September 2022 Economic Report

Economic Alliance Features Golf Skills Contest

The Evening Before Big Tournament Showcases Long Drives, Chipping and Putting Competitions

By the Economic Alliance of Lewis County

The eve of the second-annual Economic Alliance of Lewis County Open Golf Tournament at Riverside Golf Course will feature a Skills Competition Night at 5:30 p.m., this Thursday, Sept. 15.

The tournament on this Friday, Sept. 16, is sponsored by Fortescue Future Industries North America and is already full but still accepting teams on a waiting list. The Skills Competition Night, however, is open to anybody willing to put their golf talents up for prizes and enjoy an overall great time.
Sponsored by Nomad Truck and SUV Outfitters and LC Coffee Company, skills events will be Longest Drive, Chipping Contest and Putting Course, with $1,000s in prizes. Cost to enter is $100 for all three competitions or $50 per category. Entry includes two raffle tickets and one drink ticket.

Music, appetizers and two no-host bars will keep competitors swinging easy. One top raffle ticket is an overnight stay at the Ridgefield Ilani Casino in their new hotel, and dinner for two at the casino’s exclusive Michael Jordan’s Steak House.

Come on out and show off your golfing skills while also supporting your Economic Alliance of Lewis County. To pre-register call 360.748.0114 or you can register at the event.

Lumber Prices Soar, Then Abruptly Fade

Forest products companies have endured a wild stretch over the past two years, with lumber prices quintupling during the pandemic and then fading back to something close to normal.

The extreme price swings are another sign of the supply chain chaos and economic upheaval that accompanied COVID-19.

Soaring lumber prices were a harbinger of coming inflation when they began their steep upward climb two years ago. Now, a rapid fall could help moderate historic inflation in other sectors that use lumber.

Lumber prices soared from around $300 per 1,000 board feet of lumber in the weeks before the pandemic hit in 2020 to more than $1,600 in the spring of 2021.

Demand also soared in 2020 amid an uptick in homebuilding — an industry that wasn’t disrupted by COVID-19 health restrictions — and a surge in home-improvement projects by do-it-yourselfers. People across the country were cooped up at home with fewer alternatives for spending their wages and pandemic relief payments.

At the same time, the lumber supply was disrupted by a shortage of truck drivers and millworkers. The resulting squeeze pushed prices to astronomical levels.

“Prices skyrocketed from what was actually a pretty stable trend for de-cades,” said Brandon Kaetzel, principal economist at the Oregon Department of Forestry.

Prices then went into steep decline as producers unsnarled their supply chains and rising interest rates cut into home sales. That, in turn, reduced home construction and lumber de-mand.

It’s great for lumber producers when prices rise, but the upside was short-lived before prices abruptly fell back to earth. Current prices are around $500 per 1,000 board feet, up only modestly from right before the pandemic — and down slightly from 2018 and 2019.

Some companies couldn’t meet peak demand during the pandemic because of their own labor or supply constraints. Others, Kaetzel said, took advantage of the brief surge to invest in mill upgrades.

“I’d hesitate to say it was a windfall for anybody,” he said.

Not among independent mills, anyway. Boise Cascade shares are up more than 40% over the past two years, climbing twice as fast as the broader stock market.

And higher prices have been good for the counties that receive state tim-ber revenue, according to a spokes-person for the state agency. Stumpage prices — the price timber companies pay for the right to harvest trees — re-mains up about 25% from last year.

“There’s a real public benefit there when those timber prices are higher. Because that translates to higher rev-enue to counties on the same (amount) of timber,” the spokesperson said. “We’re in a better position to take on proactive projects on things like forest health, conservation.”

Gas Prices Continue to Drop Nationwide

For the twelfth consecutive week, the nation’s average gas price has fallen, declining 7.7 cents from a week ago to $3.75 per gallon today, according to GasBuddy data compiled from more than 11 million individual price reports covering over 150,000 stations nationwide.

Locally, as of yesterday (Friday) gas prices averaged $4.86 across Lewis County. For the best deal, as of yesterday in Centralia, you can find gas as cheap as $4.32 at the Harrison Super Mart, and $4.33 at both the ARCO and Safeway in Centralia (to find the cheapest gas in your area go to gasbuddy.com).

The national average is down 29.5 cents from a month ago but 57.6 cents higher than a year ago. The national average price of diesel has declined 2.0 cents in the last week and stands at $5.02 per gallon.

