New forest products study shows industry is far from dying, advocates say

Galen Thompson, of Galen Thompson and Family Inc., wants to secure the straps holding his truckload of spruce and fir logs cut from private property off Route 6 in Lincoln before trucking it to the new Great Northern Paper Co. mill in East Millinocket on Wednesday, Oct. 9, 2013.
Galen Thompson, of Galen Thompson and Family Inc., wants to secure the straps holding his truckload of spruce and fir logs cut from private property off Route 6 in Lincoln before trucking it to the new Great Northern Paper Co. mill in East Millinocket on Wednesday, Oct. 9, 2013. Buy Photo
Posted Oct. 13, 2013, at 3:53 p.m.

AUGUSTA, Maine — Maine’s forest products industry contributes $8 billion in total value to the state’s economy, including 38,789 direct and indirect jobs, a new study commissioned by an industry advocacy group shows.

According to the study released this week by the Maine Forest Products Council, the forest products sector in Maine includes businesses, organizations and individuals involved in logging and forestry, paper and related product manufacturing, sawmills and wood product manufacturing, wood furniture manufacturing, wood biomass power generation, maple syrup production and activities of the Maine Forest Service.

Although some critics contend that the study paints a rosy picture of a declining industry, the study’s goal is to illustrate how the industry is still a vital player in Maine’s economy, said Roberta Scruggs, the council’s spokeswoman.

“All you are hearing is that there are fewer jobs,” Scruggs said Wednesday. “That gives people the impression that the industry is shrinking or dying and that just isn’t true.”

What’s happening instead, according to the study, is that Maine’s forest industry and workers are more productive than ever, thanks partly to improved technology. Though far from booming, the industry has been generally retooling to prepare for an increase in productivity that industry workers expect will come with an improved economy, said Patrick Strauch, executive director of Maine Forest Products Council.

“What we want to do is let people know that manufacturing has been part of Maine and is going to be a big part of its future,” Strauch said. “We want to attract capital to Maine to build more innovation and technology to bring more opportunities to Maine.”

Lincoln Paper and Tissue LLC has installed natural gas burners. The new Great Northern Paper Co. LLC of East Millinocket is converting to natural gas. Several sawmills around Maine have added computer systems to catalog wood before it is even cut, Strauch said. Verso Paper is converting part of its mill to produce wholesale electricity.

Old Town Fuel and Fiber is exploring a facility to produce clean cellulosic sugars and biobased ethanol. End products from this process can be used to make consumer product packaging and fuel, a company spokesman said. The technology has been lab tested with the next step being a demonstration facility.

These innovations improve the amount of product and profitability the industry creates, Strauch said.

The study also shows sustainable forestry is practiced on 10.3 million acres of Maine’s forests — 59 percent of forestland in the state. The study is loaded with statistics that illustrate the industry’s potency.

With $885 million in exports, the forest products industry is Maine’s top export, accounting for 28.9 percent of all state exports. One dollar out of every $16 in Maine’s gross domestic product — the market value of all officially recognized final goods and services produced in Maine — comes from forest products. The industry pays $302 million in taxes annually and at 5.7 percent, its average worker illness or injury rate matches the private-sector average, the study states.

Some of the numbers in the council’s study differ from a 2010 study the Maine Department of Conservation initiated. That study showed that in 2007, the forest products industry directly supported 24,000 jobs, $1.4 billion in earnings, and contributed $1.8 billion to Maine’s gross domestic product. Indirectly, the industry supported 55,000 jobs, $3.1 billion in earnings and contributed another $2.5 billion to Maine’s GDP.

The recent council study shows 17,075 direct jobs, 38,789 in total direct and indirect jobs, and $1.9 billion in labor income.

Scruggs and the study’s co-author, University of Maine Economics Professor Todd Gabe, said study comparisons are likely invalid because study authors don’t all use the same data in composing their studies.

“It is really about how you define the forest products sector,” Gabe said. “I looked at products generated by using forest products, essentially manufacturing. I didn’t include forest-based recreation. I didn’t use it because I could not come up with a great way of estimating the size of that, but other studies might have.”

Officials at the University of Maine, the council’s board of directors and the Maine Forest Service sat on a subcommittee that set the council’s study parameters, Scruggs said.

The council’s report, Gabe said, is a snapshot of the forest products industry that won’t likely make for valid comparisons determining the industry’s growth or decline unless their study methodology is repeated, perhaps in five years.

“Even though this is one of Maine’s oldest industries, people don’t understand it in the same way that they used to,” Scruggs said. “There was a time where everybody who chopped wood understood it, but it is not that way anymore.”

The increase in the industry’s productivity comes with a loss to local Maine economies that isn’t reflected in the state’s GDP — namely, the industry’s significant drop in employed workers, said Joel Johnson, an economist with the Maine Center for Economic Policy.

As the council’s report shows, Johnson said, Maine’s forest products industry had 27,010 workers directly employed in 2001, and 21,773 in 2007, as industry owners relied increasingly upon machine power, not manpower, to get the job done.

“Where you used to have logging done with skidders and chain saws, now you have it done with more expensive, highly mechanized equipment that saves labor,” Johnson said. “The result of that is that the mills are generating just as much product as they used to and a lot of income for their owners.”

With fewer workers employed by the industry, the industry’s effect on the state’s local economies has decreased, as fewer workers are earning and spending money in the areas in which they work, Johnson said. The GDP statistics, which measure the state’s overall production, cannot reflect this, he said. Maine’s GDP in 2012 was $46 billion, according to the U.S. Bureau of Economic Analysis.

“On the labor side there are still good jobs in the mills and woods, but the gains from all these increases in productivity have mostly accrued to the owners of mills, not to Mainers who work in them,” Johnson said.

“Anybody who lives in mill towns can explain to you pretty clearly that the mills don’t have the same impact on the local economy as they used to,” Johnson said. “That’s pretty common sense.”

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