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Maine Future Forest Economy Project

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Maine Future Forest Economy Project MAINE FUTURE FOREST ECONOMY PROJECT CURRENT CONDITIONS AND FACTORS INFLUENCING THE FUTURE OF MAINE’S FOREST PRODUCTS INDUSTRY MARCH 2005 PREPARED FOR: DEPARTMENT OF CONSERVATION – MAINE FOREST SERVICE AND MAINE TECHNOLOGY INSTITUTE INNOVATIVE NATURAL RESOURCE SOLUTIONS LLC 107 ELM STREET, SUITE 100-E PORTLAND, ME 04101 WWW.INRSLLC.COM This material was prepared with financial support from the Department of Conservation – Maine Forest Service and the Maine Technology Institute. However, any opinions, findings, conclusions, or recommendations expressed are those of Innovative Natural Resource Solutions LLC unless otherwise noted, do not necessarily reflect the views of the Maine Department of Conservation, the Maine Forest Service, the Maine Technology Institute, or the project’s Advisory Committee, and do not constitute an endorsement of products or services mentioned. The analysis contained in this report is based upon our best professional judgment and on sources of information that we believe to be reliable. However, no representation or warranty is made by Innovative Natural Resource Solutions LLC or other authors of this report as to the accuracy or completeness of any of the information contained herein. Nothing in this report is, or should be relied upon as, a promise or representation as to the future. Cover photos by Maine Pulp & Paper Association, Small Woodland Owners Association of Maine and Innovative Natural Resource Solutions LLC (at Hillside Lumber). Used with permission. Printed Under Appropriation 013-04A-5180-512-4099 FFE3 Developed Under a Cooperative Forestry Assistance Grant CFDA 10.664 The USDA Forest Service prohibits discrimination in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, and marital or family status (not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination write: USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Ave, SW, Washington, DC 20250-9410 or call (202) 720-5964 (voice or TDD). USDA Forest Service is an equal opportunity provider and employer. Maine Future Forest Economy Project Page 2 Innovative Natural Resource Solutions LLC MAINE FUTURE FOREST ECONOMY PROJECT TABLE OF CONTENTS Chapter Page Executive Summary 9 Project Summary 24 Current Position and Challenges Facing Maine Forest Product 27 Manufacturing • Maine Forest Industry – An Overview 28 • Maine’s Forest Products Cluster 42 • Pulp & Paper Sector 48 • Sawmills & Wood Product Manufacturing 94 o Softwood Lumber 102 o Hardwood Lumber 112 o Secondary Wood Products 120 • Engineered Wood Products 131 • Biomass Electricity 150 • Bio-based Products 166 Survey of Maine Forest Product Manufacturers 177 Micro-businesses in the Maine Forest Product Manufacturing Sector 209 • Survey of Maine Forest Micro-businesses 214 Maine’s Business Climate 231 Transportation of Maine Forest Products 246 Fostering an Entrepreneurial Climate in Maine’s Forest Industry 252 Emerging Opportunities 260 • Role of Certification 261 • Carbon Markets 270 State Initiatives to Support & Grow Forest Product Manufacturing 273 Branding Maine Forest Products (by Robert Bush) 283 Maine’s Forest Resources (by the Maine Forest Service) 291 Interviews with Investors and Financial Professionals (by Pan Atlantic 308 Consultants) Results of Public Survey (by Strategic Marketing Services) 343 Recommendations for Action 360 Maine Future Forest Economy Project Page 3 Innovative Natural Resource Solutions LLC Appendices Page A. Summary of Maine Future Forest Economy Project 386 B. Essays on Maine’s Forest Products Industry and It’s Place in the 387 Global Marketplace • By Lloyd Irland 390 • By Jim Bowyer 407 • Response by Al Schuler 423 C. Survey of Maine Forest Industries 426 D. Survey of Maine Forest Micro-businesses 432 E. Advisory Committee 437 F. Summary / Notes of Workshop at Maine Forest Products Council 438 Annual Meeting G. Summary / Notes of Workshop at Maine Wood Products 446 Association H. Survey Instrument – Pan Atlantic Investor Interviews 448 I. Interview Participants - Pan Atlantic Investor Interviews 453 J. Individuals Providing Input to the Maine Future Forest Economy 455 Project K. References & Resources 462 Maine Future Forest Economy Project Page 4 Innovative Natural Resource Solutions LLC List of Figures Figure 1. Maine Forest Industry Employment – Paper, Solid Wood and Forestry & Logging, 1992 - 2003................................................................................................ 30 Figure 2. Average Wages, Maine Paper Mill and Sawmill Employees, 2000 - 2003 ..... 