U.S. secondary wood manufacturers are becoming larger – are there implications for hardwood sawmills?

Previous research has shown that large secondary wood manufacturers request numerous product-related services from their hardwood lumber suppliers. In addition, large secondary manufacturers also source more of their lumber directly from hardwood sawmills than do smaller secondary manufacturers, which tend to purchase more lumber from distributors. Current trends in the U.S. hardwood industry suggest that secondary manufacturers are becoming larger in size and more concentrated (excluding the wood household furniture sector), a reversal of a trend toward smaller size during the Great Recession that started in 2007. Furthermore, many secondary manufacturers have been focusing on reducing input costs in conjunction with more streamlined or lean manufacturing processes. Thus, it might be expected that these manufacturers would be seeking more services from hardwood sawmills regarding their lumber purchases. This notion is consistent with the results from a recent small survey, which indicated that hardwood sawmills are experiencing an increase in the services being requested by their customers. Concurrently, hardwood sawmills in the United States are showing a trend of increasing size and concentration as well, also reversing patterns evident during the Great Recession. Thus, many hardwood sawmills seem well-positioned to provide these extra services. The resource-based view of the firm states that larger firms possess more internal capabilities and resources, which in this case can help sawmills meet the market demand of providing more product-related services to secondary manufacturers.