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26 Trends in the U.S. Products Sector, Markets, and Trends in the U.S. Forest Products Sector, Markets, and Technologies

Omar Espinoza

Abstract: The forest products sector plays a critical role in the economic and social well-being of the United States. The country is the top producer and consumer of forest products, and it has the highest per capita industrial . Nevertheless, the country’s forest area has not changed in over a century, owing in part to forest practices and a strong tradition of wood utilization. Cyclical and long-term trends, such as the Great Recession of 2007 to 2009, changing consumer demand, globalization of , and emergence of substitute materials, have had negative impacts on the U.S. forest products in the last two decades. of U.S. has in turn been negatively affected, as strong forest products markets are vital to the health and resilience of U.S. forest and forest-dependent . However, there are promising opportunities for the forest products sector, including increased interest in renewable materials and , increasing demand for wood-based energy products, expanding nanotechnology applications, the emergence of timber, and increased use of wood in large-scale . This presents the major market trends affecting the U.S. forest products sector and discusses potential scenarios over the next 20 years.

KEY WORDS: forest products, market trends, wood consumption, nanotechnology, cross- laminated timber, CLT

Citation: Espinoza, Omar. 2020. Trends in the U.S. forest products sector, markets, and technologies. In: Dockry, Michael J.; Bengston, David N.; Westphal, Lynne M., comps. Drivers of change in U.S. forests and over the next 20 years. Gen. Tech. Rep. NRS-P-197. Madison, WI: U.S. Department of , Forest , Northern Research Station: 26–49. ht t ps://doi. org/10.2737/NRS-GTR-P-197-paper4.

Omar Espinoza is an associate professor, of Minnesota, Department of and Biosystems , and chair of the Forest Products Management Development Institute. To contact, call (612) 624-0770 or email at [email protected].

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Introduction fifth of the consumed in the country (Energy Information Administration Over the long term, few industries have [EIA] 2015). contributed more to the development of the United States as a than the forest However, the U.S. forest products industry products industry, and it is no exaggeration has been facing substantial challenges, to say that wood was the foundation of both cyclical, such as the Great Recession American (Youngquist and Fleischer of 2007 to 2009, and structural, such as 1977). Wood has played a central role globalization and the decline of printed media. in all aspects of the U.S. economy, from Employment in the industry has not fully transportation to construction and from recovered from the last economic recession energy to . The forest products and the associated decline in the housing industry is one of the most dynamic sectors market, which prompted thousands of layoffs of the U.S. economy. Although the United and closings (Buehlmann et al. 2007). States accounts for only 7.5 percent of total Domestic manufacturers have lost market global forest area, it produces close to one- share to low-cost imports, where sectors like fifth of all the industrial roundwood ( household were particularly affected and Agriculture [FAO] 2018), (Buehlmann and Schuler 2009, Quesada and and Americans use five times more timber Gazo 2006). Products traditionally made with per capita than the global average (FAO 2011). wood, such as windows, , framing, and However, the country’s forested area has decking, are losing market share to substitute not changed significantly in more than 100 materials. In addition, considerable decrease in years (Oswalt et al. 2014). These trends can paper consumption has reduced the demand be attributed to several factors, including for fiber (Belz 2012) and caused many sound practices, a strong and paper mills to close. Partly as a result wood , the abandonment of marginal of these developments, employment in the farmlands that reverted to forest, and effective forest products industry declined considerably fire suppression, which all contribute to offset between 1996 and 2016 (Fig. 1). The U.S. share the loss of forest to urbanization (Alvarez of global roundwood production decreased 2007). According to the American Forest and from 27 percent in 1996 to 19 percent in 2016 Paper Association [AF&PA], the forest products (FAO 2018). industry (excluding ) is among the top This paper presents major market trends 10 employers in 45 states, generating 4 percent within the U.S. forest products sector that of the manufacturing (AF&PA 2017). stand as key drivers of change for forestry This industry provides direct employment to and the forest sector. Most data presented over 1 million people (Golden et al. 2015). It correspond to the 1996–2016 period, but is also the leader in -based renewable exceptions occurred when data for that period energy generation, producing more than one- were unavailable.

