Forest industries find '08 to be a tough year
By BETH RICHARDSON, Special to The T&D Friday, November 14, 2008There has been a culmination of events that have, over the past three years, caused the price for sawtimber and chip and saw to decline to the lowest in 25 years.
Pine and hardwood pulpwood are doing okay.
There have been a number of local forest industries that have gone out of business, leaving a large number of foresters and work force without jobs.
Loggers have had a tough time with delivered prices to the mills declining, and gas and diesel prices rising. Some were forced out of the logging business.
When I arrived in South Carolina in 1985, textiles and chemicals were the top two manufacturing industries in the state, with forestry being third. This says a lot for chemicals and textiles as one out of every four people work in some part of the forest industry.
Chemicals and textiles have dropped out of the picture as king of the manufacturing industries.
But with increasing government regulations, demands by workers’ unions, aging plants and a period of higher taxation, it became cheaper to import these goods rather than make them here. It has been more difficult for our primary manufacturers -- coal, oil, gas, wood, metals, soil compounds (phosphate, lime, calcium) -- to afford to remain in business.
We have lost many forest industries in this area.
(Kiser Lumber Co, Infinger Co. Tally Corbett Co. in Springfield and in Fairfax, Coastal Lumber in Denmark (hardwoods) and in Walterboro (pine and cypress), Marsh Lumber Co. in Pamplico, Tyler Plywood Mill in Florence.
Our dollar has been strong, so it has made more economic sense to import these goods and let the factories fill with dust.
And then there are pressures put on industries by environmentalists.
These pressures can be as unknown as slowing down the barges going across the ocean to decrease the carbon footprints to as radical as burning down a wooden ski lodge because it was made out of wood and located in the back woods.
As the cost from all of these things mention rise, plus inflation and just the general cost increase, the cost has to be rectified.
Thus, local forest industries can either raise the price of the end product to offset the cost, use cheaper raw materials to lower costs, lower stumpage prices, lower employee wages, lay off workers or close the plant down.
(An example of rising cost is there has been a 300 percent increase in the cost of shipping goods overseas since March 2008, reflected in lower stumpage values.)
Forestry is not an Orangeburg County industry nor a South Carolina industry. It is a global industry where we import and export forest products.
Our overseas market and the market with our neighbors is influenced by the value of the dollar and our government policies that affect the value of the dollar.
Since 1973, our dollar has not been based on the value of gold.
That was the beginning of the federal government’s ability to print money. As more money is printed, it has less value.
Currently, some of our banks and other institutions have made bad decisions. Congress has voted to add additional money. When you circulate more dollars, they become less valuable.
I do not think we have hit the bottom.
According to the news, other countries are having financial problems. I do not know how bad these problems are or how long they will last. These answers will affect how much of our wood products they can afford to import.
If my conjectures, thoughts and conclusions are correct, you will see more bad times in forestry.
However, there will be upward slides in the value of trees.
If the market forces are allowed to work, there will be a demand. This will bring the prices up a little.
However, I believe that the timber stumpage prices will be a long time getting back to their 2004-05 highs.
What can you do as a timber grower?
Number one thing is keep managing your timber through thinning.
If you do not cut some of the trees out when the stand gets crowded, you may lose the stand to insects and diseases.
I am not advocating clearcutting unless a) you need the money, b) you are changing the land use, c) your timber stand is dying, d) you are getting a good price.
However, you must thin your pine timber to continue growing your trees to sawtimber size. Keep your timber stand healthy until the economy turns around, which may be years.
Agriculture is one of the few natural resource industries that is strong in the United States.
We have had our tough times with all of the above-mentioned problems. We are going to get through this as long as we are not pressured with higher cost from outside sources. It would help even more if some of the superfluous regulations were lifted.
Beth Richardson is a county agent with the Clemson Extension Service in Orangeburg County.
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