STRUCTURAL CHANGE IN THE FOREST PRODUCTS INDUSTRY
AND THE REGIONAL SHIF T IN PRODUCTION BETWEEN
THE PACIFIC NORTHWEST AND THE SOUTHERN U. S.
by
Lynn B. Youngbar
Portland State University
(1969)
B.S.,
SUBMITTED IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS OF THE DEGREE OF
MASTER IN CITY PLANNING
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
May,
C
1985
Lynn Youngbar 1985
The author hereby grants to M.I.T. permission to reproduce and
to distribute copi es of this thesis document in whole or in part.
7>
Signature of Author
'epaiftment
of UrbV Studie /'and Planning
&'May 28, 1985
Certi fied by9
Merrie Klapp
Thesis Supervisor
Certi fied b
Bennitf Harrison
Thesis Supervisor
Accepted by
Phillip Clay
Chairman, Master in City Planning Committee
1
JUL111985
STRUCTURAL CHANGE IN THE FOREST PRODUCTS INDUSTRY AND
THE REGIONAL SHIFT IN PRODUCTION BETWEEN THE PACIFIC NORTHWEST
AND THE SOUTHERN UNITED STATES
by
Lynn Youngbar
Submitted to the Department in Urban Studies and Planning
on May 28, 1985 in partial fulfillment of the
requirements for the Degree of Master in City Planning
Abstract
has
The solid wood sector of the forest products industry
years.
50
for
Northwest
ific
Pac
the
of
dominated the economy
has
during the last 10 ye ars, the State of Oregon
However,
shift
a
of
results
The
ls.
mil
a third of its lumber
lost
the
Southern U.S. and
share analysis of employment in the
the
that
indicate
1980,
Pacific Northwest, between 1970 and
the
in
employment
national
share of
Northwest's regional
regional
South's
forest products industry has dec lined and the
between the
in employment
share has increased. This shift
Northwest and the South is con firmed by production figures.
its market
last 10 years, the So uth has increased
Over the
share in lumber and plywood unti 1, in 1982, plywood production
in the South surpassed plywood production in the Northwest.
There are cost differentia ls between the two re gions, which
these
How ever,
partially explain the shift in production.
cost differentials have alwa ys existed between t he South and
the
analyze
is important to
the Northwest. Therefore, it
costs
why
see
to
industry
cts
produ
forest
the
structure of
became important in the locat ion of production dur ing the late
1970's.
become increasingly
sector has
The lumber and plywood
1950's. To maintain
the
dominated by large corporat ions since
profitability, the major fi rms (Weyerhauser, Geor gia-Pacific,
and paper,
Champion, and Boise Cascade) expanded into pulp
diversified
and
product lines,
vertically integrated their
into unrelated sectors.
(e.g.
When the macroeconomic shocks of the 1970's hit
inflation, the oil supply embargo, and rising interest rates),
i 11-prepared. They were
the forest products companies were
and had many large,
highly leveraged, very diversified,
lumber an d plywood
multi-plant
operations,
inefficient,
one year
up
especially in the Northwest. Their pro f its went
However most of the
next.
and dropped drastically the
2
Then two exo genous events forced
companies kept expanding.
Increasi ng competitio n from
them to be more cost-conscious.
lumber and plywood
Canada took an increasing share of the
supply of ti mber in
market. And there was a decline in the
ion.
redesignat
wilderness
to
due
Northwest
the
Consequently, the forest products compa nies were forced to
Their key strategy was to deve lop and expand their
cut costs.
located in the
(predominant ly
paper operations
pulp and
industry
and the
South), because the demand was more stable
more profitable. At the same time, the So uth was the fastest
growing home building market in the U.S. Therefore, because of
factor costs and the location of market s, most of the large
and ply wood operations with
companies integrated their lumber
the Pacific
Thus,
facilities.
existing pulp and paper
production
and
t
employmen
lose
to
continues
Northwest
the South
while
ry,
indust
plywood
and
lumber
the
in
dominance
gain.
to
continues
Thesis supervisor:
Dr. Bennett Harrison & Dr. Merrie Klapp
3
TABLE OF CONTENTS
Acknowledgements ........................
5
CHAPTER ONE, Introduction and History...
6
CHAPTER TWO, The Regional Shift.........
28
CHAPTER THREE, Industry Structure and Co ts.
