Three Strategies to Survive Fluctuating Lumber Prices

Lumber volatility impacts the P&L statement as well as jobsite safety and the skilled labor shortage.
By Deb Hilmerson
April 12, 2022

Doubling tariffs on Canadian lumber is just one of the latest actions creating volatility in lumber pricing and demand. For two years, construction also has been coping with the pandemic, lumber mill shortages and skyrocketing demand in addition to wildfires and floods. In January, lumber prices once again hit a seven-month high.

While there is no magic wand to fix this dilemma, it’s pretty much guaranteed that unless contractors make changes, the big hits to their bottom line will continue. The construction industry is notoriously slow to turn from the top. Contractors have been doing things one way for so long, why change? But this time, they must do it.

Contractors must understand that lumber volatility impacts more than their P&L statement. It is also indirectly tied to jobsite safety and the skilled labor shortage.

There are better ways to stay ahead of the pack

It’s a different world for contractors than when they first entered this industry. Leading contractors are adopting strategies to maintain their competitive advantage, create new revenue streams and deliver safer jobsites.

1. Get rid of waste that’s costing time and money.

If it’s a choice between two hard bids and contractors don’t follow lean principles and have lean products, they will lose. Lean has become a big focus among contractors in the past several years. Downtime costs contractors time, money and impacts the project schedule. Contractors can be more competitive if they limit down time. Eliminating the wasteful use of two-by-fours for temporary fall protection is a good starting point. It’s not much different than tossing extra cash directly into the landfill at the end of each job. Use two-by-fours to build structures, not to create guardrails when something more durable and sustainable could be used. Contractors will be that much less impacted by high lumber prices and supply shortages.

2. Create an extra revenue stream (or expand the one currently used).

A lot of contractors are adding durable equipment to their fleet and creating their own internal rental companies. They are moving away from ordering massive amounts of two-by-fours, and investing in construction-grade, engineered safety systems that are designed to last, faster to install and easier to maintain. By the second deployment, they are saving money instead of spending money. They have created a profit center.

3. Adapt to the skilled labor shortage.

This is another huge reason to find lumber alternatives. If contractors are not using experienced carpenters to build and install wood safety rails and leading-edge fall protection, there can be safety and compliance issues. Someone could fall and die. The contractor might be cited by OSHA. Building two-by-four guardrails is time and labor intensive, and requires skilled labor. On the contrary, if a contractor invests in an OSHA-compliant system that is easy to install with minimal components, it can assign the task to someone just learning the trade while experienced workers are used more efficiently.

It would also benefit the entire industry if each and every construction executive personally addressed the skilled labor shortage. The industry is skewing older. People are retiring early and, despite a big push to get kids into trade schools, younger people aren’t coming in. Construction executives are in a good position to reach out to kids and let them know they can make a great living working in the trades.

Those who don’t want to spend their careers behind a desk and who have an aptitude for working with their hands as well as their minds will thrive. And having a stronger, multi-generational workforce will help drive efficiency and innovation.

Today’s fluctuating lumber prices may just be the impetus we all need to make proactive changes that will serve us well for many years to come.

by Deb Hilmerson
Changing a mindset takes a mountain of grit, something that describes Deb Hilmerson perfectly, from her hard hat to her steel toe boots. Her 30 years in construction as a field laborer, Safety Director and Consultant at companies like 3M Worldwide and Mortenson landed her in the right place at the right time to transform archaic equipment practices on construction sites as President/CEO of Hilmerson Safety.

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