The forest products industry is unique from other industries in that the raw material is valued as both an aesthetic and natural resource, in addition to its obvious use in the manufacture of wood based products. Annual per capita consumption of solid wood in the U.S. is the equivalent of 250 board feet. Raw material availability for the industry is influenced by stakeholders as diverse as the forest ecosystem. In fact, it is well documented that residents in Cleveland, for example, have a stake in the forests of southern Ohio Timber harvesting occurs throughout the state and is therefore subject to the scrutiny of all citizens. Since the industry is subject to environmental regulations and public pressures associated with resource consumption, firms often strive for a “low profile” with the public sector.
Demand for hardwood lumber is generally created by the worldwide furniture markets. Ohio timber is representative of the highest quality Appalachian hardwoods, based on wholesale lumber prices. Cherry is currently the highest value domestic hardwood replacing the long time leader, black walnut. The majority of the timber sold in Ohio originates from non-industrial private land. In the most recent forest survey conducted in 1991 by the Forest Service, the non-industrial private landowner controls nearly 80 percent of the timberland acreage in Ohio.
Generally speaking, the unglaciated region of Ohio contains the greatest concentration of forest resources. Sawmills and pulp mills are located near the raw material, while the secondary manufacturing firms are concentrated near the markets in metropolitan areas.
Hardwood lumber is used in a variety of products related to home construction and industrial production. Typically, the higher grade lumber is used in furniture and home construction for molding and millwork, while the lower grade material is converted into containers and pallets used by industrial firms.
One of the largest single consumers of pallets and container products is the food industry. Material handling services are extremely important in the food industry because production, distribution and consumption are geographically separate. It is estimated that fifteen percent of the total pallet production in 1989 was consumed by the grocery industry. Based on the number of pallet firms, Ohio is one of the top three states in the U.S. due to its proximity to both the food industry in the upper Midwest and the wood raw material consumed in pallet production. It has been reported that the pallet and container industry accounted for 40 to 60 percent of the total U.S. hardwood lumber consumption over the last decade.
The pallet industry plays an important role in utilizing the lower grade hardwood lumber and the less desirable species such as the pin, scarlet and swamp white oaks. Hardwood lumber grades are based on the percentage of clear wood, free of defects such as knots, worm holes and rot, found in each board. Low grade lumber is produced in even the highest grade log. As the lumber is saw near the center of the tree, a higher percentage of the boards contain knots and other defects. Even the highest quality oak and cherry logs will have a 25 percent to 30 percent to 30 percent of their lumber yield below average grade. Lower grade material becomes raw material for the hardwood flooring and pallet industries.
In Ohio, the forest products industry is a value-added industry represented by manufacturing sectors in wood and wood products, furniture and paper. The primary manufacturing firms such as sawmills, pulp mills, veneer plants and logging contractors add value to the round wood. Secondary manufacturing firms ad value to the lumber, composite wood products and pulp to produce cabinets, furniture, pallets and paper products. Additional products include maple syrup, Christmas trees, firewood and specialty forest products. Overall, the industry generates products valued at $9 billion while employing more than 70,000 people with a payroll exceeding $1 billion. Although Ohio is not considered to be a “timbre state,” it is clearly recognized as a value-added state forest wood products manufacturing. Ohio’s forest industry is concentrated in the value-added secondary manufacturing firms.
Small business is an integral part of the economic and competitive base of most communities. The wood products industry in Ohio represents over eight percent of all manufacturing firms in the state. Furthermore, these firms are clearly examples of small business, since more than 70 percent have fewer than 20 employees. The combination of small business and wood resource utilization represents a symbiotic relationship with economic development potential in rural areas of Ohio. However, these firms are subject to the usual pressures associated with industries dependent on natural resource use.
Ohio is a net importer of raw material for the sawmill industry. Based on the most recent survey (1989, 28 percent of the logs originated from outside the state. Current consensus among most mill owners and natural resource professionals is that the number of logs imported into Ohio now exceeds 50 percent. Until recently, logs from surroundings states have been readily available. However, these neighboring states have initiated programs to promote the development of in-state firms to add value to the raw material. The result has been an increase in wood products manufacturing firms processing raw materials harvested in these traditional log-exporting states. The implications for Ohio wood products firms are uncertain at best, but could include price increases, reduced raw material availability, plant closures and lost jobs.
The availability and cost of wood as a raw material is an important issue facing forest product manufacturers. One indication of decreasing hardwood availability is recent log and lumber price increases. Harvest restrictions and increased demand for U.S. Hardwoods in both domestic and foreign markets are contributing factors affecting the hardwood resource availability. The forest products industry has responded with the adoption of new processing technology, such as techniques that increase lumber yield from the raw material while reducing residue. One example is the use of thin-bladed saws. Challenges facing the industry in the future include the adoption of further innovations aimed at efficiently processing the raw material and extending the forest resources.
Author
Robert L. Romig
Extension Specialist, Forest Products
Ohio State University Extension