I’m been thinking about where a good place to store value might be, and I’ve concluded that, for me, a good instrument is wood. For luthiers and many musicians, a good instrument is wood as well, but that’s another, um, case. Hah!
Wood is something I know fairly well and can assess accurately, unlike, say, sapphires or platinum, where I would have to rely on someone else’s assessment or certification. I believe I know quality wood from just average wood, at the very least in terms of the work I do and the solid wood materials I require to construct durable goods that perform well over time. I don’t know much about other wood products, like plywood for example. It’s not something I have ever felt called upon to become savvy about, though I have noticed today’s plywood ain’t like the material from 20 years ago – it’s inferior.
I have been working wood for a good while now and one thing I’ve noticed over time: the price of solid wood never goes down, regardless of what the economy is doing. Timber availability can shrink and expand with economic expansions and contractions, but go down in price? Not something I’ve seen. Also true is the timber never gets any better in quality either – it initially comes on the market in all its glory and wonder, then, shipment by shipment, continually gets smaller and crappier and ever more expensive as the years roll by. Sometimes you can almost tell when they reached the end of the logging road. In this respect, wood is much the same as any other natural material, and conforms to the same sort of economic factors as, say, crude oil. That is, it obeys Hubbert’s Peak – a theory, but all the same a fairly persuasive one. We have peak oil already upon us according to most estimates, and I suspect that for many species of wood we have, have had, and will be having all too soon, ‘peak timber’ as well. Heck, the peak for Zitan and Huanghuali supplies, used in the finest Chinese classical furniture, was around the year 1500. Small amounts of Zitan are obtainable to this day on the commercial market, but the quality is marginal at best and the price is $100/board foot with minimum order of 100 board feet. You can rest assured that whatever scraps which show up are usually bought by Chinese companies. Huanghuali has all but disappeared.
Due to the offshore reality of the bulk of commercial furniture production these days, not only are we seeing the die-off of many furniture producers but also the wood supply yards, as it seems that the workable model is tending towards container load exports of wood to producers. It’s the same trend everywhere, leading to one giagantic box store where we will all shop and receive both medical treatment and legal advice.
Put it this way: maybe one day in the near future there won’t be the same choices for buying wood to which I have become accustomed.
Many woods hit their peak in terms of supply and quality, then inexorably work their way down the supply curve, getting poorer in quality as they do so. At first, the forest is full of huge trees and the low lying fruit, so to speak, is trimmed quickly and easily. Years later the access tracks to the timbers reach far into the forest, and logs are trucked long distances, or floated out on rivers or even yanked off hillsides by helicopter. Yet more years later, the forest is replaced by grassland and herds of farting cows, and the best we can do is scavenge the scraps from the logs that sank in that river, or perhaps from pulling old buildings apart which employed and now effectively store those better materials. Both sources can provide some great material, but at considerable difficulty and cost of extraction.
Nowadays, once a timber has reached high levels of exploitation it often finds its way onto the CITES list, and trade in that material is all but over. While locals may continue to harvest the timber, bigger trees tend to become isolated in small pockets and national parks. What then happens, the remnants in circulation in other countries is soon vacuumed up and that, more or less, is all she wrote.
Case in point is Lignum Vitae. This wood, long a staple of the shipbuilding industry, and even a strategic resource for the US military, has been exploited as a timber for 400~500 years. An extract of the tree was used as a treatment for syphilis until as recently as 1909. Further,
“In the 1520s-1530s, the belief that the cure for syphilis (and the alleviation of other ailments) came from lignum-vitae created a craze (repeated a few generations later) that “drove its price to dizzy heights”, as much as 7 gold crowns per pound (lb.) of this very heavy wood (Crosby 1972, Record & Hess 1943, Swabey 1946, Lewis & Elvin-Lewis 1977).”
Source for the above quote can be found here.
