Transportation Study for Wood Industry in Mississippi

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Transportation Study for

Wood Industry in Mississippi

Photo by Dr. Chad Miller

Prepared By:

Yuanyuan Zhang, Assistant Professor

Jennifer Hooper, Graduate Student Researcher

(Graduate in May 2019)

Amit Tripathi, Undergraduate Researcher

Table of Contents

EXECUTIVE SUMMARY ...... 2

INTRODUCTION ...... 4

LITERATURE REVIEW ON SITE SELECTION DECISION FACTORS USED BY WOOD INDUSTRIES ...... 6

COMPANIES’ NEWS STORY REVIEW ...... 7

SHARE OF TRANSPORTATION COSTS IN WOOD INDUSTRY ...... 10

TRANSPORTATION MODES USED FOR SHIPPING WOOD PRODUCTS ...... 12

FREIGHT SYSTEM ...... 16

SUMMARY ...... 22

RECOMMENDATIONS ...... 23

LIMITATION ...... 26

REFERENCES ...... 28

APPENDIX A: WOOD INDUSTRY NEW INVESTMENTS IN ALABAMA AND GEORGIA ...... 32

APPENDIX B: INTRODUCTION TO COMMODITY FLOW SURVEY DATA ...... 42

1 Executive Summary

This study explores whether the transportation system in Mississippi provides advantages or disadvantages for the state in attracting wood industries compared to the competitor states of Alabama and Georgia. In this exploration, the literature gathered from multiple sources about wood industry site selection and 29 new investments in the wood industry in Alabama and Georgia were investigated to understand the factors considered by wood companies when selecting new investment sites. In addition, Commodity Flow Survey data were analyzed to estimate the share of transportation cost compared to goods value and transportation means used by wood product shipping. Lastly, Mississippi, Alabama, and Georgia freight facility inventories were summarized and compared. All these efforts aim to answer two main questions: 1.) Is transportation of wood products a vital impact factor in site selection for wood companies, and 2.) What are the potential issues of Mississippi’s transportation system that could negatively impact the shipping of wood products?

Findings include that transportation is indeed a significant impact factor in site selection for wood companies, and the identification of three potential challenges for Mississippi’s transportation system that could negatively impact the state’s wood products. These challenges are frequently posted bridges on routes, less dense national highways, and less dense freight railways. Other notable findings include:

• Truck drivers in Mississippi tend to encounter four (4) posted bridges every 100 miles traveled, which is 1.33 times more than in Alabama and four (4) times more than in Georgia. More posted bridges en route will force trucks with heavier loads to find alternate routes with potentially higher shipping costs or risk fines and long-term damage to the bridges. • Mississippi has the lowest number of miles of freight railway compared to the two competitor states. In terms of freight rail density, Georgia is twice as dense as Mississippi. • Both primary and secondary manufacturers of wood products would consider transportation costs as a high priority. Primary manufacturers also place a top priority on proximity to raw materials over other factors when selecting sites. At the same time, secondary producers tend to locate, in travel time and cost, by potential customer markets in major metropolitan markets.

2 • According to the investigation of new investments in Alabama and Georgia, more than half of the 12 investments tracked considered or mentioned transportation or transportation- related factors as a priority in their official media announcements. Accessibility to raw material is more critical to primary manufacturers, while accessibility to markets is more determinant to secondary product producers. • Logs and rough wood ranked as the products for which transportation costs take a more significant proportion of their prices, at about 24%. In comparison, the same transportation cost share of the secondary wood products at 5%, on average. • General wood products were shipped mostly by trucks, less by rail, and a small amount by rail-and-truck multimodal transportation means. Primary wood products such as logs and rough woods were shipped mainly by trucks, but rail had a significant percentage. However, a shipment of secondary wood products, especially paper products, relied almost purely on trucking than by rail. • Vehicle restrictions are similar in the three states and, therefore, should not be a competitiveness factor. • The public roadway network density, especially the national highway network density, is less for Mississippi compared to Alabama and Georgia. The density could result in fewer route options for truckers, whose goal is to reduce the cost of shipping wood products.

This document contains proprietary information and intellectual property of the Mississippi Forestry Commission. Neither this document nor any of the information contained herein may be reproduced or disclosed under any circumstances without the express written permission of Mississippi Forestry Commission. Please be aware that disclosure, copying, distribution or use of this document and the information contained therein is strictly prohibited.

3 Introduction

Background

In November of 2019, Irving Tissue officially opened a $470 million tissue production plant in Macon, Georgia, and announced an additional $400 million expansion project. This announcement raised a series of questions for Mississippi economic developers and forestry commissioners who had been trying to attract such investment to the state. Mississippi has access to an abundance of timber resources, and forest land covers 65% of the state (see Figure 1 for Mississippi pinewoods). However, neighboring states of Alabama and Georgia are outperforming Mississippi in the forestry industry by landing more projects. Why did Irving Tissue or other such wood industry companies choose neighbor states over Mississippi? What could be the main reasons, and is the shipping of wood products one of the reasons? These considerations triggered this exploration study.

Figure 1. Pinewoods Photographed at Longleaf Trace, Hattiesburg, Mississippi (left, by Dr. Chad Miller) and Oak Grove, Mississippi (right, by Heather Brown)

4 Purpose

Instead of exploring all possible reasons, the research team focused on wood transportation to answer two questions: 1.) Is transportation of wood products a critical impact factor in site selection for wood companies, especially the ones who chose their new business locations in Alabama or Georgia instead of Mississippi? If yes, then 2.) What are the potential issues of Mississippi’s transportation system that could negatively impact the transportation of wood products?

Methods

The researchers conducted the following to answer question 1:

• A literature review of eight (8) highly related journal articles and references, found in Google Scholar, to understand wood industry site selection factors. The aim is to determine if and how vital transportation is to wood producers when selecting new sites. • Researchers identified 29 wood companies that invested new facilities in Alabama and Georgia between 2016 and 2018. The focus was on learning how they decided on the business location and why they chose Alabama or Georgia over Mississippi. • A further review of 30 articles on 12 of the 29 new investments (excluding expansion investments).

The researchers conducted the following to answer question 2:

• The first thing to be clarified is the transportation modes used for shipping wood products in the United States. Commodity Flow Survey (CFS) 2012 dataset was used to analyze the mode share for shipment for multiple industries, including the wood industry. CFS 2012 dataset collects values for goods shipment weight (in pounds), shipment routed distance (in miles), and mode of transportation of the shipment for different types of goods (classified by Standard Classification of Transportation Goods, SCTG). • Article review identified trucking and rail to be the two most used transportation means for general wood products shipping. With that, researchers conducted a comparative investigation of Mississippi vs. Alabama and Georgia’s transportation system to determine their ability to support trucking and rail shipping. Detailed data about limitations on vehicle size, height, and weight; national highway density; posted bridge density; and freight rail

5 density was estimated in the study to determine potential trucking or rail transportation issues.