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Figure 1.—U.S. employment in selected industry subsectors, by year. Numbers to the right of the bars denote the percent change between 1997 and 2016 (Bureau of Labor Statistics 2017). Current Trends several product categories. For example, siding, which was once overwhelmingly made of wood Wood Consumption in the United States (usually naturally durable species), now has a Per capita annual wood consumption in the market share of 5 percent in the single-family United States was 1.24 m3 (530 board feet) in residential market, with vinyl and fiber 2013 (Howard and Jones 2016), the last year overtaking this segment (Fig. 3). Regional of available data (Fig. 2). U.S. consumption differences do exist; for example, vinyl is is higher than the world’s average of prevalent in the Northeast and Midwest (71 approximately 0.5 m3 (200 board feet) (FAO percent and 60 percent of homes in 2016, 2011). The of this consumption respectively) while brick and stucco have a is also markedly different; close to 90 percent considerable market share in the South (35 of U.S. consumption is in industrial wood percent and 22 percent, respectively). Stucco products, while in developing countries over and fiber cement have a large presence in the 80 percent of wood consumption is for for West (52 percent and 37 percent, respectively) cooking and heating (Bruinsma 2003). U.S. (U.S. Census Bureau 2017b). consumption declined sharply from a peak in Other industries where substitutes have taken 2005 to its lowest point in over four decades significant market share from wood-based in 2009, corresponding to the U.S. recession products are outdoor decking and windows. In and the associated decline in the construction decking products, wood had a comfortable 97 industry. percent share of the market in 1995 (Ganguly et al. 2010), which dropped to 62 percent in 2016 Trends in Raw Materials (Biobased News 2017), largely due to losses to One important trend in raw materials of wood-plastic composites and plastic decking recent decades that affects demand for wood (32 percent and 6 percent of the market in fiber is the growth of substitute materials. 2016, respectively). Wood windows, once Substitute materials continue to reduce the dominant, are now limited to the traditional market share of wood as for and luxury segments, and vinyl is the market

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Figure 2.—U.S. per capita wood consumption, by year (Howard and Jones 2016). Data for 2013 are the latest available.

Figure 3.—Distribution of primary type of exterior wall material of new single-family houses completed in the United States, by year (U.S. Census Bureau 2017b). “Other” includes concrete block, stone, aluminum siding, and other minor types. “Other” included fiber cement before 2005 and vinyl siding before 1992 (thus the large drops in those years).

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leader (Thompson 2017). Wood has held its to China as of 2016 (Snow 2016). Canada, own against substitute materials in markets the second largest export market for U.S. such as pallets, residential construction, and hardwood, decreased its market share from kitchen cabinets. Wood framing is still used 34 percent to 16 percent in the same in more than 90 percent of single-family period. China also shifted from primarily a construction (U.S. Census Bureau 2017a), and manufacturer of hardwood products (using it was estimated that more than 90 percent imported and logs to manufacture of pallet units are made of wood (National for export) to a consumer of those goods, Wooden Pallet and Container Association as its middle and upper classes grow. Another 2018, Trebilcock 2013). important trend has been some decoupling of housing construction activity and hardwood Lumber lumber prices. Historically lumber prices traced From 1996 through 2016, about 75 percent of the trends in housing starts closely; however, lumber produced was in softwood species and starting shortly after the Great Recession, 25 percent, hardwoods (Fig. 4). Production of hardwood lumber prices have been increasing both softwood and hardwood lumber reached at a higher rate than housing starts, and all-time highs in 2005: 69.2 million m3 exports have become a major driver of price (29.3 billion board feet) and 27.8 million m3 (Snow 2016). (11.8 billion board feet), respectively. Lumber The United States has been historically the production dropped during the Great Recession leading hardwood lumber exporting country to its lowest level in 2009, and as of 2016, it in the temperate region, and the importance had not yet recovered to the levels of the 1990s of export markets has been growing in the last and early 2000s. two decades (Fig. 6). However, its market share declined from 34 percent in 1990 to 23 percent Hardwood Lumber in 2011 (Bumgardner et al. 2014). During the last two decades, there has been a considerable change in U.S. hardwood lumber Softwood Lumber markets. Industrial and export markets have The United States has historically led the world grown in importance, while the participation in softwood lumber consumption. In 2016, of high value-added uses, such as furniture the United States consumed 81.7 million m3 and cabinets, decreased between 1999 and (34.6 billion board feet) of softwood, followed 2015, particularly in furniture markets (Fig. 5). by China with 56.3 million m3 (23.9 billion If only “grade” hardwood lumber is considered board feet) (FAO 2018). (excluding industrial uses such as pallets; The primary driver for softwood lumber crane mats, which are large wood platforms consumption is residential and nonresidential that provide ground stabilization for heavy construction, which has been trending upward machinery in several industries, such as oil during the last few years (Fig. 7). It is expected drilling and exploration operations; railroad that new applications, such as engineered ties; and others), participation of exports is wood products, mass timber, and increased even larger, growing from 14 percent in 1999 share in some markets (e.g., commercial to 41 percent in 2014 (Snow 2016). China’s construction, mid- and high-rise construction, share of total U.S. hardwood lumber export pallets, and containers) will boost demand shipments by jumped from 8 percent for softwood lumber. Softwood lumber of exports in 1999 to 46 percent in 2014. It has remained competitive with substitute is estimated that one in five grade lumber materials, such as steel and plastic, in markets boards sawn in the United States was shipped like dimension lumber, doors, and windows.

