Ice storm impacts S.C. timber industry

By Chuck Crumbo
ccrumbo@scbiznews.com
Published March 26, 2014

COLUMBIA, S.C. — February’s ice storm, which damaged 1.5 million acres of South Carolina forestland, promises to disrupt the supply chain of the state’s $17.4 billion forestry industry.

The storm, which struck just before Valentine’s Day, left a 170-mile-long, 70-mile-wide trail of timber damage through 21 counties, extending from the Savannah River to the North Carolina border, the S.C. Forestry Commission said.

Roughly 11% of forestland suffered direct or intermediate timber losses, the commission said. The industry, which employs 90,000 workers, suffered $360 million in damages, the commission added.

Ron Holt, a forester for the S.C. Forestry Commission, surveys damage caused by February’s ice storm to trees in Williamsburg County. (Photo/S.C. Forestry Commission)
Ron Holt, a forester for the S.C. Forestry Commission, surveys damage caused by February’s ice storm to trees in Williamsburg County. (Photo/S.C. Forestry Commission)
That figure, though, doesn’t include growth loss due to tree canopy damage and reduced residual tree value due to stem damage.

“The raw material supply chain for our state’s largest manufacturing sector has suffered from this natural disaster,” said State Forester Henry E. Kodama. “The storm has impacted hundreds of thousands of individual forestland owners and multiple corporations.”

About 25,000 to 30,000 acres of forests will have to be salvaged and replanted, the commission said, adding that the loss to the timber industry was the worst since Hurricane Hugo raked the state in 1989, causing about $1 billion in damage.

Ironically, most of the damage from February’s storm was inflicted on pulpwood size trees between 15 to 25 years old, many of which were planted to make up for the loss caused by Hugo.

The trees, 7- to 9-inches in diameter, are used mostly by pulp and paper mills, and to make oriented strand board.

Tim Gammell, editor of North American Wood Fiber Review, a trade journal that tracks the timber industry, said in an email to SC Biz News there may be a lot of pulpwood available, as well as the tops trees and branches that could be fed to S.C.’s biomass power plants.

Four biomass power plants in the areas where much of the damage occurred could absorb much of the pulpwood that will be salvaged. Those facilities include Ameresco’s alternate fuels plant in the Aiken County town of Jackson, EDF’s two 18 MW plants in Allendale and Dorchester counties, and Sonoco’s co-generation unit in the Darlington County town of Hartsville.

“Higher value sawlogs will normally find homes quickly. It is usually the lower quality, smaller and damaged material that is a problem,” Gammell said. “Biomass plants and other facilities using this woody biomass for power or steam generation can use it.”

Gammell doubts there will be any shortages of products because damaged timber tends to increase short-term availability.

“The real limitation is the number of logging contractors available to gear up, change plans and concentrate on removing the material while still servicing their normal contracts with customers,” Gammell said. “S.C. has a pretty good infrastructure of contractors and plants that have experience in finding markets and handling logistics.”

Gov. Nikki Haley’s signing of a temporary order allowing larger loads to be carried by logging trucks — up to 90,000 pounds gross per vehicle versus the usual 80,000-pound limit — should “ease a bottleneck of trucking capacity to get salvaged material to the mills (pulpmills, saw or stud mills, biomass plants),” Gammell said.

“It will also ease any price increases for pulpwood. Salvaging is nearly always more expensive than straight harvesting, but the trucking rate may decrease due to higher load allowances, and thus compensate to some extent,” Gammell said.

Landowners can expect to receive only 15% to 20% value for the timber that will be salvaged, said Cam Crawford, president of the S.C. Forestry Association.

“It gets back to supply and demand,” Crawford said. “It’s obvious that there’s a lot of supply right now, so you’re not going to get top dollar.”

The upside, though, is that an increase in general construction and homebuilding will absorb damaged timber that can be shredded and used for OSB, a particle board that’s used as sheathing in walls, flooring, and roof decking.

“Had this happened in 2008-2009 at the worst of the recession, it would have been devastating because there wasn’t much of a market,” Crawford said.

Wes Godbee, area procurement manager, for Georgia-Pacific, which has seven manufacturing facilities in South Carolina, including OSB plants in Allendale and Clarendon counties, and sawmills in McCormick and Newberry, said the company has been receiving both damaged and clear-cut wood.

“We are currently buying wood from the ice-damaged areas as long as it meets our specifications, and it will be utilized by all of our forest products mills in these areas,” Godbee said. He added that some of the wood is too small or broken into shorter pieces to be used.

“We are working with area loggers to clean up as much as possible because with warmer weather approaching, the material will begin to degrade and become unusable in our process,” Godbee said.

The forest industry’s supply chain is more local than other manufacturing sectors, Kodama said. Companies that make airplanes, tires or cars draw their raw materials from all over the world. Often, when they lose a source they can get another.

However, a sawmill or OSB plant operation is limited to local resources.

“It can only exist on the wood resource that’s within 50 to 100 miles from that mill,” Kodama said. “The resource can only be delivered by truck. You can’t order wood from Mississippi or Canada or Brazil.”

Reach Chuck Crumbo at 803-726-7542.

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