSource plant in Harrisburg, followed by a tour and dinner at the nearby Charlotte Motor Speedway. Relationship building was the initial goal in planning the summit, to allow both industries a chance to know each other better. “Once one realizes that all parties in the supply chain are real people – doing their best – many positive things can happen,” said Mike Karceski (President, Atlas Components).

There was general agreement by those in attendance that the short-term goal of this group was to prepare for upcoming and anticipated Southern Pine design value changes. The aim was to forego the traditional adjustment process that can take years and is typified by the circular questions of component manufacturers asking, “what grades and sizes can you sell me?” and lumber suppliers replying by asking, “what grades and sizes do you need?”

That one goal alone is likely what led many of the participants to express sentiments that the summit had been long overdue. “Getting component manufacturers together with lumber producers to have this type of conversation probably should have happened years ago,” said David Green (Southeast Component Manager, Stock Building Supply).  Many lumber producers expressed similar beliefs that the summit provided great value. “The summit provided a good venue for valuable conversations to be held,” said Mark Richardson (Sales Manager, Westervelt Lumber). “I think it will be a good starting point for industry participants to build on and move forward in adjusting to these lumber design value changes.”

Focusing on that short-term goal, summit participants discussed creating a series of standard grades or design value ranges that manufacturers could use and lumber producers could readily produce. More specifically, the hope was to define the buckets that CMs generally can use and then get a commitment that these are the general properties that CMs would like to see produced. The lumber mills could then decide how to maximize their yield and produce products to meet their lumber resource needs using this set of grades as a guide. In other words, it would answer both cyclical questions mentioned above simultaneously.

“There was a significant exchange of information and a connection made between two important industries that supply builders with structural building components,” said Hardy Wentzel (VP of Sales, Tolko Marketing & Sales, Ltd.). While the initial focus was on Southern Pine due to the design value changes that species was currently undergoing, it was repeatedly pointed out that the group needed to think in terms of all North American species of lumber used by the components industry.

The long-term goal of the group was to build strong lines of communication between the two industries and eliminate the possibility of future surprises regarding lumber design value changes, as well as improve business-working relationships for both parties. Even though it was just the first summit, participants worked hard on the long-term goal as well. “I was floored at the number of lumber producers who approached us after the meeting, thanking us for the honesty and openness of the session and how they are looking forward to our next meeting,” said Thomas.

“It was valuable to have the opportunity to meet with a number of component manufacturers to discuss their views and product options,” said Terry Jones (Sales Manager, Travis Lumber). “It was great to see some old faces, contacts that we have spoken to for years and never met, and, of course, make new contacts and new opportunities.” 

Educational Opportunities

During the summit discussion, it became evident to attendees that the component manufacturing industry would benefit greatly from a stronger understanding of how both visually graded and MSR/MEL lumber is produced, and what limitations exist within the process when it comes to producing lumber with various design values. Further, there was a need for lumber producers to help CMs understand the limitations of the various regions each mill harvests trees from, how growing seasons affect the wood fiber density, and how both factors influence lumber design values.

There also appeared to be varying levels of understanding among both component manufacturers and some lumber producers regarding MSR/MEL lumber, how it is produced, how its properties are determined, the visual override process and how properties are confirmed and therefore more reliable. There also was interest in understanding how the addition of several MSR grading machines into the Southern Pine market would affect the marketplace going forward.

Some of the component manufacturers in attendance saw BCMC as the perfect opportunity to address these issues. Both industries agreed it would be in everyone’s best interest to have a group of lumber producers put on a series of educational sessions at BCMC in New Orleans in October (see sidebar). These sessions promise to provide a strong understanding of the challenges and opportunities facing the North American lumber industry and how component manufacturers can benefit from a more two-way relationship with their lumber suppliers.

Lumber in Components Council

Near the conclusion of the meeting, SBCA President  Steve Stroder (Vice President Manufacturing Design, ProBuild) recommended, based on the discussion and feedback that he had heard both before and during the summit, that the group should become a more formal entity. Without objection, the group agreed to tentatively be called SBCA’s Lumber in Components Council.

“I thought the summit goal of getting producers and consumers together sounded like a great idea and worth my time and expense to attend,” said John Branstetter (Sales Manager, Vaagen Brothers Lumber). “I was not disappointed.” With so many attendees expressing similar feelings as Branstetter at the conclusion of the summit, it was agreed another meeting should be planned for late 2012 to loosely coincide with further decision-making ALSC will undertake regarding additional lumber design value evaluations.

So, was this summit, this ‘meeting of the minds,’ historic? Yes. Did it solve all the pressing issues facing the lumber production and lumber consuming industries?  No. 

However, it appears to be a significant and positive step forward in building a two-way stream of communication between these inextricably intertwined industries. Gary Schweizer (Senior Engineer, Weyerhaeuser), probably said it best after the summit concluded, “This was a great forum for a proposed unified ‘go-forward’ strategy. Now, let the work begin.”