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Modest gains expected in Idaho forest industry

A new report from the University of Idaho’s College of Natural Resources examines the Idaho forest products industry’s operating conditions, sales, employment and production for 2009, and forecasts conditions for 2010.

Idaho’s Forest Products Industry: Current Conditions and Forecast provides historic trend data and provides results from a survey of 65 of Idaho’s largest wood products manufacturers as well as smaller facilities.

While the report summarizes negative economic impacts in Idaho’s forest products industry in 2009, it states that national forecasts call for a modest increase in U.S. housing starts and consumption of wood and paper products, the University of Idaho said in a release.

The collapse of the U.S. housing industry and the related global financial crisis had a substantial negative impact on Idaho’s forest products industry in 2009, the report text said. Annual U.S. housing starts peaked in 2005 at just over 2 million and by 2009 had fallen to 550,000 units. With continued weak demand, lumber prices have fallen 13 percent in the last year and approximately 43 percent since 2005.

The estimated sales value of Idaho’s primary wood and paper products manufacturers for 2009 was just over $1.4 billion, down about 8 percent from the revised 2008 sales value. The number of forest industry workers (including the self-employed) was estimated at 10,800 in 2009, down by about 14 percent from 2008. Production of lumber, the largest component of Idaho’s forest products industry, fell to an estimated 1.1 billion board
feet in 2009 from just over 1.3 billion board feet in 2008.

The report said timber harvest declines were seen across the timber ownership classes, with lower prices offered by mills being a major factor. Idaho’s estimated timber harvest volume during 2009 was just under 800 million board feet, down nearly 15 percent from 2008. Private land harvest, including industry and non-industrial private lands, was about 20 percent lower than during 2008. Harvest from federal lands was down about 5 percent, bringing federal harvest levels near their lowest level since World War II. Harvest from state lands was down about 7 percent from 2008.

National forecasts call for a modest increase in the U.S. economy, housing starts, and consumption of wood and paper products in 2010. Idaho wood products manufacturers have expressed more optimism entering 2010 with 36 percent of survey respondents expecting operating conditions to get better.

However, 52 percent expect 2010 conditions to be about the same as the very poor market conditions experienced in 2009, and 12 percent expect worsening conditions. Twenty-three percent of respondents indicated they expected to increase their number of employees during 2010, and only 17 percent expected to decrease employment.

Forty-five percent of the wood products manufacturers stated they expect profits to increase from 2009 to 2010, while only 14 percent said they expect to see profits to decrease. Over 80 percent of the facilities surveyed anticipate production increasing or staying about the same, and 43 percent expect sales to increase this year.

“This report will benefit anyone with an interest in the Idaho forest products industry,” said Francis Wagner, co-author and professor of forest products at the University of Idaho.

Other authors include Jason Brandt, assistant director; Todd Morgan, director; Charles Keegan III, emeritus research professor of Forest Industry Research, Bureau of Business and Economic Management, University of Montana; and Steven Shook, associate professor of marketing, College of Business and Economics, University of Idaho.

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