The Future of Washington Forests and

Forest IndustriesStand Management Cooperative April 26, 2007

Larry Mason, Rural Technology Initiative

The Future of Washington’s Forests

and Forest Industries

Commissioned by the WA State Legislature 2005

Study Areas Include:

1) Timber Supply and Forest Structure Study 1

2) Competitive Position Study 2

3) Economic Contribution Study 3

4) Land Conversion Study 4

5) State Granted Return on Investment Study 5

PROGRESS REPORTS

http://www.dnr.wa.gov/

Bolsinger, C. L., N. McKay, D. R. Gedney, and C. Alerich. 1997. Washington's Public and Private Forests. Resource Bulletin PNW-RB-218, USDA Forest Service, Pacific Northwest Research Station.

*USDI Bureau of Indian Affairs. 2004. 2004 Status of Forest Management Inventories and Planning. USDI, Bureau of Indian Affairs, Division of Forestry, Branch of Forest Resource Planning.

Washington Unreserved Timberlands (thousands of acres)

Ownership Western Eastern TotalUSDA Forest Service 2208 2494 4702Forest Industry 3732 878 4610Non-Industrial *1668 1292 2960State 1390 647 2037Native American *310 1074 1384County and Municiple 194 7 201Misc. Federal 78 110 188Total 9580 6502 160827029 3959 10988

3,389 829 4218? ?

Less Roads, Buffers, Etc. 5800 3600 ~9400

North Coast

South Coast

South West

North Puget Sound

South Puget Sound

Central

Inland Empire

Washington Timbersheds: Five Westside and Two Eastside

Westside Forest Types

• Management Intensities• Harvest Implications• Land Conversions

Western Washington Harvest Volumes 1990 - 2002

W estern W ashington Share of Timberland Ownership and Harvest Volume 1990

Total Harvest Volume = 4,646 MMBF

0%

10%

20%

30%

40%

50%

60%

70%

80%

Native American Forest Industry Private Small State National Forest

Percent of Acreage Percent of Harvest Volume

W estern W ashington Share of Timberland Ownership and Harvest Volume 2002

Total Harvest Volume = 2,667 MMBF

0%

10%

20%

30%

40%

50%

60%

70%

80%

Native American Forest Industry Private Small State National Forest

Percent of Acreage Percent of Harvest Volume

Year Ownership Type – Volumes in Million Board Feet

Native American

Forest Industry

Private Small

State National Forest

Total

1990 37.6 2,974.0 557.7 573.1 504.0 4,646.3

2002 26.8 1,937.0 296.8 397.8 8.3 2,666.9

Source: DNR Timber Harvest Report 2002

Western Washington Private Forest Age Class Distribution

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

0-9 10-19 20-29 30-39 40-49 50+

Te n Ye ar Age Class

Ac

res

Industry Small Private Tribes

Western Washington Industrial Forestlands by T imbershed

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

North Coast South Coast North PugetSound

South PugetSound

Southwest

Acr

es

%

1)

What percentage of industrial forestland in western Washington would you estimate is covered by roads, rock, wetlands, water, and other areas not capable of growing timber?

8.2%

2)

What percentage of industrial forestland in western Washington is unavailable for management because of voluntary reserves?

0.4%

3)

What percentage of industrial forestland in western Washington is unavailable for management because of regulatory constraints?

9.5%

Total 18.1%

n =16; respondents are western WA WFPA member companies ≥ 10,000 acres of forestlands. Total 3.6 MM acres.

Land Allocation Questions - Weighted Average for Industrial Respondents

Western Washington Industrial Management Intensity Forecast Comparison 1990-2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Natl Regen Plant Herb Fert Gen all PCT all CT PCT/CT No Mgmt

Treatment

Per

cen

t

1990 Forecast 2006 Forecast

2006 Western Washington Timber Harvest by Species Reported by Contract Loggers

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

DF W H RA BC W P RC GF BM

Species

Per

cent

Regeneration Harvest 65%

Selective Cut/Commercial Thin 35%

W estern W ashington Nursery Planting Stock by Species 1998-2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

Pe

rce

nt

of

To

tal S

ee

dlin

gs

DF WH SS RC GF NF RA

Average Annual Available Timber Volumes: Industry Forests Historic Harvest Volumes (5-Yr) and Projected Inventory (10-Yr)

0

1,000

2,000

3,000

4,000

5,000

6,000

1965-1968

1969-1973

1974-1978

1979-1983

1984-1988

1989-1993

1994-1999

1999-2003

2004-2013

2014-2023

2024-2033

2034-2043

2044-2053

2054-2063

Harvest Interval

Mil

lio

n B

oar

d F

eet Historic Projected

Sources: DNR Timber Harvest Report 2002, FIA age-class data, UW/WFPA Management intensities Survey, Chambers 1980 DNR RPT 41.