Scope of Study

This study focuses on Mississippi’s wood transportation and its infrastructure compared with the state of Alabama and Georgia. Detailed logistics chain and individual shipping not considered in the analysis.

Literature Review on Site Selection Decision Factors Used by Wood Industries

Consideration of several specific factors is significant when a company is selecting a site for a new industrial facility (Harrington, J.W. and B. Warf. 1995). One consideration is the mobility of facilities and workforce. Production machines could more easily be moved; the workforce is harder to relocate. Thus, the need for highly skilled people is a more determinant factor in site selection decisions for firms that depend on them. Accessibility to the inputs, like raw materials, is an important consideration in site selection decisions because accessibility to raw materials determines the in-bound shipping costs and waiting time for raw materials. Lastly, the accessibility to the target market can make a difference in the success of the facility, since accessibility determines the out- bound freight expenses and the responding speed to rapid changes in the marketplace.

Particularly for the wood industry, there were significant differences in the decision processes used by different types of firms, sizes of firms, and kinds of forest products. The research showed that there was not a single factor common to all industry subsectors and companies, but various combinations of raw materials, market, and transportation factors are prevalent. Large firms and primary manufacturing sectors prioritize transportation costs and proximity to raw materials when selecting sites, while secondary producers tend to locate closer to potential markets. However, sawmills consider reduced distance to raw materials as the only determinant factor (see Table 1). Thus, for the state of Mississippi, if the desire is to attract companies to the state, then primary sector companies should be the main targets for marketing and recruiting.

6 Table 1. Determinant Factors for Wood Industry Companies

Company types Determinant factors Reference Single-owner, secondary • Personal relationships Hagenstein, 1964 wood producers • Community factors Larger firms, secondary • Financial criteria Hagenstein, 1964 wood producers • Wood supply • Labor cost • Transportation costs (to markets) Primary wood product • Proximity to raw materials; Michael et al. 1998 manufacturers transportation McCauley 1990 • Accesses to suitable manpower Lin et al. 1996 • Factory capacity Krajewski and Ritzman 1999 • Costs of production McCauley and Caulfield 1990 • Profitability • Market observations • Investment requirements Secondary wood product • Workers’ compensation costs Michael et al. 1998 manufacturers • Property taxes • Cost of land for a facility • Raw material purchase

Companies’ News Story Review

To understand further why wood industry companies chose competitor states rather than Mississippi for new investment, researchers investigated wood companies that recently invested new facilities in Alabama and Georgia. This investigation determined a list of 29 wood industry investments, 23 in Alabama and 6 in Georgia, between 2016 and 2018. Figure 2 shows the logos of the companies included in the investigation. Information about the location of these new facilities, headquarter locations, the amount of USD invested, jobs created, and project types gathered in Table 2. Further, a Google search produced 30 articles about 12 different investments (excluding expansion investments). The findings of these searches analyzed decision-making factors. Detailed information about the methodology used to identify the 29 investments can be found in Appendix A. A list of websites for the news reports and news stories can be found in the reference list (Advantage Alabama; Cahela, B, 2019; Canfor, 2016; Canfor Corp; Canfor to build a state-of-the-art sawmill in Washington, Georgia, 2018; Davidson, 2018; Demographics; Desk, 2019; Dothan Area Chamber of Commerce; West Fraser Investor Presentation, 2018; Knight, 2017; Locating in Mobile;

7 Pare, 2016; Ploumis, 2016; Ploumis, 2018; Richards, 2016; Underwood, 2017; Walden, 2017; Wilson, 2019; Why Moultrie, GA; Why Mobile, AL).

Figure 2. Companies Included in the Study Investigation

Findings in Table 2 are site selection factors considered by each company. Transportation, logistics, or distance-related factors are bold and underlined. Research founds that 7 out of the 12 companies mentioned transportation or related factors as a priority. Transportation or related factors include access to markets, rail connection to the suppliers; proximity to ports; accessibility to raw materials, and extensive transportation infrastructures. As identified by other studies, availability to raw material is more critical to primary manufacturers, while accessibility to markets is more determinant to secondary product producers.

8 Table 2. Factors Considered since 2016 by Companies Investigated, (not headquartered) in Alabama and Georgia

Company Product Location Decision-Making Factors Irving Paper towel Irving, • Robust logistic infrastructure to reach key markets GA in the southeastern U.S. • Rail connection to its headquarter at New Brunswick, Canada, and its woodlands in Maine • Proximity to the port of Savanna Weyerhaeuser Softwood Millport, • Plenty supply of logs Company lumber mill AL • High levels of safety and success achieved over the past several years • Support from local and state government Canfor Sawmill Washington, • Near the company’s existing glulam facility Southern Pine GA • Close to the larger population centers in Athens and Augusta West Fraser Planer mill Opelika, • Excellent timber drain AL • Solid existing workforce • Proximity to markets • Site infrastructure • Attractive payback • Low execution risk Canfor Sawmill Moultrie, • Qualify for the New Market Tax Credit Southern Pine GA • An agreement with the Colquitt Regional Technical College West Fraser Sawmill Maplesville, • Expansion plan based on existing facilities AL • Grant authority for abatement of taxes International Timber Dothan, • Skilled people beams panels and AL • Building layout of the former GE building beams • Financial support from the local government Precision Furniture Ohatchee, • Close to raw material sources, processers, and materials AL end-users American Engineered Florence, • Expansion on existing facilities to increase Excelsior wood fibers AL production and storage space Company Tree Brand Pallet Ranburne, • Close to the customers Packaging AL • Tax abatement for a $1.6 million expansion Jackson Paper Recycle Dalton, • Low taxes and a lower cost of living Co paper-based GA • Various tax incentives corrugated • Outstanding and hardworking citizens sheets West Fraser Finished Opelika, • Excellent timber drain dimensional AL • Solid existing workforce lumber • Proximity to markets • Site infrastructure • Attractive payback • Low execution risk

9 Share of Transportation Costs in Wood Industry

According to “The Geography of Transport System” by Dr. Jean-Paul Rodrigue (2020), “There is a distinct difference between the level of transport intensity of goods and economic sectors they are associated with, a trend which is mostly attributed by the material intensiveness of each good in relation to its value. Goods with a high transport intensity tend to have a low added value. The most transport intensive sectors are involving agriculture, forestry and fishing, which are handling ponderous goods over long distances.” In that book, the share of transport costs in product prices for different types of products was ranked from as little as 3% for leather products to as much as 27% for stone, clay, and glass. The share of transportation costs for lumber and wood products is 17%. Researchers estimated using shipping data from Commodity Survey Data the percentage for more specific wood products such as primary and secondary wood products.

