Roundwood Markets I Est Virginia

Examination of regio hardwood roundwood markets i est Virginia

Delton Alderman' William ~u~~old*

Abstract West Virginia's large and diverse hardwood resource ranges from oak-hickory forests in the southern and nor-tllwestern regions of the state to northern hardwood stands in the northeastern region. West Virginia is home to a diverse group of primary liardwood processing industries including hardwood grade mills, industrial hardwood sawmills, engineered wood-product manufacturers, rustic-fence plants, face-veneer manufacturers, a hardwood plywood mill, and several roundwood and pulpwood concentration yards that supply mills in Ohio and Virginia. Each of these primary hardwood-processing industries has specific roundwood requirements with respect to species and quality resulting in a diverse set of roundwood markets. The diversity of West Virginia's roundwood markets wcre examined based on a detailed survey of 30 logging and associated roundwood merchandising operations. The hawesting operations sunicyed merchandise roundwood to an average of four markets each. The production of sawlogs or peeler logs, however, appears to be driving these operations. Other roundwood markets appear less important or secondary but still influence the profitabil- ity of logging operations. Of the species harvested in West Virginia, yellow-poplar is the most versatile because of its use for sawlogs, peeler logs, and rustic fencing. Yellow-poplar also is utilized most often in the production of oriented strandboard.

west Virginia's large and diverse hardwood resource harvesting generally concentrated on trees in the diameter ranges from oak-hickory forests (that also contain larger quanti- classes of 15 inches or larger. Collectively, these expanding and ties of yellow-poplar) to northern hardwood stands with signifi- new markets allow economically feasible harvesting of smaller cant amounts of hard maple and black cherry (DiGiovanni diameter andor low-grade timber (Hassler et al. 1999). 1990). In the Central Appalachian region, there have been sig- West Virginia also is home to a diverse group of primary nificant increases in both the demand for timber and the types of hardwood-processing industries, including hardwood grade roundwood products used by the forest industry. Annual re- mills, industrial hardwood sawmills, EWP facilities, rustic- moval of grovi~ingstock in Mst Virginia's sawtimber increased fence plants. face-veneer plants. a hardwood plywood veneer mill, veneer log yards that provide bolts to surrounding states, by 90 percent between the 1976 to 1989 and 1989 to 2000 forest and several roundwood and pulpu~oodconcentration yards that surveys (DiGiovanni 1990, USDA 2004). During the 1990s, senJe mills in Maryland, Ohio, and Virginia. Each of these in- large-capacity mills were located in West Virginia to manufac- dustries has specific roundwood requirements with respect to ture oriented strandboard (OSB), engineered wood products (EWP), and laminated veneer lumber (LVL). Because of these mills, timber consumption in the state has increased, with a sig- nificant increase in the volume of smaller diameter andor low-quality roundwood harvested to supply both existing pulp- The authors are, respecti\ ely, Research Forest Products Technolo- g~stand Economist Project Lcader, USDA Forest Service, Northeast- n~illsand neu EWP facilities. Pallet mills also are processing ern Research Station. Princeton. U'V ([email protected] smaller diametcr roundwood in addition to low-grade lumber [email protected]). Th~spaper was received for publication in Oc- and cants purchased from grade sawmills. Before the develop- tober 2004. Article No. 9953. 4-Forcst Products Society Member. ment of these nem markets, most logging was conducted to sup- c" Forest Products Society 2005. ply satvmiIls that produced factory-grade lumber, while timber Forest Prod. J. 55(12): 153- 157.

