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OPPORTUNITIES FOR SMALL BUSINESS IN FOREST PRODUCTS UTILIZATION1 

By CARROLL V. SWEET, Chief, Division of Industrial Investigations 

Forest Products Laboratory,

2 Forest Service 

U. S. Department of Agriculture 

By broad industry standards most units of the forest industries are small 

business. Only a few units, such as pulp and paper mills, constitute large 

business. By standards within the forest industries themselves, however, 

small business has a special meaning, which, so far as is known, no one has 

attempted to define. Probably the majority think of small business in terms 

of a portable circular sawmill as contrasted with a stationary band mill or 

perhaps a producer of green crating or turning squares in contrast to a manufacturer of kiln-dried dimension stock. 

Either the amount of invested capital or the number of employees is a common 

criterion of size of a business. But for our present purposes it seems 

desirable to reduce this criterion to the extent of marketing area. Accordingly, it is proposed that we think of small business as that which serves a 

local market rather than a wide regional or national market. Many instances 

can be thought of which do not conform to this definition, but they do not 

invalidate the main point in mind. Incidentally, many of the exceptions are 

not independent units but subsidiaries of a controlling parent organization. 

As high quality timber and preferred species become less plentiful in all 

localities and as advancement is made in the technology of processing and 

making big ones out of little ones, manufacture for local markets from local 

material has a better chance of successfully competing with shipments from 

distant sources. The producers of forest products who supply the national 

market pay from $10 to $25 per M in the case of lumber for transportation 

from mill to market. A manufactured product sold locally escapes such 

burdensome transportation charges and also the sales cost inherent in wide 

distribution. The ever-increasing cost of transportation is a sizeable 

item that small business, or local-mills-for-local markets, can count on to 

offset the greater production efficiencies that frequently attend large scale 

manufacture. In view of the foregoing it is apparent that more attention 

should bo directed in forest research to helping make the adjustments in 

forest products manufacture and distribution that will enable producers to 

serve and cater more to local markets. If reseach programs do not reflect 

that need, they should be revamped accordingly. 

1Paper for presentation before Conference on State and Federal Forest Products 

Research Program, Madison, Wis. , March 18-20, 1946. 

2 Maintained at Madison 5, Wis., in cooperation with the University of 

Wisconsin. 

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True, much of the small forest products business at present is too inefficient and too productive of low quality products to stand. up well in modern 

competition. This applies in various lines of production, such as building 

materials, container stock, turning, and factory dimension. Many practical 

men in contact with the rank and file of operators have formed the habit of 

thinking in terms of products that can be produced with practically no 

investment; in other words, what can be done on a shoestring. That habit 

has some good aspects but also several very bad ones. On the other hand, 

forest products research should not be directed solely to developments and 

techniques that can be applied only with large outlays of money. One of the 

needs in forest products research is to strike a proper balance to lift 

the horizon of the practical man and pull the research technician down to 

earth. 

More and more benefits of forest products research should reach the small 

units. What are the chances that research can bring into existence modern 

business enterprises which are geared closely to local timber and local 

markets? 

It may help clarify this point to refer here to a war research accomplishment, although not directly connected with forest products, recently 

announced by the University of Wisconsin. The university chemists appear to 

be well along toward developing a new method of fixing nitrogen from the air 

for fertilizer purposes whereby relatively small gas furnaces can produce as 

efficiently and economically as the large scale high investment, electric-arc 

plants previously thought necessary. It is worth our considering this 

accomplishment even though in another field in order to emphasize to ourselves that efficiencies in forest products utilization are not always 

dependent on the largest investments. Radical improvements can be developed 

for small unit producers if we do not give up before we start and if we have 

the resourcefulness and courage to think in terms, where necessary, of 

radical departures from time-honored practices. 

