Cut more wood, says industry study

McDowell Group report backs timber industry claims

Posted: Tuesday, May 02, 2000

Forest Service works locally to help loggers

While the timber industry and the federal government are divided over major policy issues, on a local level the groups are working toward some arrangements to make the U.S. Forest Service's timber sales program more successful.

``We do have a good relationship with people at the forest level,'' said Jack Phelps, president of the Ketchikan-based Alaska Forest Association. ``Our problems are in Washington.''

The Forest Service personnel in Southeast recognize the painful transition the industry is in, said regional economist Kathleen Morse. ``We're not just ignoring this.''

Morse said sales are being redesigned to improve economics of harvesting.

For example, the agency is easing up on a previous requirement that timber companies remove rotted trees along with good ones. In many cases, the bad wood ``actually has a negative value,'' given the removal costs, she said. And the Forest Service has determined there can be an environmental advantage to leaving it in place, because it provides viable wildlife habitat.

The Forest Service also is giving more individual attention to each proposed sale, looking for ways to make the harvest more economical, Morse said.

She also noted the start-up of the Wood Utilization Center in Sitka, a Forest Service-sponsored think tank on value-added technologies and approaches to marketing Tongass National Forest timber.

Meanwhile, the agency, through its Collaborative Stewardship Project, is expediting timber-salvage sales on Prince of Wales Island.

It's intended as an exercise in building good will, said consultant Murray Walsh of Juneau, who has served as facilitator for the project. ``Basically, the Forest Service says, `Every time we do anything, we get yelled at. And if we do nothing, we get yelled at for that.' ''

Administered by the City of Thorne Bay, the stewardship project has involved 16 meetings over 18 months, Walsh said. The idea is to make micro sales to about 50 small timber operators, gradually restoring a portion of the job base lost when the Ketchikan pulp mill closed, he said.

Under this approach, the operators will scour the woods looking for dead or down timber. The guidelines allow the Forest Service to sell with a seven-day advertisement if two or more bidders want the wood, or immediately if there is only one bidder.

There could be some unusual value-added processing operations, such as making guitar and violin components, Walsh said. ``Everybody's struggling to find a niche. A little bit of wood will go a long way, if it's made easily available.''

Under the best-case scenario, all 50 small operators would get involved in the program and hire one or two employees, adding 100 to 150 jobs, Walsh said. ``That would take the island some distance back to where it had been.''

Phelps said he welcomes the micro sale program but doesn't put a lot of hope in it.

``Micro sales are real important to a certain sector, but it doesn't provide much employment,'' he said.

The Southeast timber industry got a boost recently from a report arguing that the U.S. Forest Service isn't offering enough trees for sale in the Tongass National Forest.

But the Forest Service and an environmental group say the report, from the McDowell Group of Juneau, contains little that's new and has flaws in its analysis of the worldwide timber market.

The $90,000 report, a year in the making, was commissioned by the Ketchikan Gateway Borough, where the closure of the pulp mill a few years ago depressed the economy.

``Somebody has to pay for it from some perspective,'' said Kathleen Morse, regional economist for the Forest Service.

``You could say that about any study anybody orders,'' responded Jack Phelps, president of the Ketchikan-based Alaska Forest Association.

But Phelps encouraged a comparison of the McDowell Group document with a report prepared for the Forest Service in 1997 in conjunction with the 10-year Tongass Land Management Plan implemented by the agency. The difference in comprehensiveness is ``stark,'' he said.

``It's a truism in the research business that the person who contracts for the study has influence over the content of the study,'' said Scott Miller, senior analyst with the McDowell Group. ``They get to ask the questions. They don't provide the answers.''

The study comes during a period of dramatically reduced timber sales.

In 1999, about 145 million board feet were harvested, enough to build 14,500 average-sized three-bedroom homes. In 1990, the harvest was 471 million board feet. Employment in the regional industry has declined from 4,000 jobs then to about 1,600 now, Phelps said.

Against that backdrop, the McDowell report challenges the Forest Service's analysis of the potential market for Tongass timber and says the agency's procedures have inhibited the marketability of the trees.

Key findings:

``The demand for products of the type that could be produced from Tongass timber far exceeds the USDA Forest Service's allowable sale quantity, the installed mill capacity in the region and even the forest's biologically sustainable yield. ... This long-term decline in supply sends a negative message to buyers looking for dependable suppliers.''

``Timber from the Tongass National Forest and other sources in Southeast Alaska is suitable for virtually any product that can be made from softwood species. ... (P)roduction costs are not necessarily higher in Southeast Alaska than they are in neighboring British Columbia, the source of nearly one-third of the world's softwood exports.''

``This study takes issue with current USDA Forest Service policy that implies that market demand in Southeast Alaska is independent of timber supply in the Tongass National Forest. On the contrary, federal timber commitments that are well-timed, reliable and realistically priced are a key factor in defining demand.''

``Further, continued uncertainty over timber supplies will inevitably lead to decline in the Southeast Alaska timber industry through lack of investment. ... More than `business as usual' will be required to see the industry through this very difficult period. ... The primary restraint on Tongass timber production is political.''

The 133-page report also says the Forest Service has underestimated economic growth in Asia and market opportunities in the Lower 48. Meanwhile, the agency appears to have overstated sustainable harvest levels in Russia, China, South America and elsewhere, thereby understating the demand for Tongass timber, according to the report.

McDowell used the services of forestry and wood products experts in Washington, Idaho and Alaska, including a former Forest Service official.

Phelps of the forest association said he doesn't expect to see any immediate change in federal policy in response to the report.

But it could be useful over time, he said. ``It's good sound marketing information for the companies to use.''

Also, the demand for Tongass timber is an issue raised with every proposed sale in the forest, and the demand issue is also a factor in pending litigation on revisions to the land management plan, he noted.

Although the government is offering a potential of 155 million board feet in sales this year, Phelps said that Forest Service management policies effectively limit timber sales to 120 million board feet. The industry needs at least twice that much, and the McDowell report shows potential for harvesting up to 400 million board feet, he said.

But Morse of the Forest Service said the McDowell report uses lots of worldwide timber-demand figures without giving enough weight to issues such as economy of scale, distance to markets and other competitive disadvantages in Southeast Alaska. While there might also be a big worldwide demand for cars, that doesn't mean it's profitable to make them here, she said.

``It's getting old,'' Morse said. ``I'd like to see some reality check.''

Marc Wheeler of the Southeast Alaska Conservation Council also said the McDowell report beats a dead horse.

``I think it's pretty clear we're not going to go back to the days of two pulp mills and cutting everybody's back yard for timber,'' he said.

Current law says market demand for timber must be met only to the extent that it's consistent with all other uses of the forest, Wheeler said. ``They completely miss that point.''

The forest industry already has taken the most accessible and economical timber, he said. ``They've eaten most of the apple. What we're fighting over now is the core.''

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