Small Wood, Big Potential: Conference Explores Challenges, Opportunities of Small Diameter Timber Resources and Products
SmallWood Conference: Conference focusing on small timber brings together members of forest products industry to explore issues and trends concerning small logs; part two of two-part series.
By Tim Cox, Matt Harrison
Date Posted: 10/1/2006
(Editor’s Note: This is part two of a two-part article about the SmallWood Conference that was held in Richmond, Va. earlier this year; part one was published in the September issue.)
A number of people who spoke at the conference discussed how they received federal grants for eligible projects under the government’s healthy forests initiative. For example, Dwayne Walker, a logging contractor in Eager, Ariz., secured a grant to help finance the purchase of a log forwarder for a stewardship project. The company is harvesting timber on national forest lands under 10-year contract. Also, Laura McCarthy of the Nature Conservancy described another grant project that helped pay for the development of improved safety training for loggers in New Mexico; the purpose of the project was to reduce hazardous fuel treatment costs – which would allow more acreage to be treated – by improving safety and lowering premiums for worker’s compensation insurance.
Not all the projects have been successful, however. In fact, Ted Bilek, a research economist with the Forest Service, evaluated 20 grant projects authorized in 2005, totaling $4.3 million, to increase utilization of woody biomass and reduce fuel treatment costs. Of the 20, three demonstrated positive results; 15 had no measurable impact, one was canceled, and no report was available for the remaining project.
A somewhat similar study by Steve Gaty, a senior analyst with the U.S. Government Accountability Office, examined some projects utilizing woody biomass. Two main factors limited the success of various projects: high harvesting and transportation costs, and an inadequate supply of raw material. Factors that contributed to success were financial incentives, financial benefits, and an affordable supply of woody biomass. Users indicated that mill residues and other materials may be better than logging slash.
Although the move by the federal government in recent years to reduce fuel loads in national forests clearly has aided some businesses in the forest products industry, the benefits have not been universal. Bill Turner of Timber Products Co. in Yreka, Calif., the second largest manufacturer of hardwood plywood, discussed the company’s investments in new technology in order to process small logs following the spotted owl crisis. The company’s new mill has been operating for several years whereas other mills that did not invest in small log technology were forced out of business because they did not adapt to the changing timber harvesting landscape. Timber Products now relies mainly on raw material obtained from private lands; previously it was 80% dependent on federal timber.
Karen Kovatch, executive administrator of the Intermountain Roundwood Assoc. and also active in a family business that manufactures fencing, noted that despite increased removal of fuels and thinning on national forests, businesses like her family’s cannot obtain enough small wood to make their products. Her family’s business, which formerly obtained the wood it needed from national forests, moved in 1989 because it could no longer rely on national forests for timber; the company now obtains the raw material it requires from private landowners.
A number of speakers also discussed legislative issues related to the forest products industry. The proposed farm bill would help privately owned forest land owners protect their interests. The Department of Agriculture considers the farm bill “must pass legislation” that will help maintain forests, promote conservation and new energy sources. Additionally, the 2002 forestland enhancement program is up for reauthorization for the 2007 fiscal year. Major issues targeted by legislators include deficit reduction as well as how much support to grant timber producers. About 30% of private timberland owners receive some type of federal support. However, the Doha World Trade negotiations may substantially reduce subsidy payments in what has been deemed a “unilateral disarmament” of governmental farmer support worldwide.
Tom Thompson of Thompson’s Tree Farm advocated sustainable forest management. Families that own forests must take an active interest in the overall forest products industry, he said, noting that 935 mills in the South closed between 1989-2003. Tom also touched on Senate Majority Leader Bill Frist’s plan to repeal the death tax, expressing hope that it would help families to pass along their business legacies from one generation to the next.
Another topic at the conference was timber investment management organizations (TIMO). These organizations have yet to affect profitability for family forest landowners, according to several speakers. The debate continues whether or not TIMOs aid sustainable forestry and future pricing trends. It seems the industry is still wary, but quantitative data analysis is dependent on figures over 15-30-year investment periods.
