Dive Brief:
- Lumber products maker Interfor announced plans last week to indefinitely reduce sawmill operations at its facilities in Meldrim, Georgia, and Summerville, South Carolina.
- The curtailment will lay off approximately 180 employees: 93 in Meldrim and 88 in Summerville, according to the states’ Worker Adjustment and Retraining Notification Act posts.
- The reduction is due to persistent weak lumber market conditions, according to the release. “We continue to be focused on positioning Interfor and its operations to successfully navigate through this period as supply rebalances with demand,” EVP and CFO Rick Pozzebon said in an Aug. 9 earnings call.
Dive Insight:
The Meldrim and Summerville curtailments are the result of another challenging quarter for the lumber products maker due to ongoing weak pricing, CEO and President Ian Fillinger said on the earnings call.
Interfor’s plan between now and December is to temporarily reduce its lumber production by approximately 280 million to 350 million board feet, the company said in an Aug. 8 press release.
The Meldrim and Summerville facilities produce oven-dried Southern Yellow Pine dimensional lumber used for building walls and floorboards. Together, the sawmills produce a yearly capacity of 330 million board feet, according to the press release.
However, lumber prices have been fickle over the past few years due to increased demand, rising tariffs, supply-chain bottlenecks and insufficient domestic production, according to the National Association of Home Builders.
Prices dropped slightly in Q2 with an average selling price of $602 per thousand board feet, down $8 from $610 in Q1, and down $47 year-over-year.
“Log costs and conversion costs were down in most regions and shipments were ahead of production,” Fillinger said. “Our team continued to drive cash from working capital with reductions made in receivables and also in both log and lumber inventories.”
The Meldrim and Summerville operational reductions are the latest in a long line of cutbacks Interfor has implemented in the past two years. In April, Interfor announced another North America operations-wide curtailment to reduce lumber production by 175 million board feet between May and September.
The company first announced it was cutting back on lumber production in October 2022 by approximately 200 million board feet for the rest of that year. Interfor expected to resume its operation schedule in January 2023.
When the new year came, however, Interfor announced another curtailment for its Q1, by at least 100 million board feet. The reduction was mostly concentrated outside of Interfor’s U.S. south operating region.
Fast-forward to 2024, and the company has announced indefinite curtailment plans for its sawmills in North America. In February, the company announced an operation reduction at its Philomath, Oregon, facility. The curtailment led to approximately 100 job cuts, according to Interfor’s Feb. 15 WARN Act letter to the state.
The company later sold property and assets of the Philomath sawmill for $15 million in cash, according to Interfor’s Q2 securities filing.