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Figure 4.—U.S. softwood and hardwood lumber production, by year (FAO 2018).

Figure 5.—Distribution of markets for U.S. hardwood lumber by volume, by year (Bumgardner 2016).

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Figure 6.—Exports as a percentage of production for U.S. hardwood lumber, by year (FAO 2018).

Figure 7.—U.S. softwood lumber production, imports, exports, and apparent consumption (FAO 2018). Housing starts are also represented (U.S. Census Bureau 2018b). Apparent consumption is calculated as production plus imports minus exports.

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Moreover, improvements in process efficiency, hardwood species (Sanchez Gomez 2011). such as the use of small diameter logs as raw However, there are continued efforts to material, will contribute to maintaining the use competing materials (metal, plastic) to competitive position of softwood lumber over capture market share from wood. Pallets substitute materials. and containers, as well as railroad ties, are important for hardwood timber utilization, as they provide an outlet for the lower-grade Industrial Wood Products material from lumber manufacturing. Pallets Industrial wood products support are the single most important outlet for transportation and logistics operations as well low-grade hardwood, and their production as communications and energy . consumes over 40 percent of all hardwood Major industrial wood products are pallets produced in the United States (Hardwood and containers, railroad ties, wood utility Market Report 2014). Some pallet industry poles, supplies, crane mats, and trends include the steady growth of pallet construction products (e.g., sound barriers, , an increasing market share of pallet rental systems, phytosanitation requirements guardrail posts, retaining walls, signposts, for and exports, and increased and trail and road ). These products use of softwoods for pallet manufacturing. are gaining importance as logistics operations Pallet production has grown steadily during become more global, U.S. oil and gas the last four decades but had a notable industries prosper, and outlets for lower-grade downturn in 2007 through 2008, associated hardwoods shrink. with the Great Recession (Fig. 8). Wood Pallets are a critical component of logistics railroad ties are an important outlet for wood; infrastructure, as they reduce material in 2016, more than 19 million new wood handling time and costs. More than 90 crossties were installed in the United States percent of pallets are made of wood, primarily (Railway Tie Association 2018).

Figure 8.—U.S. wood pallet and container production index, scaled to an index of 100 in 1972, by year (Federal Reserve of St. Louis 2017).

