United States

Department of

Agriculture

Forest Service

Pacific Northwest

Research Station

General Technical

Report

PNW-GTR-493

April 2002

Evaluation of the Retail Market

Potential for Locally Produced

Paper Birch Lumber in Alaska

David L. Nicholls
Author David L. Nicholls is a forest products technologist, Wood Research and Development

Center, 204 Siginaka Way, Sitka, AK 99835-7316.
Abstract Nicholls, David L. 2002. Evaluation of the retail market potential for locally produced

paper birch lumber in Alaska. Gen. Tech. Rep. PNW-GTR-493. Portland, OR: U.S.

Department of Agriculture, Forest Service, Pacific Northwest Research Station. 17 p.

An evaluation of the retail market potential for random-width paper birch (Betula papyrifera

Marsh.) lumber in Alaska was conducted. Information from lumber manufacturers and

retail managers was used to identify current barriers to customer acceptance of locally

produced paper birch lumber. Major retail markets and paper birch producing regions

throughout Alaska were considered in this study.

Results indicated generally favorable retail market potential for Alaska paper birch with

strong interest from both lumber producers and retail store managers. Key issues that

were identified included (1) the ability of lumber producers to secure dependable log

supplies, (2) consistent moisture content control and dimensional stability of kiln-dried

lumber, and (3) appearance features that could potentially influence purchasing decisions,

such as heartwood or sapwood variations. Finding suitable selling arrangements between

relatively small lumber producers and retailers also was identified as a potential barrier

to successful sales programs. Recent trends in Alaska indicate that greater volumes of

paper birch lumber are being kiln dried to the quality standards needed for retail market

sales.

Keywords: Market potential, paper birch, lumber, wood products, Alaska.
1

Much of the past research on value-added wood products markets in Alaska has focused

on softwood lumber for the construction industry. The current domestic market for Alaska

solid wood products, including lumber and timbers, has been estimated to be between

80 and 90 million board feet (MMBF) per year, and estimated demand for kiln-dried lumber

is 65 to 70 MMBF per year (McDowell Group 1998). In recent years, several hardwood

sawmills in Alaska have purchased dry kilns and have started lumber-drying programs.

There seems to be strong potential for selling Alaska birch1 in local retail markets if the

lumber can be kiln dried to consistent moisture content levels. Much of the birch lumber

now sold at the retail level in Alaska is imported from the Eastern United States.

This study was designed to evaluate the retail market potential of hardwood lumber

produced in Alaska. Although the focus of the study was Alaska birch lumber of random

width and random length for sale in retail outlets, the markets for secondary manufacturers

also were considered. The geographic focus of this study was for all birch-producing

regions of Alaska, including the Anchorage bowl, the Matanuska-Susitna Valley region,

the Kenai Peninsula, and the Fairbanks area (fig. 1). Information for this study was

accumulated from many sources, including retail lumber outlets, hardwood lumber

sawmills, and secondary manufacturers (including cabinet manufacturers and fine

woodworking facilities).

The primary objective was to evaluate the retail market potential of Alaska birch lumber

within the major birch-producing regions in the state. Based on this information, the

potential for increasing hardwood lumber production to meet current market needs was

evaluated. A secondary objective was to identify useful information and product attributes

that could assist sawmill operators, lumber dryers, secondary manufacturers, and retail

managers in successfully producing and selling Alaska birch lumber within local retail

markets.

Several studies have evaluated the market potential for eastern hardwoods and have

considered issues of interest to industry market sectors (Bush and Araman 1990, Bush

et al. 1991b, Forbes et al. 1994). Product and supplier attributes were evaluated for four

segments of the hardwood lumber industry including furniture producers, millwork producers,

cabinet manufacturers, and dimension and flooring producers (Bush et al. 1991b). Several

business strategies for competing successfully within hardwood manufacturing industries

were presented including cost leadership, focus strategies, and product differentiation.

Focus marketing strategies were identified as a logical choice for smaller firms, which

would include most of the hardwood producers in Alaska (Bush et al. 1991b). In focus

strategies, a particular segment of the market is targeted, and customer loyalty is sought

by gaining knowledge of those attributes that are most important in purchasing decisions.

An example of a focus strategy relevant to Alaska hardwood producers might include

marketing kiln-dried paper birch lumber through local retail centers to home woodworkers

for specific projects, such as kitchen cabinets. In this case, lumber manufacturers would

need to be aware of the product attributes most important to kitchen cabinet builders

and then supply hardwood lumber to consistently meet those quality standards. A

Introduction

Objectives

Literature Review

1 Throughout this paper, all varieties of paper birch (Betula papyrifera

Marsh.) wood grown in Alaska will be referred to as Alaska birch.
2

Figure 1—Major paper birch (Betula papyrifera var. humilis) producing regions and

major retail markets in Alaska.

drawback of focus strategies is that to be successful, producers must be able to correctly

identify key product attributes, something that could be difficult to achieve for small

firms with limited marketing resources.