This wood has been pillaged for centuries, and by the late 20th century was banned for trade. So, in the 2000~2005 period one could still find stock of this wood circulating around the odd lumber dealership in North America, and I made a point of picking up a few boards here and there as I could afford them. They were expensive at that time – one 2″x12″x48″ stick (a somewhat freakish size for this species) I acquired was $700 and it took me a full year of penny-pinching to scratch together the money to buy it. Some people laughed at, or at least questioned, my ‘sanity’ (I’ll use that term loosely here folks) for spending that kind of money of a single board. Now, I didn’t buy the wood as an investment at the time – I bought it because I thought it would be perfect for any wooden mechanism I might build involving easy sliding and weight-bearing combined with extreme durability. Lignum Vitae is one of the coolest woods on the planet, and I have to admit I get a bit geeky over it.
The Chinese wheelbarrow project I’ve been working on involved some Lignum Vitae; I used it to make the axles and axle bushings. Having used up a portion of my stock on hand, I set out to look for a replacement stick, at minimum a 2″x 5″x 40″ length would suffice. Not a big stick of wood as these things go, but I could find no such stick on the open market. Suppliers that do list Lignum Vitae as a stock on hand in reality did not have any stock, and would not be getting any stock, and the best I could scratch up here and there were pen-blank size pieces. You know its getting bad when all you can find of a given species are materials sized for pens or xylophone keys.
I then located a company which has -somehow- received a permit to import small quantities of LV from Mexico, and they sell this wood primarily to US hydroelectric facilities. Lignum Vitae is, after all, nature’s best bearing material. Now, put together the terms ‘sole supplier’ and ‘captive market’, mix in a smidgeon of demand, and what do you get? Yep, a price increase. A 3″x 6″x 48″ long stick was quoted to me at an astounding $2800.00. That was the most expensive stick of wood I have ever encountered (@ $466/board ft.!), though I’m thinking it likely that it is only a glimpse of things to come. Suddenly my $700 ‘investment’ in the 2″x12″ back in 2005 looks quite rational, does it not? I like to think so at least – nothing like a little vindication from the marketplace I guess. Good to be lucky, perhaps?
So, I’ve concluded that maybe the best place for me to invest any spare capital is in something I know well, and love, and something I know to have a proven record of price/value appreciation. As far as supply dynamics go, one should never underestimate the power of logarithmic increase, and with China’s economy gaining steam, it seems to me that any investment in a quality valuable raw material is bound to be a smart one. Even more so, beyond the ‘raw material investment’ side of the coin, I have the power to turn the raw materials into added-value processed goods, which is another way of saying I will be able to offer my customers certain materials that they might not be able to find otherwise. Hopefully I will be able to do justice to the materials in what I design and make.
The above is not intended to be any form of investment advice. I’m just letting you know what I’m doing and why I think I should be doing what I’m doing. I rather hope the rest of you choose not to invest in wood so as to keep the selection decent for me for the near term at least!
Thanks for coming by the Carpentry Way. Comments most welcome.
This post made me go back to a spreadsheet with some lumber dimensions. It is a small stock of rare woods for sale by someone 'around here'. No I will not tell who..
He has some small pieces of high quality LG which costs 20.335€/m³ or about 48€ a board foot. Just wrote him an email and hopefully he still has them.
With a regular supplier the price would be twice as high but that is still much cheaper then 466$ a board foot. The never ending quest for wood continuous. We better use some of it to make nice and durable things while it is still here. Or should we leave it all in woods for the sake of preservation? I plead guilty and often use some of this most amazing old grown material. I might never find a good answer to justify what we do…
Apparently it is very difficult for us to come up with a sustainable way of producing lumber to fuel our demand. Oh yes I forgot, if that would be our goal we should make an effort for the generations to come. It seems that 200.000 years of evolution is not enough to overcome greed and act out of selflessness on a larger scale.
Hiya,
I'm not sure that your “peak oil” metaphor works – fracking has changed the economics. On the other hand, it would seem that timber is a resource that is not buried in the ground so it is more likely that the supply can be more easily gauged – the examples of zitan and huanghuali seem to be relevant in this regard as it would surely be the case that any new supply of these woods would be immediately snapped up, even at a premium price. Same seems to be working for the “exotic” timbers of the Brazilian rain forest which are constantly rising in price (albeit from a very, very low initial level). Jatoba and Ipe are used for what might be considered “grunt work” – these incredibly-hard, weather resistant timbers are primarily sourced for designer-flooring as “Brazilian Cherry” or “Brazilian Walnut” and only occasionally used as a replacement for Teak which is now plantation-harvested. All of this is a long way of saying that your main point is convincing.
