The cost of Minnesota timberby Bob Kelleher, Minnesota Public Radio
In September, Ainsworth Lumber Company closed oriented strandboard mills in Cook and Grand Rapids, putting 300 people out of work. The shutdown is blamed primarily on a slump in new home construction. But Ainsworth also blames the high price of Minnesota timber. People in the timber industry have complained for years that Minnesota timber is the highest priced in the nation.
Duluth, Minn. — It's not that there isn't enough wood out there.
Most experts agree Minnesota loggers could cut more and still sustain viable forests. But for various reasons, Minnesota's forests have not been providing the state's paper and wood products plants as much wood as they need. Until the recent slump in home construction, that mismatch between timber available and timber consumed had pushed up the price of what is cut in Minnesota. Way up.
Wayne Brandt is Executive Vice-President of the Minnesota Timber Producers and Minnesota Forest Industries. He says it's the classic problem of supply versus demand.
"For a number of years there has not been as much wood on the market in Minnesota, particularly from public sources, as there is demand for the wood," Brandt says.
About half the state's forest lands are publicly owned. Generally, just less than half the annual wood harvest comes from state, county and federally owned forests combined. Timber producers think public lands should be providing more.
Brandt says the state's two Federal Forests, the Chippewa and Superior National Forests, have been hamstrung by cuts in funding and people available to put up logging sales. It's a time consuming and costly process. Brandt says stringent federal environmental rules make it even costlier.
"Before the Forest Service sells a timber sale, they will produce a document the size of the Minneapolis phone book," says Brandt. "They spend approximately 60 percent of their resources or more on analysis and less than 40 percent actually doing management on the ground."
The harvest from the two national forests has been on a downward slide for years. Some of the slack has been taken up by a significant increase over the past decade in harvesting from state forests, but it hasn't been enough to fill the gap. Sales from county and private woodlands have held fairly steady - although in the long term private sales had been on a slow decline.
Mike Kilgore is an Associate Professor with the University of Minnesota's Department of Forest Resources. Kilgore says people who own their own chunk of the state's forests often don't have logging in mind.
"And studies after study have demonstrated that the reason people own forest land is not for timber production," Kilgore says. "It's for wildlife. It's for hunting purposes."
Kilgore says the privately held woods could often be improved by logging, but that's a hard message to get to 150,000 different landowners.
And now the situation is even more complicated, because the prices have collapsed.
When you take a producer like Ainsworth lumber out of the picture there's fewer places to sell truck loads of timber. Some county timber sales have come back with no bids from loggers.
Kilgore says it's a market correction that could take months or longer to work out. Eventually, home construction should pick up again. Meanwhile, the lower prices for timber might help stimulate logging sales.
But Kilgore says there are hints of deeper troubles in the woods. Minnesota's aging fiber board and paper plants have plenty of competitors.
"I'm getting a little bit more nervous, because I talk to a lot of folks in other parts of the country, and they tell me about some of the new mills that would be competing with some of the mills in Minnesota," Kilgore says.
Some of the new mills, he says, will be three times the size of their Minnesota counterparts.
"When you look at a brand new mill and the technology that they're using compared to older mills that are smaller, and then you overlay that the prices of timber and the transportation costs, it's tough," Kilgore says.
And it's possible the Minnesota timber supply will stay tight. Mark Reed is Deputy Land Commissioner for St. Louis County. Reed says a long downturn in housing starts could take loggers out of the market for good.
"That would be a fear that we have, is that this would last long enough that some would have to drop out of that line of work," Reed says.
With fewer people available to cut the wood, the state's timber supply could just stay tight; despite a return to more robust home construction. A tight timber supply could keep Minnesota at the top of pile for timber prices.
- All Things Considered, 10/31/2006, 5:50 p.m.