Aubra Anthony's Vision Serves Company

by John Henry  on Monday, Dec. 21, 2009 12:00 am  

Aubra Anthony, president and CEO of Anthony Forest Products Co., says, "We began making adjustments earlier than most did."

At a time when forest products companies are continuing to close mills and lay off thousands or workers across the country, the foresight of Aubra Anthony has kept Anthony Forest Products Co. humming along.

The El Dorado family-owned company has not shut down a single plant. It has shrunk its payroll through attrition, not layoffs.

All of that is made all the more remarkable considering the forest products industry has been in a depression for almost four years - long before the December 2007 start of the general recession.

Anthony, president and CEO of the company, which sells mostly to wholesalers, said he got his first clue about the coming hard times in the spring of 2006 when he learned that housing sales had dropped 30 percent in one month - from April to May - in markets that had been leading the boom.

"We began making adjustments earlier than most did," Anthony said. He said the company had curtailed production and cut shifts to adjust production to market demand and adjust costs to income.

As a result, all through the long recession, the company remained profitable into August 2008, Anthony said, and has since seen ups and down but is looking to finish its fiscal year in the black. Sales year over year, he said, are down 18 percent.

Anthony recently told company stockholders that he is "seeing shadows" - not a bright light - ahead. "Lumber is simply bumping along the bottom right now. Housing is still woefully impaired," he said.

In the timber business, when a down cycle hits, Anthony said, companies normally have a high-priced inventory and they have to eat the cost on the back end. When timber prices eventually fall, companies can make a profit on the front end. "But we haven't had that uptick yet. The reality is that there is no bounce. Everything is worth less now than it used to be," Anthony said.

Random Lengths, the weekly report on the North American Forest Products Markets, said recently that the softwood lumber industry had permanently shed some 10.3 billion board feet of production capacity over the past three years. That's based on the permanent closing of 122 sawmills since January 2007. Those figures don't include those mills that have been temporarily or indefinitely shuttered or those operating at reduced capacity.

At its peak in 2005, 74.9 billion board feet were produced by the softwood lumber industry. This year, production is on track to finish the year at 38 billion to 39 billion board feet, according to Random Lengths.

Lumber demand this year has hit its lowest level in years, and any recovery in 2010 is expected to be slow at best. Industry analysts aren't expecting any real recovery until 2011 or 2012.

At the peak, there were 627 permits for forest products operations in the state, according to the Arkansas Forestry Commission. As of Nov. 23, 240 of those had been permanently closed while another 59 are inactive, awaiting better times.



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