Commodity Survey Data (2012) is used to estimate the share of transportation cost to the product value of each transportation mode, which is published by the Bureau of Transportation Statistics. The Commodity Flow Survey (CFS) captures data on shipments originating from selected types of business establishments located in the 50 states and the District of Columbia. A brief introduction to the Commodity Flow Survey data is in Appendix B. The CFS 2012 dataset shows values for goods’ shipment weight (in pounds), shipment routed distance (in miles), the value of shipped goods, and mode of transportation of the shipment for different types of products.

This study estimated the share of transportation cost by using shipping cost per ton-mile for each transportation means, shipment weight, shipment route distance, and shipment value. Multiplying shipping cost per ton-mile, shipment weight, and shipping distance yields shipping cost for the entire shipment. Then, the ratio between shipping cost over shipment value provides the share of transportation cost for that shipment. An average of the share of shipment transportation cost was used as the share for that specific type of product. The Bureau of Transportation Statistics Average Freight Revenue per Ton-Mile 2012 (Bureau of Transportation Statistics, 2012) showed shipping cost per ton-mile for truck, class I rail, water transportation, and oil pipeline. We assume that the transportation mode revenue is the price asked for by the logistics company. Shipment weight, shipment route distance, and shipment value data are from the CFS. The estimation process for a specific product type k is in the formulas shown in Formula 1, 2, and 3.

10 Assume that under product type k, there are i shipments. In the CFS database, product type k is determined by the Standard Classification Transported Goods (SCTG) code of each shipment.

= ×

𝑆𝑆ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 𝑆𝑆ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 × 𝑝𝑝𝑝𝑝𝑝𝑝 𝑡𝑡𝑡𝑡𝑡𝑡 − 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑡𝑡𝑡𝑡 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚 𝑗𝑗 𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 𝑆𝑆ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤ℎ𝑡𝑡 𝑖𝑖𝑖𝑖 𝑡𝑡𝑡𝑡𝑡𝑡 𝑓𝑓𝑓𝑓𝑓𝑓 (Formula𝑆𝑆 ℎ1)𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 𝑖𝑖𝑖𝑖 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚

𝑆𝑆ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 𝑆𝑆ℎ𝑎𝑎𝑎𝑎𝑎𝑎 𝑜𝑜𝑜𝑜 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 (Formula 2)

∑𝑖𝑖 𝑆𝑆ℎ𝑎𝑎𝑎𝑎𝑎𝑎 𝑜𝑜𝑜𝑜 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑖𝑖 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎 𝑜𝑜𝑜𝑜 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐(Formula𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑡𝑡𝑡𝑡 3)𝑡𝑡𝑡𝑡 𝑘𝑘 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑜𝑜𝑜𝑜 𝑠𝑠ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑘𝑘

Figure 3 shows results for shipping cost-share for different types of goods. Results show that shipping cost for logs and other rough woods can be as high as 24% of the value of goods, which is the same as reported in Morten Quist Andersen’s (2019) report on the shipping cost for wood companies. However, secondary wood products, pulp, newsprint, paper, and paperboard, paper or paperboard articles, and printed products have much lower shares of transportation cost compared to their product value, at 9%, 7%, 3%, and 3%, respectively. A higher transport cost determines that reducing transport costs by choosing a logistics-oriented location is critical for a competitive price. Thus, it is easy to conclude that primary wood producers should prioritize reducing transportation costs as a more critical site selection factor than other wood producers.

Figure 3. Share of Transport Costs in Product Prices by Product Types

Transportation Modes used for Shipping Wood Products This study employs the Commodity Flow Survey dataset to analyze the mode share for shipment of different types of goods within the United States. The researchers used the below values to summarize the shipped value of how many percent of pounds-miles of each SCTG category of goods by a specific type of transportation mode, also known as mode share of different types of goods (see Figure 4).

Figure 4. Mode Share for Shipping Different Types of Goods

Findings observed from Figure 4:

• Logs and other wood in the rough condition (highlighted in the red box in Figure 4) were shipped employing a for-hire truck, a private vehicle, rail, and truck-and-rail. For-hire trucks carried 42.8% of its pounds-miles shipment, while private trucks carried 15.5%, rail 37.7%, and multimodal shipping by truck and rail 3.8%. So, it is evident that shipment of most of the logs and rough woods (96% of pounds-miles shipment) was by trucks and rail, especially trucks (58.3% of pounds-miles shipment). • Compared to primary wood products such as logs and rough woods, secondary wood products were shipped a little bit less by trucks but more by multimodal transportation of

13 truck-and-rail (see “Wood Products” in Figure 2). For-hire trucks and private trucks together carried 55.1% of pounds-miles shipment, with rail taking 29.4%, and multimodal shipping by truck and rail 15.2%. • Pulp, newsprint, paper, and paperboard were shipped mostly by trucks, with a for-hire truck and private truck taking 62.1% of the shipments—the other 27% of the shipments sent by rail and the last 10.1% by truck-and-rail. • The shipment of paper and paperboard articles relied on trucking even more, with 89.5% of pounds-miles shipped by for-hire trucks and private trucks. The usage of rail and multimodal transportation means of truck-and-rail reduced dramatically for the shipment of this type of product. • Printed products were shipped almost only by trucks, with 97% pounds-miles carried by for- hire trucks and private trucks. • On the other end, goods like cereal grains, agricultural products excluding animal feed and Forage Products, gravel and crushed stone, metallic minerals, and most of coal and petroleum products employ trucks for only 3.5% of their pounds-miles shipment on average. The major modes used often for these goods were rail and waterways. • In summary, wood products were shipped mostly by trucks, then by rail, and multimodal transportation means. Figure 5 shows different types of trucks and freight train shipping woods. Mainly, primary wood products like logs and rough woods were shipped by trucks but also by rail. However, the shipment of secondary wood products, especially paper products, relied on trucking much more than rail. Thus, both trucking and rail are important for primary wood products, while trucking is most important for secondary wood products.

