Local Timber Economy May Be Headed For Downturn
WASHBURN COUNTY – The local timber economy is heading toward what some in the industry see as a downturn.
“We will be going through some pains here in the forest products industry, at least for the next year or two,” said Max Ericson, who is a local logger and operator of the Springbrook Wood Yard in the Town of Springbrook.
The problem comes from a combination of issues, one being that the price per cord of wood that loggers are receiving is down, as is the ability to sell their harvest. Despite the loss of profit, Ericson said that is not stopping loggers.
“We all still have to keep working. When you’ve got all this machinery, you can’t stop the wheels from turning,” said Ericson, who is also the president of the Great Lakes Timber Professionals Association. The overhead to run a timber harvesting operation can run in the millions of dollars with equipment and transportation costs.
“The reality is that these guys cannot afford to let the equipment sit idle. They have payments and need to maintain cash flow. Scaling back on harvesting is a means to match production to current demand,” said Washburn County forest administrator Mike Peterson.
Peterson manages 148,000 acres of public land within the Washburn County forest for timber production and public recreation. Peterson added that loggers under contract in Washburn County face revocation, bond retention or stumpage increases if they do not meet the contract deadlines for harvest.
“There is a cost to sitting on these sales and a risk of losing them completely,” said Peterson. The county does have a record amount of unharvested wood.
“We are dealing with a large amount of sales under extension right now and more requests coming. We have a record amount of unharvested contract wood value on the books right now,” said Peterson.
Peterson said this is in part because loggers have not been able to harvest due to wet conditions for the last two summers. Combined with a wet fall this year, getting into the woods to harvest has been impossible. To compound matters there are simply not enough loggers in the state to complete all of the sales under contract during the short winter logging period.
In addition, mills are not buying as much as before – and they’re paying a lower rate. This has Ericson thinking the situation could put some loggers out of business.
“I used to ship two to three cars (of wood) a week to one of the mills and now I can only ship three cars for the whole month of January,” he said.
As operator of the Springbrook Wood Yard, Ericson used to purchase wood from other loggers to fill the needs of mills but now he can fill those needs with his own harvest and still have excess.
“And that’s for hardwoods, the pine markets are worse. They are pretty near non-existent,” he noted.
More than just the timber harvesters could feel the effects of the downturn though. Ericson said that this could also affect county bottom lines, like Washburn County, that utilize timber revenues as a funding source.
“They’ll be less money into the county for stumpage, so it will affect the county’s bottom line and it’s all of the counties,” said Ericson, who harvests in Washburn, Sawyer, Burnett, Douglas and Bayfield counties.
“It’s not going to stop perse, but it’s going to slow down quite a bit,” he said. He also questioned the continued viability of the higher value timber market found in Washburn County.
“The county forest system has seen record prices and revenue streams over the last 10 or more years and while this has been advantageous to county functions, I question whether this is sustainable,” said Peterson.
He said that strong competition for timber sales over the last decade has driven standing wood prices higher, but if the prices go too high for wood-consuming industries to operate, “they will likely source their fiber from other, cheaper locations.”
Despite the foreboding picture this presents, Peterson and Ericson are not scared or intimidated, just aware.
“I have been working in this industry for over 25 years and markets always seem to be cyclical,” said Peterson, who believes the local timber industry is sustainable into the future.
“We are all harvesting timber, the prices are down and the ability to get rid of your wood is down because of the economy in the timber industry but we all still have to keep working, when you’ve got all this machinery, you can’t stop the wheels from turning,” said Ericson.
Source: By DANIELLE STAFFORD / wcregisteronline.com
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