Mathieu,
a pleasure to hear from you. It is understandable as a woodworker to feel worry or even remorse over using precious woods. It is a fairly complicated picture overall, however two things are fairly certain:
1) any material can be used by people at a sustainable rate
2) humans almost never use material sustainably, perhaps largely because of greed
A forest can be selectively logged over a very long time without doing damage to the ecosystem or even denting the total supply. I've seen this done on Vancouver Island. I've also seen the very opposite on Vancouver island and indeed the clear cut moonscape is rather the norm in that part of the world. With an intelligently managed forest, the supply of forest products, ranging form thinnings of poorer quality to select high grade timbers can be accomplished, and indeed the timber yield in such plots increases over time. It's not the way to go if you have an industrial, please-the-shareholders with a bottom line profit margin, where you are likely to seek out the fastest way to cut the mostest to sell it the cheapest.
To be continued…
Continued…
As woodworkers we have little to no influence, day to day, over the cutting of trees, and most of us encounter the material long after the cutting and conversion have occurred. In fact, in many places where timber is cut extensively, a lack of demand from woodworkers, as happens when the economy does a nosedive, actually makes the situation worse in that people who own bits of land with marketable timber are not receiving much incentive to cultivate timber if the cannot get a sufficient return on what they have. If you can make a better living growing a crop or having cattle graze on a piece of land than from having a tree farm or managed forest, then people will do that simply to survive.
And the other current approach, where ecosystems are fully protected by way of parks, is great on the one hand, however it does tend to fragment those systems to such a degree that they become fragile and more vulnerable to damage from, say, fires or windstorms or biological pathogens. I'm all for parks, however they often end up as little islands in seas of clear cut.
Really, what could control this to a greater degree is the price of the timber which should be more finely graded. The good stuff should be very expensive, and if the rate of cutting exceeds supply generally then the price should go up to sufficiently to deter the consumption. Such market-based controls do not seem to work all that well in practice however. The price does go up over time as a wood becomes scarcer and more difficult to extract, however it doesn't really seem to keep up with actual supply conditions and reality. Even when a material is abundant, the price does not tend to associate to log size and quality as much as it could. When it is abundant a material tends to be cheap and thereby over-utilized, and in this respect timber is like other natural materials
And then there are the usage patterns. I've seen 48″ thick, 20' long perfect Douglas Fir logs being sliced up only for flooring in Vancouver Island mills. The reason to choose to slice up such a huge log for that purpose? To obtain even color and grain through all the boards. To me that is akin to a crime. Then there is the veneer industry which creams the high grade logs and produces products of relative cheapness and short lifespan, products more tied to the vagaries of fashion. Veneered material is a 15~20 year trip from high grade log to landfill in an awful lot of cases. I've talked a lot about this issue in earlier posts.
So we come to the material as woodworkers at a stage where our primary influence is what we can do with that material – if we choose to do anything at all. If we can design and make things which last at least as long as the tree took to grow we are at least on a sustainable path. If our products are made in a way so that they can be repaired and continue in use for a long time, or at worst significantly reclaimed and re-purposed later on, then we have done well. There is definitely an onus on us to design things well and make them carefully. If we don't, we aren't respecting our material, which is a form of not respecting our chosen profession.
~C
Auntie,
I don't think fracking has changed the Peak oil issue one bit. It's simply another example of where we are scraping the bottom of the barrel in our desperation to keep this unsustainable system going. The true costs of fracking, in terms of poisoned groundwater and trashed environments, are, as usual, being deferred. For now, natural gas is relatively cheap and abundant, and because it is cheap it will be exploited at a more rapid rate. The usual Jevons Paradox applies. People often make quite optimistic supply claims for a resource at first, and rarely is it found that such claims turn out to have any degree of accuracy. Trees and oil share the quality of having been considered 'limitless' resources, regardless of whether you can readily see them or not.
