Recession continues to dog state's timber industry

According to researchers at the University of Montana's Bureau of Business and Economic Research, recovery of the state's timber products industry continues to be impacted by the national recession.

Key factors improved little during 2011, the bureau reported. Lumber production, employment of mill workers and wages stabilized somewhat - but at levels about half of what they were during the peak year of 2005.

"Montana's forest industry will continue to deal with a combination of local and regional factors that make major recovery in the near term unlikely," said Todd Morgan, the bureau's director of forest industry research.

The slow recovery from the recession and the ongoing U.S. housing slump continue to impact the state's forest products industry, he said.

Lumber production at Montana sawmills had declined about 8 percent from the third quarter to the fourth quarter last year. For the year, state lumber production decreased about 1 percent from 2010 to 2011. Notably, lumber production in Montana is down about 50 percent from 2005, when U.S. housing starts were at their peak.

Production workers account for 30 to 40 percent of the workers in the state's forest products industry. Employment at the state's timber mills declined by 1 percent from the third quarter of 2011 to the fourth quarter. Employment last year was down by about half from 2005, reflecting the number of curtailments and permanent mill closures.

Production wages at timber mills, however, remained stable during the fourth quarter of 2011, declining slightly from $14.5 million in the third quarter to $14.2 million. The bureau attributed the relatively small decline to shortened holiday work weeks, temporary curtailments and other efforts by mills to keep costs down while still retaining employees. Production wages in 2011 totaled $57.5 million, about 2 percent higher than in 2010.

More than two-thirds of Montana's mill managers reported a significant shortage of raw material. Few mills reported full log yards, and several mills were actively purchasing timber to ensure a sufficient log inventory before the spring break-up, when the ground is usually too soft for logging.

Log prices have remained relatively flat in Montana over the past three years, the bureau reported. Local log prices have not increased as much as on the Pacific Coast, where there is ready access to international log markets. Montana mills could face higher log prices from competition with exporters.