Abstract Preface About 160 fewer softwood sawmills are operating in the This report updates Profile 2001: Softwood Sawmills in the United States and Canada than were 8 years ago. Neverthe- United States and Canada, which was published in March less, the combined capacity of the remaining mills has in- 2001. Profile 2003 contains information on the location, creased by 16%, to over 173 million cubic meters. Of the ownership, and approximate capacity of 1,140 softwood approximately 1,140 mills, about 470 characterize their sawmills in the United States and Canada. output as dimension lumber, accounting for 67% of capacity; 136 list studs as their primary output, representing 16% of A data gathering effort of this size on an activity of private the industry’s volume; and 139 are primarily board mills, commerce so widely dispersed in ownership and geography making up a little over 5%. The others make a variety of is virtually impossible to accomplish error-free. We thank specialty products. In this report, the location and relative those who have corrected data and informed us of changes size of sawmills by State and Province are described in maps since the last report. This version incorporates those changes and tables. The data show that growth in capacity over the as well as information on changes resulting from mergers, past 8 years has exceeded growth in demand, leaving the expansions, new constructions, and permanent closures. We industry with excess capacity of at least 3%. This has con- believe we have an accurate tally of the most significant tributed to volatile pricing and narrow profit margins within operations, but the possibility remains that some data are the past 3 years, a condition aggravated by the dispute over outdated. We continue to invite readers to submit corrections Canadian lumber imports. if their facilities have been omitted or misrepresented. In- quiries can be sent by e-mail to Henry Spelter Keywords: softwood sawmill capacity, lumber, market ([email protected]). review Much of the information in this report was obtained from directories of wood-using industries published by regional U.S. and Canadian forestry departments. Additional sources for data on sawmill characteristics and ownership were the Directory of the Wood Products Industry (Miller Freeman 1999), the Big Book (Random Lengths Publications, Inc. 2002), Madison’s Canadian Lumber Directory (Madison’s Canadian Lumber Reporter 2002), company press releases, Securities and Exchange Commission (SEC) filings, and company Web sites. We acknowledge the cooperation of the many individuals who patiently helped us fill gaps in our data. April 2003 Spelter, Henry; Alderman, Matthew. 2003. Profile 2003: Softwood sawmills We are grateful to Dave Darr, Richard Haynes, Bill Lange, in the United States and Canada. Res. Pap. FPL-RP-608. Madison, WI: U.S. Dave McKeever, and Al Schuler for their careful reviews of Department of Agriculture, Forest Service, Forest Products Laboratory. this report and helpful comments. We also thank former 79 p. coauthor Tim McKeever for his consulting advice and tech- A limited number of free copies of this publication are available to the nical support that helped immeasurably in the preparation of public from the Forest Products Laboratory, One Gifford Pinchot Drive, this version of the report. Madison, WI 53705–2398. Laboratory publications are sent to hundreds of libraries in the United States and elsewhere. The Forest Products Laboratory is maintained in cooperation with the University of Wisconsin. The United States Department of Agriculture (USDA) prohibits discrimina- tion in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or familial status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact the USDA’s TARGET Center at (202) 720–2600 (voice and TDD). To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Wash- ington, DC 20250–9410, or call (202) 720–5964 (voice and TDD). USDA is an equal opportunity provider and employer. Profile 2003: Softwood Sawmills in the United States and Canada Henry Spelter, Economist Matthew Alderman, Economics Assistant Forest Products Laboratory, Madison, Wisconsin Introduction Capacity Data The intent of this report is to provide a comprehensive over- Appendix B lists sawmills for 1997 to 2003, by location and view of the size, geographic dispersion, ownership, and capacity. These data were obtained from a diverse set of capacity of the softwood lumber industry in America and sources, as described in the preface. By necessity, capacity Canada from 1997 to 2003 and to assess economic condi- data for 2003 and for the terminal years in previous reports tions in the industry. were based on