Higher mortgage rates slowed this lumber mill’s business

Back in 2021, Katrina Amaral, co-owner of Timberdoodle Farms in New Hampshire, talks about managing her sawmill business amid high demand for wood. But at the moment, the property market is being challenged by a lack of supply and rising mortgage rates, and changing conditions are affecting the timber business.

“Marketplace” host Kai Ryssdal talks to Amaral about moving business into new territory and peering into the crystal ball of 2023. Below is an edited transcript of their conversation.

Kerris Dahl: So it’s been a year, maybe more, since we talked. What is the situation in the boutique sawmill world?

Katrina Amaral: They are still busy, although we will definitely slow down. Our business is currently closely tied to new housing starts. This has not been as strong as it has been in the past two years.

Risdal: Yes, she came with some level of “oh my gosh, what’s going on with my business?” Now that the housing market is slowing down, what’s going on with your business?because if you listen [Federal Reserve] Chairman Jay Powell, it may go on for a while.

Amaranth: Yes. Honestly, it’s not bad. In fact, we’ve been diversifying to make sure we’re not completely tied to new housing starts. There are many other components of the wood business that we can leverage.

Risdal: Well, let me know about some of them. How are you diverse?

Amaranth: acid. So I think since our last talk, we’ve actually been fully vertically integrated, which means we can go to a property, cut down trees, convert them into lumber and finished lumber for the house. Yes, a lot.

Risdal: Yes. OK, OK, wait. Let’s go through them one by one. how did you do it? Are you hiring more people? Have you consulted how to do this? I mean, what’s your business model of “OK, this is what we need to do”?

Amaranth: acid. We spend a lot of time investing in equipment sized to operate, including some more efficient low-impact forestry equipment, while still having very low ground impact and maneuverability in the woods. Also invested in some new processing equipment. We also added a second kiln for drying wood.

Risdal: Well, so basically, all you do is make money with your money.

Amaranth: Yes.

Risdal: Now, is it right for you?

Amaranth: This is.

Risdal: What else have you done for diversity?

Amaranth: Well, we have another piece of equipment that’s more focused on resilience to storm damage, as well as looking into some consulting work to help build local timber networks with other sawmills or architects and designers.

Risdal: So you basically got into service?

Amaranth: A little bit.

Risdal: How did you get into this field?

Amaranth: So technically my husband is a mechanical engineer and he built a sawmill himself. We start a sawmill. We work well together and we love to do a bunch of stuff. So at the end of the day, there is a very tangible output. We all love being in the woods.

Risdal: So if you look ahead to 2023, inflation is still there and the economy is slowing, what is your vision for the Timberdoodle next year?

Amaranth: Well, indeed, the crystal ball is blurry. Yes, equipment parts have been added. We’re still feeling a lot of supply chain impact, especially when trying to modify equipment to fit our business. It will definitely be a challenge. But we can also pursue markets that add less value to us. So chicken coops, raised bed lumber, you know, things that people are always going to build. It’s not that high margin for us.

Risdal: Hurricane Katrina, what was your stress?

Amaranth: Not bad for now. We have a couple of projects still on the books, which is helpful and we’re looking forward to.

Risdal: very fair. very fair.