“The national average has declined for 12 straight weeks, the longest tally since 2018, and it could soon eclipse that mark if we see two more weeks of decline. Though, that may be more challenging given OPEC’s decision yesterday to cut oil production,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “For now, price movements will be contingent on where you are, with California seeing some minor increases, while the Great Lakes could see an upward move as BP’s refinery outage has had an impact on supplies. In the Gulf and Rockies, prices may continue to fall, so a very mixed bag for motorists in the week ahead. In addition, there are several disturbances in the Atlantic to keep an eye on, but we do switch back to cheaper winter gasoline in just over a week which should provide some additional relief.”

The median U.S. gas price is $3.59 per gallon, down 6 cents from last week and about 16 cents lower than the national average.

The top 10% of stations in the country average $5.13 per gallon, while the bottom 10% average $3.07 per gallon.

The states with the lowest average prices: Texas ($3.22), Arkansas ($3.22) and Mississippi ($3.25).

The states with the highest average prices: Hawaii ($5.21), California ($5.21) and Nevada ($4.81).

MEMBER SPOTLIGHT

Fuller Designs Brings Big Project Experience to Lewis County

Storage Project Will Inject an Estimated $18 Million into the Local Economy Over the Next Nine Years

By the Economic Alliance of Lewis County

Lewis County has a long-time heritage of farming and agriculture, with some farmers being the third or fourth generation to grow in Lewis County. For many years, these local farmers and growers have dealt with flooding and natural disasters, loss of processing facilities, and a lack of infrastructure to support agribusiness.

In response to these issues, regional producers formed the Southwest Washington Growers Cooperative to support agricultural development in Southwest Washington. Today, the Cooperative has 31 active members seeking to increase the viability of family farms through collaborative opportunities. These producers worked closely with Northwest Agriculture Business Center (NABC) and WSU Extension and found that grain, especially malting barley, could serve as a viable crop replacement for both growers and buyers. However, infrastructure was still needed to provide storage and facilitate transporting crops to regional buyers, most of whom require rail transport.

In 2019, the Port of Chehalis and the Cooperative successfully petitioned the Lewis County Commissioners and were awarded $800,000 for the installment of a rail spur on the Port’s property. The rail spur was completed in the spring of 2020 and allowed growers to transload malting barley to Great Western Malting in Vancouver, Washington, that summer.

The first year saw 600 metric tons of barley delivered, followed by 1,400 metric tons in 2021. It’s projected that 2,500 metric tons will be delivered in 2022, produced on approximately 1,000 acres.

The next phase of the Southwest Washington Grain Project began shortly after the completion of the rail spur, with the goal of creating an aggregate storage and rail transload facility alongside the rail spur.

In support of this goal, the Port of Chehalis was awarded $1.75 million through the Washington state Capital Budget in 2020. This funding will allow for the construction of a publicly accessible rail transload facility consisting of upright grain bins and conveyors for loading and unloading grain.

The Port of Chehalis is actively pursuing additional funding for the design and construction cost associated with the installation of roads and utilities to serve the facility. If the necessary remaining funding is secured, construction could begin sometime in 2023.

Once completed, the storage and transload facility will allow the region’s grain producers to access regional, national and international markets. The project anticipates generating over $750,000 in producer payments and handling fees in 2022 and injecting an estimated $18 million into the local economy over the next nine years.

— Source: POC Media

Construction Starts Soon at US 12 in Grand Mound

By the Economic Alliance of Lewis County

A contractor is scheduled to start the end of September on a roundabout to create a new intersection at US Highway 12 and Sargent Road SW in Grand Mound. Construction will continue into next year and is expected to finish by fall 2023.

Two-way traffic will be maintained on US 12 throughout construction. Drivers can expect delays due to reduced speed limits in construction zones. Work is planned to take place from 7 a.m. to 6 p.m. Monday through Friday. As work is weather dependent and other issues may arise, this schedule is subject to change.

US 12 is a major east-west highway that runs through southwest Thurston County. Travelers use this route to connect to Interstate 5 and Grays Harbor County to the west. US 12 connects to State Route 510 east of I-5 which is another vital highway carrying traffic to and from communities including Tenino, Bucoda and Rainier. Grand Mound’s businesses and residences use US 12 daily to connect to I-5 and surrounding areas.

Increased development around this urban growth area is expected in the coming years. The completion of this roundabout adds an additional north south crossing of US 12 improving traffic flow for current and planned developments. Additional route options improve emergency response. This single-lane roundabout is designed to expand to a four-lane highway on US 12 in the future.

Roundabouts have been found to reduce the severity of accidents while keeping traffic moving. Studies show that roundabouts provide:

• A 37% reduction in overall collisions
• A 75% reduction in injury collisions
• A 90% reduction in fatality collisions
• A 40% reduction in pedestrian collisions

Development in Grand Mound provides services such as banks, restaurants and retail outlets which benefit residents. Local developers and the Confederated Tribes of the Chehalis Reservation have contributed funds for the construction of this project.