Product differentiation strategies based on unique or distinguishing attributes would

position products away from competing products (Forbes et al. 1994). For example, the

distinguishing attributes of paper birch lumber, including color, grain patterns, and heartwood-sapwood variations, could be emphasized to distinguish it from leading hardwoods,

such as red oak. Differentiation or niche market strategies may be most viable for larger

firms that can provide adequate product promotion, advertising, and customer service

support (Bush et al. 1991b). For Alaska’s relatively small hardwood lumber producers,

product differentiation would not be an effective strategy unless producers could

combine resources into a cooperative structure.

A third marketing strategy, cost leadership, would most likely not apply to Alaska’s

hardwood producers because it is typically associated with large-scale producers of

commodity products (Bush et al. 1991b). Interestingly, at least one of the Nation’s

largest wood products producers does seem to be producing and marketing hardwood

lumber at this level and does have a presence in retail home supply centers in Alaska

(Weyerhaeuser Company, n.d.).

Attributes that were critical (i.e., determinant) in hardwood lumber purchasing decisions

were evaluated through a mailed survey to large hardwood producers (Bush et al. 1991b).

A total of 33 attributes was rated, and the most important attribute identified was accurate

grading practices. Lumber-drying attributes, including moisture content accuracy, straightness, absence of surface checks, and absence of end splits, were consistently given

high importance ratings.

1. Anchorage metropolitan area

2. Matanuska-Susitna valley

3. Kenai Peninsula

4. Fairbanks area
3

In a related study, Forbes et al. (1994) ranked product and supplier attributes for purchasing

decisions in the furniture industry. The leading four attributes evaluated were (1) load-toload consistency; (2) accurate grading; (3) no warp, crook, and bow; and (4) accurate

moisture content. All four of these could be either directly or indirectly related to lumber

drying quality. It is interesting that the fifth most important attribute (quote competitive

prices) was the highest ranking related to price. Based on this study, it seems that dryingrelated attributes and lumber-quality issues are often considered more important than

lumber price.

The importance of consistent lumber-drying practices for paper birch lumber in the Great

Lakes region was evaluated for several drying methods including high temperature drying,

dehumidification drying, and conventional temperature drying (Larson et al. 1986). An

important quality consideration when drying paper birch lumber was the presence of darkwood, discolored streaks of high-moisture-content wood centered near the pith. Because

this type of wood was less permeable than wood not containing these features, it was

necessary to equalize lumber samples containing darkwood to ensure consistent moisture

content and lumber quality (Larson et al. 1986). Lumber that is not dried to uniform

moisture contents is at increased risk of warp and other dimensional stability problems.

It is not known how prevalent darkwood and other moisture content variations are within

Alaska birch, but it is important to recognize its potential as well as the need to equalize

and condition lumber properly.

Bush et al. (1991a) evaluated competition in the United States hardwood industry in

terms of competitive strategies used by companies ranging from small to large in size.

Smaller firms often do not have the resources to maintain a sales staff and, therefore,

rely on lumber wholesalers to market their lumber. Most, if not all, of Alaska’s hardwood

producers would fit into this category. A disadvantage of selling through wholesalers is

that producers often have only limited contact with lumber users (i.e., the retail customers).

Consequently, many of the smaller firms may tend to be production oriented with only

limited relations with end users and, therefore, might not be fully aware of consumer

preferences (Bush et al. 1991a ). Alternatively, the product requirements of the wholesaler

could reflect consumer preferences and provide a feedback mechanism to the smaller

firms. Selling through wholesalers also would most likely result in lower net lumber prices

because of commissions and other fees not associated with direct-to-consumer sales.

Product and service attributes also have been evaluated for Pacific Northwest hardwoods, including red alder, a species that has been gaining strong market acceptance

(CINTRAFOR, n.d.). Marketing variables that received high importance ratings included

company reputation, high-quality control standards, and on-time delivery. A favorable

company reputation may be difficult for small producers or new startup ventures to

achieve, and many of Alaska’s hardwood producers could be faced with this challenge.

Several product and service attributes have been identified as being important for many

industry sectors including hardwood furniture manufacturers (Sinclair et al. 1989). The

highest rated responses were usually related to product quality and company reputation.

In addition, accuracy in lumber grading was often rated as important. Although price is

important, it should not become the most important marketing consideration, and in

many of the studies, price was ranked after several other quality-related attributes.
4

Because few hardwood lumber producers in Alaska have become established and,

therefore, cannot rely on strong company reputations as a measure of credibility, product

quality becomes important. The best opportunity for improving and maintaining lumber

quality may be through consistent lumber-drying practices. Indeed, in recent years, there

has been a strong trend among Alaska lumber manufacturers to incorporate lumber

drying into their manufacturing practices.

Other west coast hardwoods also have strong potential for utilization including Pacific

Northwest oaks for flooring markets (Green et al. 1995). In California alone, about 29

percent of the state’s 12.5-billion-cubic-foot hardwood resource inventory is of commercial

timber size (Shelley 1997). Niche markets were identified as having the most potential

for California hardwood producers to be successful. Shelly (1997) recommended that

producers focus on defining product quality in terms of key attributes, such as moisture

content, size tolerances, and surface quality.

