2/7/2005

KUFM / KGPR

T. M. Power

The Economics of Our Forests and Small Mill Closures

All is fair, it is said, in love, war, and, I would add, politics. So, I guess, the timber industry should be forgiven for trying to make political hay out of another small lumber mill closing in Western Montana. In the process of politicizing the hard times faced by the families of the workers who lost their jobs, the timber industry provided a grossly distorted picture of the Western Montana economy, the economic role our forested mountains play in that economy, and the forces that have conspired to cause many of our smaller lumber mills to shut down over the last decade and a half.

Understandably the timber industry would like to regain the privileged access it had to our public forests until about 1990. But many Montanans increasingly see in those forests a wide variety of other, non-commercial, values, not just commercially valuable timber to be clearcut. The existence of that broad and sometimes conflicting set of forest values explains the conflict that continues to dominate forest management in Montana.

We should be able to talk about those legitimate competing values without attacking each other’s integrity or distorting the actual situation. Let me mention some of the facts that the timber industry did not mention in its recent sweeping attack on Montana environmental activists as “obstructionists” and “almost criminals.”

• Mill closure is not primarily tied to past reliance on federal timber supplies. Mills have been closing in Maine, where almost all timber land is privately owned, in British Columbia where the provincial government enthusiastically encourages expanded timber harvest, and in the Deep South where private timberlands dominate.
• Mill closure is almost always tied to weak markets and the inability to effectively compete in an increasingly competitive national and international market. The loss of much of the Asian market combined with the opening of our markets to foreign imports created downward pressure on wood product prices that especially squeezed our smaller mills.
• Despite mill closures, the total capacity of American mills rose between 1996 and 2002 by 8 percent. The capacity of new and upgraded mills was 50 percent greater than the capacity of the mills that shut down. In the Western US, despite the mill closures, there was also a net gain in milling capacity, not a loss of lumber mill capacity.
• That expanded milling capacity despite weak market conditions helps explain the difficulty that small mills had in surviving the stiff competition. Huge new automated mills came on line, mills that were designed to drastically reduce costs. Labor requirements per million board feet produced in those modern automated mills were a third that of the older, smaller mills.
• Montana and other Pacific Northwest forests faced renewed competition from the new forest plantations growing on old cotton fields in the warmer, wetter, and flatter South. It takes at least twice as long to grow a commercial tree here and management costs are also significantly higher.

Clearly mill closures in Western Montana are not only or even primarily due to “obstructionist” environmental activists. In addition, there are no “criminals” causing these closures unless the timber industry wants to assign that label to its larger corporate members, to those who advocate free trade, and to God for making the South a more conducive location in which to grow and harvest trees.

The timber industry’s economic claims about the impact of Montana’s environmental activists are also misplaced.

Despite the difficulties of the wood products and mining industries in Western Montana, we have added more than 100,000 jobs since 1990, a 50 percent increase. We have been generating new jobs at the rate of about 8,000 per year despite the difficulties experienced in our traditional natural resource industries. The jobs losses associated with the small mill closures in Montana since 1990 totaled about 2,000. That is, each year, the Western Montana economy has been adding four times the number of jobs lost due to all of those mill closures and since 1990 has added fifty times that number of jobs.

It is true that many of the new jobs pay less than the jobs lost in wood products, but many of the jobs at our smaller mills were not unusually high paid jobs. It is also true that many of the new jobs in construction, manufacturing, trucking, repair services, and medical services, to name just a few of our expanding industries, paid wages at least as high as those in our small lumber mills.

One would assume that all residents of Western Montana would be interested in protecting the resources that have been energizing the impressive job growth we have enjoyed. When talking to new residents and businesses, the high quality of life and spectacular natural environment with which we are blessed are almost always mentioned. Much of our job growth is supported by the natural and social amenities of the region.

Given that, one would think that those of our citizens who labor to protect the quality of life in Western Montana would be seen as among our leading economic development agents. They are non-commercial entrepreneurs who see ways of protecting some of the most valued and fundamental qualities that hold almost all of here and help protect our overall well being. Instead of snarling viciously at them in hopes that they will be scared away, we need to be seeking common ground where we can find it. Most of us live in Western Montana for the same reasons. That should provide a broad basis for a productive dialogue about our shared future.