In West Virginia: Adding Value Piece by Piece
In Kentucky: Developing People & Technology
In Virginia & Tennessee: Updating Old Techniques
In West Virginia: Adding Value Piece by Piece from an interview with Joel Stopha, Wood Products Marketing Specialist, Appalachian Hardwood Center, West Virginia University.
The wood products industry is growing in West Virginia. According to a survey by the Charleston Gazette, wood processing and furniture jobs are up by about 3,000 over the number in 1980. Not everyone is happy with the growth as some people worry about exploitation of the state's resources and labor, but Joel Stopha of the Appalachian Hardwood Center sees promise in the future of the industry as a stable part of the state's economy.
In the past most timber companies have shipped green lumber out of West Virginia to furniture manufacturers in other states, but the rising costs of transporting materials is changing the way companies do business. Today companies are looking to eliminate waste by producing products closer to a sustainable source of raw materials. Sustainability is perhaps the most important factor in locating a manufacturing plant, as the investment is long-term.
Large companies might invest as much as $125 to $150 million in a factory, which is often financed for 30 years. In West Virginia, the companies can expect raw materials, other resources and the workforce to be there for the time it takes to pay back the investment and beyond. Because many of the large companies use smaller trees and the upper part of trees that are not traditionally used by sawmills, they are using a resource that ten or fifteen years ago was just left sitting in the woods.
But large companies aren't the only beneficiaries of the booming timber business in West Virginia. Owners of small, in-state sawmills are finding opportunities to expand and diversify their products from rough sawn lumber to dimensional wood products, which are pre-cut, pre-finished or semi-finished pieces that are sent to manufacturers to be assembled into completed furniture or other wood products.
Large furniture companies now focus on development and design, construction and marketing of their products. Much like automobile companies that use pre-fabricated parts to assemble a car, fewer finished wood products companies machine their own parts in-house. Instead, they order dimensional parts on a contractual basis, a practice that eliminates waste and cuts down on overhead.
This practice lends to a re-creation of cottage industries, creating opportunities for entrepreneurs to produce semi-finished and finished parts from small shops. Because these cottage industries often develop from existing small businesses, the economic growth is internal. With today's technology, even small producers can find international markets.
Of course, a growing industry and changing technology produces the need for constant re-education and training of the workforce. West Virginia has several resources dedicated to forestry and wood products, one of which is the Appalachian Hardwood Center at West Virginia University in Morgantown. The Hardwood Center offers technical assistance to companies in the state. In Princeton, the Robert C. Byrd Training Center provides technical training on running and maintaining various new machines and other woodworking technology.
In Kentucky: Developing People & Technology by Albert Spencer, Secondary Wood Industry Specialist, Eastern Kentucky Technology Center, Eastern Kentucky University.
Wood has always been important to the economy of Kentucky, but the potential of our forest resources has never been fully realized. The supremacy of coal in years past took away most of the incentive to develop wood products manufacturing.
On the other hand, secondary wood manufacturing in surrounding states did grow. These states looked to Kentucky as a source of hardwood lumber, and sawmills proliferated across the state. The result is that we now lag far behind our neighbors of Tennessee, Indiana, Virginia, and North Carolina in secondary wood processing, while we continue to ship millions of board feet of rough lumber annually to these and other states.
But opportunity is knocking for Kentucky's secondary wood products industry. As environmental concerns restrict the use of forests around the world, manufacturers and distributors are looking to our forests of yellow poplar, oak, and other hardwoods as an alternative source. Kentucky holds the opportunity to build the secondary wood industry to help supply the demand for hardwood products; but also faces the danger of missing the opportunity and watching rough lumber leave the state at an increasing rate.
But for Kentucky to rise to this opportunity, we must work to develop our workforce and our technology. We must be competitive in a global market. Export markets offer the best opportunity for expansion of value-added wood processing, and some Kentucky companies are already beginning to participate. In both foreign and domestic markets, Kentucky companies have short-term advantages in materials and labor, but to remain competitive will require improving both technological and human factors.
In regard to human factors, the greatest deficiency faced by the wood industry in Kentucky is the lack of adequately prepared workers, especially those at the level of supervision and management. There is currently less educational opportunity available for those seeking a career in the wood industry than ever before. Until the industry is strong enough to demand that programs be up in place, education will remain a hindrance to development.
The wood industry has traditionally been somewhat slow to adopt new technology, and Kentucky companies, being generally smaller than average, are in [an] even worse position in that regard. Secondary wood processors from out of state will bring improved technology with them. However, for existing companies to grow, a strong program of encouragement to modernize is needed.
