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Outlook for Forestry & Forest Products 2005+

Outlook for Forestry & Forest Products 2005+. Terry Conners Univ. of Kentucky Dept. of Forestry October, 2005. Topics I’ll mention. Forestry & Forest Products industry “snapshot” Quick recap of the 2003 Forest Census Where does KY’s wood go? Where does it come from?

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Outlook for Forestry & Forest Products 2005+

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  1. Outlook for Forestry & Forest Products 2005+ Terry Conners Univ. of Kentucky Dept. of Forestry October, 2005

  2. Topics I’ll mention • Forestry & Forest Products industry “snapshot” • Quick recap of the 2003 Forest Census • Where does KY’s wood go? Where does it come from? • Timber & wood products, trends • Non-timber forest products • Master Logger & Wood Magic reports

  3. Industry Snapshot Value of Forest Products made in KY: $4.5 - 5.5 Billion KY ranks 3rd nationally in hardwood production

  4. Wood Products Manufacturing Companies in Kentucky ~ 38,000 employees in forest products industries 1 out of 9 manufacturing jobs Primary industries Secondary industries

  5. Wood Industries in Kentucky • Most of the companies are small and family-owned. • About 90% have fewer than 25 employees. • Lots of one- or two-man cabinet shops and portable sawmills

  6. 2003 Kentucky Forest Census

  7. KY Forest Area (1630-2003) 100% 50% 47%

  8. Percentage of Forest Land by County 46% of KY land is available for timber production. Wolfe County Adair County 11.9 million acres in forest land per 2003 census

  9. Ownership of KY Timberland 2003 KY Forest Inventory % Private ownership = 300,000 owners; 86,000 (13% of land) are farmers

  10. We’re Still Growing More Than We Cut Million cubic feet

  11. Where KY Wood Goes (and where it comes from …)

  12. Exports of Wood from U.S. … to the world

  13. $2 billion to Canada!

  14. Who … are the largest trading partners from whom the U.S. imports wood products?

  15. $14 billion from Canada!

  16. What Does Kentucky Export to the World? What does Kentucky export in all categories?

  18. KY Wood & Paper Exports - In Million Dollars Additional Estimated Economic Impact Values: $207 Million $272 MM is ~ 2% of the value of KY exports – about the same amount as “Ag” exports.

  19. A Quick Look at KY Trade With the World: Logging and Wood Products

  20. Logs and little-worked wood - not manufactured wood products. KY exports wood mostly to China & Hong Kong; much less to Canada.

  21. Forestry & Logging Exports to World 2004 How does KY stack up compared to other states? KY ranks 26th

  22. Let’s look at WoodProducts now.

  23. Wood Products Exported 2004 How does KY stack up compared to other states? KY ranks 15th

  24. Balance of Trade – Cabinets & Furniture Saudi Arabia: + $29 million China: - $8.1 billion In thousands

  25. Timber & Wood Products How’s the sawmill & lumber industry doing in Kentucky?

  26. Hardwood Sawmills • 300 Sawmills in KY Div. of Forestry database • Losing small & mid-size mills because can’t compete for the high-grade logs that sustain lower volume, slower producers Factors: • Consolidation of mills • Optimization of mills through technology

  27. Hardwood Sawmills • ~ 1200 Portable sawmills in Kentucky (est.) • Ave. mill longevity is 5 to 6 years • ~ 80% of owners get out, 20% buy a bigger mill • Impossible to make a living sawing only 1,000 board feet/day! (ex., non-hydraulic mill) (“Hobby mills”)

  28. Hardwood Sawmills • Portable sawmills are good for specific markets or high value-added opportunities such as: • Railroad ties • New high-efficiency businesses (thin kerf) • Small landowner harvesting and lumber • Specialty, local-use woods, crafts markets

  29. Primary HW Products • RR Crossties • Hot Market! Big demand. • Prices up last few years – purchased by national companies like Railworks. • Consolidators may be needed to attract small producers.

  30. Most Common Species in Kentucky Hardwood Sawmills • Red oak is most common • Hard maple, White oak • Yellow poplar (Tulip poplar) • Other hardwoods such as black walnut, hickory and cherry • Light woods are more popular this year.

  31. HW Lumber Trends THE BIG STORY: RedOak prices are way down since last year (20 to 30%!). Hardmaple price has increased, especially for white wood (clear sapwood).

  32. Red Oak-Maple Lumber Prices Hard Maple FAS Red Oak FAS Dollars per MBF, green prices

  33. Cherry is down ~ 15% Ash is down ~ 15% Walnut is up ~ 10% Yellow-poplar is about the same as last year. Whiteoak is down significantly in the lower grades (~ 20 to 40%), but clear WO is about the same as last year. Other HW Lumber Trends

  34. SW Lumber Trends • Not a lot of information about Softwoods in Kentucky • Not a lot of volume, either (Pine < 7% of the volume of standing timber in the state, also Eastern red cedar) • Southern pine beetle hit our pines hard, ~ 1/4 died. • Trends probably similar to more southerly states, SW pulpwood is sometimes too plentiful.

  35. Primary HW Products • Pallet Cants • 48% of all KY HW lumber goes into pallets! (Good? Bad?) • Very competitive market, strong in KY due to low wood cost (~90 producers) 1999 Data from Bejune 2001.

  36. Pests in Pallets • Pallets need to be heat-treated to eliminate pests whenever there is a possibility they might be sent to another country. • Have 7 heat-treaters in Kentucky at present, more starting up each year.

  37. Sterilizing Wood Pallets • See the web page at www.ukwoodcenter.net, under the pull down menu “Sterilizing Wood Pallets”.

  38. Secondary Hardwood Products • Millwork (Residential & Commercial) • Flooring • Cabinets • Furniture

  39. Millwork • Increasing production in last 5 years • More/larger moulders have been added (lower prices) • Yellow poplar is best wood choice • Outlook: VG, remodeling still strong

  40. Flooring • Growing market, will continue to grow • Preferred over carpeting • Species used: • Red oak • White oak • Hickory • Hard maple • Ash Rank is subject to consumer preferences!

  41. Cabinets • Remodeling market won’t slow demand • Very competitive, maybe ~ 500 small firms and a few big ones (ex., Quality Cabinets in Mt. Sterling, ~ 400 employees) • Custom cabinets can have quick turn-around • Cheaper lines being imported, esp. from China

  42. Hardwood Furniture • Crafts or Custom furniture is (at present) the most important market segment in Kentucky furniture • For example, small-volume, high-quality producers of rocking chairs

  43. Master Logger and Wood Magic Programs

  44. KY Master Loggerswww.masterlogger.org • KML graduates since 1992: 5,978 • Active Master Loggers: 4,018 • New Master Loggers in 2005: 206To date • Master Logger CE programs conducted to date in 2005: 20 • CE Attendance in 2005: 398

  45. Wood Magic Program • Developed to demonstrate importance of wood and wood products to elementary school-age children • ~1400 contacts from 9/04-10/05 • Classroom programs and County Environmental Camp-type programs • (Greenup County, Carter County, Harlan County, London Wood Expo, 4-H Forestry Field Days, etc.)

  46. Acknowledgements • Dr. Jeff Stringer, UK Dept. of Forestry • Dr. Deborah Hill, UK Dept. of Forestry • Dr. Billy Watson, Georgia-Pacific • Larry Lowe, KY Division of Forestry • Gene Parker, Hardwood Market Report • Global Wood Trade Network • Timber Mart South • Jeff McBee, Pallet Profile Weekly • Pallet Enterprise • Forest Resources Association

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