Impacts of the 2000 wildfires on forest industry employment. (Wildfire Impacts).
Immediate effects of the 2000 wildfires included the destruction of homes and cabins, evacuation of people from their homes, cancellation of recreational activities and losses to the tourism industry, postponement or cancellation of timber sales, and health impacts (Bitterroot National Forest 2000). Among the multitude of longer-term effects of the fires were massive mudslides and flooding; road, trail and soil erosion; fish and wildlife kills; changes in forest and grassland community structures; invasion by non-native plants; and loss of commercial timber and agricultural infrastructure.
Potentially positive effects of the fires included temporary employment of people involved with firefighting and rehabilitation efforts, availability of timber through salvage operations on various ownerships, and natural forest fuel reduction in areas experiencing lower-severity burns.
To better understand the effects of the fires, The University of Montana's Bureau of Business and Economic Research estimated the 2000 fire season's impacts on Montana's forest industry sales and employment.
Montana's Forest Products Industry and Fire Impacts
Montana's forest products industry is a combination of activities, including harvesting, hauling, and processing timber, and associated forest management activities. Based on a census conducted in 1999, there were about 220 timber-processing or primary forest products plants operating in Montana, in addition to several hundred logging contractors. Processors included: 75 house log and log home plants, 73 sawmills, 29 post-and-pole plants, 25 log furniture manufacturers, four plywood plants, two cedar products plants, a medium-density fiberboard plant, a particleboard plant, a pulp and paper mill, and nine other facilities (Keegan et al. 2001a).
In 1999, immediately preceding the severe fire season of 2000, these plants manufactured products valued at $1.3 billion free on board (FOB) the producing mill (Keegan et al. 2001b). Wood markets in 1999 and early 2000 were generally high, with a strong U.S. and global economy. However, wood product prices began to decline in March 2000, reached very low levels by the beginning of the fire season, and remained low for the rest of the year (Figure 1). Declining prices were due to the weaker U.S. and global economy, high worldwide production, and a strong U.S. dollar. Dramatic increases in electric rates for mills purchasing electrical power on the spot market also contributed to production curtailments (Keegan et al. 200 1.b). Other factors--weak markets, high electricity prices, and the closure of a large sawmill--rather than fire impacts, were responsible for the $1.1 billion decline in total sales from Montana producers in 2000. These other factors also had a greater impact on most sectors of the forest pro ducts industry than did the fires.
Statewide Impacts of 2000 Wildfires on Employment
To estimate employment and labor income in the forest products industries, we examined three industrial groups that closely correspond to the forest products industry. These classifications, as defined by the U.S. Office of Management and Budget, are forestry and forestry services, lumber and wood products, and paper and allied products. Based on these three classifications, Montana's forest products industry actually showed an increase in employment and labor income from 1999 to 2000. Employment in forestry and forestry services, lumber and wood products, and paper and allied products increased from 10,600 workers in 1999 to 10,740 workers in 2000. Worker earnings increased from $337 million in 1999 to $352 million in 2000. This represents a 4.5 percent increase in workers' earnings. Inflation in 2000 was about 2.0 percent.
One sector, forestry services, seems to have benefited from the wildfires of 2000. Employment increased by nearly 240 workers, from 912 workers in 1999 to 1,150 workers in 2000, and income to workers was up--from $5.7 million to $7.4 million. A significant proportion of this increase was very likely associated with fire suppression and restoration work. According to the Bitterroot National Forest (2000), "the Forest Service and rehabilitation efforts employed hundreds of local individuals, many of them small contractors, during and after the fires."
Paper, which consists primarily but not entirely of a linerboard facility in Missoula County, employed about 800 workers in both 1999 and 2000, with no measurable impact from the fires. The linerboard (pulp and paper) plant did curtail operations beginning in late 2000, but that was due primarily to extremely high electricity prices.
