Timberland Investment

A century after lumber barons cut down 1.5 million acres of timberlands now protected within the Chequamegon-Nicolet National Forest to help build Milwaukee and Chicago, industry managers say the riches within the regrown forest are being squandered at taxpayers' expense.

A battle pits cash-strapped loggers and mill owners against environmentalists and a growing woodland-recreation industry, Gannett Wisconsin Media reported.

Residents of Laona, a town of 1,200 people about 100 miles northwest of Green Bay, say the industry's struggles have contributed to skyrocketing tax bills, empty classrooms and shuttered shops. Meanwhile, loggers who remain in the business often travel hours each day to saw down private timber stands while the national forest remains off-limits to them.

"I feel like we have a family starving to death surrounded by an ocean of food and water," said Jim Schuessler, head of Forest County's economic development agency. State figures show forestry jobs in the county dropped from nearly 700 in 2008 to just 118 in 2010, partly as a result of the housing crash.

Schuessler said the region is hamstrung by restrictive harvest limits within the forest.

Records show the U.S. Forest Service could have sold and cut 1.3 billion board feet of wood in the past decade under its forest management plan. That would have represented roughly $110 million in revenue. But loggers cut just 755 million board feet, or a little more than half the allowed quantity.

Maine’s forest products industry contributes $8 billion in total value to the state’s economy, including 38,789 direct and indirect jobs, a new study commissioned by an industry advocacy group shows.

According to the study released this week by the Maine Forest Products Council, the forest products sector in Maine includes businesses, organizations and individuals involved in logging and forestry, paper and related product manufacturing, sawmills and wood product manufacturing, wood furniture manufacturing, wood biomass power generation, maple syrup production and activities of the Maine Forest Service.

Although some critics contend that the study paints a rosy picture of a declining industry, the study’s goal is to illustrate how the industry is still a vital player in Maine’s economy, said Roberta Scruggs, the council’s spokeswoman.

“All you are hearing is that there are fewer jobs,” Scruggs said Wednesday. “That gives people the impression that the industry is shrinking or dying and that just isn’t true.”

What’s happening instead, according to the study, is that Maine’s forest industry and workers are more productive than ever, thanks partly to improved technology. Though far from booming, the industry has been generally retooling to prepare for an increase in productivity that industry workers expect will come with an improved economy, said Patrick Strauch, executive director of Maine Forest Products Council.

North American wood pellet exports reached a new record of over 1 million tons in the first quarter of 2013, according to the North American Wood Fiber Review. There has been a steady growth in shipments from both the U.S. and Canada the past few years, mainly as a result of the continued increase in demand for pellets in the United Kingdom.

Pellet exports from the two primary pellet-producing regions on the North American continent – the U.S. South and British Columbia – showed no signs of slowing in early 2013, with the rate of growth likely to accelerate in the second half of the year. In the U.S. South, pellet export volumes to Europe resumed their double-digit growth after a brief pause in the fourth quarter of 2012. Export volumes, based on information from industry sources as well as trade data in Europe and North America, showed exports in excess of 1.7 million tons in 2012, as reported in the North American Wood Fiber Review.

Timber output in the Russian Far East could rise by a third, and timber processing more than double by 2016, according to Viktor Ishayev, the Far East development minister in the Russian government. The timber industry itself insists, however, that such a scenario would require a sharp rise in demand in the domestic or foreign markets.

Experts say, meanwhile, that Russia’s share of the global market for raw and processed timber continues to shrink, and domestic demand in the Far East is growing too slowly for such targets to be realistic.

China’s forestry output is expected to hit 9 trillion yuan (1.46 trillion U.S. dollars) in 2020, a senior Chinese forestry official said Thursday.

The country’s forestry production reported average annual growth of 24 percent over the past ten years or more, said Sun Jian, deputy director of the accounting department with the State Forestry Administration (SFA), at a press conference.

China’s forestry output is expected to hit 4.5 trillion yuan in 2013, according to an SFA forecast issued in late 2012.

Northern Minnesota’s wood products industry woes continued in a big way today when Boise Inc. announced it will close two of its four paper machines at its International Falls mill resulting in 300 jobs being permanently eliminated.

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Boise will retain about 580 employees at the mill running two paper machines producing uncoated white office paper and producing the pulp that’s made into paper, Virginia Aulin, Boise vice president of human resources and corporate affairs, told the News Tribune this morning.

"We will no longer have to buy pulp to make our paper in International Falls," Aulin said.

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Earlier this year, Wisconsin-based Wausau Paper says it is closing its Brainerd mill and eliminating 134 jobs because of stiff global competition in overseas markets where the company was trying to expand.

Last August, Georgia-Pacific announced it would permanently close its Duluth hardboard plant, putting 141 employees out of work.

Since 2008, three oriented strand board manufacturing mills closed in Grand Rapids, Bemidji and Cook with a loss of hundreds of jobs. In Deerwood, 158 jobs were lost when Weyerhaeuser closed its strand lumber plant. And last year the Verso Paper Mill in Sartell closed for good after a deadly Memorial Day explosion and fire. It had already shed 175 jobs in late 2011 and the closure meant 260 more layoffs.

President Vladimir Putin said Russia will earmark 400 billion (£8.3 billion) roubles to boost its forestry industry and make the sector attractive for investment, Russian news provider RIA Novosti reported. Russia’s forestry sector has been plagued by poor governance, low forestry investment potential and illegal logging and timber sales.

