Have you heard the news? Lumber prices are up? Feel like punching me in the throat, don’t you? Over the past several months, we have been looking at ways to save money in the lumber market. Saving money adds money to your bank account, which means that saving money is part of our business plan to make money. It’s all about how much is left over after all of the expenses are paid. After all, isn’t that why we play the game?
Perhaps the most overlooked aspect of saving money in your component business is the area where you have the most exposure and vulnerability. That is lumber price volatility. I just read a story about a builder who signed a contract for a custom home the week before the current rally began in early February. The job is scheduled to break ground in April. His dealer advised him last week that the lumber package would be 30% higher.
That completely wiped out the builder’s entire profit. Now he is saddled with six months of work that will make him nothing. Had this builder been advised of the likelihood of such an event, he could have priced more defensively. Not only did the builder get screwed, so did the truss plant supplier. He didn’t buy to cover the job because the contractor didn’t cover. Now they are both in a nasty pickle. Last month’s euphoria has turned into next month’s nightmare.
This of all reminds me of a true life story that happened to me. Back the early 1980s, I agreed to provide my best customer, a NJ truss plant, with a fixed price on 2 carloads of SYP 2x4’s per month…January through September…nine months.
That year, lumber prices rose like this year, though a bit slower. At the worst point in that contract, I lost $70 per thousand…over $7000 per carload. When July rolled around, I was upside down $60,000. I was sick.
As you might expect, the market began to retreat and, over the last three months of the deal, I recovered the losses and came out a little ahead. That was a miserable year for me and my family.
The point is, lumber price swings can cause a lot of stress on a person and I feel your pain.
I created this occupation, lumber market forecasting, out of the desire to help others avoid lumber market catastrophes like the one I endured in the 1980s and the hundreds that are happening right now.
I sincerely hope you have fared well during these trying times, and, rest assured, this is not the end of it.
Layman’s Lumber Guide is a plug and play accessory. It is not easy for me to produce, however, it is remarkably simple for you to use. Just look at the graphs, see the forecast of time and price, read the commentary and follow the strategies.
I know, right?
Finally…something and someone whose purpose in life is to look out for you.
YES…truss plant(s) and builder(s) could have avoided this “price shock” catastrophe, but that is in the past. The question today is, do you want to avoid the next fallout and future ones? Price catastrophes are not your fault, however, you can make the decision today to keep them in the past and out of your future.
Do it now, the old fashioned way…Call me…Matt Layman 336-516-6684. Let’s talk about how I can help you. I’ll even answer on nights and weekends.
The lumber market has no friends. It is indiscriminate. It punishes all who are not in sync with it.
Looking Forward…ml
A veteran lumberman, Matt Layman publishes Layman's Lumber Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every day. You can reach Matt at 336-516-6684 or matt@laymansguide.org.