Paper birch (Betula papyrifera Marsh.) occurs naturally from interior and western Alaska

east to the Atlantic provinces of Canada, and extends south to the Great Lakes region

(fig. 2). Paper birch is one of several birch species found in North America and has lower

specific gravity and side hardness than the other eastern birches, including yellow birch

(B. alleghaniensis Britt.) and sweet birch (B. lenta L.) (table 1). Because of this, paper

birch may be considered less desirable than its eastern counterparts for some fine

woodworking applications and flooring where higher hardness properties are important.

Paper birch, however, has been used extensively for applications such as dowel products,

custom turnings, cabinets, bowls, and other specialty products. Paper birch also is the

preferred species for products requiring a smooth finish with little or no taste including

tongue depressors, popsicle sticks, chopsticks, salad utensils, and other kitchen products.

North American

Birch Resources

Figure 2—Geographic range of paper birch (Betula papyrifera Marsh.)

in North America (species range is indicated in white).
5

Figure 3—Geographic range of paper birch (Betula papyrifera var.

humilis) in Alaska (species range is indicated in black).

Table 1—A comparison of specific gravity and hardness of commercial North

American birch species

Wood property at

Species 12-percent moisture content

Common name Scientific name Specific gravity Side hardness (lbf)

Paper birch Betula papyrifera Marsh. .55 910

Yellow birch Betula alleghaniensis Britt. .62 1,260

Sweet birch Betula lenta L. .65 1,470

Source: U.S. Department of Agriculture, Forest Service 1999.

Birch species are often favored for use in veneers and plywood, and a recent evaluation

of hardwood plywood purchases ranked birch as one of the leading species for face

veneer use in plywood, representing 10 percent of total purchases by architectural woodworkers in 1997 (Forbes et al. 2001). Rodman and Mahoney (1999) studied paper birch

resources and markets in the inland Pacific Northwest along with other native inland hardwood species. They found that current inventory summaries are inadequate to accurately

estimate both the quantity and quality of birch and other hardwood resources and that

current use and characteristics of local manufacturers are much the same as in Alaska.
6

Within Alaska, paper birch forests predominate in the interior and south-central regions

of the state (fig. 3). Alaska paper birch (B. papyrifera var. humilis) occurs primarily in

interior Alaska, whereas Kenai birch (B. papyrifera var. kenaica) is found in south-central

Alaska as well as some interior locations (Anon. 1976). The total volume of sawtimber for

all commercial species in interior Alaska is estimated to be about 31 billion board feet

(Wheeler, n.d.). Alaska birch accounts for about 8 percent of this total, a volume of about

2.5 billion board feet. The most extensive forests of paper birch occur in the upper Cook

Inlet region at elevations of less than 500 meters (Wheeler, n.d.).

Almost all the birch lumber produced in Alaska is used within the state. Past uses for

locally produced Alaska birch have included kitchen cabinets, office furniture, fine woodworking applications, and gifts and crafts. Statistics for hardwood lumber exports from

Anchorage, Alaska, indicate almost no shipments within the past 5 years and relatively

few during the last 13 years (table 2).

Although hardwood lumber for home woodworking in Alaska represents a much smaller

market in terms of board feet than does softwood construction lumber, it is nonetheless

important because of its potential for adding product value during manufacturing and

drying. Kiln-dried hardwood lumber sold through local hardware and homecare centers

can often carry a retail price of more than $2.00 per board foot. Kiln drying can considerably

increase the value of hardwood lumber, which is especially important in markets where

there is little demand for undried hardwood lumber.

Paper Birch in

Alaska

Table 2—Volume and average value of hardwood lumber exports

To all countries To Japan only

Lumber Average Lumber Average

Year volume value volume value

Dollars per Dollars per

Thousand thousand Thousand thousand

board feet board feet board feet board feet

1987 3,316 699.94 361 761.77

1988 8,767 767.31 2,045 709.54

1989 64 656.25 25 760.00

1990 0 — 0 —

1991 0 — 0 —

1992 210 209.52 0 —

1993 301 548.17 92 1,369.57

1994 11 1,133.14 0 —

1995 0 — 0 —

1996 0 — 0 —

1997 0 — 0 —

1998 26 1,373.03 0 —

1999 51 1,201.04 25 864.12

Source: U.S. Department of Commerce 1999.
7

About eight sawmill facilities in Alaska are currently manufacturing and drying Alaska

birch lumber. Because of the small size of many of the producers, as well as the seasonal

and intermittent production of some facilities, it is difficult to establish precise estimates

of lumber production. Several dehumidification and hot water dry kilns have recently been

installed, thus demonstrating a trend toward high-quality lumber products under carefully

controlled environmental conditions.

Market information and sales potential of Alaska birch lumber were evaluated for retail

sale directly to consumers and also for secondary manufacturers producing fine woodworking products. Information from retail managers and dry kiln owners was evaluated

during site visits conducted between January and May 2001. A limited number of dry

kiln manufacturers also were contacted about quality lumber drying practices, with a

primary interest in lumber conditioning procedures used in dehumidification drying.