FOREST PRODUCTS JOURNAL VOL. 55,No. 12 specie!: and qualityi. This large num- Tabie I.- Board foot and proportionaf volumes of sawtimber for the northwstem, south- her of markets also creates opportu- ern, and northeastern survey units of West Virginia, 2000." ------nities for more efficient utilization of Soilthem Norlhn eestcrn hardwood roundwood. However, thc -- ?;ortheastern - Spec~es \l?vf13Fq ti RZ"VIDF 0 IclMBF ') o fom and degree of roundwood prod------uct segmentation that is occurring in YeIIU"-p"pl"r 4.1 13 14 3 5,395 22 5 3,480 18.5 West kirginia or other hardwood- red 3.418 11.9 2.453 10.3 1,54 1 8.2 producing regions has been poorly Other red oaks 1,392 3.9 2,168 9.1 2.012 10.; documented. SeIeet t%h~teoak 2,05 1 7.2 2,035 8.5 2,862 15.2 Because there are few data linking Other a hlte oaks 2,136 7 4 3,165 9.0 1.383 7.4 regional roundtvood markets to the ~,,dmaple 2.103 7.4 1.008 4 2 786 4.2 types and intensity of timber har- soft 2.732 9.5 1.335 5.6 832 4.5 vests. it is not known how the ongo- lltckory ing changes will affect timber har- 1,236 3 3 1.325 6.0 1,318 7.0 vesting practices that in hlrn affect 'lack 1.827 6 4 310 1.3 559 3.0 fumre utilization opportunities for Sofi harde00dC 9,690 33.8 9,783 39.6 6,223 30.2 forest products. In this study, the Hard hardwoodd 13.007 45 3 1 1,735 49.0 10.743 57.2 number and types of roundwood ~~ft~\i~~d~ 2,333 8 1 993 42 75 1 4 o markets in West Virginia are exam- 28,600 23.930 18,782 ined and distances that roundwood ------a Source USDX Forest Sen- (2003) are hauled to end users is reported. btMB Is board Data were obtained a survey of Includes yellow-poplar. soft maple. b~rch,beech. basswood, gums, and aspen, 30 logging jobs that were active dur- Includes all oaks, hard maple, ash, hlckones, and elms ing 200 1. The study objectiv,es were to investigate regional rouGdwood markets in conjunction with broad market indicators and to dis- cern the effects of regional roundwood markets on the type and intensity of timber harvests. The survey revealed information on the number and types of hardwood roundwood products rnerchandized at each site as well as the distance to market(s). Information on the factors that influence merchandising deci- sions also was obtained. To place this information in context, the composition of West Virginia's forests and primary forest products industry are discussed and data-collection procedures are described. West Virginia's sawtimber resource West Virginia contains three survey units or regions (Fig. 1) as defined by the USDA Forest Service's Forest Survey and Analysis (FIA) unit (DiGiovanni 1990). The northeastem region contains 40 percent of the state's sawtimber inventory followed by the southern and northwestern regions with 34 SQUTXE RN and 26 percent, respectively (Table 1). While yellow-poplar Figure I.- FIA survey regions in West Virginia. is the most common species in all three regions, the northeastern region has a higher proportion of currently high-value species: select red oak (primarily northern red oak), hard ma- in the states that border West Virginia prefer hard hardwood ple, and black cherry. Twenty-two percent of the sawtimber species. while soft hardwood species are preferred by EWP and volume in the southern region is yellow-poplar, though this hardwood plywood manufacturers. In fact, the high volume of region also contains a hiih percentagc of oak species. The yellow-poplar in West Virginia is what attracted fims to build northwestern region has higher proportions of select white three ELVP and one hardwood plywood peeling operation in oaks (primarily white) and other red oaks fpriinarily black, the state during the 1990s. pin, and scarlet). Another way to examine the hrest resource is to discrimi- Forest industry in West Virginia nate saw2imber into hard (higher density) and soft (lower den- Historicalfy, hardwood sawmills have been the rnost irnpor- sity) hardwood species (Table 1). Hard hardwood species in- tant hardwood roundlvood-consumiw industlies in west Vir- clude the oaks, hard maple, ashes. hickories. and eims. Soft ginia (Table 2): this remains tlue today. as evidenced by histor- hardwood species include ~ellow-~o~lar,soft maple. birch7 ical data and the trend toward larger (in product ion) sawmi l 1s basswood, the gums. and aspen. Pulp and paper manupdct~lrers and a decrease in the number of and production from smaller mills. In 1963, West Virginia tallied 505 sawmills. with 94 pro-

