Lewis Gaylord Provides Insight on Chinese Lumber Issue
Tweed, Ontario, April 5, 2018-Lewis Gaylord of Gaylord Hardwood Flooring created an video titled “Selling North American Logs to China,” posted to YouTube, which discusses the China’s current practice of purchasing U.S. logs, shipping them overseas for production into lumber, and then shipping them back to the U.S. for sale at below-market prices.
Gaylord reports that when he started his business in 1985, 80% of his customers were furniture plants in Canada and the U.S. Since China joined the World Trade Organization in 2001, the U.S. furniture industry has been decimated. As of 1990, North Carolina had 90,000 people employed in the furniture industry; today, the figure is less than a third of that, with many jobs going to China. Gaylord purports that all wood product manufacturers are threatened by China’s activity, and while it’s too late to save industries that have already been wiped out, the sawmill industry could yet be saved.
Gaylord explains that buyers in China are paying a premium for U.S.-grown logs, which they are taking to China for production and selling back to the U.S. at below-market prices.
How could this be? Gaylord believes that the answer is that the Chinese government is subsidizing the industry. The American Hardwood Export Council said that between January 1, 2017 to September 30, 2017, log exports to China rose by 65.5%. While many assume that the Chinese are simply able to manufacturer lumber more cheaply due to affordability of labor, Gaylord notes that U.S. sawmills have become highly efficient, and that the Chinese simply can’t be that much more efficient, especially considering the added cost of shipping the logs and lumber to and from China.
According to Gaylord, the total cost to buy the lumber, ship it to China for production, complete production (sawn and kiln dry) and ship it back should be $1,436 per thousand in U.S. dollars, compared to a cost of $1,025 per thousand if sawn in the U.S. Gaylord says, “Even if China was paying the market price for logs, not a 50% premium, there’s no way they could mill the logs into lumber and ship back to us at a lower cost. It’s obvious the industry is being subsidized by the Chinese government in an effort to steal North American jobs.”
This isn’t an unlikely reality, considering that the U.S. International Trade Commission recently ruled that Chinese hardwood plywood was subsidized by the Chinese government, ranging from 23% to 194%.
Gaylord reports that, in addition to the extremely negative impact on the U.S. sawmill industry, the Chinese’s practice is an environmental crime, noting that 15 of the largest container ships create more pollution than all the cars in the world combined, 780,000,000, running at the same time. Adding that there are 85,000 ocean-going cargo vessels and that emissions are not regulated in international waters because practices are simply too hard to monitor and enforce.
The full video is available here: https://www.youtube.com/watch?v=3T1tBfP8fIA&feature=youtu.be