Forest Products Industry Has Deep Southern Roots: The Southeast's Generous Canopy of Trees Not Only Contributes to the Region's Beauty but Has Given Rise to an Industry That Generates Billions of Dollars and Employs Thousands of People. Behind All That Bark Is a Lot of Economic Bite

By Davidson, Charles | EconSouth, Spring 2009 | Go to article overview

Forest Products Industry Has Deep Southern Roots: The Southeast's Generous Canopy of Trees Not Only Contributes to the Region's Beauty but Has Given Rise to an Industry That Generates Billions of Dollars and Employs Thousands of People. Behind All That Bark Is a Lot of Economic Bite


Davidson, Charles, EconSouth


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From the sky, much of the Southeast looks like one vast forest.

Even in an age of sprawling metropolitan areas, timberland covers half or more of every Southeastern state except Florida. Alabama, Georgia, and Mississippi are nearly two-thirds blanketed in trees. Those forests are more huge pine tree farms than untamed wilderness, though, as the timber is raw material for an array of products from the obvious--plywood, boards, and cardboard--to the not-so-obvious--diapers, LCD screens, and sausage casings.

The forest products industry is one of the region's oldest (see the sidebar on page 9). Northeastern lumbermen first turned their attention south in the late 1800s after the "cut out and get out" logging practices of the day first depleted the forests of the Northeast and then those of the upper Midwest. More than a century later, advanced forest management strategies, technology, consolidation, and globalization have transformed the industry. And today, the global recession is testing it as nothing has since the Great Depression.

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A Southern stalwart

Despite the current challenges, the industry remains a significant part of the Southeast's economy and landscape. About 197,000 people in the six Southeastern states earned a combined $8.7 billion working in forestry and logging, wood products, and pulp and paper in 2007, according to the most recent figures available from the U.S. Bureau of Labor Statistics (BLS). That employment figure has shrunk almost 14 percent since 2001 and almost 8 percent between 2005 and 2007.

Forest products are especially significant in Georgia and Alabama. In Alabama, where timber covers 71 percent of the state, the industry employed about 40,000 people in 2007, and shipments from there in 2004 were valued at $10.4 billion, according to the American Forest and Paper Association (AFPA). The industry is even bigger in Georgia, the largest state east of the Mississippi River. The state is nearly two-thirds forested, and the related industries employed more than 50,000 Georgians in 2007; industry shipments in 2004 totaled $14.4 billion, according to the AFPA.

Paper mills, veneer plants, sawmills, lumberyards, and, of course, pine plantations are commonplace across the Southeast. In 2007, just under 1,000 paper and wood products manufacturing plants operated in the region, according to the AFPA. And five major ports--Miami, New Orleans, Mobile, Savannah, and Tampa--shipped $3.3 billion worth of wood and paper products overseas in the first 11 months of 2008, according to the U.S. Department of Commerce.

Fewer felled trees mean falling revenue

But economic cycles have profound effects on the wood products industry. While the industry has evolved in the past 15 or so years, its fortunes are still tied to the larger economy. On the lumber side, that means construction. The recession that began in December 2007 has been punishing, as nationwide housing starts in 2008 dipped below one million, the lowest number since at least 1958, according to the U.S. Census Bureau. The 904,300 housing units begun last year were 33 percent fewer than in 2007 and less than half the number started in the recent peak year of 2005.

Along with demand, lumber prices have plummeted. Nationwide in January 2009, average prices for lumber used to frame houses were down 21 percent from a year earlier and 58 percent lower than the August 2004 high, according to Random Lengths, an industry newsletter. This development has left the South's lumber producers in a bind. Regional production was down by about a third late in 2008 from the year before, and the coming months offer little hope of improvement, said Debbie Brady, president of the Southeastern Lumber Manufacturers Association. The Southern Forest Products Association estimates that 2008 lumber production in the South was the lowest since the 1991-92 recession.

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Forest Products Industry Has Deep Southern Roots: The Southeast's Generous Canopy of Trees Not Only Contributes to the Region's Beauty but Has Given Rise to an Industry That Generates Billions of Dollars and Employs Thousands of People. Behind All That Bark Is a Lot of Economic Bite
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