Hardwood Market ReportHardwood Market Report

Changes in Markets for Changes in Markets for North American North American

HardwoodsHardwoods

Housing Start Cycles

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

1959

1961

1963

1966

1968

1970

1972

1975

1978

1982

1984

1985

1986

1991

1994

1998

2000

2005

2006

2007

2008

2009

Thou

sand

Uni

ts

Total StartsSingle-Family Starts

Longest up or down cycle is 5 years.

400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

2005 2006 2007 2008 Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Source: US Census Bureau Graph: HMR Executive

Thou

sand

Uni

ts

Units StartedUnits CompletedBuilding Permits

New Home Construction Starts, Completed Units, and Building Permits

New and Existing Home Inventories

3,000,000

3,200,000

3,400,000

3,600,000

3,800,000

4,000,000

4,200,000

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09 Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Exis

ting

Inve

ntor

ies

(Uni

ts)

200,000

250,000

300,000

350,000

400,000

450,000

500,000

New

Inve

ntor

ies

(Uni

ts)

Existing

New

Sources: US Census and NARGraph: HMR Executive

Feb1990

Feb1991

Feb1992

Feb1993

Feb1994

Feb1995

Feb1996

Feb1997

Feb1998

Feb1999

Feb2000

Feb2001

Feb2002

Feb2003

Feb2004

Feb2005

Feb2006

Feb2007

Feb2008

Feb2009

Feb2010

US New Home Supply Pipeline

359.0

523.8

314.9

305.0

631.8

316.6

563.0

968.5

449.6

233.0

283.8

189.7

272.0

434.6

165.4Thou

sand

Uni

ts

Total Supply Feb.1990:

1,197.7MUnits

Total SupplyFeb. 1992:

872.0M Units

Total Supply Feb.2000:

1,253.4MUnits

Supply Peaked May 2006 at

1,981.1M Units

Total SupplyFeb.2010:

706.5M Units

Multi-family Units Under Construction

Inventory of Single-Family Houses

Single-Family Units Under Construction

Source: US Census BureauGraph: Hardwood Market Report

Total Supply

Feb.1996:

1,127.8M Units

362.0

533.1

232.7 January 2010 S-F Const. and

Total Supply Pipeline of New Housing in the

US are the Lowest on

Record.

Total Supply

Pipeline has

Decreased 64.3% from

Peak

- 7

- 5

- 3

- 1

1

3

5

7

Perc

ent C

hang

e

2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 0 91Q

2 0 0 92 Q

2 0 0 93 Q

2 0 0 94 Q

GDP Percent Change Based on Current US Dollars

Source: US Dept. of Commerce

Manufacturing Capacity Utilization

60

65

70

75

80

85

Feb-

02M

ay-0

2A

ug-0

2N

ov-0

2Fe

b-03

May

-03

Aug

-03

Nov

-03

Feb-

04M

ay-0

4A

ug-0

4N

ov-0

4Fe

b-05

May

-05

Aug

-05

Nov

-05

Feb-

06M

ay-0

6A

ug-0

6N

ov-0

6Fe

b-07

May

-07

Aug

-07

Nov

-07

Feb-

08M

ay-0

8A

ug-0

8N

ov-0

8Fe

b-09

May

-09

Aug

-09

Nov

-09

Feb-

10

Perc

ent

Source: Federal ReserveGraph: HMR Executive

Average: 1972 - 2009 80.6%

Purchasing Managers Index

30

35

40

45

50

55

60

65

2005 2006 2007 2008 Jan-09 Feb-09

Mar-09

Apr-09 May-09

Jun-09

Jul-09 Aug-09

Sep-09

Oct-09 Nov-09

Dec-09

Jan-10 Feb-10

Source: The Institute of Supply Management Graph: Hardwood Market Report

Inde

x Va

lue

Index values above 41.1 percent, over time, indicate expansion of the overall economy.

Index values above 50 indicate expansion in the manufacturing sector of the economy.

