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Local area profiles of Montana's forest products industry.

Local Area Profiles of Montana's Forest Products Industry

The Bureau of Business and Economic Research, in cooperation with the Montana Wood Products Association and the USDA Forest Service, has developed a comprehensive system to monitor and analyze Montana's forest products industry. The system is based on annual and quarterly surveys of the industry's major producers and a complete census of primary wood processors scheduled for every five to seven years.

The census is a cooperative effort involving the Bureau of Business and Economic Research at the University of Montana and the Intermountain Research Station of the USDA Forest Service. The surveys are done in cooperation with the Montana Wood Products Association.

The census and surveys, combined with standard data available from government agencies and trade associations, provide a detailed picture of the industry's structure, the kinds of products produced, the timber used to produce them, and associated employment and payrolls.

Specific information developed from the Bureau's forest industry system is listed below:

* the numbers and types of timber

processors;

* plant production capacity;

* employment;

* major expenditures by the industry;

* the volume of timber received from

geographic and ownership sources;

* the species of timber received;

* the volume, type, sales value, and

market location of finished products

produced from that timber;

* the utilization and marketing of

manufacturing residue;

* plant production equipment; and the

beginning and ending inventory levels

for raw materials and finished products.

Other data sources used include: The Directory of the Forest Products Industry published by Miller Freeman Publications of San Francisco, California, the Statistical Yearbook of the Western Lumber Industry published by the Western Wood Products Association of Portland, Oregon and the American Plywood Association of Tacoma, Washington.

This article includes a brief description of the industry statewide and profiles of the primary forest products industry for local areas within Montana. The local area profile is by county or county group for seventeen western and southwestern Montana counties. For the industry in the seven western counties where the majority is located, the industry is described at the county level whenever possible without revealing proprietary data. The industry in southwestern Montana is discussed together.

These seventeen counties include over 90 percent of the timber industry in the state. This report includes a discussion of the output and sales value, timber utilized, employment, and major expenditures by the industry. More detailed information, including historic information, is available from the Bureau of Business and Economic Research on request. A major report on the forest products industry with considerably more detail will be available in October of 1990.

The State's Forest Products Industry

The forest products industry is Montana's largest manufacturing activity, with $898 million in sales in 1988. There currently are 150 to 200 primary forest products plants in the state, which produce a wide variety of products including:

* lumber and sawn products,

* plywood,

* pulp and paper,

* particleboard and fiberboard,

* house logs,

* utility poles, posts, small poles and tree

props,

* cedar products,

* electricity and fuel pellets, and

* wood by-products such as tall oils and

turpentine.

The $898 million of primary wood and paper products produced in Montana in 1988 is down slightly from the 1987 record level of $960 million (in 1988 dollars). The decline was due to strikes that affected 20 percent of Montana's sawmill capacity and half of its plywood capacity for at least part of three months in 1988. The various components of the primary wood and paper products industry are as follows:

Sawmills. Plants producing lumber and other sawn products accounted for the largest share of sales in Montana's forest products industry. Out of the $898 million in total 1988 sales, sawmills generated $385 million or 43 percent. The 1988 lumber production of 1,558 million board feet represents the third highest annual lumber production level in the state's history, in spite of the strikes. Montana's production represents approximately 4 percent of the U.S. output of softwood lumber.

Wood Residue Products. These are products based primarily on wood residue from sawmills and plywood plants. Residue-related products originate primarily in three plants in Montana: a Kraft pulp and paper mill producing linerboard, a particleboard plant, and a fiberboard plant. Electricity is also generated using wood residue, and some fuel products are produced. These residue-related products accounted for approximately $364 million in sales, or about 41 percent of the 1988 total for all primary wood and paper products.

Plywood. The plywood industry had sales of $106 million in 1988, 12 percent of the total sales of Montana's forest products industry. Plywood production in 1988 was 612 million square feet, 3/8-inch basis, approximately 2 percent of the U.S. production of structural panels. Due primarily to strikes, this is down substantially from the 715 million square feet produced in 1987.

Other manufacturers. Manufacturers that produced a variety of products such as house logs, cedar products, utility poles, and small roundwood products accounted for 4 percent of the total sales in 1988, or an estimated $40 million.