Figure 5. Logging truck hauling logs (Top left, image source: BC Logging Trucks. Top right, image source: Methow Grist); Lumber rail cars (Bottom left, image source: Dr. Chad Miller); Freight train for woods shipping (Bottom right, image source: Dr. Chad Miller)

State Codes on vehicle regulations were reviewed and compared for the states of Mississippi, Alabama, and Georgia (LexisNexisa, 2020; LexisNexisb, 2020; The Alabama Legislature, 2020). This summary does not discuss exemptions and special situations for requesting permits. Readers should perceive the information with caution and understand that it is not the intention of the study to evaluate which state’s regulation is more appropriate than the others. For any further investigation, the readers are encouraged to refer to the references cited.

Table 3 finds the following:

• The limits on weight are all based on axle type and evaluated by pounds per axle. And the limits on weight are identical for Mississippi and Alabama. Georgia has less restricted requirements on weight. • The general limits on vehicle height are identical for all three states. However, Mississippi codes specify that no structures overpass the roadway should be re-constructed to

15 accommodate any vehicle having a height over twelve feet, six inches. Please see the quotes from the code under Table 3. • The general limits on vehicle length in Alabama are less restricted by using 57ft as the maximum total length of a truck tractor-semitrailer combination, which is 4ft longer than that of Mississippi and Georgia.

Table 3. Comparison of Truck Limits among Mississippi, Alabama, and Georgia

Mississippi Alabama Georgia

Weight Single axle: 20,000 lbs. Single axle: 20,000 lbs. Single axle: 20,340 lbs. Tandem axle: 34,000 lbs. Tandem axle: 34,000 lbs. Tandem axle: 34,000 lbs. Tridem axle: 42,000 lbs. Tridem axle: 42,000 lbs. Tridem axle: 61,020 lbs. Gross vehicle weight: Gross vehicle weight: Gross vehicle weight: 80,000 lbs. 80,000 lbs. 80,000 lbs. Height 13 ft 6 in (12 ft 6 in) * 13 ft 6 in 13 ft 6 in

Length • Truck tractor-semitrailer • Truck tractor- • Truck tractor-semitrailer combination: 53 ft semitrailer combinations: 53 ft • Single trailer or combination: 57 ft • Single trailer or semitrailer: 30 ft • Single trailer or semitrailer: 28 ft • No semitrailer or trailer semitrailer: 28 ft 6 in combinations over 2 units

Note: * According to the Mississippi codes, “No vehicle unladen or with load shall exceed a height of thirteen feet, six inches. However, no person, firm or corporation, or the State of Mississippi or any subdivision thereof, shall be required to raise, alter, construct or reconstruct any underpass, wire, pole, trestle, or other structure to permit the passage of any vehicle having a height, unladen or with load, in excess of twelve feet, six inches. Full liability for damage to any structure caused by any vehicle having a height in excess of twelve feet, six inches, shall be borne entirely by the motor carrier or operator of the vehicle.”

Freight System

The highway system in a state is the backbone of the transportation system for the wood industry, consisting of different types of roadways with various functions. A public road is any road under the ownership of and maintained by a public authority (federal, state, county, town or

16 township, local government, or instrumentality thereof) and open to public travel (Bureau of Transportation Statistics, 2018). The National Highway System (NHS) consists of roadways important to the nation’s economy, defense, and mobility. The NHS includes the following subsystems of roadways (note that a specific highway route may be on more than one subsystem) (Federal Highway Administration, 2017):

• Interstate: The Eisenhower Interstate System of highways retains its separate identity within the NHS. • Other Principal Arterials: These are highways in rural and urban areas which provide access between an arterial and a major port, airport, public transportation facility, or other intermodal transportation facilities. • Strategic Highway Network (STRAHNET): This is a network of highways that are important to the United States’ strategic defense policy and which provide defense access, continuity, and emergency capabilities for defense purposes. • Major Strategic Highway Network Connectors: These are highways that provide access between major military installations and highways, which are part of the Strategic Highway Network. • Intermodal Connectors: These highways provide access between major intermodal facilities and the other four subsystems making up the NHS.

Based on their definitions, it is evident that the density of the public roadways determines how convenient and efficient the goods movement can be; the density of the national highway system reflects that of the movement for freight; and the dense the national highway network is the more routes available for cost-saving shipment. Table 4 summarizes the total mileage of public road and the national highway system in Mississippi, Alabama, and Georgia (Federal Highway Administration, 2018). Georgia maintains the highest number of miles of both types of roadways among the three, Mississippi ranks the last. If we divide the mileage of roadways by the land area of each state (United Census Bureau, 2010), we can obtain the density of each type of roadway. Georgia still maintains the densest public roadways and national highways, 1.79 times denser than Mississippi for the former category, and 2.10 times for the latter (see Table 4). The two numbers between Alabama and Mississippi 1.15 and 1.03 show that Alabama’s roadway density condition is very similar to Mississippi. Thus, in general, with the less dense roadway network, especially the national

17 highway network, dedicated to economic activities, the freight movement in Mississippi tends to have fewer route options to reduce the cost or adapt to unpredicted traffic conditions on the road.

Table 4. Comparison of Freight System between Mississippi, Alabama, and Georgia

Mississippi Alabama Georgia Public road (Mi.) 77,477 100,962 128,397 National highway system (Mi.) 3,653 4,286 7,095 Land area (Sq. Mi.) 50,645 57,513 46,923 Public road density (Mi. Per 1000-Sq. Mi.) 1,529.81 1,755.46 2,736.33 (1.79 times (1.15)** of MS data) National highway density (Mi. per 1000-Sq. Mi.) 72.13 74.52 (1.03) 151.21 (2.10) # of bridges 17,070 16,130 14,879 # of posted bridges 3,127 2,734 (0.87) 1,703 (0.54) % of bridges structurally deficient 9.4 4.3 3.3 # of posted bridges per 100-mile on Public Road 4 3 1 (0.25) Freight rail * (Mi.) 2,455 3,272 4,607 Freight rail density (Mi Per 1000 Sq. Mi.) 48.47 56.89 (1.17) 98.18 (2.03) *Excludes trackage rights **Ratio of the data in that state over that of Mississippi Bridge Data from ARTBA reports for each state. The data in ARTBA reports are from the Federal Highway Administration National Bridge Inventory released March 15, 2019. Note that specific conditions on bridges may have changed as a result of recent work or updated inspections.