58
CHAPTER FOUR, Conclusion and Recommendat ons
89
Interviews..............................
97
Bibliography............................
98
4
ACKNOWLEDGMENTS
There are several people who deserve special thanks for their
Each of my three
contributio n to the wri ting of this thesis.
guidance. Throughout my
advisors pr ovided a uni que kind of
two years a t M.I.T., Bennett Harrison's constant demand for a
intellect growth, challenged my
rigorous an al ysi s i nspi red my
He gave me
abilities.
mind, and f inely tuned my critical
special
and feedback on my work on location
en couragement
theory, whi ch inspired the development of this thesis. I owe
a special g ratitude to Bennett for making the writing of this
I also want to thank my other
thesis a po sitive exper ience.
thesis advi sors: Belden Daniels, who always reminded me of the
practical application of this work, and Merrie Klapp who
and detailed
helped me get organized and provided critical
feedback on this thesis
thanks for their
Three other people deserve a special
unending support and encouragement along the way.
My daughter
and always
Meg deserves an award for tolerat ing my moods
letting me know that she loved me, even when I had ignored her
for hours.
Barbara Fields was the friend who was always there
when I needed her advice, support, or consolation,
and who,
although writing her own thesis, al ways took the time to help
"thank
me with mine.
Jonathan Gorham also deserves a special
you".
In my
continual
discussi ons of this thesis with
Jonathan, he asked the hard questio ns and argued the points
which helped my ideas take shape. He then went the extra mile
of a true friend and spent hours edi ti ng my drafts and giving
me the critical feedback I needed.
5
CHAPTER ONE
INTRODUCTION
The
forest
consequences
products industry is undergoing
have
been
felt
dramatically
changes
by
whose
communities
throughout Oregon and Washington, culminating in a recent wave
of plant closings that have left thousands of workers
jobs.
While plant closings are nothing new to
the
without
industry,
the most recent closings are taking place during an upswing in
the economy.
After dominating the domestic lumber and plywood
industry for 40 years, the Pacific Northwest's postion appears
to be eroding in favor of renewed economic
activity in forest
products from the Southern United States.
Currently
the forest products i ndustry includes solid
(lumber and wood products) and pul p and paper.
are
wood
based,
.
they
have
Although
significantly
wood
both
different
characteristics and performances:
-
The solid wood sector is labor intensive while
paper is capital
-
Demand
for
and
intensive
paper
products
is
dependent
on
economic conditions--tracking changes in GNP,
solid wood sector is dependent
home construction
pulp
on
highly
general
while
the
cyclical
new
which consumes about 40% of lumber and
plywood.
-
Pulp and paper is more concentrated than the
solid
wood
6
sector,
which
has historically been considered
a
very
1
competitive industry (especially lumber).
Thus solid wood and pulp and paper have been considered as two
separate industries.
major
But, in the last twenty years
the
same
forest products firms have increasingly dominated
both
industries, producing
pulp and paper and solid wood products;
therefore, what was always
considered two separate industries
is now considered together as the forest products industry.
The primary focus of this paper will
side of the industry,
Pacific
Northwest
Oregon,
because
specifically
will
on
lumber
Oregon
has
point
been
for
and
solid wood
and
The
particularly
largest
solid
at least 60 years.
of inquiry will
later consider how pulp
the
the
and plywood.
is my primary interest,
producing state in the U.S.
my initial
be
wood
Although
be the solid wood sector, I
paper
has
influenced
the
recent changes in the solid wood sector.
For the past two hundred
U.S.
lumber
populations.
region
and
traditionally
industry
years
has
moved
1900,
with
later
into
have
begun
the
South,
with
a
the
Northwest, where it
lumber
has
and
industry
migration
the
Great
lumber
flourish
then
location of the
the
First in New England, then in
exploited the natural resource,
around
the central
of
moved on.
located
in the
of
Lakes
companies
activity,
Finally
Pacific
dominated that region's economy ever
1. Office of Technology Assessment, p.
7
7
si nce.
Between
1900
competitive.
and
1950
was
fiercely
After World War II the industry began to grow as
the postwar building boom
Because
the lumber industry
of
several
the
demanded
more
lumber and plywood.
their
largest companies owned
own
they were able to earn
timber, in those good economic
times,
excess profits.
profits allowed them to expand
These
excess
timber resources and to increase production capacity.
