Timber and Forest Products

Timber and Forest Products

The U.S. forest products sector is composed of both a large manufacturing sector and a large resource base that supplies material for processing. Of the twenty one U.S. manufacturing industries three are forest products industries. In 2002, in terms of total value of industry shipments, paper manufacturing ranked 9th at $152 billion, wood products manufacturing ranked 16th at $88 billion, and furniture and related product manufacturing ranked 17th at $74 billion. In 2002, these timber processing industries combined accounted for slightly over 8 percent of all manufacturing shipments and nearly 11 percent of the manufacturing employment. Total employment in 2002 by the timber processing industries totaled more than 1.6 million people with the North and South having the largest timber-processing industry employment.

From 1952 to 2002, U.S. consumption plus exports of all forest products (our total need for wood) rose by some 9.5 billion cubic feet. U.S. timber harvest increased by 6.0 billion cubic feet and imports rose by 3.5 billion cubic feet over this same period. Real prices of softwood lumber, hardwood lumber, and paper rose (compound rates of 0.8, 0.4, and 0.3 percent, respectively), while prices of softwood plywood, oriented stand board (OSB) (since 1976), and paperboard fell.

Wood, the raw material for this industry comes from 622 million acres in the lower forty eight states). In 2002, roughly 16.5 billion cubic feet of roundwood timber products were harvested from these forestlands. The majority (51 percent) of forestlands are in the eastern United States where they are predominantly (82 percent) privately owned. There are 32 percent of the forestlands in the west but public agencies manage 61 percent of the forestland. In terms of timber inventories, softwoods account for 57 percent and hardwoods account for 43 percent. About two thirds of forestlands are considered timberlands based on productivity and availability for harvest. About one third of timber harvest comes from managed forests and since the mid 1990s about 95 percent of it has come from privately owned timberlands.

Between 1953 and 2002, U.S. timberland area declined by 5 million acres, or about 1 percent, to 503.5 million acres. The major cause of deforestation has been population growth and the conversion of timberlands to developed uses (e.g., residential and commercial building sites).

Consumption

Table 1 displays total U.S. consumption by softwood and hardwood species for different classes of forest products. Here the quantity of each product is converted to the equivalent volume of roundwood that would be required for its manufacture. Table 1 reveals that the major use of wood is for the traditional solid wood products such as lumber, plywood, and miscellaneous products like posts, poles, and piles. The use for fuelwood and pulp have varied over the past fifty years. The use for pulp rose rapidly to current levels by the early 1970s. The use for fuelwood fell until the 1980s when it rose sharply before falling again in the 1990s. There are also species differences with a higher proportion of softwoods being used for higher valued solid wood products while hardwoods are used for relatively low valued products like pulp or fuelwood.

Table 1 also reveals that since the 1970s almost all the growth in consumption comes in the lower valued nonsawtimber products. The largest increase for softwoods comes in pulpwood (which includes roundwood used for OSB), while the greatest roundwood use expansion for hardwoods is for fuelwood.

Table 2 shows how the demand on domestic resources is derived from total consumption after adjustments for both imports and exports. It displays how the trends in consumption and trade both determine changes in domestic harvest and that an increasing portion of U.S. consumption is met from imports. Forest products consumption itself has increased 65 percent over the past five decades as the U.S. population has grown by 90 percent (136 million people). In 2002, harvest from U.S. forests is 78 percent of U.S. consumption, down from 88 percent in 1952. Wood harvest has increased by more than 40 percent since the early 1950s (a growth rate of 0.7 percent per year) and now supports increased forest products manufacturing. This overall increase embodies several major changes among regions, products, and owners that supply or use timber. For example, the bulk of softwood timber (roughly two thirds of all timber harvested) comes either from the South or the Pacific Coast states. In the early 1950s this was about equally divided but 50 years later the South provides mores than 60 percent of all softwood timber harvested.

