12 North Main Street, Robbinsville NC 28771
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In need of flooring and furniture, China turns to WNC trees

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Story by Tonya Maxwell – Asheville Citizen-Times

ROBBINSVILLE – The rumor in the timbering parts of the mountains began a few years back: The Chinese are buying up the lumber mills.

But those “Chinese” buyers in Western North Carolina are one charismatic man, Jimmy Lee, whose 11 mills include the old Stanley Furniture plant, once the largest employer in Graham County.
Much of the lumber Lee processes there and at other facilities in both Carolinas, Virginia and Tennessee is destined for Asian markets, particularly China, where a hunger for hardwood is fueled by consumers with recently acquired wealth and a taste for quality products.

The shifting world market helps provide jobs for local timber workers, be they loggers, mill workers or exporters. When timber value remains strong, it encourages area landowners to grow and manage timber tracts as a long-term financial investment rather than turning the land over to more traditional crops, advocates say.

North Carolina’s timber exports to China have skyrocketed in recent years. It’s a trend reflected nationwide as more timber harvested in the United States is shipped to the world’s most populous country, where it is milled into furniture, flooring and other high-value products for buyers there.

For each of the last five years, the average value of Tar Heel wood and wood products exported to China has averaged $165 million, a number nearly 30 times what the state saw in 2000. That year, wood valued at $5.7 million was shipped to China, according to the U.S. Census Bureau.
Lee, a Chinese native who began his education and career in the timber business there before moving to the United States in late 2003, said about that time, every piece of lumber shipped to China came back to the United States as furniture or other items. The country’s emerging economy has flipped that scenario.

“Ten years ago, China started to consume much more lumber, to make furniture, flooring, any wood products. Five years ago, yellow poplar, which is a very low end chipper wood, China makes the furniture with it, ships it back,” Lee said. “But the expensive wood, like walnut, nothing comes back. Cherry, no. Red oak, white oak, mostly stays in China, which is very different than what we are thinking.

“We think America uses the high-end, most expensive wood, for furniture, but in reality, no,” he said. “China is using the most expensive lumber to make the most expensive furniture.”

In that same decade, furniture manufacturing in North Carolina — once a stronghold for chairs, cabinets and coffee tables — has declined under pressure from lower-priced imported goods. Among the casualties was the Robbinsville Stanley Furniture plant, which at its height employed 400 people and at closing was nearer 300.

Lee bought the 600,000-square-foot facility in 2014, and there processes and kiln-dries wood. He said he had $8.3 million in sales from that facility last year. He hopes to hit $12 million in sales in 2017 out of the Robbinsville plant.

About 28 people work at the plant, now named Oak Valley Hardwoods, and Lee is considering adding either a sawmill or plywood processing equipment on site.

“You think about China being a strong footwear exporter, but the majority of high-quality footwear cannot be produced in China. They don’t have the right materials or the right techniques,” said Xu, comparing the manufacture of shoes to the furniture industry. “Overall, China is a very strong furniture exporter, but for a small minority, the high-end furniture, they just don’t have the capability or the natural resources to produce that locally.”

What the Chinese are great at is leveraging economies of scale and that, in combination with lower labor costs, won over consumer dollars and helped push the North Carolina furniture industry into decline in the last decade, Xu added.

“If you want to buy a $100 chair or a $200 table, most likely, they are going to be manufactured in China. Our local labor cost is high enough that anything with that price tag, we won’t be able to offer U.S.-produced stuff,” he said. “In the last five or 10 years, you can see the U.S. sending the raw materials to China, and China assembling the items and selling back to the U.S. market, including North Carolina.”
About 40 percent of North Carolina timber is now destined for Chinese markets, said John Hammond, an international marketing specialist with the North Carolina Department of Agriculture, which has a one-person office in China to help promote the state’s farmed products.

“In the downturn of the economy, especially in 2008, we saw a pickup in the exports of wood products,” Hammond said. “It’s just another means of diversifying your markets. We’ve known companies that have shipped to China and other parts of the world for 30 years, but there’s a lot of companies that started to look to alternative markets to keep up their volumes of production and keep some of these companies afloat.”

