Anthony Timberlands Inc. of Bearden (Ouachita County) said Wednesday that it will invest $10 million in improvements to its pine sawmill in Malvern over the next six to eight months.
The company, the state's third-largest forest products manufacturer, will install new equipment between August and January. It expects the upgrades to raise hourly production levels by 25%.
In a news release, President Steven M. Anthony said "the windfall provided by recent record lumber markets" has made it possible to finance upgrades at Malvern and other ATI operations internally.
"Sawmill equipment is constantly evolving," Anthony said. "If you are not periodically upgrading scanners, optimizers and lumber handling equipment, you are falling behind your competitors."
Strong lumber demand, supply chain bottlenecks and investor speculation have sent lumber prices skyrocketing since last year, hitting record levels and adding tens of thousands of dollars to the price of a new home.
While lumber futures have fallen for eight straight days since setting a new record of $1,700 per thousand board feet on May 10, they're still historically high — trading today at about $1,200 per thousand board feet.
Still, most mill companies, including giants like Weyerhaeuser Co. and West Fraser Timber Co., have refrained from building new sawmills, focusing instead on enhancements and upgrades to existing operations, according to a Wall Street Journal report on Monday.
In an email to Arkansas Business, Anthony said that, given the costs and time to bring new sawmills online, now's not the time to build new ones.
"It cost $125 million to build a modern, high production pine sawmill," Anthony said. "Start one now and it will come on line just in time for the recession that generally follows boom times such as this."
Anthony said that, with hardwood timber difficult to source amid continued wet weather, he's seen some area hardwood mills cut downtime by converting to pine production. ATI made such a conversion at its Beirne (Clark County) mill two weeks ago.
"Cutting pine at a hardwood sawmill presents its own set of problems (equipment specs, lumber drying, finishing), but the current prices justify the expense and hassle," he said.
Anthony declined to predict the future of the lumber market. "I’ve been wrong about lumber prices at every turn," he said. "I never anticipated the price increase which accompanied the pandemic. Historically, we are entering what is usually the peak of our seasonal markets, so I wouldn't expect prices to crash, though current levels would seem to be unsustainable."
At Malvern, ATI's plans include upgrading the primary breakdown systems of the nearly 75-year-old mill — the carriage head rig, which processes large logs, and the mill's sharp chain, which processes small logs. The company will also upgrade the mill's trimmer line so it can handle the higher production volume afforded by the upgraded primary breakdown systems.
Anthony said employment levels will remain the same. Anthony Timberlands employs 737 companywide, including 180 in Malvern. ATI has operations at Bearden, Beirne, Hope, Magnolia, Malvern, Mount Holly and Sheridan.