Sawmills and Wood Preservation (United States) — NAICS 32111

A Histometrics rollup primer for public-market and private investors. NAICS = North American Industry Classification System, the U.S. government's standard industry-code framework; 32111 is the five-digit "industry" that groups two more specific businesses — sawmills (321113) and wood preservation (321114).

1. Overview

NAICS 32111 is the first two industrial steps in turning a log into building material: cut it into lumber (sawmills), then, for the share that will sit outdoors or underground, force preservative chemicals into it so it resists rot (wood preservation). Together the two industries shipped roughly $51.8 billion of product in 2022 and employed about 91,700 people across some 3,050 plants.[1][2]

For an investor the value of looking at this level — rather than either child alone — is the contrast between the two businesses stapled together inside it. They share raw material and geography, but they are almost opposite investments:

• Sawmills (~80% of the level's sales) are a cyclical commodity-manufacturing business tied tightly to the U.S. housing cycle. Mills buy a volatile input (logs) and sell a volatile output (lumber), earning the spread between them through fixed, capital-heavy plants. Fragmented on paper, dominated by private families, timber real-estate trusts, and Canadian majors.
• Wood preservation (~20% of the level's sales) is a more defensive, replacement-driven infrastructure business. A large slice of its demand is utility poles and railroad ties that wear out on a fixed schedule and must be replaced regardless of the construction cycle. It is far more concentrated at the top and offers cleaner public-market entry points.

So one level contains both a "buy-it-when-housing-is-depressed" cyclical trade and a "steady-replacement-annuity" infrastructure trade. The rest of this primer maps how they differ, then treats the combined level.

2. What's inside — the two child industries and how they differ

The level splits cleanly into two industries whose economics diverge sharply:

* HHI = Herfindahl-Hirschman Index, a standard antitrust concentration score (sum of squared market shares); under 1,500 is "unconcentrated." REIT = real estate investment trust; PE = private equity. Share figures from the 2022 Economic Census and 2023 County Business Patterns.[1][2]

The one-sentence contrast. Sawmills are the bigger, more cyclical, more fragmented, harder-to-buy-cleanly business tied to new construction; wood preservation is the smaller, steadier, more concentrated, easier-to-buy business tied to infrastructure replacement. An investor who wants housing-cycle torque leans to the sawmill children; one who wants defensive, grid-linked exposure leans to wood preservation.

Why bigger plants sit in the smaller industry. Wood preservation is only a fifth of the level's sales but its average plant is materially larger — roughly $29 million of receipts per establishment versus about $15 million for a sawmill.[1][2] Treating poles and ties for utilities and railroads rewards scale, engineering, and long-lead inventory; sawmilling includes thousands of small hardwood and specialty mills that pull the average down.

3. How big it is (the rollup)

Federal statistics for the combined level (our ground-truth sources):

Concentration — dispersed, but that's the sawmills talking. At the level, the four largest firms hold just 19.5% of receipts, the top eight 32.4%, the top 20 47.4%, the top 50 59.3%, and the HHI is only 166.9 — a statistically unconcentrated industry.[1] But that headline is dominated by the sawmill child (80% of sales, HHI 191). The wood-preservation child underneath it is four to five times more concentrated (HHI 926.6, top-4 share 54.9%).[1] Averaging them hides the real structure: a fragmented commodity business bolted to a top-heavy infrastructure business.

Concentration is even understated for what investors care about. The sawmill ratios pool thousands of tiny hardwood and specialty mills with the softwood construction-lumber mills that drive the economics. Forisk estimated 2024 U.S. softwood-lumber capacity at 47.9 billion board feet, of which the ten largest producers controlled roughly 50% — so the segment investors actually buy is far more concentrated than the level's HHI of 167 suggests.[3]

A note on the firm count. The two children report 2,439 + 250 = 2,689 firms, but the rollup lists 2,677 — fewer, not more. That is expected: a company that both mills and treats wood (several integrated producers do) is counted once at the level but can appear in both child industries. Establishments, employment, and payroll, by contrast, sum exactly to the children.[1][2]

Undercount caveat. Both children are real factory industries with paid employees and fixed plants, so the federal dollar figures are reasonably solid — this is not a case like logging or many services where government or sole-proprietor activity distorts the totals. The one genuine blind spot sits on the sawmill side: a fringe of very small "portable" band-sawmill and farm operations, some without paid employees, that fall below Census employer thresholds. They are numerous — small, individual ownership dominates the count of mills — but tiny in dollars, and do not materially change the level's ~$52 billion scale.[1] No suppressed values are relied on here.