------ducing more than 1 million board feet (MhIBF) per year I Luppold, WC; and 1.1S Bumgardner Regional changcj in the timber resonrcc (Kingsley and Dickson 1965). By 1976 this number was down and sat\~nliIrng~ndustr) In Pe~u-i\yI\an~aIn prepxatlon to 365 sawmills, with 90 producing rnore than 1 MMBF per

1 54 DECEMBER 2005 year (Bones and Glover 1977).IVidmann and Muniner ( 1987) Table 2. - Number and approximate capaoty of hardwood reported 164 sawmills in 1986, 1 I 1 of these produced more sawmills and other major consumers of hardwood roundwood, than I MMBF, year. Today. the state has more than 160 saw- by region, 2000." mills, nearly half of which are in the nortfieastern region, In 2000, these rnills produced a total of about 750 hlRlBF (West VA. Div. of For. 2001). Mills in the northeastern region are 2 inore numerous, southem region mills on average are larger SanrnrlI capacit) (MMBFI 352 93 102 with an average annual capacity exceeding 7 ZLlMBF. The OSB m:lis (no ) 1 1 0 northwestern region has nearly the same number of n~iflsas the SI3 nlills cdpacrty (I2.l rons) i ,000 5 00 0 southern region, but the akerage capacity of these mills is only Peeler in~lls(no ib i 1 0 2.3 MMBF and total production in this region is only a third of Peeicr mtli capdcih (?ifhlBFf 40 40 0 that in the southern region. I-iardxvood mills also can be divided Face ~cneermrlls (no.)" 0 1 1 into larger mills that produce mostly lumber graded under the P~ilpxvoodyards (no.) 1 7 4 National Hardwood Lumber Association (2003) niles and - Rusttc fence plants (no ) 15 1 2 smaller mills that produce mostly ungraded lumber and cants ------(Table 2). " Source. U1est V~rgtniaUtvt\lon of Forestry (2001) Grade sawmills consume high-quality logs. but the highest " LVI- and plywood 'V~c~therface lcnecr operation was llsted as a market for the harvest sltes sur- qtiaiity logs are consumed by the Face-vencer industry. In 200 1, veyed. In West Irirg~nra.high-grade Litnecr logs tend to bc mechanued by one slicing operation was located in the southern region and a safimllls or log yards second operation was located in the northwestern region. The logs consumed by this industry are usually sorted in log yards where buyers of vcneer logs periodically assess them for ve- ulation was stratified by product and mill size. For each strata, neer production'. mills were selected randomly by the probability proportional to There are two OSB mills, respectively, in the northeastern size with replacement. This ensured that the largest niills were and southern regions (Table 2). These mills primarily consume selected to obtain a viable list of suppliers (small and part-time lower quaiity soft hardwood and sohood roundwood, inclttd- mills may not have been operating and such mills do not pur- ing tops and limbs. The northeastern region also has a LVL mill chase stumpage but obtain roundwood through gate wood pur- while the southern region has a rotary veneer mill (RVM) that chases). Thus, of the 30 sites, 12 would be it1 the northeastern re- produces poplar veneer core that serves a North Carolina hard- gion, 10 in the southern region, and 8 in the northwestern region. wood plywood manufacturer. Both of these operations con- The final sample differed slightly in that there were 13 obsewa- sume similar volumes of yellow-poplar peeler logs, which are tions in the northeastern region, 9 in the southern region, and 8 in relatively clear upper logs that can be used down to a small-end the northwestern region. One sebment of the survey pertained to diameter of 8 inches. These mills are located in four contiguous the types of roundwood products, the markets for these products, counties: Upshur (LVL), Braxton (OSB), Nicholas (RVM),and and distance(s) to markets. Logging company characteristics in- Fayette (OSB). Our findings indicate that the procurement cluded type of logging operation (contract, independent, or com- ranges of these mills extend 160 miles; at this distance, discrete pany). type of harvest, number of loads per day, and if a forester mills can pull material from northwestern North Carolina, was involved in the harvest layout. southwestern and central Virginia, northeastern Kentucky, Logger profile eastern Ohio, western Maryland, and southwestern Pennsylva- nia. The OSB mills consume more than 900 tonsiday, the RVM The logging crews participating in this st~ldywere primarily peeler plant uses 40 MMBFiyear, and the LVL facility utilizes contract loggers (21), eight were independent, and one was a 43 MMBFiyear. The hardwood face-veneer facility in the company logging crew. The average logging crew comprised southern region uses rotary lathes to slice oak and basswood. 