As for Zitan, an island off of Africa was found to have a small supply and is was essentially all bought by Chinese companies and all of it cut down. Cases of the organized smuggling of zitan, aka Red Sanders Wood are commonplace in Asia. The supply is indeed gauged, however the pattern of over exploitation does not change. Like lignum vitae, Zitan extracts are used medicinally in Asia, and this adds to the demand on the resource.
Jatoba and Ipe are cheap and fairly abundant at the moment, however it is only a matter of time until that changes.
~C
One more point about Ipe; you can already see in the lumber yards around here that it has begun to increase in price thus and a cheaper substitute, Red Balou from Indonesia, has been introduced. That will then get used at a higher rate until its price goes up, and something else is introduced. It's like cod from the north sea being replaced by all sort of other fish in fish and chips, as we work our way though one minor species after another in hope of a substitution that satisfied and supplies the market.
Let's face it, most of the Ipe is used to build expansive and expensive decks, which are a poor use of material, placing it out in the weather to get trashed. And even given the durability of Ipe, the decking is usually applied to a cheap framework of treated pine, which will decay and render the deck landfill material well before the Ipe is done. Some of that Ipe is going to be reclaimable, however, like 2×4 framing, the high number of fasteners and fastener holes makes it less re-purposable than otherwise. Also, given the thinness of the ipe boards used, cleaning their faces up on a planer down the line will reduce their usefulness, and almost certainly, the labor intensive nature or re-claming and re-cutting the material will make it an unattractive option in many cases.
~C
It's true that good wood is disappearing. From that standpoint, the “peak” analogy works.
It is also true (to a great degree) wood can be replanted. Oil, coal and gas, aren't renewable unless we manufacture them ourselves.
This is a complex topic, but the gist of what you are suggesting, that premium wood could be a decent store of investment and trading value for the savvy investor, might be spot on. The cost of storage is fairly low, and the risk of theft fairly low. Fire risks and handling costs are significant though given wood is a bulky, flammable material.
In some jurisdictions and situations, you might be able to avoid some taxes other investments might generate.
Like with most investments, the money to be made is on the “buy”, IMO.
Luke Townsley
“replaced by grassland and herds of farting cows” made me laugh and then sad.
I know you don't dabble in the sheet good side of things much but it's the same scenario. OSB has gone up and down in price over the past year (mainly up). 1/2″ used to be around 5.50 a sheet where I am and I've seen it go up to almost 15 and now its around 11. Manufacturing of it was curtailed due to the building bust and now that demand has come back a bit, up goes the price. Considering that it's made from wood by products and waste, the price gouging is ridiculous. I doubt I'll see it at 5.50 a sheet ever again.
Unfortunately I think the downward spiral path that were on will be very hard to stop as it's driven by $.
Chris
The lumber yard I frequent has LV in stock every time I go, and it is currently priced at $66/bdft.
If you're interested I can get you the contact info.
Luke,
your perspective is appreciated. I think there is definitely a tax angle concerning purchasing wood as an inventory item, though I haven't explored that side of things to a significant degree – thanks for the reminder, in other words!
~C
Pat,
yes, usually the price of a material goes up to a certain point until cheaper substitutes are introduced to the market. A lot of wood trim for houses is now being replaced by PVC, for example. What happens though when PVC becomes 'too expensive'?
Thanks for your comment.
~C
Derek,
I AM interested – please let me know the name of your lumber yard (my email info is at the upper right side of the page).
Thanks for your help!
~C
Well…I am about to build a house and would love to have that perfect 20' long doug fir log sliced up into flooring and trim. I would enjoy it for years to come. What's the crime? Would it be any better to have it made into a bar top at some brew pub?
Steve See
Steve,
thanks for your comment. I don't think Fir makes a great bar top material either. My objection to turning it into flooring is largely two-fold:
– the slicing of a large section into little thin pieces denies a large portion of downstream re-purposing. A lot of potential thereby ruined. It's like taking a fine slab of figured wood and cutting it into pen blanks, and that is unfortunately done far too often as well. I'd rather see off-cuts and scraps used for such purposes, and there is no reason flooring couldn't be obtained in a fairly similar way, or at least from smaller trees, which, if rotary cut for quartersawn material produce fine flooring.
