I can speak for everyone in our closely connected industry, when I say that we are so happy no one was hurt during the explosion at the Pixelle mill in Jay on Wednesday. But the damage to the mill will certainly impact our entire industry since we have such an integrated supply chain. We all are talking and thinking about this, but there are no quick or easy solutions.
Pixelle, based in Pennsylvania, is a new member of the Council, completing its $400 million purchase of the mill in February. Everyone wants to help the workers and the mill, but right now we have to give management a chance to access the damage and their options. We’ll keep members posted as we learn more.
How should we prepare for a post-mud season economy?
We’ve gone into this mud season with the traditional scramble to finish winter operations and with mill inventories in generally good shape. How we emerge out of mud season is speculative today. While we have weathered the local COVID pandemic in our rural areas, markets for building products were softening. While paper packaging and tissue investments in Maine have strengthened our economic stability, swings in pulpwood demand add to the challenge.
In some ways, we have been fortunate in weathering the COVID challenge. On March 20, the federal and state governments identified the wood products industry as an essential critical infrastructure workforce in the nation’s response to the coronavirus pandemic. So our people are still working and they are taking precautions to safeguard their health and the health of their families.
Even before Gov. Mills issued a statewide stay-home order March 31, we were working with the governor and her staff and we appreciate her help in defining essential services. Maintaining our operations and ensuring employee health helps keep part of Maine’s manufacturing economy operating.
In an informal survey March 24, MFPC members reported they had embraced recommended practices.Manufacturing facilities report that “No outside personnel (visitors, truckers, etc.) are allowed into our office or scale shacks,” one member said. “Truckers are met outside to exchange paperwork on incoming or outgoing loads. We disinfect all mail and packages coming in to our facilities. Made sure we have plenty of hand sanitizer available for folks. People handling paperwork are wearing gloves and washing their hands often.”
MFPC’s staff, for example, is mostly working remotely. Like many others, we’ve become accustomed to Zoom meetings.
However, we’re also concerned about the cash flow for forest products businesses, especially the supply chain front line loggers and truckers, and markets for our products. MFPC will deal with these issues as we prepare our recommendations for Congress’s Phase IV funding provisions.
March housing starts dropped 22.3% compared to those in February
An important figure to watch is housing starts, since experts have predicted homebuilding will slow down due to the coronavirus. That prediction was confirmed this week when the U.S. Commerce Department reported March housing starts dropped 22.3 percent compared to those in February, the worst monthly decline since the 1980s. Groundbreakings last month were at a seasonally adjusted annual rate of 1.2 million units, down from a 1.56 million pace in February. Construction of single-family houses fell 17.5 percent, while apartment and condo starts were off 32.1 percent from a month ago.
Maine’s opportunities for our dimension lumber and panels are dependent in large part on Boston and New York metropolitan housing growth. Regional leadership will be important in coordinating recovery opportunities and MFPC will be focused on advising government leaders on industry priorities.
Although we’ve not lived through a pandemic in recent times, we experienced SD Warren’s recovery boiler blowing up in the past. My understanding is that the industry worked together to keep the supply chain functioning while repairs were made to the facility. It’s been rewarding to see the recovery efforts we’ve made to date which in fact prepared us for the challenges of COVID by diversifying the kinds of wood products that we make. The public’s awareness of the importance of trees and the forest industry to Maine will help us rebuild market losses and get everyone back to work.