Timber Utilization. The industry statewide processed approximately 1.2 billion board feet Scribner of timber in 1988, utilizing approximately 79 percent of its capacity. The ownership source of that timber was 56 percent private and tribal lands, 40 percent national forest lands, 4 percent state and other public lands.

Expenditures. The industry's two largest expenditures are for timber and workers. In 1988, expenditures on these two items totaled an estimated $495 million. These amounted to $270 million on payroll and other labor-related expenditures to the approximately 11,000 workers directly employed in the forest products industry, and $225 million on timber and other wood fiber. The expenditures on wood fiber are exclusive of labor income to workers in logging. Income to workers in logging is included in the $270 million expenditure to workers.

Other major expenditures in 1988 included approximately $40 million on energy, primarily electricity, $20 million on business services and insurance, and $10 million on property taxes, not including taxes on timberlands. The remaining sales covered other expenses, debt service, capital allowance, and return on investment.

The Forest Products Industry in Lincoln County

Lincoln County in 1988 had the largest timber harvest in the state, 324 MMBF Scribner, and ranked second behind Flathead County in volume of timber processed at 241 MMBF.

An estimated thirteen primary wood processing facilities operate in Lincoln County, with the industry dominated by sawmills and one plywood plant. Other facilities include two house log manufacturers, one planing mill, and two cedar products plants. There is also an electric power plant fueled by wood residue.

Sales and Output: 1988 sales value of lumber and other outputs of the primary wood products in Lincoln County f.o.b. the mills was an estimated $100 million. In 1988, lumber production was 331 million board feet lumber tally, 21 percent of Montana's production. Plywood capacity in Lincoln County in recent years has been approximately 80 million square feet, 3/8-inch basis.

Timber Utilization: Sawmills and the plywood plant processed 99 percent of the 241 MMBF of timber processed in Lincoln County. Producers of log homes, posts, rails, tree props, and cedar shakes, shingles and split rail fences processed the remaining, 1 percent. Sawmills, and the plywood plant utilized 79 percent of their capacity to process timber in that year. Capacity utilization was affected by strikes in the summer of 1988.

The majority of timber processed in the county came from private lands, 53 percent of total purchases. The national forests supplied 46 percent of that timber with State of Montana Lands supplying 1 percent.

Expenditures: In Lincoln County, the industry's two largest expenditures are on timber and workers. In 1988, the forest products industry expended $66 million on these two categories. These amounted to $38 million on payroll and other labor-related expenditures to the approximately 1,600 workers in the industry in Lincoln County. Mills spent $28 million on timber delivered to mills. Income to workers in logging is included in the $38 million dollar expenditure to workers and not in the expenditure for timber. There is considerable flow of timber and commuting of workers, especially in logging, among counties. The reported employment and income do not therefore correspond exactly to the timber processed in individual counties. More exact detail associating timber from specific geographic areas and ownerships with, employment, labor income, and major expenditures may be available through the Bureau of Business and Economic Research. Other major expenditures in 1988 included $2.3 million on energy, primarily electricity, $2.3 million on business services and insurance, and $600 thousand on property taxes, not including taxes on timberlands. The remaining $24 million dollars in sales covered other expenses, debt service, capital expenditures, and return on investment.

The Forest Products Industry in Flathead County

Flathead County's twenty-four wood products producers led the state in timber processed with 306 million board feet Scribner, of timber, and lumber output with 345 million board feet, lumber tally in 1988. The twenty-four primary wood processing facilities in Flathead County included twelve active sawmills, two plywood plants, a medium density fiberboard plant, three log home producers, five post and pole plants, and a utility pole plant.

Sales and Output: Sales value of lumber and other manufactured primary wood products in Flathead County in 1988 was an estimated $170 million. Lumber is the major wood product in Flathead County, and 1988 production was 345 million board feet lumber tally. This amounted to 22 percent of Montana's lumber production. Plywood production in Flathead County in recent years has been approximately 310 million square feet, 3/8-inch basis. Other products produced in Flathead County include medium-density fiberboard, utility poles, house logs and log homes, posts, rails, and tree props.

Timber Utilization: Sawmills and the plywood plant processed 99 percent of the 306 MMBF of timber processed in Flathead County, with producers of log homes, posts, rails, and tree props, processing 1 percent. Sawmills and plywood plants in the county utilized 85 percent of their capacity to process timber in 1988. The medium density fiberboard plant operates entirely on mill residue. The industry in Flathead County received 49 percent of its timber from private and tribal lands, with the remainder consisting of 47 percent national forests, and 4 percent state timberlands.

