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West Fraser Acquisition of Gilman Continues Trend of Canadian Expansion in the U.S. South

On July 26, 2017, West Fraser announced an agreement to acquire Gilman Companies, a major producer of southern yellow pine lumber with six sawmills in South Georgia and North Florida comprising 700 million board feet (MMBF) of capacity. The acquisition continues the trend of consolidation of softwood sawmills and strengthens the growing position of Canadian lumber producers in the U.S. South. The deal will allow West Fraser to overtake Weyerhaeuser as the largest lumber producer in the region.

Figure 1. Top softwood lumber producers in the U.S. South. West Fraser will add Gilman’s 700 MMBF of capacity after their announced acquisition is complete.

The total capacity for operating softwood lumber mills in the South currently stands at 19.7 billion board feet. West Fraser owns 15 southern mills with total capacity of 2.4 billion board feet, or 12% of the region’s total capacity. Once the acquisition is complete, West Fraser will control 3.1 billion board feet, or 16% of the region’s capacity. If we look at the two other major Canadian companies in the South, Interfor and Canfor, the total portion of southern softwood lumber supply that is produced by Canadian companies is 27% (5.2 billion board feet) and will increase to nearly 31% after the deal is complete. Canada’s significance to the South will increase further after Conifex opens its refurbished sawmill in El Dorado, Arkansas later this year.

The influence of small and mid-sized regional sawmill companies has diminished in recent years, but they still account for more than 40% of the South’s softwood lumber production. With the acquisition of Gilman, Rex Lumber (560 MMBF) and Hood Industries (555 MBF) will take the lead as the largest regional lumber producers in the South, with Jordan Lumber (500 MMBF) not far behind.

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