4. The investable universe (where value concentrates across the children)

There is no large U.S.-listed pure-play in either child. Public exposure is indirect, and it splits by child:

Sawmill-side exposure (the cyclical ~80%) comes through diversified wood-products producers and timber REITs, with the purest lumber plays listed in Canada:

The biggest sawmill owners of all are private: Sierra Pacific Industries (family-owned, #2 U.S. producer, ~2.4M acres), Georgia-Pacific (a Koch Industries subsidiary), Idaho Forest Group, Hampton, and Roseburg.[3][4][7]

Wood-preservation-side exposure (the defensive ~20%) comes through four names, only one of which is majority wood-preservation:

Below them sit ~250 mostly private and PE-owned regional treaters plus the preservative-chemical suppliers (Viance, Lonza Wood Protection).[9]

The through-line. In both children, most of the industry is private, and the listed vehicles are either diversified conglomerates or Canadian-domiciled. For private investors that is the opportunity: timberland and family mills on the sawmill side, and a live buy-and-build roll-up of regional treaters on the preservation side. There is no ETF dedicated to either child; broad timber/forestry funds (e.g., WOOD, CUT) and building-products funds give only incidental exposure.

5. How the money works

Both children run a spread-plus-throughput model, but on different inputs and with different volatility:

• Sawmills — the lumber-to-log spread. Profit is the lumber sale price minus the delivered log cost minus conversion cost, with logs up to ~50% of total cost.[12] The winners maximize lumber recovery (board feet of saleable lumber per log — total cost falls ~2% for each 1% of recovery gained) and monetize byproducts (roughly half of each log becomes chips, sawdust, shavings, and bark sold to pulp mills, pellet makers, and biomass plants).[12][13] Framing lumber is a violently cyclical traded commodity — above $1,500 per thousand board feet in the 2021 boom, ~$903 by October 2025 — so quarterly earnings are lumpy.[14] (A board foot = 12" x 12" x 1"; volumes are quoted in billions of board feet, BBFT.)
• Wood preservation — the treating spread. A treater buys "white" (untreated) wood plus preservative chemical, runs it through a pressure cylinder ("retort"), and sells at a markup covering chemical, energy, drying, and freight.[10] Two features soften the cycle: residential treated lumber is priced off a lumber index, so unit margins hold even as dollar sales swing; and poles and ties are engineered, contract products sold to utilities and railroads on multi-year relationships — steadier and higher-margin than deck lumber. Approximately 75% of Koppers' North American railroad-products sales are under long-term contracts.[8]

For the timber-REIT owners on the sawmill side (WY, RYN), sawmilling is one half of a two-part model — timberland biology plus wood-products conversion — and REIT rules push most taxable income out as dividends. Those dividends rest on cyclical lumber earnings, so they are not bond-like. The wood-preservation leaders, by contrast, are ordinary operating companies whose infrastructure backlog gives their earnings a steadier, replacement-annuity quality.

6. What drives demand

The two children answer to different masters, which is the core reason to hold the level as a diversifier rather than a single bet:

Sawmills → new construction and interest rates. Lumber consumption tracks U.S. housing starts (single-family especially, being more lumber-intensive per unit); starts ran ~1.36 million units in 2025, roughly flat, with single-family soft. As of May 2026, starts were running at a seasonally adjusted annual rate of 1.177 million units, including 882,000 single-family.[14] The master variable is mortgage rates. The structural offset is a widely cited U.S. shortage of ~3.7–4 million homes after a decade of underbuilding, which supports long-run demand once rates normalize.[14] Repair-and-remodel and industrial uses (pallets, fencing) cushion the new-build swing — home improvement rose from 33% of residential construction spending in 2007 to 44% by Q1 2025, partly because high mortgage rates discourage owners from moving.[15]

