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Oregon Board of Forestry s Federal Forestlands Advisory Committee, November 5, 2007

Changes in Oregon's Forest Industry Infrastructure. Mill Closures Job LossesImpacts on Communities

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Oregon Board of Forestry s Federal Forestlands Advisory Committee, November 5, 2007

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    1. Oregon Board of Forestrys Federal Forestlands Advisory Committee, November 5, 2007 Ted L. Helvoigt ECONorthwest

    2. Changes in Oregons Forest Industry Infrastructure Mill Closures Job Losses Impacts on Communities & Workers Results from a Case Study: Renewed Harvesting on Federal Forests Social, Economic, & Political Reality

    3. 1. Mill Closures and Job Losses

    4. Mill Closures & Job Loss The Well Known History: In the 1970s through the late 1980s, about 50% of Oregons timber harvest was from federal forests Beginning in the late 1980s, federal harvest levels fell substantially Many Northwest sawmills shutdown Logging and sawmill employment dropped

    5. Mill Closures and Job Losses in the Northwest Sawmilling Industry Were Due to More Than Reduced Federal Harvests

    6. Productivity Growth: The Not So Well Known History 1970s: TFP = 0.55% 1.6% per year 1980s: TFP = 0.44% 1.9% per year 1990s: TFP = 1.31% 2.1% per year Sources: A Stochastic Frontier Analysis of Technical Progress, Efficiency Change and Productivity Growth in the Pacific Northwest Sawmill Industry, Ted L. Helvoigt & Darius M. Adams (submitted to Journal of Forest Policy & Economics Data Envelopment Analysis of Technical Efficiency and Productivity Growth in the U.S. Pacific Northwest Sawmill Industry, Ted L. Helvoigt & Darius M. Adams (submitted to Canadian Journal of Forest Research)

    7. Decomposing Northwest Sawmilling Job Losses* 1988 Employment Level 40,000 1994 Employment Level 30,500 Total Job Losses over this period = 9,500 Of these Between 2,100 and 3,600 (23% 38%) jobs were lost due to labor-saving productivity change Between 5,900 and 7,400 (62% 77%) jobs were lost due to reduced log harvest

    8. Despite Declines in Federal Harvest Levels Oregon is still the largest lumber producing state in the U.S. Washington produces more lumber today than at any other time in the post-WWII period Some Northwest lumber mills are among the lowest cost producers in North America

    9. The Northwest Sawmilling Industry Today While relying almost entirely on private timber harvests, strong productivity growth over the last three decades has helped Northwest lumber producers remain competitive in an ever-increasing global marketplace

    10. 2. Impacts on Local Communities & Workers

    11. Community Impacts Prior to the 1990s, sawmills and logging were important components of many Oregon communities across the state Changes in Federal land management and increased competition from other forest products producing regions has led to spatial consolidation of Oregons forest products industry Strong investment in mills in Willamette Valley & Douglas County The industry contracted substantially in the eastern and southern parts of the state

    12. There Are Few Sawmills Currently Operating in Eastern Oregon

    13. Worker Impacts* Prior to the 1990s, sawmills and logging crews were viable employment options for many Oregonians Displacement of forest products workers in the late 1980s and 1990s disproportionately affected the least skilled workers and workers in southern and eastern Oregon Average incomes for those who remained in the industry grew faster than those dislocated from the industry, but not as fast as Oregon workers as a whole Many workers in southern & eastern Oregon who left the industry moved to the Willamette Valley for work

    14. 3. Case Study Results: Renewed Harvesting on Federal Forests

    15. The following slides provide a brief summary of the results of an analysis of the economic impacts of renewed harvesting on the Cottage Grove District of the Umpqua National Forest.

    16. Case Study: Harvesting on Cottage Grove Ranger District*

    17. Case Study: Log Flows Off of Cottage Grove Ranger District*

    18. Case Study: Employment Impact of Harvests off Cottage Grove Ranger District*

    19. 3. Todays Social, Economic, & Political Landscape

    20. Social Landscape Far smaller proportion of Oregonians today are directly connected to the forest products industry Many Oregonians perceive clearcut logging to (always) be environmentally bad To many, logging on federal lands should be done only for forest health reasons

    21. Economic Landscape Technical change has allowed forest industries to produce more lumber and other wood products with fewer workers Greater societal focus on other economic values provided by forests (e.g. wildlife habitat, clean water, aesthetics, ) Strong economic pressures to move productive (private) forests into housing & other development

    22. Political Landscape The courts are the de facto managers of federal lands Eight years of an industry friendly administration has not resulted in increased harvesting on federal lands Fire & carbon sequestration are issues that will likely drive future legislation and administrative policy

    23. Thank you Questions or comments? Ted L. Helvoigt ECONorthwest 541-687-0051 Helvoigt@eugene.econw.com

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