31 Figure 3. Maine Forest Industry Employment Outlook, 2000 and 2010......................... 32 Figure 4. U.S. Exports of Wood Products, 1980 and 2000.............................................. 33 Figure 5. Relationship of Currency Exchange Rate and Forest Exports ......................... 34 Figure 6. Maine Forest Product Exports, 1998 - 2002..................................................... 35 Figure 7. Global Forest Resources................................................................................... 36 Figure 8. Global Forest Cover ......................................................................................... 37 Figure 9. Simplified Flow Chart of Maine Forest Products Industry Cluster.................. 43 Figure 10. Maine Harvest Volume by Year..................................................................... 44 Figure 11. Number of Employees by Forest Products Manufacturing Sector, 2001....... 45 Figure 12. Payroll by Forest Products Manufacturing Sector, 2001................................ 46 Figure 13. Value of Shipments by Forest Products Manufacturing Sector, 2001 ........... 46 Figure 14. World Pulp Production, 1995 and 2002 ......................................................... 48 Figure 15. Regional Shares of World Market Pulp Capacity .......................................... 49 Figure 16. Operating Rates for North American Printing & Writing Grade Mills.......... 50 Figure 17. Global Market Pulp Production as a Percentage of Capacity......................... 51 Figure 18. Top Ten Paper Producing States (by volume), 2001...................................... 52 Figure 19. Top Ten Paper Producing States (by value), 2001......................................... 53 Figure 20. Sales Per Dollar of Payroll, 2001 ................................................................... 54 Figure 21. Sales Per Employee, 2001 .............................................................................. 55 Figure 22. Historic Printing & Writing Demand and Global Economic Activity ........... 56 Figure 23. Advertising Pages in Major U.S. Magazines, 1960 - 2000 ............................ 57 Figure 24. Advertising Pages in Major U.S. Magazines, 1990 - 2003 ............................ 58 Figure 25. U.S. Shipments, By Grade, 1999 and 2002.................................................... 59 Figure 26. Geographic Distribution of Maine Pulp & Paper Mills.................................. 61 Figure 27. Maine Pulp Mill Capacity, 1961 - 2000 ......................................................... 62 Figure 28. Production of Pulp and Paper at Maine Mills, 1993 - 2002........................... 63 Figure 29. Capacity of Maine Paper Mills, Printing & Writing Grades.......................... 64 Figure 30. Pulp & Paper Employment in Maine, 1990 - 2004 ........................................ 65 Figure 31. Average Annual Wage, Maine Pulp & Paper Industry, 2000 - 2003............. 66 Figure 32. Value of Shipments per Employee, Pulp & Paper Mills, 1997 - 2001........... 67 Figure 33. Weighted Average Cash Cost/Short Ton, Coated Groundwood, Q1 2004 .... 71 Figure 34. North American Cost Curve, Coated Groundwood ....................................... 72 Figure 35. Global Cost Curve, Coated Groundwood....................................................... 73 Figure 36. Weighted Average Cash Cost/Short Ton, Coated Freesheet, Q1 2004.......... 76 Figure 37. North American Cost Curve, Coated Freesheet ............................................. 77 Figure 38. Global Cost Curve, Coated Freesheet ............................................................ 78 Figure 39. Weighted Average Cash Cost/Short Ton, Uncoated Freesheet, Q1 2004...... 81 Figure 40. North American Cost Curve, Uncoated Freesheet ......................................... 82 Figure 41. Global Cost Curve, Uncoated Freesheet ........................................................ 83 Figure 42. Weighted Average Cash Cost/Short Ton, Directory, Q1 2004 ...................... 86 Figure 43. Global Cost Curve, Directory......................................................................... 87 Maine Future Forest Economy Project Page 5 Innovative Natural Resource Solutions LLC Figure 44. Weighted Average Cash Cost/Short Ton, Supercalender, Q1 2004............... 90 Figure 45. Global Cost Curve, Supercalendered ............................................................. 91 Figure 46. Maine Lumber Production, 1839 - 2002 ........................................................ 94 Figure 47. Maine Lumber Production, 1975 - 2002 ........................................................ 95 Figure 48. Maine Wood Products Manufacturing
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