Profile of Forest Industry in the Interior West- Guest Post by Todd Morgan

The sun rises at Pyramid Mountain Lumber the morning of August 30, 2011, in Seeley Lake, Montana. They are one of the largest saw mills in Montana.

Another photo by Josh Birnbaum. You can find more of his photos here, on the Celebrate Forests photoblog.

Guest post by Todd Morgan.

Thank you for contacting me regarding forest industry information. I used the link and went to the blog discussion about “corporate interests.” There seems to be a lot of misconceptions or misunderstanding of the logging and wood products industries in the West. Sure, most mills & logging operations are part of corporations, but most local businesses (bike shops, ice cream stands, coffee shops) are incorporated too. Incorporating is a legal means to separate one’s personal finances from those of one’s business. But there are many different kinds of corporations—limited liability, publicly traded, privately held, etc.

Most of the logging and timber-processing firms (the businesses that use timber from private and public lands) in Montana and the other Interior West states are privately held, not publicly traded, most employ fewer than 100 people, and most have owners, officers, and managers that live in or near the community where the business is located. I don’t think the same can be said of industrial forest landowners (TIMOs & REITs). As the wood products industries have changed over the past 30 years, many companies that owned mills and timber land (vertically integrated) sold off one aspect of their business or the other, becoming either a mill/wood products business or a timberland business. There are very few left that have both, and those that do have both are generally overwhelmingly into one aspect or the other. For example is Plum Creek; they are a REIT with a great deal of timberland all over the country, but their only mills are the few in Montana; Rayonier, Weyerhaeuser, Boise, International Paper—these are similar publicly traded companies. But those are quite different than the local mills Pyramid, Tricon, R-Y, Sun Mountain, etc. that have very little or no land holdings, are not publicly traded, and must compete against the big corporations for timber, labor, and market share.

Most logging in our region is also performed by small, private contractor firms; they are not crews that work for the mills; they are not publicly traded companies; and I suspect most are in debt up to their eyeballs, considering the price of logging equipment, fuel, insurance, and skilled labor. Hopefully they are incorporated, so that if the business fails, they don’t lose their homes to pay business debts.

In terms of forest industry info, my program here produces quite a bit of information about Montana’s industry, Idaho’s, as well as the other western states. You have obviously been to our web site and seen some of the quarterly, annual and periodic information we produce. Attached are some documents that may be of interest to you, and below are some specific links to regional publications.

For quarterly conditions in Montana:

For annual forest industry conditions in Montana and Idaho:

For periodic reports about the industry in various western states:

For a report we did that highlights industry capacity changes across the West as well as in Montana:

It doesn’t take much research to see that the forest industries in the Interior West are more dependent on Federal timber than elsewhere in the country. It likewise doesn’t take much to realize the firms that comprise the forest industries in the Interior West are not the giant, highly politically influential, publicly traded companies that “occupy Missoula” and “occupy Wall Street” are rallying against and which people feel have too much power. Recognizing these facts would, however, require people to give up some of their pre-conceived notions and perhaps re-evaluate their world view.

Please let me know if you find this useful and what other types of info you could use or would like to see made available. We are constantly striving to improve the timeliness, relevance, and usefulness of the information we report. We also have several more up-to-date reports that are going to press or currently in review. These will be posted to our site ASAP.

Thank you again for contacting me. I look forward to further discussion.

Todd Morgan is the Director of Forest Industry Research at the Bureau of Business and Economic Research at the University of Montana.

Here are five documents he provided.

Finaldraft_DRC_ report_DRAFT

montana mill closures 4_6_2010



2 thoughts on “Profile of Forest Industry in the Interior West- Guest Post by Todd Morgan”

  1. Thanks Todd. I really think the kind of information you are presenting helps draw a more accurate picture of the situation and should be understood by all concerned with NF management in the west, no matter where one falls ideologically.

    In your post you state, “It doesn’t take much research to see that the forest industries in the Interior West are more dependent on Federal timber than elsewhere in the country. It likewise doesn’t take much to realize the firms that comprise the forest industries in the Interior West are not the giant, highly politically influential, publicly traded companies that “occupy Missoula” and “occupy Wall Street” are rallying against and which people feel have too much power.”

    You’ve also said, “Please let me know if you find this useful and what other types of info you could use or would like to see made available.” So I’m taking you up on your offer.

    From the documents you’ve provided I can see how both these statements are supported. But I am wondering if you have information that details more clearly the percentage of wood sourced from NF lands, state lands, private lands or other classifications for each of the existing milling facilities remaining within the timber industry. I’m interested in getting a better feel for how much influence timber interests are or are not playing in Forest Service decision-making. My suspicion is that this percentage will vary significantly from community to community, since wood can only be transported so far and still remain economical for the mill. In any case, it would be interesting to see this.