Average Annual Available Timber Volumes: Industry Forests Historic Harvest Volumes (5-Yr) and Projected Inventory (10-Yr)

w&wo Industry Conversions

0

1,000

2,000

3,000

4,000

5,000

6,000

1965-1968

1969-1973

1974-1978

1979-1983

1984-1988

1989-1993

1994-1999

1999-2003

2004-2013

2014-2023

2024-2033

2034-2043

2044-2053

2054-2063

Harvest Interval

Mil

lio

n B

oar

d F

eet

Industry Ind w/Conversion

Source: Gray et al. 2005. PNW-RB-246

Historic Projected

West Side Question:

This or This?

Eastside Forest Types

Ponderosa Pine, 33%

Lodgepole Pine, 7%

Other Softwoods, 10%Hardwoods, 5%

Douglas-fir/W estern Larch, 46%

• Forest health & climate change• Fire/carbon/bioenergy• Mill Closures

Eastern Washington Harvest Volumes 1990 - 2002

Year Ownership Type – Volumes in Million Board Feet

Native American

Forest Industry

Private Small

State National Forest

Total

1990 144.7 462.7 152.5 84.2 313.3 1.157.4

2002 292.3 334.6 112.8 58.7 64.0 862.4

Source: DNR Timber Harvest Report 2002

Eastern Washington Share of Timberland Ownership and Harvest Volume 1990

Total Harvest Volume = 1,157 MMBF

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Native American Forest Industry Private Small State National Forest

Percent of Acreage Percent of Harvest Volume

Eastern Washington Share of Timberland Ownership and Harvest Volume 2002

Total harvest Volume = 862 MMBF

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Native American Forest Industry Private Small State National Forest

Percent of Acreage Percent of Harvest Volume

Past Harvest & Future Available Timber Volumes for Eastern Washington: All Public and Private Vs All Private (Decadal

Annual Averages 1965-2063)

0

200

400

600

800

1000

1200

1400

1965-1973

1974-1983

1984-1993

1994-2003

2004-2013

2014-2023

2024-2033

2034-2043

2044-2053

2054-2063

MM

BF

/Yr

All Public/Private Native, Small, Large Private

Sources: DNR Timber Harvest Reports 1965-2003, FIA & CVS Inventory Data; Tribal, Industry, Small Private Forestland Managers

Historic Projected

Five Year Running Average Temperature and Precipitation Trends for Eastern Washington (1899-2006)

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

1899 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999

Jun

e, J

un

e A

ug

Ave

rag

e T

emp

erat

ure

(C

)

18.0

20.0

22.0

24.0

26.0

28.0

30.0

32.0

Pre

-gro

win

g S

easo

n p

reci

pit

atio

n (

in)

June, July, Aug temperature pre-growing season precipitation

Source: DNR, Oneil

Mortality by MPB in ponderosa and lodgepole pine in eastern Washington from 1979-2004 (tallied 1980-2005)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

1979 1984 1989 1994 1999 2004

Year

To

tal

Mo

rtal

ity

(# t

rees

)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Mo

rtal

ity/

acre

(T

rees

/Acr

e)

# Trees killed by MPB # Trees/acre killed by MPB

Source: DNR, Oneil

Without treatment, dry fuels, drought, and hot summers mean catastrophic wildfire in eastern Washington

Source: NOAA, EPA, US Census, NIFC, RTI

2006 Forest Fires

Total WA ~ 400,000 acres Total US > 9.8 million acres

This

Or

This

East Side Question:

Source: TSS Consultants, http://www.cc.state.az.us/utility/electric/EPS-TSSC.pdf

Source: WSU, WA DOE

WA Biomass and Bioenergy Potential by Feed Stock Type

This? OR This?

WA Forest Products Jobs/MMBF/Year by Sector and Timbershed (1998-2004)

0.00

5.00

10.00

15.00

20.00

25.00

30.00

NC SC NPS SPS SW EC IE

Timbershed

Job

s/M

MB

F/Y

ear

Logging Sawnwood Other Mfg Furniture Paper

Harvest6,000 Loggers in WashingtonAnnual Payroll = $250 millionEmployment = 1.84 loggers/MMBF/Yr

Average contract logger is over 50 years of age

1995: 82% had health insurance but today: 53%

Skilled workers are much harder to find than 10 years ago

13% make money; 48% break even; 40% lose money

WCLA Survey Highlights – 98 Respondents ~ 900 MMBF/Yr

Washington Comparative Harvest Costs and Cost Multipliers with Regen Harvest Cost as the Baseline

