Sunday, September 28, 2003

Bandid Island 

As the military purchases wood for construction in Iraq, plywood costs in the United States are soaring.

The higher prices are affecting home construction in the United States, and could be contributing to shortages among U.S. troops in Iraq.

The military’s appetite for wood is just one factor contributing to a plywood price hike during Hurricane Isabel last week.

Military and industry experts say other catalysts included rain in the South that made it difficult to stack plywood, fires in the West that burned into fir harvests, a spike in home construction during the summer and then Hurricane Isabel and the resulting demand for plywood to protect windows.

“You certainly can’t point to one factor and blame it all on that,” said Dawn Dearden, spokeswoman for the Defense Logistics Agency at Fort Belvoir, Va.

The agency will purchase $50 million worth of wood for the entire year, a $16 million increase over last year. Some suppliers blamed last month’s military purchase of 666,000 sheets of plywood for the price increase prior to Isabel’s smacking into the East Coast. Some of the order was part of the military’s normal purchase schedule, but a large amount was sent to the 1st Armored Division in Iraq.

Dearden said the wood was destined to be made into items such as tent floors and guard posts, but was not for the rebuilding of homes in Iraq.

“Quite frankly, there were two things I think the government should have made clearer,” said Michael Carliner, an economist with the National Association of Home Builders. “One of them is, ‘Why are they selling all this wood to Iraqis when we need it here?’ Well, it’s for American forces and not for Iraqi houses. [Secondly], people hear … 700,000 sheets and they think it’s a lot, when the total U.S. consumption of plywood alone is 16 billion sheets.”

Nonetheless, Carliner said the military purchase did have a “disproportionate effect on market psychology.”

“My feeling is, the suppliers were using the military as a scapegoat because they didn’t plan properly.”

All the factors, though, added $3,000 to the cost of building an average home. Carliner said he didn’t feel builders would raise their prices to the same degree.

The cost of an average 4-by-8 sheet of plywood has gone from about $9 in May to $18 currently, said Ron Jarvis, vice president of merchandising for lumber for the Atlanta-based Home Depot chain.

“I think some of the dynamics are still in existence,” Jarvis said, “but I don’t see the prices going up beyond December-January. … I think it will have to come down. There’s so much wood supply, once the mills get cranking, I don’t think it’s going to stay at the level it is today.”

Unfortunately, prices for now are still going up. And even after the military’s recent wood purchase, troops are still scrounging for scrap.

Troops in Iraq use wood for everything from showers and outhouses to converting old Iraqi bunkers and storage bays into barracks and work spaces.

At some bases, wood is such a hot commodity that soldiers have torn apart loading pallets.

“We scrounge for wood everywhere we can get it,” said one 101st Airborne Division UH-60 Black Hawk pilot at a base south of Mosul.

The supply lines are opening up, though.

When Sgt. 1st Class Michael Fletcher wanted to give his 1st AD troops a little privacy, he ordered 70 sheets of plywood and some framing lumber so they could carve out two-man rooms inside the storage area his platoon had moved into.

“It only took about a month for all the wood to get here,” Fletcher said. “We’re just waiting to hang the doors now.”

Not all the wood in Iraq is coming from American forests.

With little more than palm trees and scrub, Iraq offers little homegrown lumber. But Iraqi importers bring in wood by the truckload, and Uncle Sam is buying.

In Baghdad’s bustling markets, wood merchants say business is booming.

“Seventy-five percent of the wood we sell is for the American military,” said Radha Hussain Hassan, a manager with Haydar al-Khafaf, one of the five largest wood importers in Iraq.

In the past month alone, he said, he’s sold about $100,000 worth to the U.S. military, including more than 1,500 sheets of plywood as well as lumber.

Most of the wood sold in Iraq comes from Malaysia, Indonesia and South America and is imported through Jordan and Turkey. Plywood purchased in Iraq goes for about $12 per sheet, $6 cheaper than the price in America.

Sad Zaki, the manager of another major importer, said it is hard to say how much of the wood he sells is going to the military, but he knows most of the contractors he does business with are working on Army bases.

One of those Americans is 1st Lt. Steven Oliver, a logistics officer for the 1st Armored Division.

“Wood is a premium item here and we’re going through a lot of it,” said Oliver, a supply specialist with the 16th Armored Engineer Battalion at a base dubbed Bandit Island in northern Baghdad.

Most of the wood he gets comes through military supply channels, but none of it has come from the United States.

Because of the current shortage, the trend of buying foreign-produced plywood could also hit the States like an import Isabel.

“Whenever the market goes up like this,” said Home Depot’s Jarvis, “the U.S. becomes a very attractive place to ship plywood.”

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