    Coupled with the assessment of the size of remaining mill facilities that you’ve provided, understanding the percentage of wood sourced on NF land over time, on average, might help draw this picture more clearly. Any light you can shed here is greatly appreciated.


  2. Mike,
    Thanks for your reply. We cannot release firm level information due to confidentiality issues associated with federal law and private parties that provide the data. We can and do report the volumes of timber harvested and used by ownership class, and we can summarize data in other ways (for example, by groups of counties) as long as it does not reveal individual firms’ information.
    So, I can tell you that in Montana national forests have provided roughly 20% of the timber harvested and used by Montana mills over the past 5 years (2005-2010). That proportion has changed over time. It was closer to 30% in the early 1990s, and 40% in the late 1980s.
    Of course, not only have those proportions changed, but so have the actual volumes. 2005-2010 NFS volume averages about 115 MMBF Scribner per year, early 1990s about 250 MMBF per year, and late 1980s about 520 MMBF per year.
    You are correct that the amount of national forest timber used by individual mills is different by mill location and also different through time. So much depends on what volumes are being offered in a particular forest or ranger district in a given year, and not every year has the same volumes offered by the same districts. Likewise, mills’ demands for timber change constantly with market conditions, order for product, and current log inventories.
    We did a study just a couple years ago looking at just Ravalli County and found that the distance logs were being hauled had increased substantially through time–from early 1980s through mid-2000s. That has a lot to do with the decreased volume being harvested and fewer mills remaining to process that timber. The journal article in “Carbon Balance and Management” (2009, 4:9) focused on the carbon emissions associated with timber harvest, hauling, and processing; so it put that issue of changing mill infrastructure and harvest trends into a broader ecological context. A related article “Determining landscape-level carbon emissions from historically harvested forest products” also appears in a Forest Service FIA Symposium proceedings (RMRS-P-56CD).
    It is very difficult to measure how much individual mills or the state’s forest industry associations are impacting or influencing NFS harvest levels. My personal observations and the data we have strongly suggest that in most western states, including Montana, “the industry” has very little influence on federal harvest levels.
    Let me explain why: First, if the mills & loggers had strong influence, the harvest levels on national forests would have increased throughout the 1990s and 2000s as housing and lumber demand increased dramatically. Harvest from national forests, however, fell throughout this period and mills that were dependent on national forests for significant fractions of their timber either had to look to private or state lands or face going out of business. Throughout the 1990s mills in Montana were going out of business because of the difficulty getting timber as NFS harvest in the region decreased. So, in a period of strong demand for wood products, we had wood products facilities in the West going out of business because they could not get enough timber. That tells me that those mills and the associated logging workforce was not able to successfully exert influence.
    The issue of declining harvest from federal lands disproportionately impacted mills & loggers in the Interior West (Montana, Idaho, Wyoming, AZ, CO, NM, UT) compared to the Pacific Coast. A major reason for this was that mills in the interior were and still are more dependent on timber from federal lands. Looking at Forest Inventory and Analysis info about forest ownership patterns in the West clearly indicates why interior mills are more dependent–the majority of non-reserved timberland and timber volume in the Interior West states is held by the federal government. For example, in Oregon, the USFS accounts for about 47% of non-reserved timberland, 57% of the standing volume, but only 5% of the harvest volume.In Montana, 60% of non-reserved timberland is NFS, over 75% of the standing volume is NFS, while only about 20% of harvest is from NFS. Other interior states have higher proportions of NFS land and similar or lower proportions of the harvest from those lands.
    Again, this tells me that the forest industries (in these interior states) today have far less influence on NFS timber harvest levels than they did in the past, and possibly less influence than the larger, timberland-owning companies, which are prevalent in the US South and Pacific Coast states.
    Lastly, the mix of products being removed from NFS lands has dramatically shifted away from sawlogs and in recent years “non-saw” and “fuelwood” make up increasingly large portions of harvest volume in many of the interior Forest Service Regions (1, 2, 3, and 4). The decrease in sawlog volume and increase of other volume from NFS lands is not commensurate with changes in the logging and milling infrastructure. If mills and loggers had a strong influence on the agency, NFS would be selling more saw timber (logs that can readily processed into lumber or plywood) and less fuelwood & non-saw material (wood that is more expensive for the loggers and mills to handle, has lower value to the mill and landowner, and has fewer markets & uses).
    Frankly, I find the whole notion that “the industry” is influencing National Forest timber harvest volume and the types of timber harvested to be ridiculous. I think people that believe this are working with very old data, reminiscent of forest industry conditions in the 1960s and 1980s, not information from the 1990s and 2000s.


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