Retail lumber sales outlets within the interior and south-central regions of Alaska were

contacted to discuss their hardwood lumber sales programs and whether or not locally

produced Alaska birch was part of their product inventory. The primary markets studied

were (1) the Anchorage metropolitan area, (2) the Kenai-Soldotna area, and (3) the Fairbanks

area. The main objective of this component of the study was to assess current hardwood product offerings as well as the market potential for Alaska birch lumber for sale

directly to consumers in retail centers.

Specific questions were on topics such as current prices and volumes of hardwood

lumber being sold, lumber quality and sizes desired, and current lumber marketing

practices. Also of interest were the perspectives of store managers on whether consumers

would be willing to substitute locally produced Alaska birch lumber for other imported

species, such as the oaks and maples. Product pricing issues were not emphasized but

were still given consideration. Businesses were contacted primarily through onsite

interviews and phone calls.

Owners of birch-producing sawmills also were contacted through phone conversations

and site visits. Questions focused on their current marketing practices and also on desirable

attributes for Alaska birch lumber. Lumber drying practices, secondary manufacturing

practices, and plans for expansion of facilities also were discussed. Information from a

limited number of secondary processors and fine woodworking centers was evaluated.

Questions again considered the market potential of Alaska birch products, but in this

case, the primary market was professional woodworkers and cabinet producers. Discussions

focused on the product attributes and appearance features that were most important to

consumers. Information from several dry kiln manufacturers focused on quality drying

practices that would be relevant to manufacturers of Alaska birch lumber. A specific

topic included the conditioning practices needed to produce dimensionally stable lumber

in dehumidification kilns that do not have traditional (steam-based) conditioning systems.

Procedures
8

Alaska birch lumber producers were generally receptive and interested in the idea of

marketing lumber of random widths through local retail outlets. Several producers had

previous experience in retail sales efforts, including at least one who currently sells

lumber through a wholesaler who, in turn, supplies local retail centers. Another producer

had been in contact with homecenters regarding retail sales efforts designed to create

partnerships with local suppliers. Several producers had sold hardwood lumber to walkup

customers, although this did not seem to be a significant portion of their business.

A frequently mentioned concern among lumber producers was the lack of steady supply

of Alaska birch logs. Most producers obtained their sawlogs intermittently, responding to

opportunities such as land clearings, construction activities, and road building. Some

manufacturers purchased higher quality logs from distant sources rather than using locally

harvested, smaller diameter logs. It seems that predictable and sustainable harvests of

paper birch timber in Alaska could help create a more stable supply chain between sawmills and local retail outlets and could likely stimulate manufacturing development by

stabilizing the availability of raw material.

Lumber manufacturers frequently commented that they preferred to specialize in fewer,

rather than more, steps in the production and marketing process. For example, selling to

a single lumber wholesaler rather than several retail outlets would simplify the marketing

and sales functions. Another situation many secondary manufacturers were faced with

was deciding when to become active in the production process. Wood products producers

who are willing to do their own sawing and drying may be better equipped to handle supply

uncertainties than those who rely on outside sources (which may be intermittent) to

supply kiln-dried, surfaced lumber. An additional consideration for many producers is

whether their birch lumber production is a core business for them or a relatively small

part of a diversified business structure that could include other ventures. For small, familyowned businesses, the decision to expand operations could result in added administrative

responsibilities and other commitments that the owners might not have the time or

resources to pursue, even if greater sales potential were possible.

Appearance features of birch lumber generally were considered important and, therefore,

had a strong influence on customer preferences. A lot of color variation between heartwood and sapwood was often cited as a desirable attribute, especially for home hobbyists

and woodworkers. A small amount of degrade, including small knots and other figure

patterns, was generally not objectionable to retail customers. Spalting patterns (regions

of incipient decay in birch) were mentioned as a desirable appearance feature. Because

spalting is often accompanied by soft, weak wood, however, its use in fine woodworking

applications could be somewhat limited. Several producers mentioned that the importance

of appearance attributes was generally determined on an individual basis and that no

generalizations could be made about consumer preferences. In general, lumber from

smaller diameter stems such as those found in the interior Alaska region was more likely

to contain knots and other growth-related defects than lumber from larger diameter trees

in the Matanuska-Susitna Valley. It was noted that clear, defect-free, white sapwood

could actually be less aesthetically desirable for woodworking purposes than lumber

containing color variations and other character features.

Log Supply

Vertical Integration

Appearance Features

Results—Lumber

Producer

Perspectives

General Retail Sales

Potential
9

Dimensional stability was cited on many occasions as important for successful retail

sales of hardwood lumber. Alaska birch lumber may be perceived as being dimensionally

unstable in some instances, in part because of naturally occurring features such as

growth stresses in trees but also because of improper drying practices. As more dry

kilns in Alaska are being established with controlled temperature and relative humidity

conditions, however, instability seems to be of less concern. In most regions surveyed,

there was little or no market for green (unseasoned) Alaska birch lumber.

Retail sales managers were generally enthusiastic and receptive to the possibility of

carrying Alaska birch lumber. At least two outlets displayed locally produced birch as

part of their normal inventory; at least one other outlet could make it available to customers

on relatively short notice. Another major retail center had programs in place that encouraged

local businesses (including hardwood lumber producers) to become business partners.