Another challenge on the roadway network is the bridges, bottlenecks where both traffic flow, truck weight, and size are limited. This challenge is even more significant when a bridge is posted for a weight limit lower than designed. The natural environment of Mississippi determines that there are more bridges than Alabama and Georgia. Mississippi maintains the highest number of bridges compared to the other two states (American Road and Transportation Builders Associationa, 2019; American Road and transportation Builders Associationb, 2019; American Road and transportation Builders Associationc, 2019) (see Table 4). Figure 6 shows the posted bridges information gathered by Mississippi DOT and their location on the highway system in the state. Most of the posted bridges are located on state and U.S. highways. In Mississippi in 2017, state law changed how heavy trucks are weighed, forcing the Department of Transportation to “post” hundreds of new bridges. Limiting the weight allowed forced trucks with heavier loads to find alternate routes or risk fines and long- term damage to the bridges (Ganucheau, A. 2018). As a result, Mississippi currently has 3,127 posted bridges, almost two times of that of Georgia, and 14% more than Alabama (American Road and Transportation Builders Associationa, 2019; American Road and transportation Builders

18 Associationb, 2019; American Road and Transportation Builders Associationc, 2019). At the same time, Mississippi has more bridges with structural deficiencies that require repair and thus request even lower weight limits for trucks to pass. If we divide the number of posted bridges by the mileage of the national highway system, truck drivers in Mississippi tend to encounter four (4) posted bridges every 100 miles driven, which is 1.33 times more than Alabama and four (4) times more than Georgia. More posted bridges will force trucks with heavier loads to find alternate routes or risk fines and long-term damage to the bridge. The weight limits of the bridge postings vary by the bridge, so some trucks along their routes could legally cross some posted bridges but not others. All of this will make the truck drivers drive more on detours to avoid passing posted bridges and thus increase the shipping cost. “Driving 10 miles around a bridge that has weight limits costs loggers $2.00 extra per ton…… If you want to load the trucks lighter to meet that requirement and avoid driving 10 miles around it, you have to average in the cost of having to add more trucks to haul the same amount of material in the same amount of time, plus truck insurance rates, plus the extra fuel costs. Those costs multiply tenfold.” (Ganucheau, A. 2018)

Figure 6. Posted Bridges on the Mississippi Highway System

20 A comparison of the freight railroad mileage (Association of American Railroads, 2017) shows that Mississippi has the lowest number of miles compared to the two competitor states. Figure 7 shows the Class I freight railways located in the three states. In terms of freight rail density, Georgia maintains as twice as Mississippi’s density. This comparison partially resonates as to why Irving Tissue chose Macon, GA, for its new facility due to the rail connectivity to its headquarters in Canada and the raw material supplier in Maine. It is clear from Figure 7 that Georgia has more direct and accessibilities of rail than the northeast coast of the country.

Figure 7. Class I Railways in Mississippi, Alabama, and Georgia

21 Summary

This study aims to understand why wood industry companies select locations outside of Mississippi and if transportation of wood products is one of the major factors that negatively influence the decision making of choosing Mississippi for their new investments. There are not similar or highly related studies that the researchers could follow as a model. As a result, the study becomes an exploration of two questions, including 1.) if transportation of wood products indeed is essential for wood companies in their site selection? And 2.) if there is any issue for Mississippi’s transportation system that might negatively impact the shipping of wood products?

To answer the first question, the researchers applied literature review findings on the impact factors of wood companies to the criteria for site selection. To verify and investigate factors used by companies invested recently, 29 new investments in the wood industry in Alabama and Georgia were reviewed and followed. The study summarized the site selection factors mentioned by these companies to see if the transportation of wood products is essential.

To answer the second question, the study started with estimating the shipping methods of wood products. The goal is to quantify how many (in percent) of woods were shipped by what transportation means. Once identified, then the transportation facilities to support the movement of those target means were analyzed and compared between Mississippi and its competitors in the wood industry business. In this way, researchers identified potential issues of transportation systems. The results answered the two questions. First, transportation is indeed a significant impact factor in site selection for wood companies. Primary producers of wood products tend to locate their facilities closer to raw materials, while secondary producers were closer to target markets. Second, frequently posted bridges on routes, less dense national highways, less dense freight railways might be the three of the potential issues of Mississippi’s transportation system that could negatively impact the transportation of Mississippi’s wood products.

22 Recommendations

The findings of the study could shed some light on actions that Mississippi can take to improve the situation. In terms of transportation system issues in Mississippi, it is just the conditions relative to Alabama and Georgia, which is determined by multiple factors such as the unique geographic location and social-economic environment of Mississippi. For example, the causes of posted bridges include denser waterways in Mississippi, deteriorated bridge conditions, and decreased budget. Thus, it is challenging and unrealistic for Mississippi economic developers or forestry commissioners to simply take action on improving the highway facility, bridge facility, and freight railway facility for the entire state. However, there should be improvements for specific shipping routes that connect existing wood companies or target companies to their buyers. Thus, identifying these critical shipping routes might be a topic worth investigating.

First, since the primary producers would prefer locations logistically closer to the raw material with the shorter shipping time and reduced cost, these might be the target customers to recruit to locate inside the state. Figure 8 shows the primary wood producers in Mississippi, along with posted bridges and highway systems. A spatial analysis of these mills and raw materials’ locations can be used to identify key routes between them. These key routes and facilities along these routes should be the targets for improvement.

Figure 8. Mississippi Primary Wood Producers (Mills)

Secondly, accessibility between primary producers in MS and secondary producers who potentially purchase products from MS primary producers should be improved as well. This could be done based on a spatial analysis between primary wood producers, secondary producers, and highway networks. For example, in Figure 9, some primary producers located in southern MS can be

24 clearly seen in the yellow circle. A cluster of second producers in Pensacola, Florida, can also be found easily in the green circle. Thus, the route between these two clusters should be identified as a key route for improvement, as highlighted in blue in Figure 9.

Figure 9. Focus Route Identified between Primary Producers in Southern Mississippi and Secondary Producers in Pensacola, Florida

Third, for attracting secondary wood producers, economic developers need to identify big markets for secondary wood products either inside Mississippi or outside of Mississippi but with

25 great transportation accessibility. Based on identified markets, secondary producers can be targeted recruitment. For example, if home construction is defined as the target market, which has increasing needs and clustered in some locations in Mississippi, secondary producers who produce wood products for the home construction market, such as furniture companies, might be targeted in recruitment. Due to the geographical location of Mississippi, the distance between locations in the state boundary and other metropolitan areas, usually considered as target markets, is hard to change. However, shipment performance, shipping cost, or efficiency could be improved to minimize the cost of shipment, not just in the distance but most importantly in time and cost.

Limitation

This study only compared the transportation system of Alabama and Georgia with Mississippi because of the trigger of the project, which was to understand why companies like Irving Tissue chose to locate new investment in Georgia while the forestry resources are the same abundant in Mississippi. And naturally, Alabama was included because it is both adjacent to Georgia and Mississippi and has the same abundant forestry.