Wood preservation → infrastructure replacement, only partly construction. Its three engines:

1. Utility poles (structural growth) — an aging mid-century wood-pole grid (approximately 150 million poles in service across North America) being replaced faster for grid hardening, wildfire resilience, and electrification (including new data-center load); analysts estimate 8–12% annual increases in North American pole-replacement need.[16][17] Grid spending is a genuine tailwind: investor-owned utilities reported transmission investment of $32.6 billion in 2024 (vs. $30.0 billion in 2023) and projected $39.9 billion for 2025; distribution investment was $60.2 billion in 2024.[18]
2. Railroad crossties (cyclical, maintenance-led) — Class I railroads replace ties across ~90,000+ route-miles. Approximately 450 million crossties are installed in the U.S.; wood holds 90–93% of the North American tie market, and the annual replacement rate is about 3%. North American demand historically ran ~22–25 million ties a year but dipped toward ~18–19 million in recent softer years.[19][20]
3. Residential (housing-cyclical) — decks, fences, agricultural posts, tied to remodeling and lumber prices.[10]

So a rate-driven housing downturn hammers the sawmill child and the residential slice of wood preservation, while the pole-and-tie slice keeps replacing on schedule — the level's built-in ballast.

7. Regulation

The two children face very different regulatory centers of gravity:

Sawmills — timber supply and trade policy. Mills themselves are lightly regulated factories, but they sit downstream of two heavily regulated domains. First, federal-land timber: the Endangered Species Act (notably northern spotted owl protections) and the National Forest Management Act sharply curtailed federal harvesting from the late 1980s, cutting Pacific Northwest federal timber output by roughly 85% and driving the industry's migration South.[16] Second, the U.S.–Canada softwood lumber dispute: Canada supplies about a quarter of U.S. lumber, and combined antidumping/countervailing duties plus a Section 232 tariff effective October 2025 held the effective burden near 34.8% — supporting U.S.-based mill margins.[21]

Wood preservation — pesticide law. Preservatives are pesticides regulated by the Environmental Protection Agency (EPA) under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Chromated copper arsenate (CCA) was cancelled for residential use in 2003; pentachlorophenol ("penta"), a workhorse pole preservative, was cancelled in 2022 and is being phased out (after February 2024, manufacture and sale ended, with treating plants allowed an additional three years to consume existing stocks), pushing treaters to costlier alternatives such as DCOI and copper naphthenate.[22] Technical standards from the American Wood Protection Association (AWPA), referenced by the International Building Code, gatekeep which treatments are code-approved.[23] Legacy creosote/penta/arsenic contamination is a real, capitalized remediation liability for treating-plant owners.

Both children share standard Clean Air Act, Clean Water Act, and OSHA workplace-safety exposure — sawmilling and treating are hazardous, machinery- and chemical-intensive operations.

8. Consolidation

Both children are consolidating, but the mechanism differs:

• Sawmills are consolidating through a great migration South (the South rose from about ~25% of North American softwood capacity in 2009 to roughly ~38% by mid-2024, drawn by fast-growing private pine plantations and low log costs), Canadian majors building U.S. mills (West Fraser, Canfor, Interfor shifting fiber and dodging duties), and brutal capacity rationalization — more than 5 BBFT of North American capacity idled or closed since 2023.[3][14] The landmark deal is the Rayonier–PotlatchDeltic $8.2 billion all-stock merger, announced October 2025 and closed January 2026, creating the second-largest U.S. timber REIT with 4.2 million acres and seven wood-products facilities totaling ~1.2 BBFT of lumber capacity.[5]
• Wood preservation consolidates through a decades-long roll-up of regional treaters by Stella-Jones, Koppers, and Doman, protected by unusually high barriers: environmental permitting for a new treating plant is extremely difficult given the contamination stigma, and infrastructure customers buy on long qualification and AWPA certification.[9] Scale here is bought, not built — organic entry is nearly impossible. Recent examples: Koppers purchased Brown Wood Preserving's utility-pole assets for approximately $100 million in 2024; Doman acquired C.M. Tucker for approximately $255 million, expanding to 21 U.S. treating plants.[11][24]

The common thread: a concentrated (or concentrating) core of well-capitalized leaders sitting over a fragmented private tail, with the tail being steadily absorbed.