Expenditures: In 1988, the forest products industry in Flathead County spent approximately $97 million on timber and workers. These amounted to $57 million on payroll and other labor-related expenditures to the more than 2,100 workers in the industry including the self-employed, and $40 million on timber and mill residue delivered to mills exclusive of income to workers in logging, which is included in the $57 million in labor income.

Other major expenditures in 1988 included $6.2 million on energy, primarily electricity, $3 million on business services and insurance, and $1.5 million on property taxes not including taxes on timberland. These expenditures totaled about $108 million. The remaining $62 million dollars in sales covered other expenses, debt service, capital expenditures, and return on investment.

The Forest Products Industry in Lake, Mineral, and Sanders Counties

Lumber production dominates the industry in this three-county area. Of the estimated twenty-five timber processing facilities operating in Lake, Mineral, and Sanders Counties, fourteen are sawmills producing lumber. Other wood products plants include four log home producers, four post and pole plants, and one cedar products plant. There is also a decorative bark plant in Mineral County and a wood pellet plant in Lake County.

Sales and Output: Sales value of lumber and other manufactured primary wood products in these counties in 1988 was an estimated $75 million. In 1988, lumber production was 231 million board feet lumber tally. This amounted to 15 percent of Montana's production.

Timber Utilization: The industry in these three counties processed approximately 172 million board feet, Scribner in 1988, with sawmills receiving nearly 171 MMBF and other producers just over 1 MMBF. Sawmills utilized approximately 71 percent of their capacity to process timber. National forest lands supplied 45 percent of the timber processed by the industry in the three county area, with 51 percent coming from private and tribal lands and state lands supplying the remainder.

Expenditures: The two largest expenditures made by the industry in these three counties were on timber and workers. In 1988, expenditures in these two categories totaled $47 million. Payroll and other labor-related expenditures were an estimated $27 million to the 1300 workers employed in the industry. Mills in the three counties paid $20 million for timber in 1988, in addition to income to workers in logging, which is included in the $27 million expended on workers. Other major expenditures in 1988 included $1.6 million on energy, primarily electricity, $1.4 million on business services and insurance, and $500 thousand on property taxes, not including taxes on timberland. These expenditures totaled $51 million. The remaining $24 million dollars in sales covered other expenses, debt services, capital expenditures, and return on investment.

The Forest Products Industry in Missoula County

The wood and paper products industry in Missoula County is the largest and most diversified in the state. Missoula County also supports the highest level of forest and industry employment and labor income, 3,000 workers, and $95 million in labor income in 1988. There are an estimated seventeen primary forest products facilities in the county. These consist of seven sawmills, a pulp and paper mill producing linerboard, a plywood plant, and particleboard plant, two log home producers, three post and pole plants, a cedar products plant, and a wood pellet plant.

Sales and Output: Sales value of primary wood and paper products produced by Missoula County mills was $419 million. In 1988, lumber production was 142 million board feet lumber tally. This amounted to 9 percent of Montana production. Plywood production in recent years has been approximately 330 million square feet, 3/8-inch basis, approximately half of Montana's output. Other products produced in these counties include linerboard, particleboard, log homes, cedar products, post and rails, and wood pellets.

Timber Utilization: Sawmills and the plywood plant processed 93 percent of the 193 MMBF of timber processed in Missoula County, with producers of pulp and paper, log homes, posts, rails, tree props, cedar shakes, shingles, and split rail fences processing 7 percent. The paper mill and the particleboard plant are based primarily on mill residue. The industry in Missoula County received 78 percent of its timber from private and tribal lands, with 15 percent coming from federal lands and 7 percent from state lands.

Sawmills and plywood plants had the capacity to process 213 million board feet of timber in 1988 and utilized 86 percent of this capacity, processing 184 million board feet of timber. The capacity utilization was affected by strikes in the summer of 1988.

Expenditures: The two largest expenditures by Missoula County mills are on wood fiber and workers. In 1988, expenditures on these two items totaled over $185 million. These amounted to $95 million on payroll and other labor-related expenditures to approximately 3,000 workers including the self-employed, and more than $90 million on timber and mill residue in 1988. The $90 million does not include income to workers in logging which is included in the $95 million expended on workers.

