Title: Some thoughts on Currents and Turbulence in American Forest Management
1Some thoughts on Currents and Turbulence
in American Forest Management
Professor Frank Greulich University of Washington
Nihon U. Sept. 2002
2American Forest Industry - Responding to Change
- The operational environment of the forest
industry is changing rapidly.
- Managers are now confronting a growing level of
uncertainty in their revenue and cost structures.
- Managerial reaction is to pursue strategies that
reduce the risks associated with this uncertainty.
3The Rapidly Changing Operational Environment of
Forestry
4The Response of Industrial Forestry
5First Case
- How a
- Changing Regulatory Environment
- and
- Changing Regional Demographics
- - - - - - - - - - - - - -
- Led to
- Industrial Timberland Divestiture
- and a
- Timber Supply Hedging Strategy
6First Case
- A new, nonprofit land trust (Evergreen Forest
Trust) has struck a tentative deal to buy
Weyerhaeuser's 100,000-acre Snoqualmie Tree Farm
in the Cascade foothills .....
- ... (Weyerhaeuser) company spokesman Frank
Mendizabal said development pressures and
environmental regulations, including the
Endangered Species Act, made it increasingly
difficult for Weyerhaeuser to manage the land as
a commercial forest. Chinook salmon, a threatened
species, spawn in the forest's streams.
- The trust said it would continue to manage most
of the land as a working forest. But it said
logging would be prohibited or strictly limited
on about 20 percent of the property to protect
streams, wetlands and wildlife, and overall
timber harvest is expected to drop.
Seattle Times Friday, January 18, 2002
7Second Case
- How
- Changing Regional Demographics
- - - - - - - - - - - - - -
- Led to
- Forest Land Output Diversification,
- Internalization of Externalities,
- and
- Mooted Water Quality Regulations
8Second Case
- ... the steadily increasing demand for
recreation convinced company (International
Paper) executives that charging fees for
recreation made sense.1
- Today two-thirds of (International Papers) six
million acres in the United States is managed
profitably for wildlife and recreation.2
- In one year, International Paper Company made
35 of its woodland operating profits in Texas,
Arkansas and Louisiana from leasing the hunting
rights of its forests.3
- ... forest managers modified their methods and
made wildlife habitat a higher priority.
Corridors of trees 100 yards wide were left
between harvested areas, clumps of older trees
were left standing beside younger trees, the size
of cut areas was reduced, and harvests along
streams were halted.2
1 www.perc.org 2 PERC Reports 12/98 3
Economist 10/22/88
9Third Case
- How a
- Changing Timber Input
- and
- Free Trade Agreements
- - - - - - - - - - - - - -
- Led to
- Output Diversification,
- Research Development
- and
- Off-shore Investment
10Third Case
- The Weyerhaeuser Company (which) said it will pay
720 million to acquire TJ International ...
obtains full ownership of Trus Joist MacMillan,
of which Boise-based TJ International owns 51
percent. Weyerhaeuser acquired a 49 percent stake
of Trus Joint when it bought Canadian lumber
maker MacMillan Bloedel for 1.9 billion in
November.
- Sales of engineered wood are expected to jump in
the next three years, say industry analysts.
Engineered wood is gaining market acceptance for
use in floors, beams and other applications
because it doesn't warp easily and is easier to
install.
- Trus Joist MacMillan's patented manufacturing
technologies transform wood fiber into
high-performance, consistent products. The
company uses small-diameter trees that provide
resource-efficient alternatives to traditional
sawmill products.
- Weyerhaeuser said it is too early to tell if
layoffs will result from the acquisition. It does
not anticipate layoffs because it does not
produce the same products as Trus Joist MacMillan
...
The Forestry Source, 1/2000
11Fourth Case
- How a
- Change in the Market Place
- - - - - - - - - - - - - -
- Led to an
- Industry Association Response
12Fourth Case
- (Green) certification represents a new way and
cost of doing business. While it may not
contribute to short-term profitability, becoming
certified is the price of entry to compete in
some markets. While certification is a relatively
immature market, those who ignore it may do so at
their own peril.
- The Home Depot and BQ are the worlds first and
third largest retailers of building materials.
They are both promoting the use of certified
forest products. It is reasonable to expect
other retail chains to follow suit. BQ has a
goal to sell 100 certified wood products with
the FSC ecolabel by Dec. 1999.
- The Sustainable Forestry Initiative (SFI) is an
ambitious program of the American Forest Paper
Association. Compliance with SFI guidelines,
principles and performance measures is mandatory
for all AFPA members who own over 90 of the
industrial forestland in the United States.
Eco-Link 9(1)
13Managers of American Forest Industry are
responding to increased uncertainty
- by actions that reduce their expected risk,
or
- by actions that stabilize or reduce risk
variability.
14Some major impacts on the management of
industrial forestry lands
- Silvicultural systems are being re-examined
- multiple use and even ecosystem
management objectives are being - followed or considered.
- Land management activities are becoming much more
restricted - increased timber harvesting costs
- greater internal external oversight