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Appendix B Case Studies of Successful Forest Business Clusters

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Appendix B Case Studies of Successful Forest Business Clusters THE STATUS OF AND OPPORTUNITIES FOR BUSINESS CLUSTERING WITHIN THE FOREST PRODUCTS SECTOR IN THE U.S. Appendix B Case Studies of Successful Forest Business Clusters 2009 Prepared for the U.S. Endowment for Forestry and Communities, Inc. Individual Contributors: Francisco X. Aguilar1, Stephen M. Bratkovich2, Kathryn Fernholz2, Amy Garrard3, Robert K. Grala3, Liam Leightley3, William Martin3, and Ian A. Munn3 1 Department of Forestry, University of Missouri 2 Dovetail Partners, Inc. 3 Forest and Wildlife Research Center, Mississippi State University CONTENTS Introduction .............................................................................................................................................................. 3 Northeast: Maine Forest Sector Cluster - Cluster Development in a Mature Industry ............................................... 4 Midwest: Ohio - the Role of Cultural Identity in Forest Sector Cluster Development, Amish Furniture Industry .......... 9 Lake States: Wisconsin - the Role of an Economic Development Initiative in Forest Sector Cluster Development, Ladysmith Forest Industry Park ................................................................................................... 12 East: Virginia - the Role of Family Forest Landowners in Forest Sector Cluster Development, Blue Ridge Forest Cooperative ............................................................................................................................................. 16 South: Mississippi - the Role of Entrepreneurship in Forest Sector Cluster Development, Northeast Mississippi Furniture Cluster .............................................................................................................................. 18 Southwest: Arizona - the Federal Role in Forest Sector Cluster Development, Arizona White Mountain Stewardship Contract ......................................................................................................................................... 24 Pacifi c Northwest: Washington - Integrating Across Industries, Port Townsend Wooden Boat Cluster .................... 27 International Comparison: Finland & Sweden - Examples of Forest Sector Cluster Development ........................... 31 INTRODUCTION RepresentativeRepresentative ccasease studiesstudies werewere developeddeveloped forfor eacheach distribution of activity. Th e case studies include clusters regionregion ofof thethe U.S.U.S. toto highlighthighlight clusteringclustering activitiesactivities inin tthehe in Maine, Ohio, Wisconsin, Virginia, Mississippi, forestforest sector.sector. GivenGiven thethe numbernumber andand rangerange ofof clusteringclustering Arizona, and Washington. Information is also provided examplesR that are available, these case studies only about clustering in Finland and Sweden for international represent and illustrate a range of approaches and the comparison purposes. 3 NORTHEAST: MAINE FOREST SECTOR CLUSTER Cluster Development in a Mature Industry CLUSTER PROFILE Name: Maine Forest Sector Cluster Location: Maine (statewide) Duration: 150+ years Legal Status: Many for-profi t and no-profi t organizations are part of the cluster Umbrella Organization: No formal organization Product Focus: Primary and secondary (value-added) products with recent emphasis on high technology enterprises Number of Firms: >750 Key Strategies: Implement recommendations of statewide forest industry study; transfer research and development results to industry Website: See websites listed in Reference section to Maine Future Forest Economy Overview estimates current forest acreage in Maine to be 17.7 million MaineMaine boasts the highest percentagepercentage of forestlandforestland in thethe acres with 97% classifi ed as timberland (land capable of country—90%.country—90%. PrivatePrivate ownershipownership dominatesdominates MMaineaine wwithith producing commercial crops of wood and not restricted from harvest). 95% of the state’sstate’s forestsforests in privateprivate hands.hands. TotalTotal fforestlandorestland in Logging and sawmilling have been important to Maine theM state is approximately 17.7 million acres. since the early days of European settlement. South Berwick, Maine’s economy directly derives $6.5 billion from Maine is reported to have been the home of the nation’s fi rst the state’s forest-based industry; accounting for indirect sawmill in the early 1630s. Since that time numerous forest contributions, the industry’s total impact is over $10 billion. product related industries have contributed to the growth of In 2002 the forest-based industry employed over 18,000 Maine as well as the entire country. Wooden shipbuilding, people, with forest products representing over 36% of the for example, was important in Maine as its output of state’s manufacturing output. schooners—often more than 300 annually—lead the country Employment in forest-based industries declined by many years between 1820 and 1890. 