4.5 employees (range: three to eight). Seven of the 30 crews Most of the sustic-fence manufacturers in West Virginia are used manual bucking and the remainder used buck saws. The akerage number of loads hauled per day was 3.5 (range: two to in the northeastern region. In addition to black locust, a hard hardwood, these businesses use smaller dian~eteryellow- eight) and 1 1 crews contracted material hauling. poplar logs and other soft hardwood and softwood species for Ninety-thee percent ofthe study sites were on privately held rails and posts. Although there are no pulpwood mills in the land, of which 40 percent was owned by the forest industry, 17 state,'l0 pulpwood yards provide raw matcrials to niills in ad- percent by other types of private corporations, and 36 percent joining states. The northern reglons have four yards each and private individuals. Only 7 percent was publicly owned tirnber- the southem region has onty two yards. land. The aberage tract xvas 98 acres (range: 15 to 440) and thc elevation ranged from 6.50 to 3.500 feet. Eleven of the survey Data-collection procedures plots weye selection cuts that were marked by professional for- Thirty harvesting sites mere selected by a representative sam- esters; nine sites were diameter limit cuts. Clearcuts and log- ple of primary wood-using mills in Wst Virginia. Since \;Vest ger's choice hanests accounted for three sites and seven sites Virginia is divided into three FIA regions, the decision to strati& were disparate harvest types. the sample using these regional examples was made. To ensure Gencr-ally one would assume that contract loggers would that all of the products were represented acc~~rately.the mill pop- abide by the objectives of their employer (timber purchaser or land owner) while independent contractors would have greater latitude in selling roundwood. Therefore, the average number UTLlpnerJ E . R Srnaliej. mil h Ci I uppoid Fnctors affect~ngthe rncich'incllring of markets for ~lldependentloggers should be greater than the of I~arii\\oodlops In the Southcni Tic1 of Yee Yorh In prt.par;ttinn merage number of markets for contract loggers. These expec-

FOREST PRODUCTS JOURNAL VOL. 55, NO. 12 tations were not apparent in the cur- Tabie 3. - Number andpercentage of surveyed logging operations that merchandire logs to major roundwood markets, by region, 2000. rent study as each logger group a\ er------s---s------aged 3 -9 roundwood markets How- C'ortheastem ------Southern-- Yorthn ebtcrn ever, the current study focused on ----- humber $ri Yumbcr Oo ?lumber oo Item ------broad categories of roundwood and ------7 13 100 9 100 i 88 not the separation of sawlogs or other S""iogs Peeler logs for I~'v"Land ~1)~~ood 9 69 e 89 ci 75 nroductsr into sub categories.- Further- more, the steep terrain in &lest Vir- Reports that peelers alru were a 2 15 h 66 2 3 8 ginia limits thesize of the log landing prlnlar, product and effectively limits the number of OSB log sorts that can take place. Much of Puip\\ood the log sorting in West Virginia oe- Low-grade sawiogs curs at sawtnills or log yards. R~istlcfence rnaterlal Roundwood merchandising Aserase nuinher of roundwood inaskcti" 2 3.1 3 8 Range In number of round~oodmdrkets 2 to 5 3 to 5 I to 6 west Virginia ------in - -____ - _ _I_____------Hardwood sawlogs were the most " Includes additional markets for meta1lurglcal chlpi, logs for log houses, and fireirood, common roundwood product merchandised by the surveyed operations (Table 3). In addition to the six markets listed, four additional Impact of market haul distance minor markets were identified: alloy chips, softwood ptilp- Transportation economic theory normally stipulates that the wood, firewood, and logs for log houses. On average, the har- greater the val~teof a commodity per unit weight, the greater vesting operations surveyed merchandized roundwood to the distance the commodity can travel to the end consumer about four markets (Table 5). A11 but two