Harvest Type

WCLA 2006 DNR 2006

Cost/MBF Cost Mult Cost/MBF Cost/MBF

Regen - Grd $ 69 1 $ 67 1

Regen - Cable $138 1 $ 93 1

Regen – 50/50 $104 1 $ 80 1

Select - Grd $160 2.32 - -

Select - Cable $231 1.67 - -

Select – 50/50 $196 1.89 - -

Thin – 50/50 $250 2.41 $175 2.19

Ave WCLA & DNR Lippke 1996

Cost/MBF Cost Mult Cost/MBF Cost Mult

$ 68 1 - -

$116 1 - -

$ 92 1 $150 1

- - - -

- - - -

- - - -

$213 2.32 $275 1.83

Harvest Type Logging Cost Change 2006-1996 Cost/MBF

Regen - Grd -

Regen - Cable -

Regen – 50/50 ($58)

Select - Grd -

Select - Cable -

Select – 50/50 -

Thin – 50/50 ($62)

WCLA Survey Response What are your company's five-year goals?

30%

11%

22%

13%

7%

18%

0%

5%

10%

15%

20%

25%

30%

35%

Diversify Outof Logging

Specialize Get Smaller Expand MaintainStatus Quo

Retire

% R

esp

on

den

ts

48% are leaving logging!

HaulMore than 1 million loads/year 150 million miles 2400 Truck Drivers Annual payroll = $100 million Employment = 0.65 Drivers/MMBF/Yr

Source: WCLA Survey, Timber purchasers survey, NW Truckers Coop, Log Truckers Conference

Contract Vs Company Log Truck Preference

0%

10%

20%

30%

40%

50%

60%

70%

80%

contract truckers company truckers both

% R

esp

on

den

ts

Timber Purchasers Contract Loggers

70% of Truckers are independents

Average trucker is over 50 years of age

Skilled workers are much harder to find than 10 years ago

A Comparison of Log Truck Registrations for WA- In State, WA- Interstate, and OR- In WA

0

500

1,000

1,500

2,000

2,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

# T

rucks

WA/In State WA/Interstate OR/WA

WA DOT, WA DOL, and ODOT

2006 - OR Trucks = 1593, WA Trucks = 1325 No. of WA Trucks down 36% since 1998

Sawn Wood Manufacture

12,000 mill workers in WashingtonAnnual Payroll = $480 millionEmployment = 4.3 mill workers/MMBF/Yr

Average years in business = 60 Average No. Employees = 192 Average Production = 200MMBF/Yr Sales are 98% domestic Average worker age = 43 Skilled workers hard to find

Sawmill Survey: 34 Respondents, 4.2 Billion BF Production

WA is #2 Producer in US 40% plan to expand 0% will pay for certified logs

Washington Lumber Production, Timber Harvests, and Log Exports

1992-2002

0

1000

2000

3000

4000

5000

6000

Mil

lio

n B

oa

rd F

ee

t

Lumber Production Timber harvest Log Exports

Reductions in log exports offset reductions in timber harvest for sawmills

Historical Lumber to Log Overrun Ratios for Western and Eastern Washington Sawmills

0

0.5

1

1.5

2

2.5

Rati

o

west east

Spotted Owl

Closure of inefficient mills, improvements in technology, and shift to second growth result in overrun gains (west but not east).

Source: DNR Mill Survey, RTI 2006 Survey

Log Price and Sale Net Log 2003-2006

$479

$516

$565$558

$192

$323

$205

$107

$420

$440

$460

$480

$500

$520

$540

$560

$580

2003 2004 2005 2006

$/M

BF

Lo

g S

cale

$0

$50

$100

$150

$200

$250

$300

$350

$/M

BF

LB

R S

cale

Log Price Margin

Coast Log Price (left side)

Coast Lumber Return Net Log (right side)

2003 $3012004 $3762005 $3452006 $298

Year Lmbr Price

Westside Over Run = 2.23

Source: Random Lengths, Log Lines, NW Management, Future of WA Forests

$440

-$40

East Log Price

East Lumber Return Net Log (Not Good!)

Eastside Over Run = 1.34

Washington Forest Products Manufacturers - 2006

Pulp and Paper

8,500 Pulp and paper workers in WashingtonAnnual Payroll = $450 millionEmployment = 2.5 paper workers/MMBF/Yr

Washington Forest Products Manufacturers - 2006

No. of WA Pulp Mills & Pulp Export Facilities and Total Annual Production 1989 – 2002

2 Export Facilities 1 Export Facility

17 Domestic Mills

12 Domestic Mills

11.8 MMBDT

21.5 MMBDT

1 MMBDT

3.5 MMBDT

0

2

4

6

8

10

12

14

16

18

20

1989 2002

Nu

mb

er

of

Fac

ilit

ies

0

5

10

15

20

25

Milli

on

Bo

ne D

ry T

on

s/Y

ear

Export Domestic Domestic Export

45% Reduction in Domestic Production 71% Reduction in Export Production

Forest Industry Summary

40,000 direct jobs & $1.7 billion in payroll

100,000 indirect jobs

Gross Business Income (2005) = $14.6 billion