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Value-added Products production of (LVL), I-, and glulam has increased steadily. Value-added wood products are manufactured by using the outputs such as lumber, veneer, One product that has and wood-based panels obtained from primary received considerable attention during the processing operations. Value-added products last decade is cross-laminated timber (CLT), include furniture, kitchen cabinets, millwork, a relatively new engineered wood product , decking, railings, windows, made of multiple layers of wood boards and doors. Production of value-added wood oriented perpendicularly to the adjacent products has declined in the United States over layers (Karacabeyli and Douglas 2013). These the past three decades because of the Great panels are manufactured in large dimensions Recession, increased competition from imports, to form entire wall and floor systems. The market penetration from substitute materials, cross-laminated configuration of CLT (Fig. and other factors. For example, more than 10) results in excellent mechanical properties, 70 percent of the nonupholstered furniture and the prefabricated nature of CLT allows consumed in the United States is now imported for high precision and a construction process (Fig. 9). There have been changes in the characterized by faster completion and little disruption to the neighboring areas. In the sourcing of those imports as distributors look United States, CLT panels for structural use are for lower-cost suppliers. For example, in 2015 certified by the American National Standards China accounted for 59 percent of total imports Institute (2018), which specifies requirements of household and institutional furniture and and test procedures for quality assurance. cabinets, by value, down from 61 percent in One early study estimated that a CLT market 2010. Meanwhile, Vietnam has been steadily in North America could generate need for increasing in market share (Bumgardner 2016), 1.2 million to 3.6 million m3 (0.51 billion to mostly due to Vietnam’s lower costs. Imports 1.5 billion board feet) of wood, depending from China grew only 3 percent in 2016, while on market penetration (Crespell and Gaston those from Vietnam grew 30 percent in the 2011). In the United States, as of the time of same period (American Association this writing, two firms manufacture CLT 2017). The decline in U.S. manufacturing of panels approved for structural use (American value-added products has led to a decrease in Plywood Association 2018), two firms produce domestic demand for grade lumber (Fig. 5). noncertified panels, and the construction of Other market segments, such as flooring and four has been announced (Dalheim millwork, have shown similar trends. 2017, Esler 2017). Engineered Wood Products Wood-based Panels Engineered wood products (EWPs) are Wood-based panels can be structural or generally made by breaking down wood nonstructural. Structural wood-based into smaller pieces or particles, which are panels are used in construction as sheathing then bonded with . These products for roofs, floors, and walls. The two basic reduce wood product variability and help to types of structural panels are plywood and utilize the raw material more efficiently. They (OSB). Structural are designed to meet precise standards and plywood is made mostly from softwood specifications (Fig. 10). species. Nonstructural wood-based panels In general, trends of engineered wood products have countless applications, such as furniture follow those of the housing market (Fig. 11). and kitchen cabinets, laminated flooring, After a large drop during the Great Recession, millwork, doors, wall paneling, parts, and

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Figure 9.—Market share estimates of imports of kitchen cabinets and furniture in the United States (Nicholls and Bumgardner 2018).

Figure 10.—Examples of engineered wood products. From left: parallel strand lumber, I-joists, and cross-laminated timber (Photo : Maria Fernanda Laguarda Mallo, University of Minnesota, used with permission).

Figure 11.—U.S. production of laminated veneer lumber (LVL), I-joists, and glulam, by year (American Plywood Association 2017, Howard and Jones 2016).

