State of the Lumber Industry - May 2021

The past year has brought unprecedented changes to nearly every aspect of our lives. The global pandemic of Covid 19 has not only affected the health, safety, and sanity of every person worldwide, but the side effects of social isolation have impacted many businesses and industries in unexpected ways, as well.

For the first year of the crisis, our small business was able to hang in there, and maintain our manufacturing facility and online retail store with a slight decrease in profits. During that time we secured federal PPP funding, kept our team employed and insured, and even managed to find a new business location locally so we could move out of our increasingly cramped headquarters. With strict adherence to safety guidelines, we haven’t seen any spread of the virus in our place of business, and we’re happy to have kept everyone safe and healthy.

And while many of us in the board game community lost the opportunity to play games socially, a fair number of gamers were able to continue playing within their households, or via digital streaming. To our relief, when we shared the news of our slowed manufacturing and shipping in March 2020, the gaming community sent supportive messages and continued to shop with us.

You placed orders with messages like, “I’m in no rush. Just wanted to support your business. Ship it when you can.” You placed orders during online conventions. You bought our products for holidays and gifts. No denying that we saw an overall dip in our annual sales, but it wasn’t as much as we had anticipated. Despite fewer opportunities to play games the way we’re all used to, our community was still buying organizers and accessories, and for that we will be forever grateful.

But now our business is greatly threatened by an unforeseen problem, which will cause an incredible challenge for the coming months: we’re facing a global wood shortage. Not good news for a company whose primary product lines are made from wood.

The International Lumber Shortage

We buy wood sheets by the truckload. And since The Broken Token began in 2013, lumber prices for Baltic Birch had already almost doubled by 2020. We did our best to keep our prices as low as possible despite those gradual increases. But at the end of this month, our cost per sheet will be increasing another 43%. We’ve secured as much wood as we can at the current price, and we're saving as much wood and scrap as possible, but our supplier can only give us so much. And Frosthaven is coming, for which we were delighted to have secured over 33,000 pre-orders.All of this forces us to make a hard decision. In order to stay in business, we’re going to have to increase the costs of our wood products.

So Why is There a Global Lumber Price Increase?

If your cities are anything like ours, then you’ve probably noticed all the construction of new outdoor areas and remodeling projects, both residential and commercial, in every neighborhood. We’re very happy to see the city coming back to life again, but we now find ourselves in a worldwide lumber shortage due to all these projects happening at once. And that’s not the only reason.

“Lumber prices are skyrocketing for various reasons beyond just high demand from homebuilders and remodelers. Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down.”1And it wasn’t just a 2020 problem. Random occurrences of 2021 have added insult to our global injury. “Factor in a few freak events such as ice storms in Texas (that crippled chemical plants that produce products such as resin for panels or insulation) or a blocked Suez Canal (which stranded hundreds of ships with thousands of containers full of goods for over a week) and a bad situation becomes even worse.”2

According to Shepley Wood’s Lumber Market Update for May 2021, “...Prices have been slowly escalating into record territory for more than six months now, begging the question of when it will end. The answer is when demand tapers off, but no one sees an end coming any time soon. With prices that defy logic, one has to think that we’d already be at a breaking point, but the public demand for houses and home improvement continues to takes precedence over expense.”2

The economic impact is really very staggering. But even the 43% price increase that The Broken Token is facing is lower than the average 67% percent in 2021. In a recent news story from CNBC, they stated “Lumber prices seem to set a new record almost daily, now up 67% this year and up 340% from a year ago, according to Random Lengths, a wood products industry tracking firm.”1

Demand for Baltic Birch

Baltic Birch is a really good wood. It’s strong, it’s versatile, it’s attractive, and until recently, it was cost effective. These are just some of the reasons we chose this wood as our primary material. But the demand for Baltic Birch has risen significantly in recent years.

Just one search for laser-cut wood products at Etsy or Pinterest will give you a glimpse at how many hobby crafters (and the businesses that supply those crafts) are using Baltic Birch. The popularity of Glowforge lasers, along with the reasonable price and availability of more high-end industrial lasers for businesses who need a larger laser unit, has impacted the demand for Baltic Birch. And it’s long been a wood used for more industrial purposes.

Now companies and industries who would normally use different types of wood for their projects are beginning to turn to Baltic Birch as a resource, further depleting the supply. For example, flooring companies that usually rely on hardwoods for their products are facing challenges with their own supply, so now some of them are finding alternatives, stating that “using Baltic Birch for its cores and backing has reduced this particular pain point.” It may have reduced their pain point, but it’s adding to ours.

Broken Token Price Increases

Until now, we’ve been able to prevent major price increases in our store. As we released new products over the years, we accounted for the “current” material prices, and set their prices accordingly. We’ve done a few small increases across the board, but nothing major. We want our organizers and accessories to be as accessible as possible. Unfortunately, with the most recent price hike, we’ve been forced to make some tough decisions, and prices will be increasing sitewide for our wood products.

We have a team of 40ish people, and we’re doing our best to keep them all with us for the long haul. We know that every dollar in your wallet is important to you. We hope that although this price increase may impact a single customer for $10-$20, the quality of our products will be seen as being worth the difference.

From the bottom of our hearts, we thank you all for your support over the past 8 years. We appreciate your continued support through the tumult of 2020 and 2021. And most of all, we thank you for understanding this difficult challenge we’re facing, and for your continued support as we move forward in the current state of the world.

We hope you all are safe and doing well in these turbulent times. And we hope that games have been the joyful escape for you all as they have been for us.

Sources:

Login