projections provided by firms or extensions of previous data. These data are subject to change, as actual Among the major industrial groups, the softwood lumber performance data are obtained and corrections of omissions, sector is one of the most disaggregated. As of April 2003, errors, or misclassifications are made. The extent of potential about 1,140 sawmills in the United States and Canada con- revisions can be judged by comparing current capacity val- centrated exclusively, or in large part, on making softwood ues with those initially reported (Table 2). lumber. The capacity and production of these large, perma- nent plants are reported in Appendix B and summarized in Much of the challenge in compiling this list revolved around Table 1. Data on numerous small or seasonal softwood expressing the data in comparable units. There is no general lumber operations are not reported because these do not pattern of operation in sawmilling. Most large mills run two make a significant amount of lumber. shifts per day, but some run three shifts and others only one. Shifts also range from the standard 8 h/day to 9 or 10 h and Appendix B also includes information on capacity and pro- often vary as a result of market conditions. The capacity data duction of panel and pulping operations. Adding these data reported here reflect the normal mode of operation of a given to lumber production provides estimates of timber drain. mill. Thus, in many cases, the potential for physical produc- These can be contrasted with timber inventories to gauge the tion may be higher. The addition of a shift is one cause of relative physical scarcity or abundance of softwood in a data revisions illustrated in Table 2. given region. Additionally, the mill distribution maps for the United States show softwood timber inventories within Mills in the United States and Canada estimate their capaci- counties (indicated by shading), derived from the latest ties in board feet. These values were converted to cubic USDA Forest Service timber inventory data. The following meters using the international convention of 2.36 m3 per sections describe the industry capacity data and the influence thousand board feet. This conversion can be misleading of recent events on its evolution. because the actual dimensions of many lumber items are Table 1—Summary of capacity and production of U.S. Table 2—Capacity estimates reported in current and and Canadian softwood lumber sawmills from 1997 previous Profiles to 2003 Profile 1999 Profile 2001 Profile 2003 6 3 6 3 6 3 Capacity Year (×10 m ) (×10 m ) (×10 m ) Mills Capacity Production utilization Year (no.) (×106 m3) (×106 m3) (%) 1995 148 149 149 1996 151 152 152 1997 1,276 157 146 93 1997 156 157 157 1998 1,265 162 147 91 1998 157 162 162 1999 1,254 169 155 92 1999 158 167 169 2000 1,246 173 153 89 2000 — 168 173 2001 1,214 173 150 87 2001 — 166 173 2002 1,163 174 157 90 2002 — — 174 2003 1,140 174 — — 2003 — — 174 smaller than their nominal sizes, resulting in true cubic 115 Exchange rate 500 volume conversions of 1.6 to 1.7. Thus, the metric capacities Trade deficit 110 reported here tend to overstate actual physical volumes. 400 However, for the purpose of estimating capacity utilization, 105 where production is divided by capacity, this is of no conse- US$) 300 9 quence because the errors cancel out. 100 Index This report also contains typical sawtimber prices across 200 regions. Again, placing these data on a comparable footing 95 Deficit (x10 was an issue. 100 90 In the United States, sawtimber prices are generally reported per board foot, as estimated from local log scaling rules. 85 0 However, a variety of such rules exist, and the measurement 1995 1996 1997 1998 1999 2000 2001 2002 2003 of a log by one rule may be different from its measurement by another. Converting board feet to cubic feet is further Figure 1—Real, broad index of the dollar exchange complicated by the fact that conversion is dependent on log rate (Federal Reserve) compared to real trade deficit diameter, length, taper, and defects. If these differ by region (Bureau of Economic Analysis). or change over time, then the appropriate conversion also changes. The depth of the problems in manufacturing and the collapse in stock values impelled the U.S. central bank (Federal In previous reports we converted U.S. prices per board foot Reserve) to drastically reverse course in early 2001. A series to cubic meters using factors of 5.3, 4.8, and 4.5 m3 per of cuts brought interest rates down to the lowest levels since thousand board feet for the U.S. West Coast, remaining the 1950s. This ameliorated the severity of the contraction as States except Maine, and Maine, respectively.