About Oregon's Forest Products Industry

Contents

• Introduction
• The Industry's Contribution to Oregon
• A Global Industry
• Industry Detail - Definitions & Descriptions
• Wood species & their uses
• Location - What gets made where
• Industry Changes - Adaptation & Innovation
• Sustainability & Oregon's Forest Products Industry
• For More Information
• Oregon Forest Industry Directory

Introduction

“Where Timber is King!” and “Wood Basket to the U.S.” have been phrases often used to describe Oregon’s vast and valuable wood resource. Oregon has been the nation’s leader in lumber production for much of the past century. And, it’s the timber industry that has fueled the economic growth of the state for most of the past 150 years. A recognized leader in forest product manufacturing, Oregon is the source of many innovations found in today’s wood industry.

But times have changed. And, the timber industry has evolved, adapted, downsized, and consolidated as markets, technologies, raw material supplies and competition - both home and abroad - have changed.

Where sawmills were once relatively low-tech labor-intensive operations, they are now fewer in number but state-of-the-art, large-scale automated facilities.

While employment has declined in one sector of the industry (primarily lumber and plywood manufacturing), employment continues to increase in “value-added” manufacturing (for example, millwork, cabinets, and furniture).

And after all that change, Oregon still produces more lumber and panel products than any other state in the nation (WWPA Lumber Track, April, 2003). Oregon’s sawmills produce approximately 6 billion board feet of lumber each year – enough lumber to build about 400,000 3-bedroom homes.

The Industry’s Contribution to Oregon

Economists term the wood products industry a “basic industry.” In essence, this means the industry produces products sold outside the local area and as a result, brings new money into the area. Basic industries provide support for non-basic industries such as restaurants, groceries, and other service-sector businesses. These service-sector employers couldn’t exist, without the basic industry portion of an economy. Thus, the economic contribution of basic industries far exceeds their direct employment.

At one time, nearly ½ of Oregon’s manufacturing employees worked in the wood products industry. Total employment peaked at around 93,000 in 1978. Employment at the end of 2003 was approximately 46,000 with a total payroll of $1.7 billion. [Note: These figures do not include employment for forestry and logging.]

The primary factors accounting for declines in overall wood products industry employment are economic recessions (principally the recession of the early 1980’s), public timber supply constraints beginning in the early 1990’s, automation, and consolidation.

In the 1990’s, Oregon’s “high-technology” industries surpassed the wood products industry as the leading employer in the state. Such a fact, however, fails to recognize the regional importance of certain industry sectors. The majority of high-tech employment is concentrated around the Portland metro area. The wood products industry continues to be the dominant manufacturing sector in many counties in the state; wood products manufacturing comprises 50% or more of the manufacturing employment in 12 of Oregon’s 36 counties.

Oregon is the headquarters for a number of well-known forest products companies. Collins Products, Hampton Affiliates, and Roseburg Forest Products are examples of lumber and structural plywood producers. Columbia Forest Products, Timber Products, and States Industries make decorative hardwood plywood. Firms making moulding, doors, and windows include Contact Lumber, Bright Wood, and JELD-WEN – the State’s largest privately-held firm.

A Global Industry

Wood products from Oregon are marketed throughout the U.S. and exported to every corner of the globe: Douglas-fir is still highly valued in Europe and Asia and pine moulding and millwork from southern and eastern Oregon mills provide a sizeable share of the raw material input for Midwestern door and window manufacturers – although the origins of this pine have changed.

At one time, the vast majority of the raw lumber for Oregon’s moulding and millwork producers originated from the ponderosa pine forests of Oregon’s high desert. Today, much of the material used by these mills comes from south of the Equator. For example, radiata pine (a tree native to the central California coast where it is known as Monterey pine) is produced in fast-growing, intensively managed plantations in several countries including New Zealand, Chile, Brazil and South Africa. New Zealand alone has approximately 4 million acres of radiata pine plantations.

Industry Detail – Definitions & Descriptions

There are many different ways to categorize the wood products industry, including:

• wood species used (e.g. Douglas-fir or ponderosa pine);
• location (e.g., Willamette Valley, southern, eastern, or coastal Oregon);
• size of the mill (e.g., annual production or number of employees); and
• type of product produced

A common set of categories based on product types produced is the following:

• primary – sawmills and plywood mills
• secondary – millwork, cabinet, and furniture producers
• reconstituted products – particleboard or medium density fiberboard (MDF)
• pulp & paper

Also, there are a number of pulp & paper mills in Oregon. The vast majority of the raw material for making paper is the residue from other mills – primarily chips from sawmills. While there are only a half-dozen or so pulp mills in the state (firms that dissolve or grind wood chips into pulp), there are nearly 60 firms producing paper and paper products such as linerboard (the outer surface of cardboard boxes), newsprint, and writing papers.

Wood Species and Their Uses

Location – what gets made where

Regardless of product produced, the Willamette Valley is home to a sizable portion of Oregon’s wood products firms. About ½ of the state’s sawmills are in the Willamette Valley. Veneer (thin sheets of wood used to produce plywood and other products) production is concentrated in the Willamette and Rogue Valleys. Although the majority of the state’s larger moulding & millwork plants are in eastern Oregon, about 2/3 of the total moulding & millwork firms are in the Willamette Valley. About 2/3 of the kitchen cabinet production is in the Willamette Valley as well. Furniture manufacturing is even more concentrated – about ½ the furniture makers are in the metropolitan area of Portland.

Industry Changes – Adaptation and Innovation

Selection of high strength veneer for laminated veneer lumber (LVL) is another example of the use of technology in Oregon mills. Ultrasonic sound waves are sent through sheets of veneer to identify denser, more desirable pieces.

Secondary/ value-added wood products firms also use machine vision technology to scan boards for knots and other visual defects and then determine the optimal way to cut the boards to produce the desired end products (e.g., parts for doors or windows).

Sustainability and Oregon’s Forest Products Industry

Oregon has stringent forest practices laws that are unmatched in many states and most countries around the world. In a global economy, this high environmental performance can be a competitive disadvantage since it generally comes at a higher cost. The state of Oregon is seeking to turn this potential disadvantage in the marketplace into an advantage by targeting markets that value products grown in environmentally well-managed forests. Long known as a state that is “green and clean”, this reputation could help future wood product marketing endeavors.

Forest Certification Forest certification, or green certification as it is sometimes called, is an attempt to identify forestland that is well managed. The main issue behind forest certification is a need to provide objective evidence that forest products are being produced without harm to forests or to the natural and human systems that they support. The evidence of this is often documented in an on-product label, or ecolabel. Forest certification and a supporting ecolabel allow forest industry companies to use marketing as a mechanism for supporting sustainable development in society. Marketing activities build a bridge between the company and its many stakeholders, especially its customers. The function of marketing is to analyze customer needs and transform them into business opportunities. If customers are environmentally conscious and want to make choices supporting sustainable development, a company can transform these environmental requirements into business opportunities. The State of Oregon and various members of the forest industry are exploring the potential to use certification and/or the Oregon Forest Practices Act as a mechanism for recognition in the marketplace via “Brand Oregon”.