The Commodity Flow Survey dataset the study used is from 2012, the most recent year with final data released online. Dataset 2017 is to be released in July 2020. Another limitation of the CFS data is that it does not cover all the country industry types, nor does it include all shipments. Only sample industries with a limited number of shipments are recorded and summarized in the dataset.

In this study, the comparison of highway systems between Mississippi, Alabama, and Georgia is based on the whole public roadways and also national highway system. Although this comparison itself is accurate and appropriate methodologically, the researchers recommend classifying and focus further only on the roads that logging trucks are allowed to travel through. A comparison of a logging truck roadway system will be more accurate and more effective in identifying potential transportation issues regarding wood shipping. Figure 10 shows the legal truck weight limit on different highways in Mississippi. A task for a future study could be to compare mileage and density of the roadways with the same weight limit in multiple states to see if Mississippi is in a better position.

Figure 10. Map of Legal Truck Limits on Mississippi Highways

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31 Appendix A: Wood Industry New Investments in Alabama and Georgia Prepared by Jennifer Hooper

Mississippi exports nearly 40% of its timber, supporting the value-added productions in neighboring states. Mississippi is leaving a great deal of domestic value and production unrealized due to not having enough wood processors and wood product manufacturers. This report will analyze the investments in the states made by companies in the forestry industry between 2016-2018. Alabama data gathered from the state’s New and Expanding Industry Report, which was published to highlight the growing industries of the state (Made in Alabama, 2018). The report analyzed the project and job announcements for each county in the state and compared industries. Georgia data gathered through multiple keyword Google searches such as “forestry projects in Georgia,” “forestry investment in Georgia,” “Georgia forestry industry expands,” “forestry company invests in Georgia,” “GA forestry projects” and other similar combinations. Results lead to articles by local organizations and the forestry companies that were checked for validity and reliability before being analyzed for this report. The information separated into four categories to better examine the site selection criteria for each project. The types are Sawmills and Lumber Companies, Wood Pallets, Products, and Treatment, Pulp Products, and Other. The researcher chosen categories were based on similar supply chain needs, such as tree types and product output. The charts for each category are organized based on the amount invested by the companies, beginning with the highest amount.

Methodology wise, Alabama data gathered from the state’s New and Expanding Industry Report, which was published to highlight the growing industries of the state (Made in Alabama, 2018). Georgia data was gathered through Google keyword searches such as “forestry projects in Georgia,” “forestry investment in Georgia,” “Georgia forestry industry expands,” “forestry company invests in Georgia,” “GA forestry projects” and other similar combinations. Wood industry companies included in the investigation include sawmills and lumber companies, wood pallet producers, wood products and treatment, pulp producers, and others

Sawmills and Lumber Companies

Sawmills operate to turn timber into lumber. Pine tree species are the primary input for this category. Mississippi only has 92 sawmills, whereas Alabama has 112, and Georgia has 154 (EMSI, 2019). Alabama saw the most growth in this category of the forestry industry between 2016-2018. Companies invested a total of $368,818,600 in Alabama for sawmills and lumber companies,

32 creating 182 jobs. Many of the projects invested in Alabama were by companies headquartered within the state (see Table A-1).

Table A - 1. Sawmills and Lumber Companies in Alabama, 2016-2018

Headquarter Amount # of Jobs City Company Name Type of Project location Invested Created Weyerhaeuser Millport Washington $165,000,000 45 Upgrade existing mill Company Talladega Georgia Pacific Georgia $100,000,000 100 Build new sawmill Opelika West Fraser Canada $92,600,000 4 Upgrade existing mill Two Rivers Lumber Build company first Demopolis Alabama $59,500,000 55 Company sawmill The Westervelt Moundville Alabama $19,993,600 4 Build new sawmill Company Grayson Lumber Build company first Houston Alabama $11,000,000 4 Corporation sawmill Canfor Southern New headquarter Mobile Canada $6,275,000 20 Pine location Scotch & Gulf Cannot be Fulton Alabama $6,100,000 0 Lumber determined Two Rivers Lumber Expand newly Demopolis Alabama $5,800,000 35 Company created mill Built company's first Stevenson Keller Lumber Alabama $1,280,000 10 sawmill United Treating Cannot be Muscle Shoals and Distribution Alabama $1,000,000 0 determined LLC Cannot be Muscle Shoals United Lumber LLC Alabama $120,000 4 determined Oxford Lumber Cannot be Oxford Alabama $100,000 5 Company Inc. determined Litrell Brothers Cannot be Vinemont Alabama $50,000 0 Lumber Company determined

Georgia had $433,000,000 invested by two different companies, but the data for the number of jobs created from most of the projects in Georgia was not available. Both of the companies that invested in Georgia were organizations not headquartered within the state (see Table A-2).

33 Table A-2. Sawmill and Lumber Companies in Georgia, 2016-2018

# of Headquarter Amount Jobs City Company Name location Invested Created Type of Project Albany Georgia Pacific Georgia $150,000,000 130 Build new sawmill Warrenton Georgia Pacific $135,000,000 Georgia Upgrade existing mill Athens Canfor Southern Pine Canada $120,000,000 Build new sawmill Moultrie Canfor Southern Pine Canada $28,000,000 Expand existing mill

Companies that invested in both Alabama and Georgia

• Georgia Pacific

o Invested $100 million in Talladega, Alabama, to construct a new facility. The project was a part of a larger initiative by the company, that funded the upgrade of another mill in the state.

o Invested $135 million in Warrenton, Georgia, to upgrade an existing mill. The company noted that the mill was operating well, and executives were ready to take it to the next level.

o Invested $150 million in Albany, Georgia, to build a new mill. The company noted that the location was because of the region’s talented workforce, low cost of doing business, proximity to trees, and access to rail and highways. • Canfor Southern Pine

o Invested $6.2 million in Mobile, Alabama, to establish a new U.S. headquarter location. 350 out of the company’s 1,900 employees are in Alabama; 3 of the company’s 11 mills are in Alabama; most timber comes from landowners within 75 miles of the mills. This was a staged purchase that began in 2015 when Canfor acquired four companies in the southern U.S. The 20 jobs created are at the executive level. The headquarters location is downtown in a building owned by the RSA, home to many other corporate offices.

o Invested $120 million in Athens, Georgia, to build a new sawmill. The company stated that the ability to draw on strong, skilled employee base from Athens and Augusta was a deciding factor.

o Invested $28 million in Moultrie, Georgia, to expand an existing sawmill by purchasing a family-owned company in the area and expanding operations. The company utilized the

34 New Market Tax Credit offered by the local EDA, which stipulates that wages paid would be at least 30% higher than the average wage in the area.