Almost all the retail managers contacted seemed interested in participating in marketing

trials of locally produced birch. It was noted, however, that sales of niche products, such

as paper birch lumber, could soon reach saturation in smaller markets if sold through

several retail outlets.

The primary concern of retail managers was in maintaining a consistent product supply

that would be available to customers for immediate purchase. Only one of the retail

managers mentioned that an unsteady supply could be acceptable but only if matched

by an unsteady demand (seasonal or otherwise). One manager commented that a steady

and consistent supply was particularly important during winter when many home woodworkers would be purchasing lumber for projects.

A frequent comment from retail sales managers was the need for kiln-dried lumber of

consistent and uniform quality. Other concerns about product attributes of Alaska birch

lumber included potential staining problems and the tendency of birch to be more easily

dented than some of the other species used for fine woodworking, having higher specific

gravities. Softness was particularly a concern for spalted birch, which although desired

by many for its decorative qualities, is often characterized by regions of incipient decay,

and therefore tends to be easily deformed under even relatively small pressure.

The hardwood lumber inventory in many of the retail centers consisted mostly of red oak

(Quereus falcata Michx.). Few stores had locally produced Alaska birch lumber as part of

their displayed inventory, although several stores carried eastern yellow birch lumber and

plywood products. Several stores sold small amounts of poplar (Liriodeudron L.), maple

(Acre L.), and alder (Alnus Mill.) lumber, thereby indicating a willingness to market lessused or niche species. At least one retail center had estab-lished a program to encourage

local manufacturers to become lumber suppliers. Another retail center had some degree

of local authority to make purchasing decisions without having to go through a corporate

process. This could create a favorable environment for Alaska birch producers to work

with decisionmakers at the local level and also to find out what criteria are considered

most important by retail managers. In several cases, small, defect-free hardwood cuttings

were sold for specialty applications (including at least one instance for Alaska birch).

This product was generally less than one board foot in size and carried unit prices

considerably higher than random-width lumber of the same species. At least one retail

center sold moldings and other profiled products milled from local Alaska birch.

Product Quality and

Dimensional Stability

Results—Retail

Sales Manager

Perspectives

General Retail Sales

Potential

Product Offerings and

Supply
10

In general, most of the hardwood lumber sold at large retail centers was characterized

by uniform color and texture, particularly for red oak and maple. Most of the retail lumber

found in the larger centers lacked heartwood-sapwood color variation, spalting patterns,

or other decorative features. Two notable exceptions to this trend included the sale of

yellow poplar lumber and the use of hickory (Carya Nutt.) for kitchen cabinets (both of

which can be characterized by distinct heartwood-sapwood color variations).

“Brightwoods” were a popular retail standard for many hardwood lumber products. This

could be a disadvantage for Alaska birch, which is often characterized by figure patterns

or heartwood-sapwood variations. Successful niche marketing, however, could take

advantage of the fact that Alaska birch can be distinguished from some of the more

popular eastern hardwoods based on these appearance features.

There was a general consensus that Alaska-specific marketing practices such as a

“Made in Alaska” label would not significantly increase sales of retail lumber. In addition,

the practice of shrink-wrapping individual lumber pieces for retail sale was generally not

viewed as being beneficial.

Secondary producers included businesses that purchased kiln-dried birch lumber for

remanufacture into value-added products such as furniture, moldings, and crafts. These

firms were not directly involved in retail lumber sales but were able to provide additional

insights into marketing opportunities for primary producers. Their viewpoints were

generally in close agreement with many of the primary manufacturers and retail

managers contacted.

Kiln-dried, dimensionally stable lumber was indicated as an important prerequisite for

primary and secondary manufacturing. Also important was the need for accurately graded

lumber so that lower grades would not be included when clear lumber was required. The

effect of small knots and other growth-related defects on lumber value, and also on

customer preferences, was not emphasized in this study but is potentially a key consideration in successful retail marketing. Given the high incidence of minor defects and

knots that are found in Alaska birch, further information to characterize the presence of

these defects (including allowable size and number) could be beneficial, particularly

from the lower grades.

Concerns about the limited supplies of high-quality birch sawlogs and the availability of

kiln-dried lumber also were mentioned. Substituting locally produced Alaska birch for

imported species such as maple was indicated as a possibility if steady supplies could

be obtained locally. In general, secondary manufacturers seemed receptive to the idea

of incorporating more Alaska birch into their product offerings. Many of the secondary

manufacturers indicated that color variations found in birch would be a desirable

marketing feature for their customers.

Lumber quality considerations, including uniform moisture contents and proper relief of

drying stresses, were considered important by retail managers in Alaska and also through

other marketing studies. Most of the smaller lumber-drying systems in Alaska do not include

steam boilers and therefore would not be capable of conditioning lumber by conventional

means. At least one dry kiln manufacturer has addressed this need by including small humidifying systems that can inject a water spray into the drying chamber. These systems

are available at low cost and are easily operated by using conventional water supplies.