The global forest
Lee, 43, is not the only lumber man shipping timber to international timber markets from Western North Carolina, but ambitious and candid, his friends and fans include Jim Davis, a North Carolina state senator who represents the seven westernmost counties.

In late 2015, Davis and other state politicians visited China, a trip paid for by the Charlotte-based Carolinas-Asian American Chamber of Commerce, to learn about markets and needs there.

“China has over 300 million in their middle class. Three hundred million,” Davis said, adding that the country values American products, a perception that he said North Carolina needs to better leverage in business. “We’re in a global market now. I have no problem with Jimmy Lee buying mills at a market price if he can keep those mills working and keep those employees working. Where they sell the wood is irrelevant to me so long as they are enhancing the business opportunities.”

Across his company, Tides and Times Group, Lee said he has 250 employees and contracts exclusively with more than two dozen logging companies

At Oak Valley Hardwoods, the company purchases milled wood and dries much of that lumber before shipping it internationally or domestically. Lee estimates about 20 percent is destined for China, while 40 percent goes to Vietnam and 30 percent is sold in the United States.

Along with adding jobs, Lee’s investment has kept the building from falling into disrepair, said Sophia Paulos, Graham County’s economic development director.

“He kept this building alive. If you’ve seen what happens to buildings when they go unoccupied, it causes massive destruction,” said Paulos. “Not only do we have his business here, but we have additional space that he’s maintained that allows other industries to take up residence in the county.”

Those talks to attract other businesses have begun, said Paulos, who declined to name prospects.

‘The right place’
Lee, who said he grew up in poverty in China, was college-educated there in lumber because it offered a higher stipend than more prestigious tracts like computer science.

He came to the United States in late 2003, where he was educated at the National Hardwood Lumber Association and quickly set about making connections.

“You go fishing, you have to go to the ocean or pond. You do lumber business, you either have to go to Australia, or Russia to do birch, or America or Canada to do hardwood. Lumber is calling me,” he said. “I think I came to the right place.”

The Chinese government in 1999 began instituting timbering bans in areas that included watersheds of the country’s two largest rivers – the Yangtze and the Yellow – after massive flooding a year earlier left thousands dead, millions homeless and caused billions of dollars in economic loss.

The disaster was widely believed to be the product of record rains in combination with deforestation.

Those bans remain in effect, said Naomi Basik Treanor, a forest policy and trade program manager of Forest Trends. That international organization, based Washington, D.C., seeks to promote responsible forest use through methods that are sustainable and legal.

Laws in the United States and other countries ban the illegal harvesting of timber, so China sourcing legal wood is encouraging, she said, though about half of their imported hardwood is taken from countries without such regulations, according to data compiled by the organization from China customs.

“Looking at the larger compliance and governance picture, if China does not meet its hardwood demands from the U.S., it’s going to look to countries like Papua New Guinea, or the Solomon Islands or Laos or Nigeria where the wood is harvested far less sustainably and often is taken illegally and in blatant violation of the rights of indigenous people who live in the forest where the timber is harvested,” she said.

“If you care about climate change, I would say it impacts all of us.”

Graham County banned clear-cutting in 1980. In that decade, as logging on U.S. Forest Service land fell into decline, one casualty was a large sawmill where Jonah “Jody” Brown worked. He later watched Stanley close and felt the same sense of dread.

“I worked at Beamis Lumber, that’s where I learned to grade lumber, and I watched it shut down and get auctioned off. It shut the loggers down. It shut everything down,” he said. “I thought this plant would be the same way: ‘It’ll set here and grow up in weeds.’”

After the plant closed, Brown had also heard rumors that “the Chinese” would buy Stanley, but later heard positive things about Lee’s work ethic and applied for a job, soon rising to plant manager.

People are his most important investment, Lee said, and he stressed that nothing can destroy a business faster than bad management. He considers Brown among his best.

“If Jody takes care of this place, this place is going to take care of him and his family,” Lee said.

Lee, a father of two with a wife who is active in the business, brings a decidedly Southern flavor to the company: He considers his mills and employees as extensions of his family.

“When you have someone like Mr. Lee come into town, you’re not thinking, ‘The Chinese are buying up all our stuff,’” said Paulos, the economic director. “You’re thinking, ‘There’s a great businessman who sees potential in our town.’”