EDGECOMB, Maine — The forest products industry has played an essential role in the region’s economy for more than two centuries, but a shrinking domestic market for by-products of the industry, including wood chips, has taken a heavy toll on the logging industry, pulp mills, sawmills, and local harvesters.
Despite its long ties to the state’s economy, the past decade has seen fundamental shifts hit the timber sector, pushing portions of the industry, including pulp and paper mills, close to a breaking point.
“What I see is a real crisis on our step and it’s going to get worse if we don’t do anything,” said Norman Hunt.
Hunt is the proprietor of N.C. Hunt Inc., which operates a sawmill in Jefferson and retail stores in Jefferson and Damariscotta.
Hunt has deep ties to Lincoln County, as he owned mills in Damariscotta and Wiscasset before opening his Jefferson operation, and to the forest products industry as a whole, as he began working with his father and brothers on their mobile sawmill when he was a youth in the 1940s.
In recent years, pulp and paper mills have shut down, directly leading to job losses at the mills themselves, but also impacting other jobs in the forest products sector, notably among loggers.
Recently, the closure of a pulp mill in Old Town and the Verso Paper Mill in Bucksport, the declaration of bankruptcy by Lincoln Paper and Tissue, and layoffs of 300 workers at Verso’s Androscoggin Mill in Jay have rocked the industry.
Hunt said he believes small operations are getting hurt.
“The real loser is the small guy with a skidder and a chainsaw. Today he can’t get rid of pulpwood. It’s a very competitive market and the small operator is the one who is going to lose first,” Hunt said.
Pulpwood refers to soft wood traditionally used to make pulp for paper production, and more recently employed to fill biomass needs both domestically and internationally.
Many logging operations use high-quality trees for sawlogs to go toward lumber production, while lower-quality trees deemed unsuitable for lumber are harvested for pulpwood.
Hunt said larger companies are better able to spend the money necessary to compete in an ever-shrinking market for pulp and paper products, but the outlook is not overly positive.
“Big operations can ground product into biomass and wood pellets, but there are only so many wood pellets you can sell,” Hunt said.
Hunt said a drop-off in wood chip sales is a major reason the forest products industry is in trouble.
Wood chips, solid material produced in the process of cutting or chipping larger pieces of wood, are used as raw material for producing wood pulp, fibrous material used as the basis in the production of paper.
Wood chips are still a marketable commodity in the creation of biomass solid fuel and organic mulch for use in landscaping and gardening. These new markets, however, are not yet as lucrative as the long-standing pulp mill industry.
In the past, the sale of wood chips, sawdust, and bark have helped sawmills throughout the nation meet their overhead costs and retain their workforces.
There are still new and expanding markets for these stalwarts of paper and pulp.
Hunt said the Jefferson mill still sells sawdust to farmers, bark to landscapers, and wood chips to pulpwood companies.
However, the economic value of these goods has declined substantially, creating stress on operations throughout the state.
When Hunt purchased an automated mill for his Damariscotta operation in the 1970s, he planned to pay for half through the sale of wood chips produced by the mill.
“The chips more than paid for the mill,” he said. “I covered the cost because of a strong pulpwood industry.”
Currently, Hunt’s operation in Jefferson specializes in sawed pine and hemlock chips, less popular than hardwood chips in the growing domestic biomass industry.
The biomass industry is centered on the use of organic matter derived from plant-based materials to be used as a source of energy to power utilities.
“Right now we can’t sell pine pulpwood. There is no mill locally taking pine and hemlock chips,” Hunt said.
Maine Forest Products Council Executive Director Patrick Strauch concurred with Hunt’s assessment, saying the current market for low-grade wood is an issue facing Maine’s sawmills.
He said sawmills are concerned about the market for low-grade wood and often reluctant to harvest, whereas the market for high-quality wood, found in a tree’s base, is much stronger.”How do we encourage markets to be strong for all parts of the tree?” Strauch said.