Around 1950, the industry
began to concentrate economically
(the largest firms accounted for an increasing share of
production).
By the late 1950s,
two
of
the
three
total
largest
lumber and plywood companies expanded into the pulp and
industry.
From
this
position they
developed
a
structure
which
they
hoped
insulate
them
would
paper
corporate
against
business cycles, because pulp and paper was countercyclical
the highly cyclical lumber and plywood industry.
companies went "public", this became
because
their
they
stock
strategy
had to maintain the
to
was
1)
satisfy
to
their
vertically
increasingly
price/earnings
shareholders.
integrate
from
As the large
important,
ratios
Their
timber
finished products in lumber, plywood, and pulp and paper,
2) to diversify
into
to
of
dual
to
and
other industries, some wood-related and
some not.
During the 1950's and 1960's,
steadily, declining in
was a mature, if
not
the
employment
was
slowly,
but
industry, an indication that this
declining
industry.
In
contrast
to
8
employment,
paper.
demand
continued to grow for
lumber,
pulp
and
Consequently, many of the large companies made healthy
profits and continued to grow.
However,
the
industry
went
through a period of profit squeeze from 1957-1963. During that
time forest products companies expanded their operations in an
attempt
to
restore
results
of
this expansion was that
previously
became nation-wide.
Finally
high
in
profits.
One of
production
and
the
markets
the late 1960s profits began
to rise again for the major forest products companies.
By 1970, most of the major companies were conglomerates
most
were
highly
leveraged
with
debt.
They
anticipated
continued growth in demand for paper and wood products.
when the national economy experienced several
during
the
1970s, the profits of
forest
and
But,
major recessions
product
companies
declined sharply.
During the seventies
production
lumber and plywood industry, but not
economy
grew
during
this
same
and employment grew in the
as
fast
period.
as
Forest
the
products
employment in the South was growing faster than
the
average in the industry, and the Northwest
growing
slower and experiencing large
firms.
Between 1976-1982
by 36%
in
the
Oregon
Northwest
has
alone.
yet
the
scale
was
plant
total
national
much
closings by major
number of lumber mills dropped
The lumber and plywood industry in
to
recover
from
the
1981-1982
recession.
The goal of my thesis is to
demonstrate that there has been
9
a regional
shift i n production taking place bet
en the
South
and the Northwest. This shift helps explain why
he
has experienced-so many plant closings
in
last
years.
growing
faster in the
of this cha
e is directly
Production and employment
South than in the Northwest.
are
Much
attributable to the actions of
large
the
forest
Northwest
several
oducts
which have opened new plants or acquired existi
firms
ones in the
South and closed p lants in the Northwest. The r
ationship
one
and
of
gradual
disinvestment in
investment
in
t he Northwest;
the
South
it is not that
is
gradual
ants close in
one region, move, and then reopen in another.
This thesis is organized
into
four
gives the history of the industry and
the
documents
region al
comparative pro duct ion
analysis
share
between
the
regional
shift
Chapter One
the
establishes
oper ation of 1umber and plywood f 1rms.
structure and
Two
chapters.
is
firms changed i n the
Chapter
the
through
use
of
fig ures between 1950 and 1984. A shift
used
to explain how
Chapter three
two regions.
is
shi ft
basic
taking
examines
changed
why
th is
place, with an emphasis on how t he
1950s
explains how and why cost
employment
and
1960s.
factors
became
Chapter
Three
important
in
al so
the
1970s and how these factors influen ced corp orate strategies to
shift
production.
Finally
the
conclusi on,
Chapter
analyzes the affect the regi onal shift has had on
in the Northwest and
for
preventing
specul ates
massive
on
di slocation
Four
communiti es
some possible strategi es
due
to
relocation
of
industries.
10
HISTORY OF LUMBER MILLING
Lumber milling is
of America's oldest industries.
one
earl iest pioneers began cl earing
forests
the
seaboard to build their fi rst communiti es.
wood
provided
the
basic
material
were
for
houses,
England.
However,
which
the
bui 1t
Its
main
uses
based
wagons, roads, and
ships,
milling became a large-scale
New
on the eastern
During the 1800's,
on
environment in the United States was
by
operation
fuel.
du ring
1840, growth i n
Lumber
the 180 0's in
population
westward movement, and the depletion of the forests had
the industry inland, and to the abundant Ye llow
of the South. (Early development
because of the
Civil War).
destruction
flourished there until
Great Lakes
area
area
to
of
the
South
moved
Pine
forests
had
s tal led
transp ortation duri ng the
the Erie
Canal,
the eastern market.
the 1890's.
the
By
the
late
the Mi chi gan
The industry
1800's
the
was cut over, and the locus of the industry
moved South again.
