A Comparison of the Primary and Secondary Wood Products Sectors in Louisiana

As part of an ongoing research program, the Louisiana forest products industry is surveyed every five years to identify salient issues, challenges, and opportunities. In this paper, we compare results from two studies conducted on the primary and secondary sectors in Louisiana. In the past, we generated two manuscripts based on research results, one for the primary and one for the secondary sector. However, this paper compares results for common questions asked in both surveys. Louisiana’s forests represent an important resource for the state, both in terms of income to landowners and as inputs to the forest products industry. Both primary and secondary respondents indicate an interest in increasing their workforce in the next five years. The issues that drive company expansion fall into four areas: the overall attractiveness of the business climate of the community and state, labor productivity, costs and supply, and financing. Introduction “Lumber industry hit hard” was the caption in The Baton Rouge Advocate, daily newspaper (Calder 2008). It was referring to the housing slump that saw the lowest number of new housing starts since 1959 (US Census Bureau 2008). Housing is a major driving force of wood markets where 70 percent of wood building materials, primarily softwood lumber and structural panels, are used in residential construction including both new construction and remodeling (UNECE/FAO 2008). With such a downturn in the housing industry, production and prices of wood building materials have collapsed. According to Random Lengths (2009), overall softwood production was down 27 percent in 2008 compared to 2005, and prices for framing lumber were down 38 percent from their 2004 peak. Panel production suffered similar market turns, dropping 25 percent from 2005 and composite structural panel prices plunged 37 percent from 2004 (Random Lengths 2009). As of early 2009, prices have been even weaker and many mills are curtailing production and/or downsizing (IBIS World 2009, Wood Digest 2008). In August 2005, two Category 5 hurricanes hit the Gulf Coast of the United States. Hurricane Katrina made landfall with a direct hit to New Orleans causing catastrophic levee failure and widespread flooding. One month later, Hurricane Rita hit the West Louisiana/East Texas border. Combined, they damaged over 4.4 billion board feet of standing timber and wiped out the equivalent of more than two years’ worth of pine sawtimber harvest and more than 11 years’ worth of hardwood sawtimber harvest for the entire state (Chang 2006). The closest timber loss Louisiana faced, up to then, was the southern pine beetle outbreaks of 1985-86, with a loss of 1.1 billion board feet (Mistretta and Bylin 1987). In this paper, we present a brief history of the forest sector in Louisiana and then discuss results of a study which offers a perspective on the state of the forest products industry in Louisiana three years after the hurricanes hit the state. Louisiana’s forest products industry The development of the lumber industry in Louisiana began in the period following the Civil War. There was a great demand for lumber to rebuild the war-torn areas of the South as well as to supply the industrial revolution taking place in the North (Maxwell 1973, Quarterman and Keever 1962, Foster 1912). Longleaf yellow pine was abundant throughout the state. The chief demand for lumber was for construction, telegraph poles, railroad ties, and furniture manufacturing (Maxwell 1973). In addition to pine, Louisiana sawmills also cut oak, ash, gum, and cypress as well as many other woods. The milling of cypress had significant economic importance to the southeastern region of the state where it was used principally for manufacturing of shingles and cisterns (Kellogg 1909).