The forestry industry consists mainly of raw-log production, with typical machinery and equipment (M&E) comprising timber feller bunchers, skidders, log-handling equipment, truck tractors, and log-bunk trailers. Commercial and residential constructions are the driving forces of the industry. Weather anomalies also affect production, since abnormally wet or dry seasons in growing regions (both domestically and overseas) affect the quantity of logs that can be harvested.
The recent announcement of final countervailing (CVD) and anti-dumping (ADD) duties on Canadian lumber exports to the U.S. is expected to keep prices near record levels over the next five years. The first real “supply gap” could occur as early as 2019, when a lack of incremental lumber supplies may fail to meet U.S. demand. As import duties give U.S. mills a cost advantage, capacity expansions have already started, allowing American mills to increase their market share. Total U.S. output is forecast to increase by roughly 10 billion board feet (bf) by 2022, up from nearly 34 billion bf in 2017. Technological advances are also bringing more automation to this labor-intensive industry.
Forestry equipment endures hard use through exposure to rough terrain and inclement weather. For those reasons, valuation requires a skilled and thorough examination. Our teams of professionals have the experience needed to get under the hood and accurately gauge all wear and tear. Because companies under financial stress will often forgo crucial maintenance, we’ll examine the records to verify whether equipment has been properly maintained and upgraded throughout its lifecycle.