Perhaps you will accept this viewpoint fairly readily on the assumption that 

it refers primarily to improving small sawmills and encouraging the making 

of rough and ready products, like turning squares, industrial blocking, and 

the like which small sawmills are producing more and more in lieu of rough 

lumber only. This angle should by no means be minimized. However, I am 

here concerned principally with a less conventional setup and one for which 

there is not much of a counterpart at present. It is concerned with the 

gradual introduction of a type of small plant that is equipped to take 

advantage of the good features of the newer forms of products for housing, 

farm building and equipment, packaging, and the like. It is not so much a 

volume producer of rough products as it is a quality producer of finished 

or semi-finished products. It utilizes wood in the solid natural form to a 

considerable extent, but also may make use of veneer and plywood, or 

laminating and prefabrication. The plan of operation is likely to involve 

treating for decay and perhaps fire resistance. The plant can hardly 

include any pulping or chemical utilization processes, but its wastes are 

converted to chips, fiber, or flour for shipment to such a mill. Clearly 

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it is not a, single product business but one of some diversification to supply 

a reasonable range of the wood products that are used in the community in 

which the plant is located and to which its local species can most readily be 

adapted. Diversification of product means the integration of production, 

which is the desired key to better utilization and better forest management. 

Admittedly this specification of small forest industry is in too general 

terms to mean anything more than a starting point for discussion. If time 

permitted it night be treated in more definite terns. However, many of the 

questions that could be raised cannot be adequately answered at present, 

othervise the subject would be of little importance at a research conference 

of this kind. 

Within certain limits this type of small forest products business is widely 

applicable. The conditions and requirements, however, will vary widely as 

between States according to the prevailing type of agriculture, industry, 

and general living conditions to be found. What will apply to one State 

will not apply fully to another. Wood products for modern housing and farm 

buildings are a mainstay in all States, but vary some with the locality. 

Agricultural containers vary according to the region from fruit to vegetable 

and from cheese to meat and eggs. Similarly, finished wood parts for urban 

industrial consumption vary over a wide range of items which in turn vary 

also as between States. Such a scheme of operation, of course, will not be 

universally applicable, will not preclude present types of small business 

feeding into a national market. Also it will not meet the requirements of 

utilization for large holdings in isolated regions of the country. However, 

with respect to the latter it should not be overlooked that in many instances 

it is the localities close to major bodies of timberland that are the rapid 

growing farm communities. It is the growing farm communities which comprise 

the largest market for wood products the world around, a condition which has 

always applied in the past and which will probably apply more and more as 

time goes on. 

One arrives at deductions fairly close to those outlined above by recalling 

such recognized facts as follow: 

(1) With the cutting out of the large mills many sawmills in the South have 

found it more and more advantageous to sell their product close at home, 

often at retail. 

(2) A leading West Coast shipper points out that a much larger proportion 

Of the Douglas-fir cut will be consumed on the West Coast than was the case 

prior to the war. 

(3) More fabrication at the point of production is the course which 

lumbermen prescribe for themselves. 

(4) Retailers and technical men point out that buyers of houses and of 

farm buildings are becoming more interested in the finished product than in 

the raw material which goes into it. 

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(5) Fabricated building products take higher freight rates than do raw 

materials and usually are more bulky. If they are to be supplied in place 

of raw material they have to be assembled relatively close' to points of use, 

(6) Many retail lumber yards have started to prefabricate farm structures 

and equipment, and the trend seems to be developing rapidly. 

Hence it seems to be recognizing and conforming to the trend of the times to 

plan forest products research in support of local manufacture for local use. 

Much research still has to be done to give direct support to the development 

here referred to, Some of it is basic in the sense that it is applicable to 

all regions, for example, further development of the small dry kiln, further 

simplification in laminating and prefabricating methods, and further improvement in use of wood as fuel. Much of it is regional or state-wide in the 

sense that specific and local adaptations of general principles are needed 

with respect to better methods of processing, better form of products, and 

better equipment for use with qualities of wood locally available, Pilot 

plant tests to determine costs and demonstrate methods will be important 

factors. Although there will be a similarity between States, the conditions 

vary so much among States that several different research programs can be 

undertaken without much overlapping of one with another. 

If research work to this end were to be undertaken in various States according to the needs of local conditions, it should greatly hasten the day of 

more stable and permanent forest industry. It might sacrifice a little of 

the glamour that goes with discovering a new plastic, for example, but it 

should have a public appeal and be of great public benefit. 

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