9. Risks

Shared across the level:

• Input-cost and lumber-price volatility — both children are squeezed when the log/white-wood cost and the sale price move apart faster than they can adjust.[12][10]
• Substitution — steel and concrete in framing and utility poles, concrete/composite ties, and composite decking chip at wood's share; offset on the sawmill side by mass-timber growth (see §10).
• Capital and labor intensity — staying low-cost demands continuous automation against a tight, aging skilled-labor pool.

Concentrated in the sawmill child:

• Cyclicality — the overriding risk; earnings hostage to housing starts and rates, with down-cycles forcing curtailments.
• Log supply / federal-land and wildfire constraints, and trade-policy whipsaw on Canadian duties.

Concentrated in the wood-preservation child:

• Environmental and legal liability from legacy creosote/penta/arsenic sites. Koppers reported $10.2 million of environmental reserves at the end of 2025 and expected approximately $13 million of 2026 capital spending for environmental controls.[8]
• Regulatory chemistry transitions (the penta phase-out) and customer concentration — a handful of utilities and Class I railroads anchor the profitable demand.[22][20]

10. How to invest, and the outlook

Matching the vehicle to the thesis:

• For housing-cycle torque (sawmill child): timber REITs Weyerhaeuser (WY) and Rayonier (RYN) for diversified sawmill-plus-timberland exposure with dividends (cyclical, not bond-like); West Fraser (WFG) for the most direct large-cap lumber-producer bet on a U.S. exchange; Interfor (IFP) / Canfor (CFP) on the Toronto Stock Exchange for pure-play lumber; CME lumber futures for a direct commodity bet (very high volatility, not a business).
• For defensive infrastructure exposure (wood-preservation child): Koppers (KOP) for the most direct U.S.-listed treated-wood-plus-chemicals play (small-cap, cyclical); Stella-Jones (SJ) for the purest large-cap infrastructure-wood play with a 21-year dividend-growth record (Canadian-listed, also over-the-counter in the U.S.); UFP Industries (UFPI) for treated-lumber exposure inside a diversified building-products company; Doman Building Materials (DBM) for Canadian-listed distributor-and-treater exposure with an expanding U.S. footprint.
• Private-market routes are, unusually, where the bulk of both children actually sits: timberland (directly or via Timberland Investment Management Organizations, TIMOs) and family mills on the sawmill side; a live buy-and-build roll-up of regional treaters, plus preservative-chemical suppliers, on the preservation side.

Outlook (forward-looking judgment). The two halves of this level are likely to move on different clocks. The sawmill ~80% stays muted while high mortgage rates keep housing starts flat and capacity closures continue, with a genuine long-run bull case resting on the structural housing shortage, the U.S. South's cost advantage, elevated Canadian duties, and the emerging mass-timber demand leg (engineered products such as cross-laminated timber in taller buildings). The wood-preservation ~20% looks structurally steadier — aging-grid replacement, wildfire hardening, and electrification should keep utility-pole demand growing at a mid-to-high single-digit pace, with crosstie demand recovering off cyclical lows.[17][20] Net: NAICS 32111 is best understood as a cyclical commodity manufacturer (buy it when housing is depressed) welded to a defensive infrastructure supplier (own it for the replacement annuity) — and the reason to study the level, rather than a single ticker, is precisely that those two engines rarely fire at the same time.