The negative impacts of the wildfires were concentrated in the lumber and wood products segments. This is the largest of the three segments in Montana and includes activities such as logging, processing of timber into products like lumber and plywood, and further processing of lumber and other primary products into secondary wood products (e.g., trusses or door and window parts). This segment employed 8,880 workers in 1999 and 8,786 in 2000.
Because logging consists of a large number of small operators and a large number of self-employed workers it was necessary to use a number of sources to describe total employment and impacts on logging employment and workers compensation. A comparison of total employment from several databases indicates approximately 2,000 self-employed lumber and wood products workers in Montana in 1999 and 2000 (FIDACS 2002, MMIS 2002, REIS 2002, State of Montana 2002). Approximately 200 of these self-employed workers were in timber processing and 1,800 were in logging. In 1999, there were 1,220 wage and salary workers in logging. Including the self-employed, there were an estimated 3,000 workers in Montana's logging industry.
Examining the wage and salary component of logging employment, there was an increase of 35 workers from 1999 to 2000, from 1,220 to 1,255 (State of Montana 2002). However, the increase was due to additional logging activity early in the year when lumber prices were relatively high. Forest closures led to restrictions on logging in various parts of the state for four to six weeks during the summer, and during part of that time there was a total cessation of logging. This means that for at least several weeks of 2000, the entire logging work force was not actively logging in Montana. Employment data indicate that even though logging was not taking place, the majority of the logging work force remained employed, most likely in firefighting or in non-harvesting activities like equipment maintenance.
Compared to 1999 wage and salary data, the year 2000 showed a small employment decline in July (25 workers) and more substantial declines in August (83 workers) and September (223 workers). Assuming the self-employed segment of the logging industry was impacted to the same degree as the wage and salary sector, total declines in the fire-impacted months would be 60, 254, and 530 workers, respectively. Expressing these temporary declines as logging workers for a full year, the decline would be approximately 70 workers, and losses in workers' earnings would be approximately $2.2 million.
While not to minimize these declines or the real impacts on workers and businesses in the logging industry, it is clear that most loggers were able to remain employed in some capacity during the fires. The decline is approximately 2 percent of Montana's logging workforce. It is possible that some of the declines in logging in 2000 were due to poor market conditions. However, July through December is a period when logging activity is typically high. Even in years of weak markets, there has historically been little decline in logging activity during these months (State of Montana 2002). It was therefore assumed that the decline was attributable to disruptions caused by fires.
Estimates of statewide impacts of the 2000 fires on Montana's timber processors were developed primarily from survey data and follow-up interviews with mill operators and managers. Quarterly surveys done by the BBER collect month-to-month information on production, number of production workers employed, and wages paid to production employees from mills that account for more than 95 percent of the timber processed in Montana (CURFOR 2002). Minor changes were evident in all sectors of the wood products industry, but the mast noticeable differences between 1999 and 2000 were in the lumber and plywood sectors, which process more than 95 percent of the state's timber.
The last half of 2000, when markets were bad and the wildfires occurred, was a tough period for Montana's wood processors. The major factor affecting the statewide industry, however, was the market situation, not wildfires (Figure 1). Few mills indicated curtailments due specifically to the wildfires; most attributed declines primarily to market conditions. Although impacting as many as 700 production workers for several days, the total number of worker-days lost at Montana mills due to the fires of 2000 was relatively small. When adjusted to full-time equivalent employees (240 worker-days per year), these curtailments equal only 15 to 20 FTEs. Those 15 to 20 workers represent a decline in annual worker earnings of approximately $600,000. Put into perspective, these curtailments and declines equal less than 1 percent of employment and worker earnings in Montana's timber-processing industry.
The relatively minor declines in Montana's wood products sales, employment, and worker earnings caused by the 2000 wildfires belie the substantial fire hazard threat that still exists in the state. Moderate to high fire hazard conditions still exist across most of Montana's forestland, but dealing with this hazard in an ecologically sound manner has the potential to create economic benefits for Montana's wood products industry, forestland owners, and the thousands of other Montanans who rely on our forests for recreation and tourism-related income (see MBQ previous article, pages 2-7). Forest management regimes that recover some merchantable timber have the potential to sustain both Montana's forests and the wood products industry, while reducing the threat of another fire season like 2000.