Companies that invested only in Alabama:

• Weyerhauser Company invested $165 million in Millport, Alabama, to upgrade an existing mill. The decision aligns with the organization’s existing capital plan designed to improve cost competitiveness and long-term mill viability. • West Fraser invested nearly $93 million in Opelika, Alabama, to upgrade an existing mill. There are no news reports published for this project. • Two Rivers Lumber Company invested $59.5 million in Demopolis, Alabama, to create the company’s first mill. The project took place in a “targeted county” under incentives legislation, which provides enhanced benefits for job creation. The company’s CEO stated that there is a strong family history in the area due to businesses with Southern Yellow Pine. The company’s website avidly highlights their location at the confluence of the Tombigbee and Black Warrior Rivers, so this may have been a factor that played into decision-making for this project. • The Westervelt Company invested $19.9 million in Moundville, Alabama, to create a new sawmill. The company’s CEO stated that south Alabama was always the preferred location for the organization because of the deep roots the company has established there, and the region offers the workforce and resources that support their long-term strategy.

Wood Pallets, Products, and Treatment

The category of wood pallets, products, and treatment consists of companies that utilize secondary woodworking to create their products. Hardwood trees are the primary input for this category; hardwood veneer is top-grade and is more expensive than regular hardwood. There was no data able to be found about projects in Georgia for the group of wood pallets, products, and treatment in the forestry industry. Companies invested $425.3 million in Alabama between 2016-2017, and 487 jobs were created (see Table A-3).

35 Table A-3. Wood Pallets, Products, and Treatment Projects in Alabama, 2016-2018

Headquarter Amount # of Jobs Company Name Type of Project City location Invested Created Oxford Kronospan U.S. LLC Alabama $362,000,000 160 Upgrade facilities

Maplesville West Fraser Canada $24,600,000 0 Cannot be determined

International Dothan Florida $19,600,000 60 Build a new facility Beams, XLAM, LLC

Harragan Lumber Monroeville Alabama $5,253,747 65 Upgrade facilities Company Inc. McVantage Tuscumbia Alabama $5,000,000 50 Upgrade facilities Products North Ohatchee Precision Materials $4,000,000 40 Cannot be determined Carolina Southeast Wood Louisville Alabama $1,800,000 23 Cannot be determined Treating Inc. American Excelsior Florence Texas $1,000,000 0 Upgrade facilities Company Tree Brand North Ranburne $882,000 16 Build a new facility Packaging Carolina Haleyville Pinecrafter Inc. Alabama $550,000 15 Cannot be determined PalletOne of Selma Florida $500,000 20 Cannot be determined Alabama LLC Bishop Cabinets Montgomery Alabama $200,000 10 Upgrade facilities Inc. APC Forest Sheffield $0 6 Products Simcoe Wood Cullman $0 22 Products Inc.

Websites Evaluated • Albany Wood • AL.com • Area Development Magazine • Bishop Cabinets • Cullman EDO • Forestry.com • Harragan Lumber • International Forest Industries • Investment Tracker • Louisville EDO

36 • Made in Alabama • Monroe County EDO

• PineCrafter • PR Newswire • Precision Materials • Ranburne EDO • Resolute Forest Products • Southeast Wood • Tree Brand • Tuscumbia EDO

• United States Forestry • West Fraser

Companies that invested only in Alabama

• Tree Brand Packaging invested $882,000 in Ranburne, Alabama, to create a new facility. News reports indicate that the company picked up a major manufacturer for its specialty products in the area, creating the motivation to establish operations in Alabama. Also noted are the efficient channels for sourcing a wide spectrum of the raw materials required for its products and proximity to an established site in Chattanooga. • International Beams invested $19.6 million in Dothan, Alabama, to construct a new facility. The company’s CEO stated that Dothan is a city known for its manufacturing and agribusiness industries and provides that workforce needed. • American Excelsior Company invested $1 million in Florence, Alabama, to upgrade existing facilities. This project was a part of a larger project by the company that included expanding operations at three different facilities throughout the U.S. • Kronospan U.S. LLC invested $362 million in Oxford, Alabama, to expand existing facilities. News reports indicate that the facility was performing very well, and the company worked very closely with the county economic development officials to construct the project.

Pulp Products

The pulp products category has companies that use the pulp from trees to create paper and other products. Companies invested $178 million in Alabama, creating 25 jobs (see Table A-4).

37 Table A-4. Pulp Products Projects in Alabama, 2016-2018

Headquarter Amount # of Jobs Type of City Company Name location Invested Created Project Kimberly-Clark Upgrade Mobile $110,078,000 Corporation Texas 17 facilities Upgrade Monroeville Georgia Pacific $60,000,000 Georgia 8 facilities Upgrade Selma International Paper $4,000,000 Tennessee 0 facilities Resolute Forest Products Upgrade Coosa Pines $3,984,200 Inc. Canada 0 facilities

Websites Evaluated • AL.com • Area Development Magazine • Georgia Pacific • International Forest Industries • International Paper • Kimberly-Clark Corporation • Mobile Area Chamber of Commerce • Monroe EDO

• Resolute Forest Products

In Georgia, $151 million was invested by companies to create 510 jobs. One of the companies is headquartered in Mississippi but chose to build a new facility elsewhere. Mississippi has a plentiful supply of pulpwood that not currently utilized, so this indicates a significant loss for the state (see Table A-5).

Table A-5. Pulp Product Projects in Georgia, 2016-2018

Headquarter Amount # of Jobs Company Name Type of Project City location Invested Created Relocate Sandy Springs Graphic Packaging Georgia $136,000,000 460 headquarters Dalton-Whitfield Build new Jackson Paper Co. Mississippi $15,000,000 50 County facility

Websites Evaluated • GA.org • Graphic Packaging • International Forest Industries

38 • Jackson Paper Co. • Southern Logging Times Magazine

Companies that invested only in Alabama:

• International Paper invested $4 million in Selma, Alabama, to upgrade existing facilities. The company’s CEO stated that the expansion would help to define a more streamlined and balanced system overall. News reports indicate that the project is supported by the Alabama Reinvestment Act, which consists of abatements that entice companies to reinvest in a facility to prevent it from becoming a legacy plant that ceases to grow as well as non-educational property and sales taxes. • Kimberly-Clark Corporation invested $110 million in Mobile, Alabama, to upgrade existing facilities. The organization’s CEO noted the strength of the facility and the local workforce as decision factors. • Resolute Forest Products Inc. invested $3.9 million in Coosa Pines, Alabama, to upgrade existing facilities. News reports indicate that the facility was performing so well it had to expand operations. • Georgia Pacific invested $60 million in Monroeville, Alabama, to upgrade existing facilities. The CEO of the organization stated that the upgrade was necessary to keep up with global competitiveness.

