the “great recession” and the western forest products industry
TRANSCRIPT
Charles Keegan, Colin Sorenson, Jean Daniels, Erik Berg, Charles Gale, Chelsea McIver
The “Great Recession” and the Western Forest Products Industry
Setting the Stage
• Overall strong economy in mid-2000s
• Low interest rates
• Easy access to credit
• Real estate speculation
• Led to more than two million U.S. housing starts in 2005 and record annual
lumber consumption from 2003 to 2005
Recession and Aftermath
• Sharp drop in U.S. housing markets beginning in 2006, global financial crisis
of 2008, and official recession 2007-2009
• Post-World War II record low of 554,000 housing starts in 2009, and little
rebound in 2010-11
• Wood product prices and outputs of the wood and paper products industries
fell dramatically
• In 2009 and 2010, virtually every major Western mill suffered curtailments,
and 30 major mills closed permanently
• Capacity utilization dropped from 83% in 2005 to under 60% in 2010
• Lumber production dropped by almost 50 percent and employment in the
forest products industry in the West declined by 40,000 workers from 2004 to
2010
• Sales value of wood and paper products from mills in the West fell by over $4
billion between 2005 and 2010
Outlook
• Much of the pre-recession capacity remains intact at Western wood products
facilities, providing the ability to quickly respond to increased demand
• West coast log exports have been up dramatically in 2010 and 2011, offering
opportunities for landowners but raw material competition for west coast mills
• Modest improvements in wood products markets are expected in 2012, but
significant gains are not likely until 2013 or beyond
0.0
0.5
1.0
1.5
2.0
2.5
1980 1985 1990 1995 2000 2005 2010
U.S. Housing Starts, 1980-2010
Mill
ion
s
Hawaii’s Forest Products Industry • Smallest wood products industry among western states
• Very active woodworking community
• Large focus on small-scale projects with high value-added component
• Ongoing efforts to develop hardwood veneer and bioenergy facilities
$17.6 $18.0 $17.8
$20.9 $20.2
$19.1
$18.1
$15.1
$12.3 $12.4
$0
$5
$10
$15
$20
$25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Western Forest Products Industry Sales Value, 2001-2010
0
1,000
2,000
3,000
4,000
5,000
6,000
1986 1996 2003 2005 2008 2009 2010
Capacity Use
West-wide Timber-Processing Capacity and Timber Use, 1986-2010
72%
73%
76% 83%
64%
52% 57%
0
100
200
300
400
500
600
700
Do
llars
per
MB
F, L
um
ber
Tal
ly
Nationwide Composite Lumber Prices, 1990-2010
0
5,000
10,000
15,000
20,000
25,000
30,000
1950 1960 1970 1980 1990 2000 2010
Harvest, MMBF Scribner Lumber Production, MMBF Lumber Tally
Western Harvest and Lumber Production, 1945-2010 M
illio
n C
ub
ic F
ee
t B
illio
ns
Sources include: National Association of Home Builders, Random Lengths Publications, Western Wood Products Association, The University of Montana Bureau of Business and Economic
Research Forest Industries Data Collection System, U.S. Census Bureau Annual Survey of Manufactures, various state and federal agencies
Contact Us
• Charles Keegan: [email protected]
• Colin Sorenson: [email protected]
• www.bber.umt.edu/forest
Cooperators
• Interior West Forest Inventory and Analysis Program
• Pacific Northwest Research Station:
Forest Inventory and Analysis Program
Goods, Services, & Values Program
Western United States