operations listed (Bressler and Fhng 1970). However, there are underlying as- three or more roundwood markets and one operation listed six pects of the hardwood roundwood market that counter this as- markets. Only one operation did not produce hardwood saw- sumption. Large sawmills are the primary users of higher value logs as a primary product and at least one additional hardwood hardwood3. These mills are widely distributed in West Virginia product. The lone sample site that produced a single product atid appear competitive in both input and output markets. Still, was a softwood pulpwood harvest. grade mills obtain sawlogs through a variety of channels. Peeler logs were the second most common roundwood prod- which includes ownership of standing timber, stumpage pur- uct merchandised. Nearly half of the operations that rnerchan- chases on the open market, logs purchased from independent dised these logs also considered peelers as primary products. loggers, and logs procured from concentration yards. Mid- and The high proportion of operations merchandising peeler logs low-grade sawlogs are usually processed by numerous smaller reflects the relatively high price for this material, $350 to $400 sawmills or rustic-fence manufacturers. By contrast, peeler per thousand board feet (MBF) (Doyle scale). A greater per- mills, OSB plants, and pulp mills are less numerous (Table 2) centage of logging operations in the southern region merchan- and consume greater quantities of roundwood. Therefore, even dised peeler logs and two-thirds of the operations in this region though these larger users may consume lower value round- considered peeler logs as a primary product. The LVL plant wood, their requirements (species, size, etc.) and locations im- purchased peeler logs down to a :-inch small-end diameter, ply that, on average, roundwood must be hauled a greater distance from harvest site to the mill. while the hardwood plywood mill purchased logs down to a 10-inch small-end diameter. The northeastern region had the Average haul distances to various roundwood markets are lowest percentage of peeler log merchandising, possibly be- listed in Table 4. Since all but one of the logging operations cause rustic fence manufachirers purchased yellow-poplar logs sampled was associated with the production of sawlogs. the down to a 6-inch small-end diameter. haul distance to the mill or dish-ibution yard for sawtogs is a critical factor. In the three regions examined, the average dis- OSB was the third most common market for hardwood tance to the primary sawlog delivery point ranged from 33 to 35 roundwood. This product requires a greater volume of round- miles. This narrow range would be expected given the rela- wood material than peeler mills, but the relative value of OSB tively even distribution of large and small sawmills throughout material is considerably lower. OSB appeared to bc more ini- the state. However, there was considerable variation in the haul portant in the southern and northwestern regions than in the distances to other roundkvood consumers. northeastern region. Peeler logs uere hauled 49 and 86 miles from the logging Rustic fence material appeared important only in the north- site tq the mill. Roundwood directed to OSB manufdcturers eastern region (Table 3).The fact that rustic fence manufactur- uere hauled an average of 95 miles fi-om the northwestern re- ers can use a portion of the logs that othercvise would be gion as there are no OSB facilities in this region. The ha~lldis- shipped to an OSB mill might accotint for the lower percentage tance for pulpwood varied considerably by region possibly due of OSB roundwood mercha~ldisingin the northeastern region. to differences in topo~aphyand access to highways. The nortbwestcm region is the least mountainous area of the state Pulpwood was merchandised by more than haif of the operations but appeared more important In the northern regions than - in the south. The lack of pulp markets in the sotithern region is Face tenser logs are the highest dueform ot hard\\ood r-uund\\ood Llo\;ce\cr partly the result of the rough terrain and lack of major high- thcsi: logs are usuallq transported to a sa~rnillor m~llyard before the! arc ways in the western portion of this region. rza~c.rchandi/cdto a log btiyrr

