February 5th, 2007

Experts see hope for timber industry

PORTLAND -- Despite such recent news such as the closure of a Weyerhaeuser sawmill near Lebanon, economists and observers say the long-term outlook for the timber industry in Oregon is healthy.

The harvest level, though, will be lower than the mid-1980s highs, and the current housing slowdown will mean a rough patch, they say.

"It's a new stable industry, and it's growing," said Richard Haynes, an economist with the U.S. Forest Service's Pacific Northwest Research Station in Portland. "The region has recovered from what happened in the 1990s."

In 1990, the wood manufacturing industry in Oregon employed 46,100 people.

That was 3.7 percent of a 1990 nonfarm payroll of 1.25 million workers.

In 2006, 32,100 people were employed in the industry, 1.9 percent of the nonfarm payroll of 1.71 million.

The number of logging jobs in Oregon has fallen from 11,300 in 1990 to 7,000 in 2006.

The state continues as the nation's largest producer of lumber: 31 percent more in 2004 than Washington, its nearest competitor, according to the Western Wood Products Association.

"In the early '90s, people talked as if the industry was going to go completely," Haynes said. "What happened is it went through a severe transition -- we have less workers, but we're producing more wood than before."

Oregon Department of Forestry data shows that overall timber harvest in Oregon -- from private, tribal, state and federal land -- fell from a high of 8.74 billion board feet in 1986 to a low of 3.44 billion board feet in 2001.

Annual cutting figures have risen since then, with 4.35 billion cut in 2005.

Gary Lettman, an Oregon Department of Forestry economist, said an annual harvest of 5 billion board feet is sustainable with current levels of environmental protection.

"The west side (of Oregon) is very healthy, lots of timber, productive land base," he said. "If lumber prices go up again, we could increase production."

But in recent months a national housing slowdown has led to lower lumber prices and translated to fewer jobs at Oregon mills.

Employment in Oregon wood manufacturing at the end of 2006 was 30,800 -- 1,500 fewer than at the end of 2005, according to the Oregon Employment Department.

With less demand for wood, the price of a thousand board feet of softwood lumber fell from a yearly average of $387 in 2005 to $327 in 2006, also a drop of 16 percent, according to the industry group Random Lengths.

"The industry has just recently started to feel the effects of a slowdown in housing," said Art Ayre, a state employment economist.

Weyerhaeuser, which has announced four mill closures since August, didn't attribute the planned closure of its mill near Lebanon directly to the slowdown.