Appearance Features

Miscellaneous Marketing

Considerations

Results—Secondary

Manufacturer

Perspectives

Results—Dry Kiln

Manufacturer

Perspectives
11

Many of the barriers to successful Alaska birch lumber sales seem to begin with dependable

log supplies. Much of the Alaska birch sawtimber is obtained from land clearing and other

intermittent activities rather than being harvested on a sustainable basis from managed

forests. Primary and secondary manufacturers, as well as retail managers, are all impacted

by the inconsistent supply of birch logs and lumber. Compounding the problem of sawlog

supply is the fact that many of the birch producers in Alaska are not large enough individually

to supply major retail centers on the consistent basis that the centers require.

Because few, if any, hardwood lumber producers in Alaska would be large enough to manage

independent retail sales and marketing programs, a cooperative approach between producers

might result in greater overall success. For example, if all sawmills within an economic

transportation distance supplied a single drying facility with green lumber, this facility could

supply kiln-dried lumber of consistent and dependable quality to one or more retail sales

centers. Under this scenario, the uniformity and overall quality of retail lumber would likely

be much higher than under a scenario of several producers supplying lumber dried in their

own facilities under potentially different conditions.

The retail market potential for Alaska birch might improve (versus current sales levels) once

local producers can become established in a retail sales environment. That is, the ability of

producers to “get their foot in the door” could be a key step in establishing successful sales

programs. Alaska’s smaller manufacturers could develop marketing relations with a limited

number of local customers or retail sales centers, which could consume a large portion of

the company’s production. Advantages of this type of business arrangement include minimal

sales force requirements, consistent cash flow, and the ability of a single large customer to

protect the producer from short-term market fluctuations (Bush et al. 1991a).

Given the small size of most birch lumber manufacturers in Alaska, focus strategies might

be the most successful marketing approach to use (Bush et al. 1991b). In this strategy,

certain consumer segments would be identified, and marketing efforts would be directed at

satisfying the needs of these market segments. For example, if it were determined that

local woodworkers preferred birch for kitchen cabinet projects, then desirable product attributes

could be identified for this group of consumers. Lumber manufacture and marketing practices

could then be designed to emphasize or enhance these product attributes. Alternatively,

this same focus strategy could be applied to other woodworking applications such as

furniture or flooring.

One disadvantage of focus strategies is that a certain level of market research is needed

to determine customer needs, and this might be difficult for Alaska’s smaller producers to

achieve individually. Lumber manufacturers should communicate with retail managers and

sales staff to determine the most important customer needs and important product attributes

(Bush and Araman 1990). This feedback would help ensure that customer needs are being

met, and lack of information in this area could be a barrier to successful focus strategies.

An alternative to focus strategies would be a differentiation, or niche market strategy, in

which a given product is perceived as being unique on an industry-wide basis (Bush et al.

1991b). For example, producers of Alaska birch lumber might promote the benefits and

desirable attributes of their product versus other leading hardwood species, such as red

oak or maple. Heartwood-sapwood color variations and unique grain patterns are

Conclusions

Log Supply and

Sawmill Capacity

Competition Versus

Cooperation Between

Producers

Appropriate Marketing

Strategies
12

characteristics of Alaska birch that could be used to help distinguish it from competing

species. Product differentiation strategies might be difficult for Alaska’s smaller producers

to accomplish with limited resources for promotion, advertising, and customer support

(Bush et al. 1991b).

Product attributes are related to the presence of desirable features and characteristics.

Service attributes, on the other hand, are typically related to the ability of a supplier (or

producer) to fulfill important customer needs (Bush et al. 1991b). Several product and

service attributes have been identified as being important for various industry sectors,

including furniture manufacturers (Sinclair et al. 1989). The highest rated responses were

usually related to product quality and company reputation. In addition, accuracy in lumber

grading was often rated as being important. Although price is important, it should not

become the most important marketing consideration, and in many of the studies, price

was ranked as less important than several other quality attributes (Sinclair et al. 1989).

Most retail managers surveyed in Alaska did not mention price as being an overriding

consideration influencing the market potential of locally produced birch lumber.

For buyers and sellers of Alaska birch, the most important product attribute identified in

this market study was lumber quality. Specific lumber quality features included uniform

moisture content free of residual drying stresses. The most important service attribute

identified was related to product supply, for both logs and for hardwood lumber. This was

especially important for retail lumber sales during the winter home-woodworking season.

In past research, the least important product attribute for hardwood products was the

presence of a trademark or product logo (Bush et al. 1991b). This is consistent with the

prevailing attitude of most Alaska retail lumber managers, who generally did not view a

“Made in Alaska” designation as being beneficial. Many managers did feel, however, that

consumers would give preference to products that were manufactured in the state.

Several studies have recognized that some of the most important product attributes are

related to lumber drying quality. Key attributes identified in these studies included moisture

consistency from load to load, and the absence of warp, crook, and bow (Bush et al.

1991b, Forbes et al. 1994, Sinclair et al. 1989). Lumber drying quality also has been

identified as an important consideration in maintaining dimensional stability of edgeglued birch panel products (Bowyer et al. 1986).