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siding. Common nonstructural wood-based greatly reduced consumption of newsprint, panels are plywood (often hardwood plywood), writing paper, and paper, especially particleboard, medium density in developed countries. The sharp growth (MDF), and . During the last few in electronic commerce has increased parcel decades U.S. production of wood-based panels shipping, reflected in increased demand for has shown a sustained shift from plywood to and wrapping and packaging other panel products (Fig. 12). In residential paper—a trend that is expected to continue construction, OSB has overtaken a large part in the United States (Fig. 13) and elsewhere. of the plywood market share. Plywood’s largest Consumption of household and sanitary market is now in the industrial sector (United paper products has kept pace with population European Forestry Commission/Food growth, but an emerging trend is a shift and Agriculture Organization 2017). Oriented in consumption; people in lower income strand board is also used for siding, and about countries are rapidly increasing their use of 600 million square feet (3/8 inch basis) household paper goods. Low-income countries (56 million m2; 1 centimeter basis) was were projected to surpass higher income produced on average from 2012 through 2016 countries in the use of household and sanitary (American Plywood Association 2018). paper products in 2014 (Hansen et al. 2014). In secondary wood products manufacturing, Last, there has been a considerable increase in the use of composites, such as particleboard the share of recovered paper as input to paper and MDF, has increased. However, an production in the United States; recovery rates increasing percentage of consumption has almost doubled, from 34 percent in 1990 to 66 been covered by imports, while domestic percent in 2017 (AF&PA 2018). production has decreased. For example, the In the United States, the pulp and paper average production volume of MDF between industry has experienced consolidation and 1996 and 2016 decreased at an average annual plant closings. The number of establishments rate of 3 percent, while imports grew 19 percent decreased from just under 7,000 in 2001 to annually (calculated with data from FAO 2018). 5,500 in 2016, and employment fell from U.S. imports of OSB panels, almost exclusively 630,000 to 368,000 between 1997 and 2016 from Canada, grew by more than 11 percent (Bureau of Labor Statistics 2017). Likewise, from 2010 to 2017 (calculated with data from there was a decline in capacity, from American Plywood Association 2017), while 62.0 million metric tons (air dry; 68.3 million plywood imports came primarily from China tons) to 53.5 million metric tons (air dry; and Canada. 59.0 million tons) between 1997 and 2016 (FAO 2017). Consumption and production of Pulp and Paper Products paper and paperboard are expected to continue Pulp and paper products include a wide variety to decline in North America. According to at of goods, such as least one projection, consumption in 2030 (e.g., printing paper, newsprint), packaging may be half of what it was in 2000 (Hansen and paperboard products, and tissue. There et al. 2014). These changes have profound is also high diversification in terms of raw implications for wood fiber demand. materials, channels of distribution, and final Another important development in the pulp uses. Many of the ’s and paper industry is the diversification outputs are raw materials for other industries. toward new products, such as biorefining and Important structural changes have affected . efforts the global paper industry during the last three in the industry are focused on decades. Electronic communications have in biochemicals, , biocomposites,

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Figure 12.—Wood-based panel production in the United States, by year (FAO 2018, Howard and Jones 2016, Howard and McKeever 2016, Howard et al. 2017). Values for 2016 are estimates. OSB: oriented strand board; MDF: medium density fiberboard. Plywood figures include hardwood and softwood plywood.

Figure 13.—Apparent consumption of paper and paper products in the United States, by year (FAO 2018). Some data for 2016 are estimates.

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nanotechnology, and others. Industry and (EIA 2018b). The major use of wood biomass research communities have proposed the is for and electric energy generation concept of “biorefinery,” which is a production (combined heat and , or ) facility that can use different raw materials by the forest products industry, mostly pulp (forest or agricultural biomass, or municipal and paper. and industrial solid wastes) to produce a A bioenergy application of wood that has wide variety of outputs. These products grown rapidly is wood pellets (Fig. 14). As of include biofuels, , chemicals, and July 2018, there were 83 facilities producing conventional products like paper, lumber, and densified biomass in the United States, composites (Hansen et al. 2014). Biorefineries with a production capacity of 12 million will take years to become an economically metric tons (13 million tons) per year (EIA viable option, but they can have an important 2018a). Although pellet production started effect on demand for fiber. in the Northeast and Northwest, most of the growth in pellet production capacity has Wood Energy been in the Southeast (Dale et al. 2017). The Markets for heat and major raw material sources for wood pellet from wood biomass have grown during the manufacturing in the United States are mill last decade. In 2016, wood represented over 40 residues and (both softwood and percent of the total biomass energy consumed hardwood). in the United States and 20 percent of the Exports of wood pellets account for 80 percent total renewable energy (EIA 2017). Wood- of total , with close to 100 percent going based energy represented 2 percent of total to Europe (80 percent to the United Kingdom) U.S. and 10 percent of to replace for power generation (EIA industrial energy consumption as of July 2018 2018a). European targets to reduce greenhouse

Figure 14.—U.S. wood pellet production and exports, by year (Lamers et al. 2012, Thrän et al. 2017, United Nations European Forestry Commission/Food and Agriculture Organization 2017).

