Steady support keeps this Indigenous-owned sawmill buzzing in a volatile market.
Six weeks into the first COVID-19 lockdown of 2020, hundreds of thousands of remote workers sitting in their ad hoc basement or spare room home offices looked around and made what seemed like a collective decision: If this work-from-home thing lasts much longer than a few months, we’ll have to renovate.
Tradespeople were suddenly booked a year in advance, supplies of everything from drywall to nails were on backorder and the cost of lumber shot up higher than the tallest redwood. Prices for construction materials doubled, if not tripled, as supplies drastically dwindled due to port, border and factory closures.
But does this fully explain the price spike? It’s not like Canada suddenly ran out of trees. So, what happened?
Almost three years later, in his Meadow Lake Tribal Council (MLTC) office 600 kilometres from Regina in the Saskatchewan hinterland, Al Balisky chuckles.
As president and CEO of Meadow Lake Tribal Council Industrial Investments (MLTCII), an economic development corporation that generates wealth and opportunities for the MLTC’s nine-member First Nations, he has a unique perspective.
“What happened with the price of two-by-fours? That’s a very good question. It’s a complicated answer, but the short version is that lumber is sold on emotion. The pandemic created an elastic band of demand versus supply. The perception of a looming commodity shortage created a panic purchasing situation,” says Balisky.
In just one year, for example, the push-pull between supply and demand forced North American lumber prices to nearly triple, from an average of $499 per 1,000 board feet in 2019 to a staggering $1,288 in September 2020.
It’s easy to assume this price increase meant nothing but good things for lumber producers, like MLTC. But the pandemic threw up roadblocks that made it challenging for them to reap the benefits. In the early stages of the pandemic, the initial decision was to reduce sawmill operations and, like many other mills, they were forced to cut shiftwork for their 120 employees, 65% of whom are Indigenous. Fewer hours worked meant less finished lumber produced from Canadian sources—a major reason for the spike in North American lumber prices. Yet, low interest rates meant easier access to loans for renovations, and so the cycle continued.
Fast-forward to 2022, and it’s all changed again.
“We now have entered an inflationary period with rising interest rates and the housing market has cooled off,” says Balisky. “We’re constantly looking into the crystal ball and constantly getting it wrong.”