A large area of northern Wisconsin is called “The North Woods” for obvious reasons. The timber and logging industry is historic and credited with spurring the development of many cities and communities, including Eau Claire, Chippewa Falls and Menomonie.

The industry is still very much alive, but at least one area wood products company is concerned about aging crews that do the harvesting.

“It is a concern, in part because we see that trend occurring and we’re not sure when it might end,” said Jeff Koxlien, vice president of Koxlien Brothers Wood Products in Strum. “We’re not exactly sure what that might mean to the industry.

“Typically, logging has kind of been handed down family lines,” he said, adding that Koxlien’s used to have several logging crews but now hire independent contractors for their supply.

“Most younger people coming in and learning about logging are exposed to it through their dad, uncle or another relative,” he said. “It’s certainly not, at least by the current economics, a get rich occupation by any means.”

A downward economy in the last five years has taken its toll on some logging businesses, including logging crews, Koxlien said, noting that his company stopped buying logs for about six months, the only time the firm did that in its 30-year history.

A media leak has brought to light a project that would create 350 jobs and put Clark County on the map for pulpwood production — if Clark County is the location chosen for the prospect's site.

Arkansas Business on Monday reported that a Chinese wood pulp mill company called Sun Paper "plans to invest about $1 billion in building a plant" in either Camden or Arkadelphia.

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Sun Paper, or more specifically Shandong Sun Paper Industry, is a 30-year-old company that produces about 3.5 million tons of paper and board products annually, according to the article. The new paper mill would produce paper pulp for exportation to China.

The article predicts an announcement to be made by the company in one of the two cities "in the next few weeks."

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Allen Morgan, an EDCCC member and co-owner of the Arkadelphia-based timber company Hunter-Wasson, Inc., declined to comment on whether there has been local discussion with Sun Paper, but did shed light on why southern Arkansas would be an ideal location for a paper plant.

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Morgan explained that, prior to the economic recession, Arkansas timber companies were growing more timber than they were harvesting. "Clark County lost a huge proportion of the mills that bought our landowners' timber, and as a result of that … we're growing in excess of what we now cut — about 6 million tons per year — so we would easily provide enough raw materials for one large plant or several smaller plants."

The plantation timber industry is playing down concerns about the sector's plight in southern Western Australia despite predictions of a major rationalisation of the estate.

The business that took over tens of thousands of hectares of timber plantations from a collapsed company says as much as two-thirds of the land could be returned to agriculture.

When Great Southern collapsed, international forestry manager New Forests bought 60,000ha of its plantations.

New Forests' David Brand said a third of the land will be returned to agriculture.

He said another third will be retained for forestry while the future of the remaining land will depend on market conditions.

"In some areas, the plantations were pushed out into areas that were too dry for forestry," Mr Brand said.

Increasingly, plantations are being converted back to agriculture, but consultant David Wettenhall insists it is a market correction, not a demise.

The exit of its majority owner and operator leaves the future uncertain for a long-delayed project that has attracted at least $120 million in public financing to turn wood from Michigan’s Upper Peninsula into fuel for vehicles.

New Hampshire-based biofuels company Mascoma Corporation announced in 2011 that Valero Energy would provide up to $50 million in financing for a $232 million facility in Kinross Charter Township, Michigan, and purchase the 20 million gallons of ethanol it would produce annually.

However, Valero spokesman Bill Day confirmed in an email that the company “is no longer involved in the Mascoma cellulosic ethanol project” but declined to give further details.

Georgia-Pacific showcased its oriented strand board plant in Clarendon County Wednesday, which recently began ramping up operations to supply the needs of a quickening home-construction market in the eastern United States.

The Atlanta-based forest products company that is a closely held unit of Koch Industries bought the plant in 2010 from Grant Forest Products, a Canadian forest products company. Grant finished the plant, and another one in Allendale in 2007, but never began operations because it came on line just as the Great Recession crushed the housing industry.

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Last month, Georgia-Pacific announced that it is developing plans for potential investments, totaling almost $400 million, in its plywood and lumber operations. The facility expansions and equipment upgrades would increase Georgia-Pacific's overall capacity by approximately 20%. Pending final site selection and required permitting, startup would be expected in the second half of 2014 through the beginning of 2015.

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The beginning of production at the Clarendon OSB mill created 130 new jobs, [CEO Jim] Hannan said.

In addition, the mill will spend $30 million to $40 million a year purchasing trees — the raw material of OSB products — from land owners and timber harvesters in a 60 to 70 mile radius around the plant.

The economy of New Zealand grew at the fastest pace in three years in the last quarter of 2012, with demand for forestry exports underpinning gains in the primary sector, the National Business Review reported on 21 March 2013. In addition, gains in the forestry sector helped offset declines in other areas such as manufacturing. The outlook for New Zealand’s forestry sector remains positive mostly due to demand from China, which is likely to provide support for New Zealand forestry investment.

Wood energy pellets: love them or hate them. It all depends upon your perspective and understanding. That’s why the U.S. Endowment for Forestry and Communities (the Endowment) today released two new reports on the rapidly-growing wood energy pellet industry: “The Wood Pellet Value Chain: An economic analysis of the wood pellet supply chain from the Southeast United States to European Consumers,” and “Applying Pathways to Sustainability: A case study of how hypothetical bioenergy facilities in VA and GA can increase the sustainability of their supply chains.”