The state's forest industry is getting a boost from an American dollar that has shrunk drastically in value compared to its Canadian counterpart, economists and industry leaders say.
A steady, five-year decline in the value of United States currency has evened the playing field with Canada, which historically has benefited from the stronger U.S. dollar, as well as what the federal government maintains are Canadian subsidies of its lumber industry.
Simply put, as the American dollar becomes weaker against Canadian currency, Canadian products become more expensive.
And now that Canadian labor is no longer cheaper, neither are the two-by-fours produced at its mills.
John Richardson, Maine's commissioner of the state Department of Economic and Community Development, explained the new dynamic in plain terms.
"Wages and the value of those wages are relatively equal," Richardson said. "It's essentially just that simple."
Richardson said he has no hard numbers but believes Maine exports to Canada have increased. Some Canadian forest-products companies, meanwhile, are hurting.
"A stronger Canadian dollar makes them less competitive globally," Richardson said.
Peter Lammert, project forester for the Maine Forest Service, said that the years-long Canadian subsidy of its sawmills has been rendered moot. He said that Canadian mills have made the technological advances necessary.
"Canadian mills are up to snuff," Lambert said.
But Lammert said that the new exchange rate will only tilt the U.S. advantage further.
"Now that we're on par, that will make it harder for them to pick up saw logs and haul them back to Canada," he said.
Moose River Lumber Co., Inc., which employs up to 85 workers at its Jackman sawmill, is among the Maine companies benefiting from the exchange rate. Annually, Moose River saws 90 million board feet of spruce and fir, used largely for framing houses.
"It has helped manufacturers tremendously," said sales manager Steve Banahan. "My biggest competition comes from the Maritimes and Quebec. Those guys' break-even has changed dramatically."
Banahan explained that as Canadian manufacturers "throttle back" on production, Moose River and other Maine companies get a better price for their product. The difference helps these companies as they try to recover from the devastating fall of the American housing market.
"We'll probably lose money this year, but we'll lose less than we did last year," Banahan said.
Robbins Lumber, Inc., of Searsmont has worked the Maine woods for more than 170 years, producing white pine products. Jimmy Rollins II, vice president of the company, said that he is waiting for the positive effect of the exchange rate.
"It levels the playing field," Rollins said. "The mills to the north of us don't have that advantage. It takes more wood off the market, which eventually will create more of a demand.
"Right now it's such a hard market, we're not seeing any of those effects yet."
All is not positive when it comes to the weaker U.S. dollar.
Banahan said that Canadians can now come here and pay for Maine timber with their stronger dollar.
"We now have Canadian companies coming down and outbidding us for logs," he said. "It just makes the log supply very, very tight." Paul Fortin, a wood buyer for P.R. Fortin & Sons Land and Timber of Madison, works with a number of Canadian sawmills. He said the lack of supply has nothing to do with the exchange rate.
"I think it shakes out pretty even, myself," Fortin said. "The labor force is shrinking. There are not enough people who want to cut and truck wood."
Fortin acknowledged that Maine contractors stand to benefit.
"It will increase the demand for their services," he said.
Richardson said that Maine's strong forest-management laws help since they ensure a healthy forest and a good supply of logs.
Patrick Strauch, executive director of the Maine Forest Products Council, made that point known last week. Strauch was the featured speaker at the monthly meeting of the Somerset Economic Development Corporation meeting, held in Jackman.
Strauch pointed out that 90 percent of Maine is forested, and that the state's forest ecosystems are resilient. Maine has the largest contiguous block of undeveloped forest land east of the Mississippi River, he said.
"Our forests are in remarkably good shape," Strauch said. "We have a six million cord per year harvest. The question is, 'Is this all in balance?' What we're seeing is our cuts are matching our growth, and that's what you look for. We've got things in balance."
Strauch said that Maine also is unique in that is boasts a large supply of wood not far from major population centers.Kennebec Journal Morning Sentinel
