British Columbia’s wildfire impact on lumber supply to the U.S.

This summer, roughly 375 wildfires in British Columbia burned through 913,000 acres of Canada’s forestry region, forcing area residents to flee their homes and causing some businesses to suspend operations.

This destruction poses a threat to North America’s lumber industry. The U.S.purchases approximately one third of its lumber from Canada to use as components for residential construction and in 2013, the U.S. spent over $2.5 billion on softwood lumber exports from B.C. — constituting almost 49.4 percent of their exports.

Wildfire in Alberta, Canada – flickr/Cameron Strandberg

Leading businesses in the industry such as West Fraser Timber Co. and Norbord Inc. halted their lumber production and evacuated their mills on 100 Mile House, complying with government issued evacuation procedures in a state of emergency. On Monday July 24, Norbord Inc. officially reopened their operations, hoping to stay on track with their third quarter results. The lumber company has a production capacity of 440 million square feet of oriented strand board, which is the main component used to build 70 percent of residential floor, wall, and roof sheathing in North America. Meanwhile, the West Fraser Timber Co. did not endure damages to their site from the fires, yet remains closed indefinitely. Bloomberg reported that the company has a production capacity of 800 million board feet of lumber and 270 million square feet of plywood used to create frames for homes.

These closures instigated an increase in the price of lumber given steady demand and decreased supply, jeopardizing U.S. wholesalers’ opportunities to purchase lumber. With Canada’s lumber subsidies meaning they can export for below U.S. market value, the White House imposed tariffs averaging 20 percent on softwood lumber imports, potentially augmenting cost increases for U.S. wholesalers. These tariffs influenced the U.S. real estate industry causing an increase of approximately $1,700 to the average house in the market, and raising the price of a single family-home up to $406,400.

According to British Columbia’s public safety page, wildfires in the region surface around this time every year and are subject to rapid growth due to the combination of dry heat and windy conditions. Approximately 375 fires burning through Canada’s forestry region have caused the evacuation of 37,000 people from their homes, Bloomberg reports.