Producers of Alaska birch lumber can use these findings through increased attention to

kiln-drying practices, including close control over final moisture content and the use of

conditioning treatments to relieve drying stresses. Recent trends in Alaska have favored

the use of controlled drying conditions in dehumidification kilns and hot water kilns.

Inexpensive systems are also available to provide conditioning stress relief for dry kilns

that do not have steam boilers.

Buyers are able to reduce the risks of purchasing hardwood lumber in at least two ways:

(1) by dealing with established suppliers having good reputations and (2) by purchasing

from suppliers that provide a product of known (and consistent) quality (Bush et al.

1991b). Alaska birch lumber producers who have not yet established strong reputations

Product Attributes Versus

Service Attributes

Lumber Drying Quality
13

will need to reduce purchaser risks by producing lumber with consistently high-quality

standards. Examples of this could include specifying final moisture content, color

characteristics, levels of heartwood and sapwood variations, and other key product

attributes.

Many lumber producers, secondary manufacturers, and sales managers expressed interest

in the possibility of marketing paper birch lumber in a retail environment. Almost all the

retail sales managers contacted were receptive to the idea of test marketing trials of

locally produced birch lumber. Some of the retail centers had the authority to initiate

sales programs for locally produced lumber rather than going through more lengthy

processes involving their corporate centers. Other retail centers were interested in carrying

a variety of hardwood species, not just the most popular species. Red oak and maple,

however, predominated at most retail centers visited.

Some retail centers carried secondary hardwood species having little shelf space (for

example, red alder lumber), thus indicating a willingness to carry niche species, which

could possibly include Alaska birch. Species having heartwood-sapwood variations

similar to birch were observed on several occasions. Yellow poplar lumber was common,

as were kitchen cabinets manufactured from hickory. Therefore, it seems that heartwoodsapwood variations would not limit the retail potential of birch lumber products. At least

one major retail center had a special program in place designed to encourage smaller

local producers to participate in test marketing trials. Overall, retail centers did not seem

averse to developing business relations with smaller local producers who are able to

supply products of a uniform quality on a consistent and timely basis.

Overall Retail Potential of

Locally Produced Alaska

Birch Lumber
14

Anon. 1976. Alaskan woods, series no. 2: Alaska’s birch. [Place of publication unknown]:

Alaska Department of Natural Resources; U.S. Department of Agriculture, Forest

Service, Alaska Region.

Bowyer, J.L.; Kallio, E.; Monson, C.R. [et al.]. 1986. Standard blanks: a new alternative

to hardwood lumber. Forest Products Journal. 36(2): 67-73.

Bush, R.J.; Araman, P.A. 1990. Optimizing product attributes to gain competitive

advantage in markets for hardwood lumber. In: Symposium on specific forest

products opportunities. [Place of publication unknown]: [Publisher unknown]: [Pages

unknown].

Bush, R.J.; Sinclair, S.A.; Araman, P.A. 1991a. A qualitative investigation of competition

in the U.S. hardwood lumber industry. Forest Products Journal. 41(11/12): 43-49.

Bush, R.J.; Sinclair, S.A.; Araman, P.A. 1991b. Determinant product and supplier

attributes in domestic markets for hardwood lumber. Forest Products Journal. 41(2):

33-40.

CINTRAFOR. [N.d.]. An assessment of the PNW hardwood lumber industry,

CINTRAFOR fact sheet 38. http://www.cintrafor.org/FS38.htm. [Date accessed

unknown].

Forbes, C.L.; Jahn, L.G.; Araman, P.A. 2001. An investigation of hardwood plywood

markets. Part 1: architectural woodworkers. Forest Products Journal. 51(3): 17-24.

Forbes, C.L.; Sinclair, S.A.; Bush, R.J.; Araman, P.A. 1994. Influence of product and

supplier attributes on hardwood lumber purchase decisions in the furniture industry.

Forest Products Journal. 44(2): 51-56.

Green, D.; von Segen, W.; Willits, S. 1995. Western hardwoods value-added research

and demonstration program. Gen. Tech. Rep. FPL-GTR-85. Madison, WI: U.S.

Department of Agriculture, Forest Service, Forest Products Laboratory. 43 p.

Larson, T.D.; Erickson, R.W.; Boone, R.S. 1986. Comparison of drying methods for

paper birch SDR flitches and studs. Res. Pap. FPL-RP-465. Madison, WI: U.S.

Department of Agriculture, Forest Service, Forest Products Laboratory. 13 p.

McDowell Group. 1998. The Alaska market for value-added lumber products. [Place of

publication unknown]: [Publisher unknown]; final report.

Rodman, S.; Mahoney, R. 1999. Exploring the feasibility of increasing utilization and

expanding markets for native hardwood species in the inland empire of the Pacific

Northwest. Moscow, ID: [Publisher unknown]. 79 p.

Shelley, J.R. 1997. An examination of the oak woodland as a potential resource for

higher-value wood products. Gen. Tech. Rep. PSW-GTR-160. Albany, CA: U.S.

Department of Agriculture, Forest Service, Pacific Southwest Research Station. 12 p.