Table 2 also reveals the underlying trend in the origin of the forest products consumed in the United States. Prior to 1996, net trade in the United States had accounted for 7-8 percent of consumption. Trade’s share more than doubled after 1996 and was 22 percent in 2002 as the full effects of harvest reductions on western federal timberlands worked their way through the forest sector.

Harvest

Timber harvest data are summarized by owner and region in table 3. The various increases in harvest over the past fifty years have been within the capability of the resource base as available timber inventories have increased 39 percent over this same period (14 percent for softwoods and 98 percent for hardwoods). Growth in inventories along with rising harvest reflects more diligent management by private timberland owners of young stands that have rapid volume accumulation.

The trends in timber harvest do not necessarily follow the trends in consumption (shown in table 1). For example, in this decade (through 2010) softwood timber harvests fall slightly, while softwood consumption increases. The difference is made up from increases in trade, especially for softwood lumber. After 2010 softwood harvest is expected to rise as harvests from managed private forests increase.

Describing harvests by regions and owners and reveals some broad scale changes in the manufacturing industry over the past fifty years. First, while the forest products industry moves to be closer to available wood supplies and markets it is concentrated in the Pacific Coast States and in the South. Second, there have been periods of both increases and decreases in amounts of timber supplied from public lands (especially the federal forestlands) reflecting shifts in public expectations for how these forests should be managed. Following World War II there was public support for increased scientific management of public timberlands leading to increased harvesting. Starting in the early 1960s, growing concerns first for recreation and old growth preservation and later for habitat conservation lead to extensive reductions in federal harvest in the 1990s. Third, much of the growth in harvest has been for nonsawtimber products such as OSB and wood pulp. Sawtimber cut for lumber, plywood, and other solid wood products increased until the late 1980s but declined slightly in the last decade reflecting a modest reduction in U.S. softwood lumber production and a steady fall in plywood output. Fourth, the decreases in western public harvest were offset by a combination of factors including increased harvest on private western timberlands, increases in harvest in other regions particularly the U.S. South and the interior Canadian Provinces, the collapse of the log export market, and the loss of other export markets.

Table 3 masks differences between hardwood and softwood conditions. Hardwood harvests are dominated by relatively lower valued products especially pulpwood and fuelwood. Unlike softwoods, hardwood species are concentrated mostly in the East and are owned almost entirely by non industrial private land owners. Much of the growth in harvest over the past fifty years resulted from the expansion of the pulpwood component of nonsawtimber harvest as mills adopted technologies and products that allowed the use of higher proportions of hardwoods in various paper and paperboard products.

Manufacturing

Forest products manufacturing rose until the late 1980s or early 1990s for most major products. But in the 1990s the twin forces of globalization and reductions in federal harvests led to structural shifts in U.S. forest manufacturing. These shifts included greater import dependence for lumber and panel products, loss of export markets (because of higher U.S. product prices) for both logs and paper and paperboard products, and reduced expectations for financial returns to timberland owners.

The production data summarized in table 4 reveals a number of trends for various forest products. First, the expansion of production during the 1950s and 1960s mirrored increases in U.S. consumption. But for some commodities like softwood lumber and some grades of paper, increased consumption was met with increased imports especially from Canada. Second, the production data for lumber and panel products illustrates extensive substitution that goes on among forest products. For example the rapid growth first in softwood plywood replaced sheathing lumber in residential construction and than second the substitution of OSB for plywood starting in the late 1970s. Third, the rapid growth until recently in paper products reflects both a highly competitive industry and rising consumption fueled by population growth and sustained increases in economic activity.

Lumber

Increases in lumber consumption led to increased lumber manufacturing until the late 1980s when production was limited by harvest reductions. The increases in lumber consumption are due to sustained growth in industrial production and continued high levels of residential construction over the past fifty years.

Consumption of softwood lumber is particularly dependent on sustained high levels of single family housing start, a progressive increase in the average house size of 131 percent over the past fifty years, and in the last twenty years the rapid increase in expenditures for residential upkeep and alteration. In 2002, 67 percent of all lumber was used in construction, 35 percent in new housing, 25 percent for residential upkeep and alteration and 7 percent for non residential construction. While the level of softwood lumber production has remained around the same for the past two decades, its location within the U.S. has shifted first from the west to the South and more recently from the north and interior west to the South and Pacific Northwest.

