2025 US Wood Manufacturing in Review & Challenges for 2026

2025 is finally behind us, and to be honest, we’re thankful for it.

I won't sugarcoat it—the past year was incredibly challenging for all of us. Whether you were running a sawmill, managing a logistics fleet, or trying to keep a manufacturing line staffed, 2025 felt less like "business as usual" and more like a test of endurance.

We saw it in the numbers, but we felt it on the ground. The government shutdown in October didn’t just mess up the data; it froze decision-making when we needed it most. For 44 days—from October 1 to November 12—administrative operations stalled, disrupting the flow of information we all rely on [1]. While the headline GDP numbers looked good on paper (growing at 4.3% in the third quarter), the reality on the factory floor was much grittier [5].

The Hard Reality of the Numbers

If it felt like the industry was shrinking, that’s because it was. The Federal Reserve finally revised their data in November, confirming what many of us suspected: manufacturing production actually declined by 1.5% on net over the last five years [1].

We spent 2025 grinding through a contraction. The Institute for Supply Management (ISM) reported that manufacturing shrank for nine consecutive months [2]. Why? Because the cost of doing business skyrocketed. Over 80% of manufacturing firms reported paying tariffs on their inputs this year [3]. Whether it was steel for machinery or components for assembly, the "cost to build" went up, squeezing margins for everyone.

Wood Manufacturing Industry: A Symbiotic Partnership

Nowhere was this pain felt more acutely than in the wood manufacturing sector. But to understand the pain, you have to understand the partnership.

The American wood product industry relies on a single, crucial organism: the symbiotic relationship between the landowner and the sawmill. Landowners are the stewards of the only truly renewable and sustainable natural resource we have—timber. They provide the lifeblood of our industry. In turn, sawmills provide the economic engine that allows those landowners to keep their forests as forests, rather than selling them off for development.

In 2025, that heartbeat slowed dangerously.

The hardwood sector—the home of so many independent, family-run mills—bore the brunt of the downturn. Between 2022 and 2025, U.S. hardwood lumber production fell by a staggering 29% [10]. That isn't just a "market correction"; that is a structural loss of capacity. In that same window, the hardwood industry lost approximately 40,000 jobs [10].

These numbers represent small and medium-sized sawmills closing their doors—some temporarily, many for good. When those mills close, the ripple effect is immediate. Logging employment fell 5% in the U.S. North and 3% in the U.S. South this year [11]. Why? Because when the local mill goes dark, the landowner loses their buyer, the logger loses their haul, and the local diner and truck stop lose their customers. We didn't just lose capacity in 2025; we lost neighbors.

Global Regulatory Pressure: The EUDR Cliff

This partnership is facing a new kind of external threat: the bureaucratic storm of the European Union Deforestation Regulation (EUDR). While the European Parliament recently voted to delay full enforcement until December 30, 2026, the core challenge remains dangerous. The regulation demands strict geospatial data for every plot of land where timber is harvested, a requirement that clashes with the reality of the US supply chain where thousands of small, private landowners—not giant corporate plantations—supply the bulk of our fiber. If these small landowners cannot or will not provide that data due to privacy concerns or technical barriers, that wood is effectively locked out of the global market, further squeezing the sawmills that depend on them.

However, this delay is not just a pause; it is a tactical window. The amendment passed by the EU Parliament mandates a "simplification review" by April 30, 2026, specifically to identify ways to reduce the administrative burden on producers. This gives US industry leaders and government officials a critical four-month timeline to advocate for changes that recognize US sustainable forestry practices without demanding invasive data collection. Instead of just waiting out the clock for December 2026; there is an opportunity to push for a framework that protects our forests without dismantling the independent landowner network that sustains them.

Building a Foundation on Durability

But it wasn’t all hardships and lost time. While all of us were grinding through the challenges, the US was also pouring concrete for the future. The pressure of 2025 forced us to stop talking about "quality" and start proving it.

For our customers—manufacturers who move heavy, valuable industrial components—the "cheapest pallet available" stopped being an option. With Canadian softwood lumber facing tariffs of over 35%, the price gap between a disposable softwood pallet and a durable hardwood pallet narrowed significantly [7, 8].