23% between 1997 and 2002. One reason for the drop Th e development of wood pulp paper in the 1880s in employment can be traced to technology effi ciencies at created a boom for New England’s paper industry, including processing mills and harvesting operations. However, worker Maine. By 1900 the paper industry consumed nearly half of productivity, average wage, and capital expenditures increased Maine’s annual timber harvest. By 1919 the state’s average during the same time period. Th ese trends, according to paper mill employment numbers were more than double the Maine Forest Service, refl ect the natural evolution of that of neighboring states. Paper production continued to a mature industry going through transition and aiming to increase during the fi rst half of the 20th century, and by the remain competitive in the global marketplace. 1950s accounted for 80% of the annual harvest. In fact, by 1970 one in every four Maine manufacturing workers was Cluster Development - Pre-colonial employed in the paper industry. Through 20th Century Maine has long been a prominent producer of turned In the early 1600s, the estimated area of forest land in wood products such as dowels, rods, pins, and other shaped what is now Maine was 18.2 million acres. As settlement products. Maine also had some of the nation’s earliest increased, forest land decreased, reaching a low of about oriented strand board (OSB) plants (1980s). 15 million acres in the early 20th century. Forested acres According to Irland (1999), “...from 1905 to 1991, the rebounded however, reaching a peak around 1971 and share of Maine manufacturing employment originating in has been stable since then. Th e USDA Forest Service the lumber and paper industries actually increased slightly, 4 while their share of the state’s value of manufacturing fi rms are important to the entire cluster as they provide a production rose signifi cantly.” market for byproducts or low value products, and present an opportunity for good forest management. Forest-based Industry Cluster Th ere are signifi cant opportunities to produce bio- Today, pulp and paper manufacturing serves as the products in Maine since they can be produced at stand-alone backbone of Maine’s forest industry cluster. However, facilities or integrated with existing pulp and paper mills. many sub-clusters exist in addition to pulp and paper Maine is a leader in forest certifi cation. Currently, including sawmills, wood product manufacturers, forest the state boasts more than 7 million acres certifi ed to the ownership and management, timber harvesting, and American Forest Foundation’s American Tree Farm System, biomass power generation. In addition, the cluster includes the Sustainable Forestry Initiative (SFI) or Forest Stewardship equipment manufacturers and distributors, university Council (FSC) standards. Certifi cation provides Maine programs, fi nancial institutions, government agencies, industries with an opportunity to capture market share by trade associations, forest-based recreation businesses, and distinguishing their products from non-certifi ed products. transportation fi rms. Th e pulp and paper industry in Maine has been a driving A strength of Maine’s state-wide forest industry cluster is force in the certifi cation movement. its depth and diversity. Markets for a wide variety of products are available including veneer, sawlogs, pulpwood and woody Moving Forward: The Maine Future biomass. Th is diversity provides markets for the trees grown Forest Economy Project by landowners and the products harvested by loggers, and An ambitious task was completed in March 2005 to provides opportunities for landowners to practice sustainable identify “what is needed to maintain Maine’s existing wood- forestry. Markets for low-grade wood—pulp mills and using industries and to identify what Maine State Government biomass facilities—are important in this regard. and the industry itself could do to improve the prospects As in other states, Maine’s forest product manufacturers for Maine’s forest product industries” (Innovative Natural are facing challenges in an ever increasing global marketplace. Resources Solutions LLC. 2005c). Th is project was an Some fi rms have prospered in this competitive climate, initiative of the Department of Conservation (Maine Forest whereas others have not. Service) and the Maine Technology Institute. Th e participation During 2000-2005, output at paper mills and sawmills of 300 individuals and fi rms supported the project in addition was at near record levels, although employment was down. to an advisory group
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