Recent layoffs and production slowdowns at SDS Lumber Co. may have given some employees the jitters, but Jason Spadaro, president of SDS, is convinced the lumber mill remains strong.
"It's the diversity of SDS that provides a solid footing," Spadaro said last week. "Today, our energy production is an example of the importance of diversification. Energy values are strong, while traditional products are in a down cycle. I hope that concept is understood in the community the next time we propose a diversifying project."
In mid-April, SDS started operating three diesel-powered generators as a way to produce electrical power, thereby bringing a new source of revenue to the lumber producer.
Spadaro conceded that the recent handful of layoffs in the plywood mill could have had an impact on the morale of SDS's employees.
"We're laying off 16 positions, but it's nothing that jeopardizes the plant," he said.
Spadaro added that the cuts were necessary to maintain the health of the business, given recent instability in the plywood market in particular.
"Plywood has some challenges from competing products. It continues to see a more difficult market due to competition from lower-cost fiber board, but we're doing all we can to develop new products and increase competitiveness," Spadaro explained. "It's been a changing market. To that end, we've reorganized some of our shifts and staffing, and have made efficiency improvements resulting in a layoff of 16 positions. The layoffs will help us to improve our overall efficiency and make the plywood division stronger over the long run."
The recent layoffs have been in the plywood plant only. Currently, 109 employees work in the plywood mill at SDS, down from a high of 140.
"More than likely, these latest layoffs will be longer-term," he explained. "But it depends on how the markets respond."
Spadaro added, however, that no other cutbacks are planned.
"Everything we're doing will strengthen the security of everyone at SDS," he said.
Spadaro noted that recent economic decisions by the Federal Reserve -- where interest rates have been reduced several times in the past few months -- are helping to spur construction activity and increase the demand for lumber and plywood products.
According to Spadaro, the plant has been working a full schedule since shortly before Christmas.
"I'm hopeful we've seen the bottom, but we definitely have been going through a down cycle in lumber and plywood," he said. "The interest rate cuts have helped boost activity, and lumber prices have bounced back some."
SDS has a total of 315 full-time employees.