Lakes
of rail
With the opening
woods became accessible
of
The
Most of
moved
well-established.
lumber barons from the Great
South,
Some
Frederick Weyerhauser,
the
of
where
them
founder
of
the
went
west,
the
Production peaked in the South in 1909;
industry
was
most
notably
Weyerhauser
empire.
by
1930
it
had been
mostly cut over.
Although there was
pressure
inexpensive, plentiful supply
to
of
move
to
the
West for an
softwood, most of the labor
and even the mill owners did not move out of the South as they
11
had the Northeast and the
different in the South.
Great
Lakes.
Lumber
Sou th
Because the
milling
had
been
was
settled
long before 1umbe r mill ing became a domi n ant ind ustry, most of
the
ti mberl ands
Souther n
smal 1 parcel S.
were
(Only
in
Mississippi,
Loui si ana, and East Texas we re ther e large tracts
of timber.)
Many of the
loggers
process nearby trees and go
cheap
in
poor,
back
owners
to far mi ng.
rural
blacks,
The
paternalistic company
characteristic of the larger
indigenous population.
stayed and
ti ed
previously
number
to
of
subsistence
town
organization,
adapte d
operators,
would
Labor was very
the South, largely because of the lar ge
agriculture.
well to the
When areas were cut ove r, the workers
continued their subsistence.
knew the Southern Pine would grow back
so most of them stayed in the area
west.
s awmi 11
and
Land a nd mill owners
w ithin 20 to 30 years,
also.
i nste ad
of heading
Therefore, the i nfrastructure was already in place when
the industry returned 30 years later.
West of the Cascade Mountains
Northern
the
Oregon,
Washington,
California, there existed a plentiful
Douglas
Fir,
a
softwood
characteristics as pine.
the timber
in
with
the
new
resource,
same
strength
These fir trees were much bigger and
stands denser, making them economical
the logging and sawmill equipment
had
larger trees and more rugged terrain.
completed from
the
East
and
to
the
been
to log--once
adapted
to
the
When the railroads were
Northwest,
the
area
was
accessible, and development began in earnest.
12
The earliest mills in
the
Northwest
Columbia and Willamette Rivers in
Sound area of Washington.
establishments
mills in the
and
a
deep
Washington
became
markets.
Since
Oregon
1880,
been
and
Oregon
peaked
at
about
along
in
had
Washington had 37 (the
Northwest
Seattle had
By
had
the
Puget
228
total
1,850
the
lumber
number
of
2
1947).
in
water port, therefore, at an early date,
the
the
exporter
Douglas
of logs to
Fir
plentiful and accessible in Oregon,
the
timberlands
the
California
were
industry
more
grew
more
rapidly there, once the eastern markets were opened up by rail
transportation.
Output of the national
million board feet
lumber industry peaked in
1909 at 46
3
with 715,000 employees.
During the next
25 years, output declined by 10%
23%,
and
,
the
number
of
the number of mills by 50%, primarily
workers by
due
to
the
quality, availability, and price of substitutes such as brick,
4
concrete,
and steel.
Although the
industry has
been
declining nationally in terms
Pacific
Northwest
has
of
continued
output
and employment, the
to gain market
share
and
remained the premier lumber producer in the nation
until
the
late 1970's .
2. Jerry Lembcke and William Tattam, One Union in Wood, New
York: Internati onal Publishers, 1984, p. 5.
3. Ann Markusen, Profit Cycles,
Oligopoly,
Development, Cambri dge: MIT Press, 1985.
and
Regional
4. IBID.
13
STRUCTURE OF THE INDUSTRY--A COMPETITIVE MODEL
The
lumber
and
wood
products
industry
considered very competitive, and is often used
model
of
pure competition.
market levels of
the
production,
wholesale
and
as
a
classic
timberland ownership, lumber
lumber
distribution.
Each
Understanding their differences
important foundation for understanding how structural
at each market level
have contributed to structural
the large companies.
