Turning Point for Timber as Demand Rises, Workforce Numbers Fall

by Jan Cottingham  on Monday, Nov. 25, 2013 12:00 am  

Some in the timber industry in Arkansas say they see demand for forest products slowly increasing but fear that a workforce decimated by recession won’t be able to meet that demand.

The timber industry in the state has been down so long — Arkansas Business’ headlines began growing gloomy in 2006 — that predicting an upturn seems downright foolhardy. But some in the sector are forecasting a slow-motion recovery.

It’s a confidence in industry improvement bolstered by AB’s own list of biggest players in the state, a list that saw 10 of the 21 largest forest products companies in Arkansas adding workers in 2013, with six maintaining their numbers and only five losing employees. And total employment in these companies has risen as well, to 10,495 compared with 10,260 in 2012. That, however, remains far below the 15,476 workers reported by the biggest companies in the palmy days of 2005.

Demand for timber products has not yet rebounded to prerecession levels, said Rick Holley, chief executive officer of Plum Creek Timber Co. of Seattle, which owns 720,000 acres of timberland in 22 Arkansas counties. Blame the continuing weakness in the housing industry for that. Forty percent of construction-grade lumber is used in homebuilding, he said.

“At the depth of the recession, new home construction dropped to approximately 500,000 starts, a level never seen in my lifetime,” Holley told Arkansas Business. “Since that time the recovery has been slow. In 2013 we expect housing starts to reach about 950,000 starts, and 2014 starts, by most forecasts, may approach 1.2 million. So the recovery is on the way, but timber products still have a way to go to full recovery to prerecession levels.”

Nevertheless, Holley said, “We expect lumber production in the U.S. South to increase by 50 percent during the next three to five years from present levels.”

(For more from Holley, see this week's Executive Q&A.)

Matthew Pelkki, a professor of natural resource economics at the Arkansas Forest Resources Center in Monticello, is more circumspect. “For a variety of reasons, I don’t see any indications that we’re going to see a real strong saw timber stumpage market for another two or three years,” he said. “I’m just not seeing the housing industry moving that strongly.”

Pelkki acknowledged that some forest products companies in Arkansas have added workers in the past year or so. Georgia-Pacific’s mill in Fordyce, for example, has returned to running three shifts, “and they’re running 24/7, 365 right now at that facility, where a couple of years ago I think they were just running one shift four or five days a week.”

The list in fact shows that Georgia-Pacific, the largest forest products company in the state as ranked by number of Arkansas employees, has added 200 to its workforce in the state in 2013, rising to 2,700.

Other examples: Anthony Timberlands Inc. of Bearden reported 157 more workers in 2013 — 697 — compared with 2012, and Deltic Timber Corp. of El Dorado added 98.

Total employment in the forestry industry in Arkansas was 26,234 in 2011, and the sector had an economic impact of $2.9 billion, according to the University of Arkansas Division of Agriculture.



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