Companies that invested only in Georgia:

• Jackson Paper Co. invested $15 million in Dalton-Whitfield County, Georgia, to create a new facility. Company executives noted the local workforce and quality of life as decision factors along with extensive work with local economic development officials. • Graphic Packaging invested $136 million in Sandy Springs, Georgia, to relocate corporate headquarters. The project was part of an initiative by the organization to consolidate four campus buildings into a single location.

Other

This category is investments that do not fit into the above three categories. Alabama received $110 million in investments from companies looking to produce hardwood veneer, plywood, fiberboard

39 panels, and more. These investments created 144 jobs in the state between 2016 and 2017 (see Table A-6).

Table A-6. Projects in Alabama between 2016-2018, other wood products.

Headquarter Amount # of Jobs Type of Project Company Name location Invested Created Slawson Lumber Company Alabama S5,500,000 25 Upgrade facilities Garrison Brother Lumber Alabama $3,000,000 1 Cannot be determined Company HITREE Logging Alabama $750,000 0 Upgrade facilities Scotch Plywood Alabama $468,000 8 Cannot be determined Alabama Inter-Forest Alabama $340,000 6 Cannot be determined Corporation I-Core Composites LLC Alabama $50,000 4 Upgrade facilities

Websites Evaluated • AL.com • Area Development Magazine • Alabama Inter-Forest Corporation • Garrison Brothers

• International Forest Industries • Made in Alabama • Scotch Plywood

Caterpillar, headquartered in Illinois, invested $25 million in Lagrange, Georgia, to expand its existing facility. The company’s CEO stated the project was necessary due to the success rate of the facility. The region expects to see 50 jobs created from this investment.

Websites Evaluated • International Forest Industries • Southern Logging Times

Conclusion

The forestry industry in Mississippi has the potential for growth. Currently, not all state resources utilized, and too much timber exported to other states (Mitchell, 2017), which is providing the necessary means for other states to grow their forestry industries. The amount invested in Alabama for the 38 projects evaluated for this report is $1.083 billion. The location of 16 of the 38 projects reviewed is within 100 miles of the Mississippi/Alabama state border, and 14 out of the 38 projects

40 invested in were by companies not headquartered within Alabama. The amount invested in Georgia for the ten projects evaluated in this report is $609 million. Jackson Paper Company, headquartered in Mississippi, invested $15 million in Georgia instead of Mississippi, indicating a significant loss in- state.

Southern Yellow Pine, considered the strongest and most versatile species of wood, was mentioned in many of the site selection reports evaluated for this report. Economic development officials in Mississippi should assess the state’s current supply and growth to the removal rate of Southern Yellow Pine and attempt to increase resources in this area of the forestry industry. Out of the three different wood types, Mississippi’s most abundant supply is pulpwood (Mitchell, 2017). Between 2016-2018, Alabama received $178 million in investments from four organizations headquartered outside of Alabama. This statistic indicates opportunities that were missed out on by Mississippi. Economic development officials should investigate these projects and evaluate why Mississippi was not selected. Secondary value-added projects, such as those in the wood pallets, products, and treatment category, provide the most significant economic impact. Hardwood veneer supply increases this impact, and Mississippi economic development officials should evaluate the state’s current supply and ability to meet needs within the state.

Unfortunately, organizations in the forestry industry are choosing to invest in southeastern states other than Mississippi. Still, the abundance of forest land in Mississippi provides the state with the necessary resources to grow the forest industry and meet the needs of organizations. The next steps to be taken are evaluating the forestry industry projects that were invested in the state of Mississippi in 2016-2018 and compare data to what is in this report for Alabama and Georgia. The site selection criteria evaluated will enable economic development officials to determine Mississippi’s needs moving forward. A strategic plan should be made and focus on capitalizing on Mississippi’s current assets to target and attract growing organizations in the forestry industry.

41 Appendix B: Introduction to Commodity Flow Survey Data The Commodity Flow Survey captures data on shipments originating from selected types of business establishments located in the 50 states and the District of Columbia. The establishments are asked to provide shipment information about a sample of their out-bound shipments during a pre-specified one- week period, four times per year, once in each quarter of the calendar year. More details about the CFS dataset and data collection method found on the United States Census Bureau’s website (United States Census Bureau, 2020).

Table B-1. Standard Classification of Transported Goods (SCTG) Codes

SCTG Description SCTG Group 01 Animals and Fish (live) 01-05 02 Cereal Grains (includes seed) 03 Agricultural Products (excludes Animal Feed, Cereal Grains, and Forage Products) 04 Animal Feed, Eggs, Honey, and Other Products of Animal Origin 05 Meat, Poultry, Fish, Seafood, and Their Preparations 06 Milled Grain Products and Preparations, and Bakery Products 06-09 07 Other Prepared Foodstuffs, and Fats and Oils 08 Alcoholic Beverages and Denatured Alcohol 09 Tobacco Products 10 Monumental or Building Stone 10-14 11 Natural Sands 12 Gravel and Crushed Stone (excludes Dolomite and Slate) 13 Other Non-Metallic Minerals not elsewhere classified 14 Metallic Ores and Concentrates 15 Coal 15-19 16 Crude Petroleum 17 Gasoline, Aviation Turbine Fuel, and Ethanol (includes Kerosene, and Fuel 18 Alcohols) 19 Fuel Oils (includes Diesel, Bunker C, and Biodiesel) Other Coal and Petroleum Products, not elsewhere classified 20 Basic Chemicals 20-24 21 Pharmaceutical Products 22 Fertilizers 23 Other Chemical Products and Preparations 24 Plastics and Rubber 25 Logs and Other Wood in the Rough 25-30 26 Wood Products 27 Pulp, Newsprint, Paper, and Paperboard 28 Paper or Paperboard Articles 29 Printed Products 30 Textiles, Leather, and Articles of Textiles or Leather 31 Non-Metallic Mineral Products 31-34 32 Base Metal in Primary or Semi-Finished Forms and in Finished Basic Shapes 33 Articles of Base Metal 34 Machinery

42 35 Electronic and Other Electrical Equipment and Components, and Office Equipment 35-38 36 Motorized and Other Vehicles (includes parts) 37 Transportation Equipment, not elsewhere classified 38 Precision Instruments and Apparatus 39 Furniture, Mattresses and Mattress Supports, Lamps, Lighting Fittings, and 39-99 40 Illuminated Signs 41 Miscellaneous Manufactured Products 43 Waste and Scrap (excludes of agriculture or food, see 041xx) 99 Mixed Freight Missing Code 00 Commodity code suppressed