Hurricane spin-offs may impact Barwick mill

When hurricanes Charley, Frances, and Ivan roared through the Sunshine State over the past month, they left a path of destruction and death in their wakes.
But they also left something else—opportunity.
While millions of Americans abandoned the vulnerable coastlines and sought refuge inland, thousands of others tried to ride out the storms by nailing panel boards over windows to protect them from flying debris.
In many cases, the panels themselves were destroyed and had to be replaced as subsequent storms threatened Florida.
So, how does all this affect us?
It so happens the Ainsworth OSB mill in Barwick produces some of those very panels that currently are in such demand in the U.S. southeast, as well as some of the materials that will be used once reconstruction of the devastated areas begins in earnest.
The relationship between the recent hurricanes and the Barwick mill is far from direct.
According to the Ainsworth Lumber Co., which recently purchased the Barwick mill, the local plant already is producing at capacity. But with the approach of winter and the end of the summer construction season, things normally would slow down a bit.
However, the annual building boom may well be extended because of the damage in Florida and the Gulf states.
Robert Fouquet, vice-president (marketing) for Ainsworth, thinks the current demand for the Barwick products could continue into the new year—partly as a result of the havoc in Florida and partly because of normal market forces.
“The market profile currently in North America is such that demand for structural panels is at an all-time high and continues to be, even though we are edging towards the winter, which tends to be a slower building period because of the weather,” Fouquet noted last week from his office in Vancouver.
“Because the demand is so buoyant, supply of structural panels is barely keeping up and the impact [of the hurricanes] is to maintain that demand,” he added.
Fouquet stressed there likely won’t be any direct increase in demand for the Barwick mill’s products because there is such a long chain between the manufacturer and the end-user, but the trickle-down effect probably will be noticeable.
“It will contribute,” he remarked. “There are a lot of dynamics that affect the market. One is that between Barwick and the end user, there is a distribution chain.”
That chain consists of distributors, retailers, and finally, builders. And since Ainsworth is based on the west coast, most of its U.S. customers are located in the Midwest.
Shipping costs to the southeast are not cost-effective, but if there is sufficient demand as a result of reconstruction in Florida, Barwick may yet benefit from the boom.
“Barwick typically does not sell in these regions because freight costs become prohibitive,” Fouquet said. “However, the dynamics are such that the southeastern and mid-Atlantic mills are going to find more local demand to face the repairs likely to occur.”
And because of that increased demand, more remote mills such as Barwick may have to step in to pick up the slack.
“We know that inventories currently are not huge and that is the key,” Fouquet said. “The hurricanes would have the effect of causing retailers to replenish their inventories, which, in turn, makes distributors ask us to sell them more product, so the momentum is quite good.”
He noted the effect more likely would be felt in the form of higher prices than in increased demand, but that could change if there is more damage.
“It is an interesting dynamic that is affecting the whole of North America,” he concluded.
“We are anticipating a modest increase in demand—it depends in the end on how much damage is caused,” Fouquet said, though stressing he would rather not have to service a market based on human suffering.
“We certainly pray that there is no significant damage occurring because damage is always destructive to people’s lives,” he added.