Burl Carraway of the Texas Forest Service and Cornelius F. de Hoop of Louisiana State University touched on several major problems concerning debris removal and salvage logging following the devastation caused along the Gulf Coast by Hurricanes Rita and Katrina in 2005. Private forestland owners are struggling to make profits because of damage to their timber, inaccessibility to forests, and devotion of private logging resources to government contracts. To make matters worse, the Federal Emergency Management Agency (FEMA) mandated that debris can only be hauled to FEMA-approved sites, usually landfills or burn piles, which has prohibited the sale of some salvageable timber and logs to mills. The Gulf Coast economy is losing money that could help offset clean-up and reconstruction costs.
Burl and Cornelius emphasized that plenty of potential exists for small, mobile sawmill operations along the Gulf Coast. Most mills are above 90% capacity.
Forestry officials estimate that Louisiana has lost nearly $1 billion in timber, and the figure is growing. Timber sales have become increasingly difficult because mills do not want to bid on salvage lumber, and excessive salinity from inland flooding is killing timber.
Although Katrina and Rita epitomized one of the worst hurricane seasons, nevertheless, there has been some positive fall-out. The Hurricane Recovery Task Force, sponsored by LSU, was established after the storms. It has helped address pivotal concerns for forest landowners, such as logging, wood utilization, communication, forest health and regeneration, governmental affairs, and data collection. The task force also has helped to facilitate the mobilization of firefighters, distribution of fuel, and expedited wet-deck permitting.
While the first half of the conference dealt with industry challenges and the natural disasters, the second half highlighted small successes that show economic potential.
For instance, Charles Becker of the Virginia Department of Forestry discussed research into ailanthus, or tree of heaven, arguably Virginia’s most stubborn, invasive tree. State officials are studying this invasive species for its potential for pulpwood, charcoal, and low-grade lumber for pallets and other industrial applications.
Anthony Witherspoon and Jessica Simons of the Michigan Department of Natural Resources described urban logging efforts to control the spread of invasive pests like the emerald ash borer and to salvage timber. About 15 million trees in the Detroit area are dying because of borer infestation. As infested trees were removed, eight localities in the region generated 53 tons of wood waste in just one year, incurring costs for removal and trucking to landfills. However, environmental organizations learned the dying trees still have plenty usable fiber — and value. As a result, several small companies received grants from the U.S. Forest Service as contracted municipal loggers.
Wood-plastic composites are making headway as viable, wood-based alternatives to using wood alone. Companies already are producing composite lumber products for decks and other construction applications, and research into other commercial architectural uses is pending. Once durability and structural integrity become more uniform and standardized and composite lumber products become easier to mass produce, the market for building materials should really blossom, according to Craig Clemons of the U.S. Forest Service and Vikram Yadama of Washington State University.
Tom Hammett of Virginia Tech cited the need for smaller businesses to utilize niche marketing tactics. Niche marketing can help businesses identify and develop products for specific markets, connecting supplies of small diameter timber with buyer interest. Furthermore, although markets for products made from small diameter timber have been overlooked, especially in the Southeast, businesses can profit from perceived market shortcomings with quick growth, limited competition, competitive advantage, and direct customer relations.
Internet marketing of wood products has become a fortuitous trend. Tim Holmes of adirondackcraft.com has taken advantage of the e-commerce boom to unite furniture, craft, and wood products companies in a loose advertising confederation. He suggested that small businesses attempting to market via the Internet should focus on informing consumers about pricing, company legitimacy, quick delivery, and customer service. Like niche marketing, Internet merchants also must concern themselves with details such as wood species, materials, colors, and sizes to express the uniqueness of each item for sale.
The U.S. mulch industry appears to be moving towards unification and standardization. One of the major concerns of the industry is environmental misinformation campaigns, such as the one that successfully targeted Chromated Copper Arsenate in the lumber treating industry. A unified industry may be in a better position to repel and counter such campaigns. Also, standardization could benefit producers by identifying and controlling certain types of mold and fungi. Currently, the Mulch and Soil Council, an independent certification association, has certified more than 250 types of soil and mulch. The council will audit participating, certified businesses and implement uniform product terms, labeling guidelines, and distinct classes of products.
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