Sinclair, S.A.; Bush, R.J.; Araman, P.A. 1989. Marketing hardwoods to furniture

producers. In: 17th annual hardwood symposium of the Hardwood Research Council—

making the most of the hardwood resource: Proceedings of a conference. [Place of

publication unknown]: [Publisher unknown]: [Pages unknown].

U.S. Department of Agriculture, Forest Service. 1999. The wood handbook—wood as

an engineering material. Gen. Tech. Rep. FPL-GTR-113. Madison, WI: Forest Products

Laboratory. 463 p.

Literature Cited
15

U.S. Department of Commerce. 1999. Volume and average value of hardwood lumber

exports from Anchorage, Alaska, 1987-99. [Place of publication unknown]: [Pages

unknown].

Weyerhaeuser Company. [N.d.]. Weyerhaeuser fact sheet. Wood Products Overview.

[Place of publication unknown].

Wheeler, E.E. [N.d.]. Alaska paper birch. Alaska Division of Community and Business

Development, Department of Community and Economic Development.

http://www.dced.state.ak.us/econdev/tree5e.htm. (10 August 2001).
16

For retail store managers, information about the market potential of birch hardwood

lumber was based primarily on the following questions.

1. What hardwood species do you currently sell for the home craftspeople and

hobbyists?

2. What sizes and thicknesses are in greatest demand (random width and length

versus specific sizes)?

3. What volume of each species is sold (board feet per year)?

4. What are the selling prices of each species sold (cost per board foot)?

5. What quality features are most desirable for sale of hardwood lumber?

6. What other appearance features do your customers find important when purchasing

hardwood lumber? (Could include color, grain patterns, absence of knots, etc.)

7. How much degrade, in terms of small knots, minimal warping, etc., would customers

not object to and still be willing to pay full retail prices?

8. Do you currently sell paper birch lumber?

9. If the answer to question 8 is yes, is the paper birch from Alaska?

10. Do you sell hardwood lumber from any Alaska species other than paper birch? (For

example, cottonwood, aspen, or alder)

11. What potential is there for substituting locally produced Alaska birch for imported

hardwoods received from the lower 48? (Could include oaks, maples, and birch.)

12. To the best of your knowledge, for what types of projects do your customers use

birch lumber of random length and random width?

13. How receptive would you be to purchasing paper birch lumber from a local producer?

14. Do you feel that a “made in Alaska” label on lumber products could improve your

sales of hardwood lumber?

15. Would shrink wrapping individual pieces improve your sales of hardwood lumber?

16. What marketing suggestions might you have for the point-of-sale area to increase

sales of hardwood lumber products? (Could include displays, location of product

within store, etc.)

17. What problems or obstacles might need to be overcome for acceptance of locally

produced hardwood lumber by home hobbyists and craftspeople?

18. What potential is there for sale of small pieces of end trim and other miscellaneous

pieces? (For example, puzzle parts, games made from hardwood pieces, etc.)

19. What other comments or suggestions do you have regarding successful sales of

hardwood lumber in retail outlets?

Appendix A

Sample Questions for

Retail Store Managers
17

For sawmill owners, information regarding the market potential of birch hardwood lumber

was based primarily on the following questions.

1. What hardwood species do you currently saw into lumber?

2. Do you currently saw paper birch lumber?

3. Do you produce hardwood lumber from any species other than paper birch? If so,

what hardwood species?

4. What sizes and thicknesses of hardwood lumber do you produce (random width and

length versus standard sizes)?

5. What volume of each species do you produce (board feet per year)?

6. What are the selling prices of each species sold (cost per board foot)?

7. What lumber appearance features do your customers find most important? (Could

include color, grain patterns, absence of knots, etc.)

8. How much degrade, in terms of small knots, minimal warping, etc., would your

customers not object to and still be willing to pay full retail prices?

9. Do you kiln dry your lumber?

10. Do you surface (plane) your lumber?

11. Do you sell your hardwood lumber directly to customers?

12. Do you sell your hardwood lumber to a local retail outlet?

13. Do you feel that selling your lumber to a local retail outlet would improve your sales

potential?

14. What potential is there for sale of small pieces of end trim and other miscellaneous

pieces? (For example, puzzle parts, games made from hardwood pieces, etc.)

15. What other comments or suggestions do you have regarding successful

manufacturing and sales of hardwood lumber?

Appendix B

Sample Questions for

Sawmill Owners
The Forest Service of the U.S. Department of Agriculture is dedicated to the principle of

multiple use management of the Nation’s forest resources for sustained yields of wood,

water, forage, wildlife, and recreation. Through forestry research, cooperation with the States

and private forest owners, and management of the National Forests and National Grasslands,

it strives—as directed by Congress—to provide increasingly greater service to a growing

Nation.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and

activities on the basis of race, color, national origin, gender, religion, age, disability, political

beliefs, sexual orientation, or marital or family status. (Not all prohibited bases apply to all

programs.) Persons with disabilities who require alternative means for communication of

program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET

Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W,

Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call

(202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer.

Pacific Northwest Research Station

Web site http://www.fs.fed.us/pnw

Telephone (503) 808-2592

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FAX (503) 808-2130

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