Consumption of hardwood lumber is concentrated in shipping (pallets) and manufacturing (furniture) end-uses. Hardwood lumber use rose rapidly during the 1980s as pallet and furniture production expanded. Consumption growth slowed during the 1990s as use in manufacturing, flooring, millwork, and miscellaneous end-uses stabilized and increased recycling and rebuilding old pallets reduced requirements for new pallets. Recently the shift in U.S. wood furniture production offshore has further reduced U.S. hardwood lumber consumption growth. Virtually all hardwood lumber is produced in the eastern states, with the South-central and Northeastern regions the largest producers.

Structural Panels

Structural panels have been one of the few categories of solid wood products showing major consumption and production growth. Between the late 1970s and early 2000s, U.S. consumption of structural panels rose by nearly 85 percent from twenty billion square feet, 3/8” basis (bsf) to nearly thirty seven bsf. Production did not increase as fast and imports from Canada and more recently Latin America have made up the difference.

New housing and residential upkeep and alteration have been the primary areas of expansion but trends for the two components of structural panels, softwood plywood and OSB, have been markedly different. Softwood plywood has lost market share to OSB across all major end-uses and plywood consumption has fallen steadily since the late 1980s. OSB consumption has grown and surpassed plywood in the late 1990s. Production of both lag consumption as imports play an increasing role in total panel consumption. Production is concentrated in the south continuing a trend started in the early 1960s when the southern plywood industry first developed.

Nonstructural Panels

Nonstructural panels comprise insulating board, hardboard, hardwood plywood, and medium density fiberboard (MDF)-particleboard. Consumption and production of these panels reflects shifts in use among these products. There has been expanding use of MDF-particleboard in furniture, cabinetry and underlayment, consumption rose by nearly 60 percent between the late 1970s and the early 2000s. Insulating board consumption and production is falling because of substitution from other materials in residential construction. Hardwood plywood, used in manufacturing and construction, is also declining. Consumption of hardboard which in the past has been used mostly in cabinetry, furniture, and siding and paneling has maintained a steady production.

An average of roughly 25 percent of U.S. consumption of nonstructural panels comes from imports, more than half for hardwood plywood (from Canada and Europe) and 20-30 percent for the other panel types.

Paper and Paperboard

From 1960, consumption and production of pulp and paper experienced steady growth (consumption increased at an average annual rate of 2.8 percent) until an unprecedented downturn that began in the late 1990s. Much of this downturn resulted from changes in U.S. industrial production and changes in the strength of the U.S. dollar relative to other world currencies that led to structural changes in the demand for packaging and advertising. Since 2002, there has been a gradual rebound in demand along with resumed growth in industrial production. Current principal end uses for paper and paperboard include shipping containers and packaging (49 percent of consumption), print media and advertising (42 percent), and household and sanitary products (7 percent).

These structural changes that have occurred in U.S. pulp and paper manufacturing and the modest growth now expected in pulp, paper and paperboard consumption relative to the trends of the late 20th century suggest little expansion in production capacity for at least the next decade.

References

Haynes, Richard W., Technical Coordinator. An Analysis of the Timber Situation in the United States: 1952 to 2050. General Technical Report PNW-GTR-560. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station. 2003.

Howard, James. L. U.S. Timber Production, Trade, Consumption, and Price Statisticss 1965-2002. Research Paper FPL-RP-615. Madison, WI: U.S. Department of Agriculture, Forest Service, Forest Products Laboratory.

Smith, W. Brad; Patrick D. Miles; John S. Vissage; and Scott A. Pugh. Forest Resources of the Future. General Technical Report NC-241. St. Paul, MN: U.S. Department of Agriculture, Forest Service, North Central Research Station. 2002.

Submitted: August 2006; V3

Updated: 22 April 2007