This
been
However, there are actually three
industry:
performs differently.
has always
analysis,
in
one
is
an
changes
changes in
turn, helps explain
the regional shift in production.
Ownership of Timber Resources
Together, the South and the
Northwest
have 70% of the U.S.
softwood timber species, such as Fir, Pine and Redwood.
50% of the softwood volume of America
Coast region (Northern
while the South
nearly
has
California,
about
20%.
About
is found in the Pacific
Oregon,
and
Washington)
The trees in the South grow
twice
more than
as fast as the Northwest, so they account for
5
half of the annual growth.
The softwoods are in
the greatest demand commercially
them preferable for
structural
because their strength makes
applications,
structure makes them ideal for pulp.
Fir and
5. Office of Technology Assessment, p.
and their cell
redwood are the
154.
14
most often used species for lumber and plywood.
are taller and bigger around,
or plywood
than
they
Because
have more value as lumber
as pulp, when prices are equal.
other hand is faster growing, but
they
is
a
Traditionally, pine costs less, and so it
much
Pine on the
smaller
is
tree.
preferable
for
pulp and paper since it takes about two tons of wood to make 1
ton of paper.
(Biologically,
both
trees
can
be
used
for
either lumber or pulp.)
Ownership
characteristics
of
forest
substantially over the last 85 years.
there was
lands
changed
Between 1910 and
1953,
a substantial decline in ownership concentration at
the national
level.
fact that the
This trend was in large part due to the
railroads,
large landholders since the 1800's,
began divesting much of their land in the
Much of their
private
have
timberland
owners,
some
of
example, Weyerhauser bought
Northwest
timberlands
from
the
were
was
sold
smaller
whom were lumber
his
railroad.
revested
in
early 20th Century.
initial
parcels
companies.
to
For
900,000 acres in the
But,
most
of the
railroad
the
U.S.
Bureau
of
to
Land
Management.
In 1977,
28%
of
the commercial
timberland in the U.S. was
owned by public agencies (mostly the U.S. Forest
the Bureau
of
Land
product industry,
Management),
Service
and
14% was owned by the forest
and 58% was owned by non-industrial private
6. Adapted from Brian K. Wall Trends in Commercial
Timberland
Area, U.S. Government Printing Office, 1981, p. 10.
15
6
owners.
However, regional distrib ution
widely.
of
ownership
varys
In the Northwest, 58% of the commercial timberland is
either federal or state-owned, 23%
products
industry,
and
only
is
19%
owned
is
by
the
privately-owned.
contrast, in the South, only 9% of the
commercial
is federally or
owned
state-owned,
21%
forest
is
by
By
timberland
the
forest
7
products industry, and 70% by non-i ndustrial private owners.
To understand how timberland ownership affects the structure
of the forest products industry, it is important to look at to
how concentrated the ownership of timber is among
the
products
lumber
companies.
Although the production of
plywood is competitive, the ownership of timber is
much
forest
and
more
concentrated.
Of the commercial timberland
companies, concentration
owned
by
the forest products
in
ownership has
been increasing
8
since 1953. The concentration ratio
of ownership by the
top
four
companies
went
from
22.4% in 1953
to
Ownership by the top eight firms increased from
to 45% in 1979. I have no figures
of the top 20
in
1979.
14.4% in 1953
for ownership concentration
firms in 1953, but by 1977, it was 69% of total
forest industry timberland
fifty
30%
companies
owned
ownership.
over
90%
Also by 1977, the top
of
all
industry
7. Adapted from Census of Manufacturers, Bulletin
1977, p. 529.
owned
1359-1375,
8. A concentration ratio is the percentage of production or
ownership of a given number of companies divided by the total
production or ownership of the industry.
16
timberlands.
In
the
Northwest
concentrated.
timberland
ownership
was
By 1960, the top four companies
even
owned
the forest industry timberland, and the top eight
The Weyerhauser Co. owned more than
9
owned by the top four,
and these
10
since 1960.
The
increasing
concentration
stumpage (trees still on the stump)
forest.
have
parallels
prices
of
62%.
the land
increased
the
in
48%
owned
one-half of all
figures
more
increasing
the
national
The privately owned resource base is limited, because
the only way the amount of available commercial timberland can
be increased is to shift it from other uses.
timber
(fee-owned)
The ownership of
obviously gives a company
against rising prices of public
stumpage.
some
It
security
also
enables
companies to assume a longer range planning horizon, by giving
them a preferred position in the bidding process
timber.
in the
for
federal
Hence, most of the major companies buy federal timber
Northwest,
as a way to expand their supply of timber.
