The Current Lumber Shortage: Causes and Potential Solutions

Since COVID-19 hit in 2020, there have been scores of supply chain snags. Industries from toilet paper to metalworking have felt the hurt, with nearly half of small businesses saying they have felt an impact from these issues. Another 72% said they experienced the consequences of supply chain stagnation daily and 70% said it directly impacted what they offer. Such statistics mirror problems in the construction sector with the current lumber shortage.

2020 proved to be a damaging year for large and small companies alike. Whether there was heightened or decreased demand for their offerings, it majorly affected profits and employment stability. The lumber shortage happening now started in the same year, yet while other industries have begun to bounce back, construction still suffers from the lack of material. Here is a look at why lumber shortages continue and how sector professionals can ease their strains.

Why Is There Still a Lumber Shortage?

When lockdowns happened, there were naturally massive supply chain issues because no one was present to create or ship products. This halt caused nearly every company out there to experience extended wait times or profit losses. One of the most significant deficits was in the transportation industry, where 41% of respondents said they lost $50–$100 million because of issues related to COVID-19. However, many of the sectors polled have restrengthened, so why does construction still lag behind?

There are several different factors at play. There is an employment shortage in the lumber industry, and workers cannot keep up with the increased demand that began during the pandemic that has only escalated since. In addition to this, wildfires have also impacted the lumber supply at its source.

Employment Shortages

One significant problem is the number of workers. According to IBISWorld, there are currently nearly 90,000 employees in the logging industry, but that has been declining by -0.1% since 2017. However, their research did show a slight boost in the number of new hires in 2022, rising about four percent. Analysis from the U.S. Bureau of Labor Statistics expects a -4% decline in job outlook, with 7,200 new positions expected to open up between 2021 and 2031.

Lower employment means fewer people are available to chop down and process trees. Therefore, executives must charge more for their products to make ends meet with the reduced labor force and output.

Increased Demand

The pandemic also saw thousands of people bored at home, looking for anything and everything to do. Many started crafting or doing DIY home repairs, creating another market of buyers lumber businesses needed to cater to. This massive legion of new interested parties further increased the scarcity caused by lower employment, causing prices to rise even more. At one point, the cost of wood was over $1,500 per thousand board feet, which got more people to stop buying and thankfully started to ease the pressure.

Many lumber companies also thought demand would decrease once the pandemic hit. They started slowing down production, expecting they would experience the same slowdown many other organizations were seeing. Instead, demand skyrocketed, meaning there was much less supply to go around.

The Housing Boom

Even before COVID-19, people were struggling with being able to make rent on their apartments. Some experienced a bit of relief once lockdowns hit as they fled their city lodgings in favor of rural housing, making landlords lower asking prices to entice new tenants. However, those days are over and prices are rising as more leave their childhood homes or take on new jobs. To fight the rent hikes, many seek a house as their permanent residence.

But there needs to be enough lumber to meet that demand. In 2021, home sales jumped from 5.64 million to 6.12 million, highlighting an extreme interest. This rapid buying rate has increased the harshness of the lumber shortage as people buy up newly built houses and make repairs on old ones. Research from Freddie Mac estimates the U.S. is short nearly four million homes compared to what people want to buy.

Ways to Help Ease the Lumber Shortage Burden

Of course, the construction and lumber sectors must find ways to rebound from the lack of wood. These critical industries provide shelter and warmth to millions, so they have to increase their output for those who rely on them. Luckily, there are ways to do so. Here are a few tips leaders could look to to start easing the strain of the current lumber shortage.

1. Entice New and Current Employees

Logging is a perilous job. In fact, the Occupational Safety and Health Administration (OSHA) calls it the most dangerous career in the U.S. Over the course of 10 years — from 2010 to 2020 — there were 314 deaths in the sector. Poor working conditions, improper equipment, lack of standardized safety training and dangerous terrain are all potential reasons for this high number. To entice new and older workers to stay in the field longer, it’s crucial to invest in their safety.

According to OSHA, struck-by events were the top cause of fatalities, often in the head. Ensure all employees have strong helmets and wear them at all times. Additionally, enforce all safety protocols — they may seem silly or inefficient, but they save lives. If there’s a high turnover rate due to stress injuries, provide resources for surgery, physical therapy or useful wearables. Caring about the health of your team members could make them want to stay around and draw in wary applicants.

2. Mitigate Demand

Because there’s only so much lumber to offer, it might be necessary to be choosy about buyers. A lumber business might sell its wood to construction companies and bigger retail stores like Lowes or Home Depot. To account for lower stock, leaders may need to cut back on who they work with to ensure those who most need their product get it. Whether that means appealing to the builders or DIYers depends on how the business profits from each.

3. Invest in New Offerings

Organizations must stay modern to keep afloat in the ever-changing market and lumber must follow suit. To increase their supply and appeal to consumers, lumber companies could start offering reclaimed wood along with fresh products. It’s easier on workers and the environment since someone else has already processed the wood and people don’t have to cut down more. Not to mention, 66% of people — 80% of which are young adults — will pay more for sustainable products.

It may also be time to consider automating some parts of the process. Doing so cuts down on menial work and allows crews to spend more time in the field doing productive work. Automation can help workers get the most yield from a log and speed up the process. While the technology could cost more, it pays for itself in efficiency.

The Construction and Lumber Industries Will Bounce Back

People will always need lodging, so the lumber and construction industries will never die. They just need some assistance to rebound from the pandemic’s effects. While it may take time to curb the lumber shortage, employees and decision makers can work together to find the best ways to combat it.