From the start, 2018 was full of promise. The year began with a fantastic lumber market—one of the best we’ve seen in years. Our sales team hustled to move product all over the world and established a number of new partnerships with vendors and suppliers.
When markets are good we invest back into our infrastructure and our people. In 2018 we completed a number of capital projects at all of our mills and expanded our wine growing operations with the purchase of the Fennwood Vineyard in Oregon’s Willamette Valley. We also launched the Hampton Scholarship Program, which in its first year awarded $100,000 to children and spouses of employees.
And then late summer rolled around…
In the third quarter we experienced a 50 percent drop in lumber prices almost overnight—the largest drop in lumber prices since the industry started tracking such things. With log prices still high, sawmills throughout the Pacific Northwest were forced to reduce production. At Hampton, we’ve had to temporarily curtail operations at our Banks sawmill until lumber markets return to normal. Trade disputes have complicated things further as tensions with China create new and evolving challenges for our import/export sales businesses.
On the log supply side, our resources department continues to work tirelessly to secure raw materials for our mills. This is no easy feat. The Pacific Northwest has the highest log prices in North America due to restrictions on public timberlands. On the bright side, this year we’ve seen reductions in U.S. log exports as China has backed off the market and imposed new tariffs on U.S. logs. As a result, local log prices have started to drop and supply has increased—a trend that we hope will continue into 2019 and help us adjust to changes in the lumber market.
With 2019 fast approaching, I’d like to take a moment to remind everyone that while 2018 has been full of ups and downs, we are built to handle volatility. With nearly 80 years in the business, we’ve weathered such challenges before. We have good people, good ideas, and owners that are committed to making the business last another 80 years.
While economic volatility and the negativity and uncertainty stemming from the global political scene can fuel pessimism, I’d like to urge everyone to take a step back and look at what we have and what we have accomplished together. Smile. Laugh. Listen. Help those around you when you can. Stay positive. And always remember to look for a better way every day. If we can do that, I have no doubt that 2019 will be an amazing year.
Have a safe and happy New Year!
Steve Zika, CEO