Whatever steps sawmills and their counterparts at paper and pulp mills take to operate in the current economic environment, Hunt said the industry cannot afford to remain idle.
“We can’t afford to shut down a year and make up our minds. If we lose the pulpwood and sawmill industry, you just can’t start it up again,” Hunt said.
Hunt reiterated the important role sawmills have played throughout the state’s history, saying a continued slump in pulp and paper will have impacts on other portions of Maine’s economy.
“The crisis is, if mills can’t get rid of chips, they are shutting down. It’s not just 500 jobs; it’s 50,000 jobs. The industry is connected with other jobs. What do we have to do to hold it together?” Hunt said.
Those with ties to pulp and paper in Maine can find some optimism in proposals to export low-grade wood chips to Europe, which could provide a lucrative new market for the products.
Cull, or waste wood, is not used in domestic biomass facilities and is also not used in domestic paper and pulp mills.
However, opportunities abound for the waste wood on foreign shores.
Nations in the European Union have set ambitious goals to transform coal-powered utilities to sustainable energy sources.
Specifically, the EU’s Renewable Energy Directive requires the union to fulfill at least 20 percent of its total energy needs with renewable energy by 2020.
“It’s a great place for low-quality wood. The EU is pretty big on replacing coal with wood to meet emissions targets,” Strauch said.
Strauch said since the emissions targets are set by elected officials, it can make for a volatile export climate.
“It’s a tremendous market, but it’s based on the policies of foreign governments, so it is very unpredictable,” Strauch said.
Entrepreneurs in the state are looking to capitalize on the apparent market potential.
Eastport-based Phyto-Charter Inc. has developed a patented system for treating wood to eliminate pathogens and pests, ensuring the product meets the import standards of the member nations in the European Union.
By adhering to the EU’s current regulations, which were enacted in 2000, a market closed off for more than a decade could soon be open to the state’s pulpwood industry.
The firm’s patented Shipboard Heat Treating System efficiently sanitizes export wood fiber to meet the EU’s standard.
The business hosted a meeting Dec. 22 at the Eastport Area Chamber of Commerce to present information on its plans to open the new market for the industry.
Eastport Port Authority Executive Director Chris Gardner said the meeting was well-attended, with 60 people, predominantly from the logging industry, pulp mills, and sawmills, in attendance.
“We have been working in connection with (Phyto-Charter’s) efforts to open up markets for lower-grade wood,” Gardner said.
Gardner said the partnership between the company and the port authority dates back to 2009, when the port authority embarked on an expansion project and brought in a bulk cargo conveyor system to enable the loading of wood chips onto ships in the harbor.
He said he is aware of the struggles within the pulp and paper industry and hopes Eastport can help revitalize the long-standing sector of the state’s economy.
“Forest producers are a long-standing backbone to the state’s economy. Many who operate in the industry believe it is reaching a crisis point,” Gardner said.
He said the seaport and the forest products industry are at an intersection of opportunity and need.
“We recognized the opportunity and built this out in front of the need. You have two choices. You can chase the curve or set the curve. The industry couldn’t wait. By building out in front we can be ready,” Gardner said.
Hunt, who attended the conference in Eastport, said he went in with an optimistic attitude about the potential for a new market to export wood chips out of Maine.
However, he said the lack of a clear timeline for the project, in addition to risks including investments and whether enough ships will take the product to make it worthwhile for harvesters around the state dented his spirit of optimism.
“I came away from Eastport very discouraged. They didn’t leave the right message with the logger,” Hunt said.
Nonetheless, Hunt said he is aware of the time and effort that Eastport has poured into the project. “Eastport has done a heck of a good job. They’ve worked hard to build this thing. They are very optimistic and have done a good job,” he said.
Looking toward the future, the executive director of the state’s forest products council was hopeful. “We are pretty optimistic. It’s going to be a new world,” Strauch said. “It’s not going to be your grandfather’s paper industry; it’s going to be more like your granddaughter’s industry.”