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New uses for wood, insurance top agenda

Convention goers considered how timber can be the key element in tall buildings and checked out the problems with truck insurance and our economy during the Louisiana Forestry Association meeting in New Orleans in September.

The slow-moving Hurricane Harvey caused the annual meeting to be rescheduled, but despite the change in date, almost 400 people attended the event.

Candice Nichol, architect from Vancouver, British Columbia, works with a firm specializing in tall wooden buildings made with engineered wood products referred to as “mass timber.” The first big project — a seven-story 224,000 square-foot building completed in 2014 in Minneapolis — made headlines across the country.

“There is a huge market for these types of buildings,” Nichol said but added that it was still in the “early adopter stage.” The assets of tall timber over steel and concrete in construction included:

  • Lighter construction with natural materials requiring less foundation.

  • A better atmosphere for office workers who inhabit them.

  • Pre-fab opportunities to be more productive in the building phase.

  • A “cool vibe” from these designs that appeal to younger workers.

  • A natural carbon sink that comes with the wood in these buildings.

“Timber is our way of putting our fingerprint on a building,” said Nichol.

Glulam, cross laminated timber (CLT), laminated strand lumber (LSL) and nail laminated timber (NLT) make tall buildings possible. Glulam beams might be paired with Nail Laminated Timber for floor panels. NLT is made by taking dimensional lumber like 2-by-4s and 2-by-6s, stacking them together on their edge, and nailing them into a panel.

Much of the timber for the first building came from trees harvested because of the mountain beetle epidemic in that area of the country, so it also has a recovery aspect to the project.

Wood is the “only material grown by the sun,” said Nichol who pointed to studies that show physical and mental health is better in wooden buildings. One study even showed that patients recover quicker in the presence of a wooden structure.

Nichol, who works for Michael Green Architecture, is high on the possibilities.

“The material is developing faster than building codes,” she said. “We could go to 30 stories when the building codes allow.”

Projects are underway or completed in Oregon, New York, Chicago and Paris.

The Oregon State College of Forestry is doing the testing of these materials and their new university building will be mass timber, she said.

Insurance Costs for Logging

James Prather, attorney and expert in the defense of the trucking industry, got the audience’s attention quickly when he said: “Insurance rates are rising around the country and Louisiana is among the five most expensive states.”

It wasn’t really news to those in the audience paying for insurance for their logging trucks, but Prather explained that in 2016, insurers paid out $110 for every $100 in premiums for commercial auto insurance.

“A lot of companies are running away from coverage,” Prather said, adding that Louisiana is “a very litigious state.”

Some of the problems cited by Prather included:

  • More expenses for property damages today since vehicles are bigger and more expensive with new technology.

  • Targeting of our industry by personal injury lawyers.

  • Runaway verdicts that affect rates as well.

  • Rising medical costs — which is rising 1.5 times faster than other costs.

  • Increase in miles driven due to a better economy.

  • Bad actors in the profession.

Prather said insurance companies are setting rates as an industry not as a company.

“Your competitor’s loss history affects your rates,” he said.

Aggravating these conditions is the use of the Collateral Source Rule which, simply put, means parties found at fault have to pay costs already paid by the victims’ insurance including medical bills. Hospitals and doctors are listing the “sticker price” to be paid and not the negotiated price charged by Medicare or other insurance plans.

“In this arena, doctors and hospitals can get sticker prices that they would never get,” Prather said.

Added to that is the practice of some doctors working as “hired guns” for attorneys working in this field for the same lawyers over and over again. Juries are charged by the judge to give extra weight to a patient’s “treating physician” over other experts. The problem is these are not the physicians treating these patients but are specifically retained for the litigation.

Complicating matters more is litigation funding by venture capitalists that pay the costs upfront waiting on the day that a big judgment is made to receive their investment and more back from a claim. Litigation funding is “an unregulated industry” that complicates these trucking cases, Prather said.

Prather advised trucking companies to have a plan in place for the preservation of required records in the event of an accident. Failure to preserve evidence relevant to the litigation and the destruction of that evidence is becoming a common claim in such cases.

Good News / Bad News

Noted Louisiana economist Dr. Loren Scott had good and bad news for the audience. The devastation wrought by the hurricanes in Texas, Florida, parts of Louisiana and the Caribbean will create a demand for wood products, he said.

On the national scene, he gives President Trump good marks for ending the “regulatory tsunami” but questions his anti-free trade tendencies.

“If we get into a trade war, it will make the Great Depression look good,” he said.

Levying tariffs on incoming goods always brings retaliation, said the former chairman of LSU’s Economics Department.

To simplify the trade imbalance, Scott pointed out that the problem isn’t Mexico and Canada; it’s the 408 percent deficit with China.

Housing is always key to the forest industry, and housing starts are growing slowly. Household wealth and consumer spending are also on a slow train upward. That translates to a slight increase for plywood and other products associated with construction.

“For construction, they really need immigrants,” Scott cautioned, referring to another looming political discussion in Washington, D.C.

In an economic roundup for Louisiana for big industrial projects, Scott said most of the activity is in the Lake Charles MSA and along the Mississippi River in Baton Rouge and New Orleans. Louisiana has $179 billion in industrial project announcements.

“There is not another state in the Southeast that can compare,” he said.

Many of the Baton Rouge projects are nearing completion, however, which means that “pickups are about to leave construction sites” in those areas. But it’s all rosy for Lake Charles, which is one of the fastest growing areas in the country.

The Liquefied Natural Gas (LNG) projects in the southwest part of the state won’t start opening until late 2018 or 2019, so good things are ahead for that region.

The loser in the state in the past two years, Scott said, was the Lafayette area with employment dropping 11 percent due to the oil industry downturn.

“It is starting to turn around,” he said and added that the Haynesville Shale fields in the Shreveport area also are slowly going up again.

“Louisiana had been in a 20-month recession because of the oil patch,” he said, but in May the numbers had turned positive.

The annual meeting was rescheduled after Hurricane Harvey threatened flooding rain but foresters, landowners, loggers and exhibitors showed up for the popular event three weeks later. Next year’s convention is tentatively scheduled to be held at Sam's Town Hotel & Casino in Shreveport.

(Janet Tompkins is the former editor of Forests & People magazine.)

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