Drivers of Change in U.S. Forests and Forestry over the Next 20 Years • GTR-NRS-P-197 Trends in the U.S. Forest Products Sector, Markets, and Technologies 39 gas emissions drive this demand in great part Other Products and Trends as Europe strives to meet 20 percent of its energy needs from renewable sources by 2020 Nanotechnology (European Commission 2018b). Demand for Nanotechnology is the manipulation of wood pellets is likely to increase as countries materials at dimensions of less than 100 in Europe and other regions move away nanometers (Atalla et al. 2005). For perspective, from coal for power generation (Beeler and 100 nanometers is approximately one- Morrison 2018). thousandth the thickness of a sheet of paper. The major driver for U.S. domestic At this scale, material properties change consumption of wood pellets has been the significantly from those of materials at a competitiveness of wood biomass with macroscale, allowing for new and unique heating oil and , coupled with very applications. For example, some forms little industrial demand for pellets (Thrän of exhibit high strength, et al. 2017). In the United States, wind and transparency, and electroactive behavior solar are the preferred renewable energy (Hansen et al. 2014). It is believed that sources (Motyka et al. 2018). Growth of wood nanotechnology will be an important driver pellet production in the United States also of economic growth, and it is expected to responded to declines in the pulp and paper transform the forest products industry by industry. However, wood biomass for pellets opening new and commercially important accounts for a small percentage of removals areas for . Significant investments (e.g., only 2 percent of 2014 removals in are being made on nanoscience and the Southeast) (Dale et al. 2017). Currency nanotechnology research, such as the P3Nano exchange rates will greatly influence the Public-Private (U.S. Endowment future of U.S. pellet exports; a strong dollar for Forestry and Communities 2018), the will benefit suppliers in other countries. nanocellulose pilot plants at the USDA Forest New environmental policies in the United Service’s Forest Products Laboratory (Forest Kingdom may negatively affect imports of Products Laboratory 2018), and the University U.S. wood pellets. However, new subsidies of Maine’s nanomaterial pilot plant (University in the Netherlands may offset such losses of Maine 2018). Some potential applications (Tovey-Fall 2016). The European Commission of nanocellulose technologies that are being publishes European and national biomass investigated are in mining and drilling rheology action plans (European Commission 2018a). agents, concrete additives, , An emerging wood energy application is energy efficiency, drug delivery, tissue torrefaction, where wood biomass (as chips engineering and scaffolding, automobile parts or pellets) is “roasted” in a low oxygen manufacturing, food packaging, self-sterilizing environment, increasing its surfaces, coatings, bioremediation, and (Fosnacht 2018). Torrefied wood can be chips (Bowyer et al. 2016, Laks and co-fired with coal in power generation, Heiden 2004, Moon et al. 2006, Wei et al. 2014). increasing renewable energy output and reducing emissions. Recent tests in several Wood-based Chemicals and Biofuels power plants yielded promising results Deriving chemicals from wood is not a new (Fosnacht 2018, HM3 Energy 2018). industry. Exudates from pine (Pinus species) were used to obtain turpentine and rosin in North America beginning in the early 1700s, and these products had many applications in the “naval stores” industry