[FIGURE 1 OMITTED]
Table 1 Ravalli County Forest Products Employment [FTEs] By Sector * 1999 2000 Logging sector 91 95 Sawmilling & other timber processors 154 157 Log home 373 405 Miscellaneous secondary 63 69 Total 681 721 Source: State of Montana, Dept. of Labor and Industries. * For wage and salary workers only.
Bitterroot National Forest. 2000. Bitterroot Fires 2000: An Overview of the Events, Effects on People and Resources, and Post-Fire Recovery Priorities. USDA, Forest Service, Bitterroot National Forest, Hamilton, MT 108 pp.
(CURFOR) Current Forest Industry Data Collection System. 2002. Bureau of Business and Economic Research, The University of Montana, Missoula, MT.
(DNRC) Department of Natural Resources and Conservation. 2002. Cut-by-county report. State of Montana, DNRC, Forestry Bureau, Missoula, MT.
Devlin, S. 2001. "Massive Logging Operation near Darby is Clearing the Forests of nearly 21 Million Board Feet of Burnt Timber." Missoulian, January 21, 2001. Online at http://www.missoulian.com/specials/fires2001/resources/timber-012101. html.
(FIDACS) Forest Industry Data Collection System. 2002. Bureau of Business and Economic Research, The University of Montana, Missoula, MT.
Forest Service Region One. 2001. Timber Harvest Report 2001. USDA, Forest Service, Region One, State and Private Forestry, Missoula, MT.
Keegan, C.E., K. Gebert, A.L. Chase, T.A. Morgan, S.E. Bodmer, and D.D. Van Hooser. 200la. Montana's Forest Products Industry: A Descriptive Analysis 1969-2000. The University of Montana-Missoula, Bureau of Business and Economic Research, Missoula, MT.
Keegan, C.E., S.R. Shook, K. Oebert, and F.G. Wagner. 2001b. Montana's Forest Products Industry. Montana Business Quarterly 39 (1): 34-36.
(MMIS) Montana Manufacturers Information System. 2002. Bureau of Business and Economic Research, The University of Montana, Missoula, MT Online at http://www.mmis.umt.edu.
National Interagency Fire Center. 2002. Wildfire statistics. Online at http://www.nifc.gov/stats.
Random Lengths. 2001. Random Lengths Yearbook 2001. Random Lengths Publications, Inc. Eugene, OR. 296 pp.
(REIS) Regional Economic Information System. 2002. U.S. Department of Commerce, Bureau of Economic Analysis, Washington, DC.
State of Montana. Department of Labor and Industries. 2002. Montana Covered Employment & Payroll. State of Montana, Department of Labor and Industries, Helena, MT.
RELATED ARTICLE: Short-Term Impacts of 2000 Wildfires on Ravalli County's Forest Products Industry
An examination of timber-industry employment statistics in Ravalli County revealed no obvious negative impacts from the 2000 wildfire season. In fact, employment actually grew by 5.5 percent, from 681 to 721 wage and salary employees (Table 1), and wages increased from $22.4 million in 1999 to $24.3 million in 2000. Most of this increase is attributable to the continued growth in Ravalli County's log home industry, which has seen employment nearly triple in the last decade and increase nearly fivefold in the past 20 years (from 85 workers in 1979 to 405 in 2000).
In 1999, there were 35 timber-processing facilities in Ravalli County (Keegan et al. 2001a). The 35 mills included 21 log home manufacturers, seven log furniture producers, four post-and-pole producers, and three sawmills producing lumber. Sales in 1999 were about $74 million (Keegan et al. 2001a, MMIS 2002), $69 million of which were in the log home industry. In addition to the timber processing facilities, there were more than 26 logging firms and additional independent contractors harvesting timber in Ravalli County.