DECEMBER 2005 Table 4. - Average haul distance to market, by regton, 2000. among the three regions. Hovcevcr, because of the small sarn------ple size. it is impossible to detemline if these variations \rcrere Product Northeastern Southern Uorthwest the result of regional variations in timber supplies, topography. ------[mlics)------and hardwood-consuming industries or can be aMributed to sta- Salt logs 35 33 33 tistical \ ariation. Although 29 har3~estingoperations indicated Peeler logs 38 86 77 that "higher grade" sasawlogs were a primary product. most OSB 3 3 56 95 low-quality ro~indwoodmarkets appeared secondary in nature. Pulp\\ ood 33 10" 8 1 tiowever, as time has progressed. rekenues from these second- b Rustic fenc~ng 25 s3 s ary markets have probably become integral in the long-term vi------ability of logging operations in West Virginia. Fxcludes one logg~ngsite thdt >old pulpttood d~rectlyto trucker. One of the most interesting findings of this examination was the importance of yellow-poplar to a variety of industries in while the western portion of the southern region contains some West Virginia. Total consumption of small-diameter yellow- of the steepest slopes in the eastern United States. poplar logs by LVL, hardwood plywood, and rustic fence in- The greater distance that lower gade hardwood roundwood dustries exceeds 80 MMBFiyear. OSB manuhcturers also use is shipped in West Virginia seems contradictory to the expecta- lower grade yellow-poplar roundwood while sawmills process tion of transportation eco~~onlicsin that the lowest value per yellow-poplar butt logs. The multiple uses of yellow-poplar are unit weight products are being shipped the longest distance. unique because segments of an individual tree could be Because of economies of scale in production, OSB and pulp merchandized for three to five discrete roundwood users. mills must be large and therefore require a large procurement Literature cited area. Furthermore, because these operations are the only mar- Bones, J T and R P Glover 1977 The trmber industries of West Vrrgtnla kets for low-grade roundwood, they have limited influence on Res Bulletrn NJi-47 USDA Fore\t Serv , Northca\tern Forest Exp the price of roundwood. This pricing influencing behavior is Sta , Broomall. PA 16 pp demonstrated by OSB and pul$ mills in West Virginia when Brcssler. R G and R A King 1970 Markets, pnces and lnterrcgional loggers are provided premiums for long hauls if market condi- trade John Wiley & Sons, New York 426 pp tions rnerit these premiums. These large users also may reduce DtGlocann~,D M 1990 Forest statrstjc.; for Wc\t V~rginld-1975 dnd 1989 Rcs B~illetlnNE- 1 14 USDA Forest Sen1 , Northeastern Forest or eliminate suppliers from distant areas when demand for Res Std , Radnor, PA 172 pp OSB or pulp declines. Has~ler,C C , J E Baumgas, A J Stccle, and W G Luppold 1999 141 methodology to determlne the effects of roundwood markets on the Concluding comments type and lntensrty of trmber harvests In West Virg1111d Morgantown, WV 3 PP This examination of how roundwood is merchandized in IOngsleq, N P and D R D~chson1965 Trn~berproduct~on in West Vrr- West Virginia demonstrates the complexity of hardwood gintd 1965 Res Bulletrn NE- I0 USDA Forest Serv , Northeastern roundwood markets in this state. Ten discrcte markets were Forest Exp Sta , Upper Darby, PA 52 pp identified by examining logging hawesting operations: saw- Nattonal Hardwood Lumber Assoc~ation(NHLA) 2003 Rules for thc logs, peeler logs, OSB roundwood, hardwood pulpwood, low- medsuremcnt & tnspection of hardwood & cypress NHLA, Memphls, TN 66 pp grade sawlogs, and rustic fencing material were cited most fie- USDA Fotest Service 3004 Forest Inventory Mapmaker Vc~sionI 0 quently as end-use destinations. On average, there were about USDA Forest Serv , North Cent Kes Std , St Pdui, 'vfN http iincrs2 four roundwood markets for each logging operation surveyed; fs fed us/480 lifiadbirndeu htm the number of markets ranged from one to six. West V~rginraDlkts~on of Forestry 2001 www &\forestry comi greenlumber doc Other than the average distance that sawlogs were hauled Widmdnn. R H and E C Murnner 1937 West Vrrginla trmbcr products and the average number of roundwood markets per logging output 1987 Rcs Bulletm NE- 1 15 USDA Forest Sen/ , Northeast- job, there were variations in procurement characteristics ern Forest Exp Sta . Broomall, PA 40 pp

FOREST PRODUCTS JOURNAL VoL. 55. NO. 12