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(Williams 1992). Wood hydrolysis, which Wood biomass is considered an attractive converts wood polymers into simple sugars, feedstock, due to its abundance (making up has been understood for well over a century four-fifths of the total global biomass [Badger and has been used to create commercial 2002]), relatively low cost, greater energy quantities of and cellophane since balance than starch-based ethanol (Morey et the early 1900s (Goldstein 1978). There is al. 2006), long storage , high bulk density, renewed interest in using wood biomass high sugar content, and established collection as raw material for chemicals traditionally systems (Roberts 2008). When harvested derived from and other sustainably, forest biomass can be a source compounds, as the for renewable energy with low greenhouse explores a transition from hydrocarbon-based emissions, minimum impacts on , products to carbohydrate-based products. and carbon mitigation benefits (Bowyer et al. Processes such as gasification, extraction, 2011a, 2011b; FAO 2010). However, cellulosic and fermentation seem promising for the biofuels markets today have fallen short of commercial production of chemicals from the expectations. The 2016 Renewable Fuel wood biomass. For example, lactic acid, a very Standard anticipated 17.0 billion liters versatile platform chemical, is industrially (4.5 billion gallons) of cellulosic derived from starch crops, but it is possible produced, and the actual production was only to use sugars from wood as raw material 0.6 billion liters (0.16 billion gallons) (most (Abdel-Rahman et al. 2011, Parajo et al. 1996). of it biogas) (Lynd 2017). Some of the causes Other chemicals from wood with commercial are technological readiness, underinvestment, application are acetic acid, furfural, succinic the large amounts of biomass and land acid, , itaconic acid, and hydrogen required, balance between economies of scale (MacKay et al. 2009). and logistics, and the fall in oil prices. As Wood , a product of thermal investment in biofuels has dwindled, most decomposition under conditions of low of it has been directed toward biochemicals oxygen and low temperature, is commonly development (Lynd 2017). used as a conditioner (Lehmann and Joseph 2009) but has potential for carbon Wood Composites sequestration, for energy generation, and as a Many research and development efforts have low-cost alternative to activated carbon (Groot been carried out to enhance wood properties et al. 2016). There are about 135 producers of by combining components of wood with biochar in the United States, with estimated other substances. For example, in fiber cement production between 35,000 and 70,000 tons siding, fibers were incorporated (32 to 64 teragrams; 1 Tg = 1 billion grams) into cement as a safer alternative to asbestos. per year (U.S. Biochar Initiative 2018). Future This product has had market success since its “forest biorefineries” could produce and introduction in the early 1980s, doubling its chemicals from wood biomass derived from market share in the residential housing market a number of sources, including roundwood, during the last decade (see Figure 3). Wood- short-rotation woody crops, harvest residues, plastic composites (WPCs), which incorporate small diameter , wood residues from wood fiber into , are another manufacturing operations, debris, successful alternative to solid wood, especially or black from pulp mills (Golden et al. in market segments such as outdoor decking, 2018, MacKay et al. 2009). siding, , and window manufacturing. Second-generation biofuels, based on Further development of WPCs may include cellulosic feedstock, were highly anticipated. the incorporation of nanomaterials, such as

Drivers of Change in U.S. Forests and Forestry over the Next 20 Years • GTR-NRS-P-197 Trends in the U.S. Forest Products Sector, Markets, and Technologies 41 nanotubes, to enhance performance (Omar Chemicals-based Wood Preservation and Matuana 2008) and the advancement A more traditional way to enhance the of structural applications, for example, by durability of wood has been to treat it with extruding WPC on solid wood. chemical preservatives. There are many Wood Modification Treatments preservative formulations, with the choice depending on the required protection, Some of the same forces driving the exposure, health and safety, and expected development of chemicals and composites service life of the structure (Ross 2010). Wood derived from wood explain the expanding preservatives are broadly classified in two interest in chemical-free treatments to groups: oil-borne preservatives and waterborne enhance wood’s durability for both residential preservatives. Examples of oil-borne and industrial uses. Interest in treatments preservatives are creosote, naphthenate, with lower impacts on the environment and and pentachlorophenol; and in the waterborne human health has encouraged researchers group commonly used preservatives are and industries to develop treatments such as ACQ (alkaline copper quaternary), CCA thermal and chemical modification of wood. (chromated copper arsenate), and ACC (acid In thermal modification, wood is heated copper chromate) (Vlosky 2009). In 2016, to very high temperatures (Kocaefe et al. the wood preservation industry employed 2008), thus altering its chemical and physical 10,600 and had a total value of shipments properties (Esteves and Pereira 2009). As a of $7.8 billion (U.S. Census Bureau 2018a). result, dimensional stability and resistance Currently heavy-duty preservatives, namely to rot and decay are improved (International creosote, pentachlorophenol, and heavy metal ThermoWood Association 2003, Leitch 2009, systems, have the largest share of the wood Rapp and Sailer 2000). preservation market for industrial uses. For the residential market, CCA, which was the Thermally modified wood has been predominant chemical, was discontinued due successfully marketed for nonstructural to environmental and health concerns and exterior applications, such as decking replaced by alkaline copper systems; more and siding (International ThermoWood recently, micronized copper options have Association 2003). Although it is still in its dominated residential applications (Morrell early stage of adoption in the United States, 2017). In the future, it is expected that the use it is believed to have market potential as a of metal-free options, nonbiocidal treatments, high-end substitute for tropical species coatings, and barriers will be expanded, and WPCs (Gamache et al. 2017). In chemical after technical and economic limitations are modification, the basic chemistry of the overcome. cell wall polymers is changed to obtain the desired improved properties, often to reduce The Environmental Movement the hydrophilic nature of the cell wall or to Concern for the sustainability of natural improve dimensional stability. One chemical and human health has given rise treatment that has had some market success is to market-based initiatives such as forest acetylation, where wood is treated with acetic certification and green rating systems anhydride, resulting in the esterification of (Espinoza and Dockry 2014, Espinoza et al. the hydroxyl groups in the cell wall (Rowell 2012). These systems are aimed at creating 2013). Acetylated wood has shown improved a market incentive for forest managers and dimensional stability and decay resistance companies to adopt sustainable construction (Ohkoshi et al. 1999, Rowell et al. 2009). standards. In the United States at the time of