But if competition forces the prices
of
stumpage
their fee-owned timber protects them from having to
too
pay
high,
high
prices for public timber.
In other words, they have a choice,
based on
price,
whether
or not to buy public timber.
stumpage
prices
go up when lumber prices go up,
9. Mead, p.
10.
firms
Since
with
81.
Interviews:
0'Laughlin, Ehinger.
17
their own timber are at a
these
short
claim
that
advantage.
term economi c reasons,
the
manage
in
order
11
addition
and
to
to
O'Laughlin
r atios
part of corporate
timberland
In
Ellefson
increasi ng concentration
ownership are an explicit
and
cost
in
timber
strategy
to
own
future
guarantee
availability of raw materi al s.
It is
of
important
available
to note here that most of the large tracts
timberland
controlled by the forest
is
little
chance
of
in
the
Northwest
products industry.
are
Therefore, there
most companies expanding
their
owned
The
South,
resource except by buying land from one another.
however, is very different;
offers more future potential
most land is
privately
for ownership.
already
held
This potential
and
is
important to companies who don't want to rely solely on public
timber.
PRODUCTION OF LUMBER AND PLYWOOD
It is the production and distribution of lumber and
which have always
the industry.
there
are
two
been
plywood
considered the competitive portion of
In analyzing the competitiveness of an industry
key
concepts
which
are relevant:
economic
concentration of the industry and the conditions of entry.
using
these criteria to determine competitiveness;
of the structure of the solid wood industry
11.
Ellefson and O'Laughlin,
Strategies
Timberland Ownership and Management, p. 4.
By
a
picture
emerges.
From an
for
Corporate
18
understanding of
-the
structure,
we can begin to see how and
why current changes are taking place in the industry,
that have
hastened,
if
not
caused,
a
regional
changes
shift
in
production.
Conditions of Entry
The conditions of entry into the industry are
one
element which distinquishes a competitive market.
Mead and Zaremba both found very low
lumber industry.
critical
As of 1963,
barriers to entry in the
The ease of entry and exit from the industry
helps explain the high drop-out rate among smaller
firms.
I
consider three elements of entry which define the industry
as
competitive:
production
requirements, capital
requirements,
and ownership of timber resources.
By as late as 1970, the production techniques used in lumber
and plywood milling had changed
century.
Major improvements
been in the area of
safety,
speed of operation,
and
industry
among
has
been
in
little
the
energy
since the turn of the
sawmill operations have
sources
for
machinery,
lumber handling methods.
The lumber
the
most
labor
intensive
of
manufacturing industries in the U.S. New machinery was easy to
reproduce, because it was
not very technically sophisticated.
There was always an active market for used sawmill
machinery,
especially in the Northwest, therefore, the production methods
requirements were not a barrier to entry.
The capital requirements of starting
a
lumber
or
plywood
19
mill do not present a significant
Capital
to
entry
either.
requirements are relatively low--even for an
optimum
size plant.
From a s urvey conducted in 1963,
that an entrepreneur
a medium sized
plant
$2
is
however,
are up and/or rising.
in
about
for
less than optimum size
up
plant,
million.
An even more
is viable to run a
especially
when lumber prices
Northwest
business.
So
profit-margin conditions, entry
prevalent.
with
Smaller, less efficient plants could be
the
a
estimated
that it
for
about
investment (in 1963), based on the ease of
establishing
Mead
could get into the sawmill business
compelling argument,
started
barrier
when
of
$70,000
equity
getting credit and
there
small,
are
favorable
marginal
firms is
In fact, Mead showed a direct relationship between
the price of lumber
mid-fifties.
and
He notes
the
that,
number
of
mills
up until
the
after 1948 lumber prices varied
with construction cycles, and the number of mills expanded and
contracted with the cycles, but with a persistant pressure for
12
exit among the smaller mills.
What was behind the pressure
to exit?
As lumber prices rise, firms enter the business
lumber.
The
non-timber
auction for publicly-owned
increased demand on public
owning
timber.
12.
time
Mead,
milling
at
federal
Consequently,
there
of
Historically, there
between rising 1umber prices
p.
compete
timber, and the price
(trees still on the stump) rises.
lag
mills
of
and
rising
is
stumpage
was
a
stumpage
119.