-the fact that flooring, like wallpaper, paint, kitchen cabinets and countertops, and carpet, is by and large treated as a decorative applique and is therefore subject to fashion trends and fads. In this year, out the next. Entire kitchens made of fine woods are ripped out to make way for a new trendy stainless steel cabinet set, etc.
While flooring is to an extent a somewhat re-claimable material, softwood flooring is not nearly as durable a choice for most people, who wear shoes in the house.
The argument for consistent color is a typical one made by interior designers, seemingly unaware that most woods are photosensitive and will change in color, often unevenly. Floors tend to be exposed to a fair amount of sun bleaching. What's wrong with a little variegation?
You might intend to enjoy the trim and flooring in your house for years to come, and good for you for building your own house, however you might also be faced with a sudden change of plans after the house is built and be forced to the sell, the next owner coming along may not share your enjoyment, finding Doug Fir too 'orange' or something like that.
I think a large fine grained log presents a certain rare opportunity to make use of the high fiber quality in such a way that preserves as much of the gift as possible. slicing up the whole log into flooring and trim also represents, through the saw cuts, a higher portion of 'waste' than would otherwise be the case.
I guess it rubs me the wrong way to cut up a venerable old tree into flooring to be walked on, scuffed, abused, and I hope you consider making other choices than to use such special materials in such a manner. There are plenty of options to use reclaimed or salvaged fir, for instance.
~C
Well, it is true saw cuts will turn some of a large log into waste. And some may find Doug fir too orange and just paint it…. but on the flip side there are a good number of people who just go wild (like me!) for the look of Doug fir. We will strip the paint off old windows, doors and trim. We will sand down the scuffed floors. A turn of the century craftsman style house with original millwork in any city on the west coast will sell for a premium… that is pretty much my inspiration for the house under construction.
I know another way to build would be timber frame with large beams… but not sure I could swing it. The best I can do is use wood carefully in a way that will stand the test of time.
Cheers!
Chris, you sometimes always manage to simultaneously excite me and depress me. Finding good wood is getting harder, narrower planks and higher prices. Ordering wood off the internet is starting to be a need. One i always avoided just because of the doubt of the plank(not seeing it in person!) and the extra cost of shipping. Then again I'm in Canada, maybe we just dont get the same containers shipped to us. I browse US lumberyard websites and see a much bigger selection with somewhat better prices.
Recently my local yard got some pretty fantastic looking Doussie planks, sawn through and through. Asked where they got it and…why they dont really have fantastic exotic lumber in stock, maybe they need to find a better deal in Africa?
Nope, apparently came from a yard in the US and the log just wasnt good enough for them.
Steve,
“The best I can do is use wood carefully and in a way that will stand the test of time”
That my friend, is the main thing. Good for you!
~C
NGB,
interesting. On the flip side, two of my largest pieces of Lignum Vitae were purchased from Windsor Plywood outlets on Vancouver Island…
~C
As a fellow woodworker and someone who sees the supply/demand leverage on materials, I appreciate your article and agree. It reminds me of the layman's definition of quantum physics where ones attention on something, just by looking at it, changes it. Enough people “wanting” a certain type of wood and the “market” reacts.
I just finished building an ipe deck with the exact treated pine joists as you mentioned last week. Yes, it will not last. And yes, it is what the customer wanted right now.
It is my belief that this good earth will continue to supply us with material long after I am gone. Although many woods are scarce now, how many are not even noticed yet by the masses and the “market”? I laugh at the thought of my great grandchildren coveting their new pvc/exotic wood hybrid engineered deck 200 years from now. It's all the rage as they said in the 20's. As the late carpenter Larry Haun stated “life goes on”. Great article and thank you!
Brett,
pleased to hear from you and I appreciate very much that you enjoyed the read.
~C
Chris , I worked at Bethlehem Steels shipyard in Hoboken in the 70s . We made bearings for ship shafts there . I remember seeing large bolts of the stuff which we got out the bearing shapes .
Those were the days I guess, Billy. I wonder how much stock in LV is maintained to this day by the US Navy, or whether they continue to stock it at all for that matter?
Thanks for your comment!
~C