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this writing, there are currently 14 million it important to update recruitment and hectares (35 million acres) of forest certified educational efforts (Espinoza 2015, Sharik and under the Forest Stewardship Council system Bal 2018). (Forest Stewardship Council 2018) and 33 million hectares (82 million acres) under the Programme for the Endorsement of A Look 20 Years Ahead and Forest Certification (which, in turn, includes Implications for the Forest Sector the Sustainable Forest Initiative and the The forest products industry will continue American System) (Programme to play a critical role in the economic, social, for the Endorsement of Forest Certification and environmental development of the United 2018). Green building systems promote the States during the next two decades and use of environmentally preferable materials beyond. However, several trends will affect in , for example, by favoring the use the structure of the industry and the nature of environmentally certified wood products of its contributions to the economy and forest (Espinoza et al. 2012). More than 63,000 health. These trends include the globalization projects achieved LEED (Leadership in Energy of the economy, export opportunities in fast- and Environmental ) certification, the growing economies, increased interest in leading green building system in the United renewable materials and energy, changing States, by 2018 (U.S. Green Building Council demographics in the population, and 2018). Other green building systems include technological developments. Some of these Green Globe (Green Globe Ltd. 2018) and the changes will increase the demand for wood Living Building Challenge (International fiber or shift its use to new applications, while Living Future Institute 2018). others will reduce the need for wood. Potential Changing Demographics of the Labor Force scenarios are discussed next. • Sustainability concerns, architectural and Demographic trends are likely to affect the engineering considerations, and changes forest products industry in the next two to building codes may lead to the increased decades. An aging workforce and difficulty use of timber in commercial and mid- and attracting new employees in some sectors tall-rise building construction, including an can have negative effects on the industry. increased use of of building For example, the logging industry has been elements. particularly affected; the median age of workers in the industry was approaching 50 • The increased use of engineered wood years in 2017 and a workforce contraction of products could lead to further improvements 13 percent is projected over the next decade in wood utilization, particularly the use of (Bureau of Labor Statistics 2017). Added to small diameter and low-value trees. the growing driver shortage in the trucking • Production of wood-based energy products industry (Raphelson 2018), this shrinking of (e.g., biofuels, pellets) could increase, driven, the labor force will make timber harvesting in part, by demand in European and Asian the most fragile link in the forest products countries. Increased production would supply chain. Innovations in timber harvesting benefit mostly producers in coastal areas. such as automation, robotics, Greater demand for wood-based energy and precision forestry (Goulding 2016) are products could intensify competition for unlikely to offset labor shortages in this sector wood feedstocks with other sectors, such for the next two decades. Similar trends can as wood-based panels and pulp and paper, be observed in other sectors, which makes potentially leading to higher fiber prices. A

Drivers of Change in U.S. Forests and Forestry over the Next 20 Years • GTR-NRS-P-197 Trends in the U.S. Forest Products Sector, Markets, and Technologies 43

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The content of this paper reflects the views of the author(s), who are responsible for the facts and accuracy of the information presented herein. While edited, the views may not necessarily be those of the USDA Forest Service.

Drivers of Change in U.S. Forests and Forestry over the Next 20 Years • GTR-NRS-P-197