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Sources

1. U.S. Census Bureau, 2022 Economic Census — receipts, firm counts, concentration ratios, and HHI (NAICS 32111 and children 321113 / 321114), 2022. https://www.census.gov/programs-surveys/economic-census.html
2. U.S. Census Bureau, County Business Patterns 2023 — establishments, employment, annual payroll (NAICS 32111 and children), 2023. https://www.census.gov/programs-surveys/cbp.html
3. Forisk, "Top 10 North American and U.S. Lumber Producers in 2024," 2024. https://forisk.com/top-10-north-american-and-u-s-lumber-producers-in-2024/
4. Weyerhaeuser, 2025 Form 10-K. https://www.sec.gov/Archives/edgar/data/106535/000119312526051422/wy-20251231.htm
5. Rayonier Investor Relations, "Rayonier and PotlatchDeltic Announce Closing of Merger of Equals," 2026. https://ir.rayonier.com/news/news-details/2026/Rayonier-and-PotlatchDeltic-Announce-Closing-of-Merger-of-Equals/default.aspx
6. West Fraser, Q4 2024 Investor Presentation, 2025. https://www.westfraser.com/sites/default/files/2025-02/WFG%20-%20Q4%202024%20Investor%20Presentation%20-%20vFINAL_0.pdf
7. Wikipedia, "Sierra Pacific Industries," 2025. https://en.wikipedia.org/wiki/Sierra_Pacific_Industries
8. Koppers Holdings Inc., 2025 Form 10-K, 2026. https://www.sec.gov/Archives/edgar/data/1315257/000131525726000012/kop-20251231.htm
9. Stella-Jones Inc., 2025 Annual Report, 2026. https://www.stella-jones.com/sites/default/files/reports/SJ-AR-2025-EN_0.pdf
10. UFP Industries, Inc., 2025 Form 10-K, 2026. https://www.sec.gov/Archives/edgar/data/912767/000110465926019567/ufpi-20251227x10k.htm
11. Doman Building Materials Group Ltd., C.M. Tucker Acquisition Announcement, 2024. https://cdn.domanbm.com/files/10-01-24-DBMGL-CM-Tucker-Final-PR.pdf
12. SawmillSmart, "How to Increase Sawmill Yield: Strategies, Technology, and the True Cost of Doing Nothing," 2026. https://sawmillsmart.com/articles/how-to-increase-sawmill-yield-in-2026-strategies-technology-and-the-true-cost-of/
13. Northern Woodlands, "Lumber, Chips, and Sawdust: For Sawmills, There's No Such Thing as Waste," 2006. https://northernwoodlands.org/articles/article/lumber_chips_and_sawdust_for_sawmills_theres_no_such_thing_as_waste
14. Newswire / Madison's Lumber Reporter, "Lumber Prices and US Housing Starts Update: Full Year 2025," 2025; and U.S. Census Bureau / HUD, New Residential Construction (May 2026). https://www.newswire.ca/news-releases/lumber-prices-and-us-housing-starts-update-full-year-2025-830799563.html
15. National Association of Home Builders, "NAHB Expects Remodeling Growth in 2026 and Beyond," 2026. https://www.nahb.org/news-and-economics/press-releases/2026/02/nahb-expects-remodeling-growth-in-2026-and-beyond
16. Congressional Research Service, "Timber Harvesting on Federal Lands" (R45688), 2022; and North American Wood Pole Council, FAQs, 2024. https://woodpoles.org/tech-resources/faqs/
17. Cognitive Market Research / Verified Market Reports, Wood Utility Poles Market (pole-replacement demand), 2024. https://www.cognitivemarketresearch.com/wood-utility-poles-market-report
18. Edison Electric Institute, Industry Data, 2025. https://cms.eei.org/resources-and-media/industry-data
19. Railway Tie Association, FAQs, 2024. https://www.rta.org/faq/
20. Railway Age, Crosstie Market Outlook, 2024; and Fastmarkets, The crossties sector faces a complex downturn, 2024. https://www.railwayage.com/mw/crosstie-market-outlook/
21. Congressional Research Service, "U.S.-Canada Softwood Lumber Trade: Current Issues for Congress" (R48781), 2025; and White House, "Proclamation: Adjusting Imports of Timber, Lumber, and Their Derivative Products into the United States," 2025. https://www.congress.gov/crs-product/R48781
22. U.S. Environmental Protection Agency, EPA Requires Cancellation of Pentachlorophenol, 2022; and T&D World, "EPA Officially Bans Utility Pole Preservative 'Penta'," 2022. https://www.epa.gov/pesticides/epa-requires-cancellation-pentachlorophenol-protect-human-health
23. American Wood Protection Association, AWPA Standards and Codes (referenced by the International Building Code), 2024. https://awpa.com/info/technical/codes
24. Koppers Holdings Inc., Brown Wood Preserving Acquisition Announcement, 2024. https://investors.koppers.com/node/20106