Other major expenditures in 1988 include $25 million on energy, primarily electricity, $10 million on business services and insurance, and over $6 million on property taxes, not including taxes on timberland. The expenditures listed above totaled $226 million. The remaining $193 million in sales covered other expenses, debt service, capital expenditures, and return on investment.

The Forest Products Industry in Ravalli County

The largest component of the forest products industry in Ravalli County is sawmills, but the log home industry, which is concentrated in Ravalli County, is also a major component. An estimated twenty-seven timber processing facilities operate in Ravalli County. These consist of eight sawmills, thirteen log home plants, five post and pole plants, and a wood pellet plant.

Sales and Output: Sales value of lumber, log homes, and other primary manufactured wood products produced in Ravalli County was $39 million in 1988. Lumber production has been approximately 80 million board feet lumber tally in recent years. This amounts to about 5 percent of Montana production. Other products produced in this county include log homes, posts and rails, and wood pellets.

Timber Utilization: The industry in Ravalli County processed 65 million board feet of timber in 1988. The ownership of that timber was 70 percent national forest, 22 percent private, and 8 percent state and other ownerships.

Expenditures: The Ravalli County industry's two largest expenditures are on timber and workers. In 1988, expenditures on these two items totaled $26 million. These amounted to $12 million on payroll and other labor-related expenditures to the more than 600 workers including the self-employed, and $14 million on timber, not including income to workers in logging, which is included in the $12 million expended on workers. Other major expenditures in 1988 included approximately $1 million on energy, primarily electricity, $1 million on business services and insurance, and $200 thousand on property taxes. The expenditures listed above totaled $28 million. The remaining $11 million in sales covered other expenses, debt service, capital expenditures, and return on investment.

The Forest Products Industry in Southwestern Montana

Much of the attention focused on Montana's forest products industry is concentrated on the seven westernmost counties, where the largest share of the state's industry is concentrated. However, there is also substantial forest products activity in southwestern Montana, and it forms an important part of the economy of a number of counties in that region.

An estimated thirty-six timber processing facilities operate in the ten counties (Beaverhead, Broadwater, Deer Lodge, Gallatin, Granite, Jefferson, Madison, Park, Powell, and Silver Bow). These facilities consist of seventeen sawmills, eight log home plants, ten post and pole plants, and one utility pole facility.

Sales and Output: Sales value of lumber and other manufactured primary wood products in southwestern Montana in 1988 was an estimated $75 million. Lumber is the major wood product in southwestern Montana, and output has nearly doubled in the last decade. In 1988, lumber production was 344 million board feet lumber tally, 22 percent of Montana production. Other products produced in southwestern Montana include log homes, utility poles, posts, corral poles, and tree props.

The sawmills in southwestern Montana had the capacity to process 231 million board feet of timber in 1988 and utilized about 82 percent of this capacity processing 190 million board feet of timber. The industry in this region received approximately 56 percent of its timber from private lands, 41 percent of its timber from federal lands, and 3 percent from state lands.

Expenditures: The industry's two largest expenditures are on timber and workers. In 1988, approximately 65 percent of the total sales value of $75 million was expended on these two categories. These amounted to $26 million on payroll and other labor-related expenditures to the more than 1,200 workers in the industry, and $23 million on timber delivered to mills, not including income to workers in logging which is included in the $26 million expended on workers. Other major expenditures in 1988 included $1.8 million on energy, primarily electricity, $1 million on businesses services and insurance, and $500 thousand on property taxes, not including taxes on timberland. These expenditures totaled $52 million. The remaining $26 million in sales covered other expenses, debt service, capital expenditures, and return on investment.

Charles E. Keegan III is director of forest products industry research, Bureau of Business and Economic Research, University of Montana, Missoula. He is also research associate professor of management in UM's School of Business. Daniel P. Wichman is a research assistant in the Bureau. He has an undergraduate degree in forestry from UM and is currently an MBA student in UM's School of Business.
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Article Details
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Author:Keegan, Charles E., III; Wichman, Daniel P.
Publication:Montana Business Quarterly
Date:Jun 22, 1990
Words:3297
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