Recovery will continue, but challenges will remain

Will 2022 be the year of recovery? That was the question for an Oct. 28 webinar with Christopher Kuehl, managing director of Armada Corporate Intelligence, presented by the Association of Woodworking & Furnishings Suppliers.

The short answer is yes, though the wood industry will continue to be dogged by supply chain issues and labor shortages. Growth should be possible, but increased demand is already a problem for the industry, according to Kuehl.

“In 2021, we thought the growth would be relatively slow, that it would take a while for people to get back to normal. That wasn’t the case,” he said in the webinar. “Nobody expected the demand that they got at the beginning of this year. They haven’t really expected the demand they got throughout this year.

“The supply chain crisis is partly due to inhibitions in the transportation sector and the impact of Covid, but a lot of it is just being overwhelmed by demand.”

The labor shortage boils down too few job seekers, a situation that is unlikely to improve anytime soon. Kuehl shed light on the reason.

“There’s this narrative that people don’t want to work anymore. People are just staying home, taking money from the government. Well, that may have been a factor earlier this year, but those programs expired in September and you still have job opportunities that are going unfilled,” he said.

“The fact of the matter is we’ve been dealing with this as a problem for years. The shortage of manufacturing workers has been decades in existence and one of the key issues that people keep forgetting is that [Baby] Boomers are retiring. Ten thousand Boomers reach retirement age every day. We have been losing 3.5 to 3.7 million workers per year for the last four to five years, and we will continue to lose that many for next four to five years.”

As a result, the workforce participation rate will be the lowest since the 70s, he said.

Kuehl said inflation isn’t a major concern, since it’s more likely to trend down than up over the next few years. Instead, wages are more worrying.

“Once wages go up, they don’t go down, and most of the hikes have been for skilled workers.”

On the housing market, Kuehl predicts that mortgage rates “are not going to skyrocket but they’re going to go up enough that some of those marginal first-time homebuyers are going to be priced out of the market. Nothing has really been favoring housing except mortgage rates.

“If they start to go up, even though they’ll be minor, it’s going to have an impact on at least some of the buyers.”

Keuhl covered much more in his hour-long presentation, available at tinyurl.com/myd3234t. 

This article was originally published in the December 2021 issue.