-50%-29%6.59.210.411.211.612.9

Total Estimated

Consumption

N/AN/A0.050.2N/AN/AN/AN/A

Board Road/Mat Timbers

7%-32%0.751.11.01.00.90.7Railway Ties

-64%-38%0.50.81.31.41.51.4Flooring

-42%-42%0.71.21.31.51.61.2Cabinets

-69%-43%0.40.71.01.21.31.3Millwork

-34%-21%0.791.01.21.31.31.2Exports

-88%-57%0.30.71.01.11.22.6Furniture

-33%-14%3.03.53.63.73.84.5Pallets

% Change 1999

% Change 2008200920082007200620051999Market Sector

3.03.53.63.73.84.5Pallets

200920082007200620051999

2.0

2.5

3.0

3.5

4.0

4.5

Bill

ion

Boa

rd F

eet

1999 2005 2006 2007 2008 2009

- 33% 1999 to 2009

0.30.71.01.11.22.6Furniture

200920082007200620051999

0.0

1.0

2.0

3.0

Bill

ion

Boa

rd F

eet

1999 2005 2006 2007 2008 2009

- 88% 1999 to 2009

0

2,000

4,000

6,000

8,000

10,000

12,000

Mill

ion

US

Dol

lars

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

US Imports of Wood Household Furniture

Total China

AHFA Estimates of Manufacturers' Shipments of Residential Wood and Upholstered Furniture

0

5

10

15

20

25

2005 2006 2007 2008 2008* 2009* * 2008 and 2009 Through Q3

Bill

ion

US

Do

llars

TOTAL

WOOD

UPHOLSTERY

0.791.01.21.31.31.2Exports

200920082007200620051999

0.0

0.5

1.0

1.5

Bill

ion

Boa

rd F

eet

1999 2005 2006 2007 2008 2009

- 34.2% 1999 to 2009

0.40.71.01.21.31.3Millwork

200920082007200620051999

0.0

0.5

1.0

1.5

Bill

ion

Boa

rd

Feet

1999 2005 2006 2007 2008 2009

Millwork- 69% 1999 to 2009

0.71.21.31.51.61.2Cabinets200920082007200620051999

Cabinets

1.21.6

1.51.3

1.20.7

199920052006200720082009

Billion Board Feet

0.50.81.31.41.51.4Flooring

200920082007200620051999

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Bill

ion

Boa

rd F

eet

1999 2005 2006 2007 2008 2009

- 64% 1999 to 2009

0.751.11.01.00.90.7Railway Ties

200920082007200620051999

0.00.20.40.60.81.01.2

Bill

ion

Boa

rd F

eet

1999 2005 2006 2007 2008 2009

+ 7% 1999 to 2009

Furniture20%

Exports9%

Millwork10%

Cabinets9%

Flooring11%

Railway Ties5%

Pallets36%

Percentage of Hardwood Consumption by Primary Market Sector - 1999

Grade markets comprised 59% of consumption.

Percentage of Hardwood Consumption by Primary Market Sector - 2009

10%

6%

12% 1%

47%

11%

8%

5%

Data Collected from a Variety of Industry, Academic and Government Sources Graph: Hardwood Market Report

Board Road &Mat TimbersRailway

Flooring

Cabinets

Millwork

ExportFurniture

Pallets

Grade markets comprise 40%

of consumption.

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Mill

ion

Boa

rd F

eet

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Eastern US Hardwood Lumber Production

2009 est. 5,730,000,000

board feet

1999 est. 12,619,000,000 board

feet

1962 est. 7,770,000,000 board feet

1975 est. 7,157,500,000 board

feet

- 54.6%from 1999

-49.3%from 2005

Sources: William G. Luppold, Ph.D. and Hardwood Market Report Graph: Hardwood Market

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Mill

ion

Boa

rd F

eet

1999

2007

2008

2009

Jan-

08

Feb-

08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep-

08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep-

09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Estimated Annual Rates of Sawmill Production for Eastern US Hardwoods

12.6B bd. ft.

Feb. 2010: 5.05B bd. ft.

8.1B bd. ft.

9.9B bd. ft.

Jan. 2008: 9.9B bd. ft.

Jan. 2009: 7.2B bd. ft.

©Hardwood Market Report 2010

June 2009: 5.4B bd. ft.

July 2009: 5.5B bd. ft.5.7B

bd. ft.

Challenges AheadChallenges Ahead

Access to working capitalAccess to working capital

Challenges AheadChallenges Ahead

Access to working capitalAccess to working capitalHigh unemploymentHigh unemployment

Challenges AheadChallenges Ahead

Access to working capitalAccess to working capitalHigh unemploymentHigh unemploymentGovernmentGovernment–– Health careHealth care–– Cap and tradeCap and trade

OpportunitiesOpportunities

►►HousingHousing

OpportunitiesOpportunities

►►HousingHousing►►The EconomyThe Economy

OpportunitiesOpportunities

►►HousingHousing►►The EconomyThe Economy►►Limited Supplies and Low InventoriesLimited Supplies and Low Inventories

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