Although industry employment in Ravalli County was higher in 2000 than 1999, a census of timber processors conducted by the BBER in early 2002 did reveal some negative impacts of the fires. Twenty-seven firms, accounting for more than 95 percent of production, responded to the survey. Nine (one-third) of the firms reported no appreciable effect from the fires of 2000. On the other hand, 18 (two-thirds) of the forest products firms contacted reported that the fires of 2000 negatively affected their operations, All of the 18 stated that impacts were immediate, with nine of the firms indicating the fires of 2000 were expected to have long-term negative impacts.
The most commonly reported short-term impact was reduced production, reported by 15 of the firms, with three firms able to make up the lost production in the year 2000. The other 12 firms estimated a combined reduction in sales of $1.6 million caused by the fires of 2000, representing about 2.5 percent of 1999 sales. Other common impacts reported were interruption of raw material inflow (because of road closures and the cessation of logging operations), interruption of product shipping schedules because of highway closures, and lost use of equipment.
Employment was impacted at nearly half of the firms. However, total layoffs and hours lost per employee were very small. Thirteen firms reported reduced employment, affecting about 80 workers, for a total estimated loss of 285 man-days of work. Lost wages associated with these reductions totaled $32,600. This is comparable to about 1.2 full-time employees out of total of 727 full- and part-time wage and salary workers in Ravalli County's wood products industry. Declines in sales were proportionately greater than the decline in employment and wages because a number of firms that curtailed production kept workers on the job to provide fire protection for the facilities and perform other tasks. Other reported monetary losses totaled $75,000--$50,000 in the form of equipment burned and $25,000 in logs destroyed.
As of February 2002, none of the timber-processing firms reported their business had improved as a result of the forest fires of 2000, and the number of wage and salary workers in Ravalli County's forest products industry actually declined by about 30 workers, with the number of wage and salary workers declining by 10 workers. The managers of five firms impacted by the fires stated that they had returned to normal by January 2002, but 13 firms reported that they had not returned to normal. Those 13 firms attributed at least part of the difficulty in recovering to declines in the general economy. It is possible that there were and still could be financial benefits to some workers and firms as a result of the wildfires. For example, the log home industry--the largest component of the industry in Ravalli County--has historically used dead timber (including salvaged burned timber) as a raw material.
Fire salvage led to an increase harvest in Ravalli County of about 25 million board feet in 2001 vs. 2000 (DNRC 2002, Forest Service Region One 2001). This volume represents enough timber to employ 100 loggers for an entire year. Certainly, the increased harvesting in Ravalli County resulted in increased economic activity; however, there was a small decrease (12 workers) in reported logging (wage and salary) employment in Ravalli County in 2001 vs. 2000. The increased logging probably involved greater numbers of self-employed loggers, and certainly involved loggers from outside Ravalli County. This would have generated increased economic activity, particularly in southern portions of Ravalli County where the salvage took place. News reports during the height of salvage operations indicate considerable increases in business activity (i.e., motels, hotels, grocery stores, and restaurants) in that area (Devlin 2001). A detailed examination of these additional localized indirect impacts was beyond the scope of t his analysis of impacts on the forest products industry.
Charles E. Keegan III is director of Forest Industry Research at The University of Montana Bureau of Business and Economic Research. Todd A. Morgan and A. Lorin Hearst are research foresters at The University of Montana Bureau of Business and Economic Research. Carl E. Fiedler is research associate professor at The University of Montana School of Forestry.
We thank the Missoula Area Economic Development Corporation, The U.S. Department of Commerce Economic Development Administration for funding support. Baseline data on industry structure and related employment was developed through ongoing research done in cooperation with the Rocky Mountain Research Station, Interior West Forest Industry and Analysis Program.
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|Author:||Keegan, Charles E.; Morgan, Todd A.; Hearst, A. Lorin; Fiedler, Carl E.|
|Publication:||Montana Business Quarterly|
|Date:||Sep 22, 2002|
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