This shifted the conversation back to reliability. Hardwood pallets are built to survive 5 to 10 trips (or more), compared to the 1 to 3 trips you get from a standard softwood stringer pallet. When you are moving high-value goods, you don't need a pallet designed for a lightweight robotic system; you need a pallet that won't buckle when a forklift hits it. 2025 taught us that "cheap" is expensive if the load fails, but "durable" is an investment.

The Reality of 2026

Just because the calendar flipped doesn't mean the headwinds have vanished. We are walking into 2026 with our eyes wide open. The reality for U.S. manufacturing is that the road ahead is still steep.

• The "De Minimis" Shift: Come mid-2026, the rules for imports are changing. The removal of the "de minimis" exemption means fewer small parcels and more bulk, palletized container shipments hitting our ports [9]. We have to be ready for that volume.

• The Labor Gap is Real: We still face a shortage of skilled workers. The data shows manufacturing employment is down by over 76,000 jobs year-over-year [4]. Finding the people to run the lines is going to be a daily battle.

• The Lag Time: All those new investments in infrastructure take time to come online. You can't just flip a switch and resurge after a downturn; it takes time to ramp capacity back up safely.

• Fragile Wallets: Many workers across the economy are stuck in part-time roles. The number of people working "part-time for economic reasons" jumped by over 900,000 late last year [4]. That means our communities are still financially bruised.

But We Are Still Here.

Despite the shutdowns, the tariffs, the closures, and the shortages, Blackberry Pallet is still here. The Turman Group is still here.

And more importantly, you are still here.

Making it through 2026 isn't going to be an individual effort, or even just a company effort. It’s going to take all of us. It’s the logistics managers figuring out new routes. It’s the landowners stewarding the forests for the next generation. It’s the customers valuing partnership over the lowest spot-price bid.

It goes deeper than that. This industry supports the highway truck stops where our drivers grab coffee at 4 AM. It supports the local diners where third-shift workers eat breakfast in the afternoon. It keeps the lights on in the local garages that fix our personal trucks and the Starbucks drive-thru that give us the fuel to jumpstart our morning commutes or sustain us on the drive home.

Manufacturing isn't just a sector of the economy; it's the engine of our communities. 2025 tested that engine, and it held. 2026 is going to demand that we put it in gear and move forward—together.

It’s a new year, new challenges and new potential. Bring it on, 2026.

References

1. Federal Reserve Board. Industrial Production and Capacity Utilization - G.17. December 23, 2025. https://www.federalreserve.gov/releases/g17/current/default.htm

2. Institute for Supply Management (ISM). November 2025 Manufacturing PMI Report. https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/pmi/november/

3. National Association of Manufacturers (NAM). 2025 Fourth Quarter Manufacturers' Outlook Survey. December 2025. https://nam.org/2025-fourth-quarter-manufacturers-outlook-survey/

4. U.S. Bureau of Labor Statistics (BLS). Employment Situation News Release - November 2025. December 16, 2025. https://www.bls.gov/news.release/empsit.htm

5. U.S. Bureau of Economic Analysis (BEA). Gross Domestic Product, 3rd Quarter 2025 (Initial Estimate). December 23, 2025. https://www.bea.gov/news/2025/gross-domestic-product-3rd-quarter-2025-initial-estimate-and-corporate-profits

6. Forisk Consulting. U.S. Southeast Wood Fiber Market Updates. https://forisk.com/u-s-southeast-wood-fiber-market-updates/

7. National Association of Home Builders (NAHB). Lumber Capacity Has Peaked for 2025. December 23, 2025. https://www.nahb.org/blog/2025/12/sawmill-lumber-production

8. Sandler, Travis & Rosenberg, P.A. Section 232 Tariffs on Steel & Aluminum. August 19, 2025. https://www.strtrade.com/trade-news-resources/tariff-actions-resources/section-232-tariffs-on-steel-aluminum

9. Fastmarkets. Pallet Market Trends Amid Economic Uncertainty. August 19, 2025. https://www.fastmarkets.com/insights/pallet-market-mid-year-review-economic-uncertainty-dominates-the-outlook/

10. Hardwood Federation. Hardwood Industry Economic Impact. 2025. https://hardwoodfederation.wildapricot.org/Hardwood-Industry-Economic-Impact/

11. Forisk Consulting. FORISK NEWS - Q3 2025 Edition. August 12, 2025. https://forisk.com/wp-content/uploads/Forisk-News_2025-Q3_20250811_FINAL.pdf