Public policy will also affect the direction of wood industry development, both by legislation regarding education and technology and by regulations on forest use. Due to conservation policy, millions of acres of forest land have been removed from production of timber, leading to a steady decline in lumber production in other parts of the U.S.
When one source of supply is restricted, the natural response of the market is to seek a new source. For example, Appalachian yellow poplar is being used as a substitute for ponderosa pine, the prime western species for millwork and moldings. Shifts like this may account for significant growth for Kentucky over the next five to ten years. However, the overriding issue of preservation will eventually affect all forests.
The effects of regulation based on concern for the environment can include: 1) elimination of the forest from production, 2) restriction on the amount of timber harvested, or 3) restrictions on loggers and landowners regarding methods of harvesting timber. All of these will lead to decreased production and higher prices for wood products.
This behavior of the market is not appreciated by many who are concerned that our forests are going to be depleted. Some are convinced that we are in imminent danger of literally using up our forests. But what is more likely to happen is that as demand increases toward the point that the forests cannot supply enough timber, prices will increase as well, restricting the demand.
A more desirable scenario would be that before the critical point is reached, landowners, businesses, and public officials would recognize the problem and institute better forest management practices. But even in the absence of widespread forest management, the market will adjust, trees will continue to grow, and we will not run out of wood.
In Virginia & Tennessee: Updating Old Techniques condensed from material by Anthony Flaccavento, Executive Director, Clinch Powell Sustainable Development Initiative.
There is good news and bad news from the forests of Appalachian Virginia and Tennessee. The good news is that the forests are abundant, and that at present, trees are being generated faster than they're being cut. Jobs in logging, sawmilling and wood manufacturing are growing to the point that many economic development officials are touting wood products as the region's future.
This good news, however, also gives rise to some bad news. The abundance of our forests is being used by regional state economic development officials to recruit huge chip mill factories and other wood-based manufacturers that may well lead to timber harvesting rates well beyond the forests' regenerative capacity. Many of these large facilities produce a lower value product such as chip board or trusses, which add relatively little value to the raw material. Finally, the current positive rate of regeneration is only statistical and may mask other problems, such as reduction of species diversity and a general decline in tree size, health and quality.
But there are ways to build a forest economy that creates a large number of locally based jobs, while helping to rejuvenate forest health and diversity. The Clinch Powell Sustainable Development Initiative is one effort underway to promote sustainable wood products industries. The Initiative's wood products strategy focuses on increasing employment while reducing stress on the forest ecosystem.
The Initiative is working to train loggers in environmentally sensitive harvesting practices. The training includes elements of forest ecology, directional felling, chain saw safety, and tree selection.
Particularly interesting is the training in utilizing horses as the primary power for skidding logs out of the forest. The updated version of this old-fashioned technique has reduced damage to the forest and risk to the logger and animals. While some established loggers choose to continue using machinery in an environmentally sensitive way, those who are just starting a business find the $25,000 cost necessary to capitalize a horse logging business more feasible than the $100,000 required for a conventional operation.
The Initiative works to promote maximizing the value of each log harvested by sawing, drying, and manufacturing it into finished products. When economists speak of adding value, they are referring to any process that takes a raw material closer to its final form. Sawing logs into boards adds value. Drying and planing the boards adds more value. Fashioning the lumber into products adds even more value.
Each step of processing that takes place at the source of the raw material creates local jobs and generates revenue. In our current situation, most of this processing is done far from where the resource is located. Wood is shipped out as unprocessed logs, leaving little economic value in the region, and increasing the rates of timber cutting.
Wood manufacturing facilities are vital to adding value locally to wood products. In Tennessee, an entrepreneur who does environmentally sensitive logging has also built a wood manufacturing facility that focuses on making high value wood products from lower value species. The factory turns out tongue and groove wall boards from poplar and beech, cabinets of sycamore, and book shelves using scrap oak.
The Clinch Powell Initiative is working to develop and apply certification standards to ensure sustainable forestry is employed. While only a few sustainably harvested logs have been sold under the certification standards, a test marketing of certified lumber and wood products will begin soon.
The test marketing will include assessing markets within and beyond the Appalachian region. Three kinds of markets currently exist for sustainable wood products: sales of finished, dried lumber to manufacturers in the region; development of regional craft associations and manufacturers who use small quantities of diverse wood species; and exports of sustainable lumber to businesses which are promoting sustainably harvested wood products.
Maintaining healthy, diverse forests will require entrepreneurs skilled in environmentally sensitive techniques and an infrastructure that supports their efforts. The public will also play a role in supporting their efforts through our choices in the marketplace.