20
As the prices for public stumpage
prices.
were reduced and the
least
efficient
mills suffered losses,
and eventually, many of them went out of business.
the
feet
and exit of small mills (less than
"entry
per
much
13
provide
shift)
8-hour
profits
up,
went
of
Therefore,
40,000
the
board
necessary
adaptation to changing lumber demand."
In brief
the smal 1 mills operate when 1umber
and before stumpage prices catch up with l umber
narrowing
margi ns.
profit
As
these
small
prices are up
prices,
thus,
mills
enter
increases there is
production, supply increases.
As
less upward pressure on prices
and eventually prices even out
or start dropping, as do profi ts.
smaller firms go out
supply,
which,
of
busi ness
supply
At
this point, many of the
which,
in
reduces
turn,
every thing else remaining constant, should keep
prices from dropping too far.
For
these reasons profit
in the lumber indust ry tend toward the minimum
In fact, lum ber
economic theory.
rates
postulated
in
and wood product's rates
of
return, on both sale s and stoc khol der equity, ran consistently
lower than the
14
of time.
average
manufacturing rate during this period
this is the industry-wide trend, further
analysis
shows some discrepancy between companies who own and
those who
Although
119.
13.
Mead,
14.
Ibid.
p.
252.
15.
Ibid.,
p.
89.
p.
21
15
do not
The companies who own their
own timber.
their
own
already
have
or
prices, unless they ration their own timber
cut it.
stumpage
public
rising
the
own stumpage are not subject to
So during a period of rising prices they make capital
were
prices
when
1947-1963 period,
above
companies were making profits
the
during
that
assume
can
We
gains on their operations.
rising, these
steadily
industry wide trend
the
towards minimum profits.
Economic Concentration
A
concentration
economic
within
an
the level
of
determined
by
is
competitiveness
of
indicator
common
industry,
concentration ratios; an analytical tool which shows the share
of a total market accounted for by the largest producers.
The
industry,
the
concentrated
assumption is that the more
more likely there is to
levels
among
companies,
the
collusion in price and production
be
therefore
and
an
impediment
to
competi ti on.
Lumber
characterized
takers and
had
milling
did
by
always
thousands
not
of
been
competitive,
very
were
small firms who
earn excessive profits.
national level, even though the number of firms
price
By 1947, at the
had
steadily
declined over the last 50 years, the largest four producers in
Standard Industrial Classification (SIC)
2421,
sawmills
planing mills, only accounted for 5% of the sales.
and
The eight
22
largest producers accounted for 7% and the twenty 1argest only
16
11%.
Only five out of 426 four-digit SIC codes
had
ower
concentration
rat ios
for the four
largest
on ly
eight and twenty 1argest firms,
firms.
For
the
two SIC codes had lower
concentration rati os--fur goods and women's suits, coats, and
17
skirts.
In cont rast the plywood sector (SIC 2436) was more
concentrated.
sales,
The largest four fir ms
the largest
for
22%
and
the
largest
there
was
clearly
accounted
eight accounted for 34%,
of
twenty accounted for 56% of sales.
Nationally,
between
1947
1963,
and
increasing con centration in the lumber indu stry.
four
largest
producers
accoun ted
for
By 1963,
9 2% of sa les,
the
the
accounted for 12 .4%, and t he larges t twenty
18
See Table
1) Most
of
this
accounted for 18% of sales.
largest
eight
change
occurr ed
between
1954
attributed to a national merger
and
1960.
It
is
generally
movement in American industry,
which was taki ng place at the ti me.
16. Walter J. Mead, Competition and Oligopsony in the Douglas
Fir Lumber Industry Berkeley: University of California Press,
1966.
Industry,
U.S.,
Concentration in American
17.
1st
Committee of the Judiciary, 85th
Congress,
Washington, 1957, p
133-165.
18. Mead, p.
Senate,
session,
102.
23
TABLE 1
19
Economic Concentration in the Lumber Industry
In percent of total production by area
region
Douglas fir
1947
1954
1960
1963
United States
1947
1954
1960
1963
Turning
Twenty Largest
Eight Largest
Four Largest
Year
to
the
15.9
16.6
23.9
19.7
20.6
22.1
29.4
25.7
30.0
31.6
40.6
37.2
4.8
5.1
9.2
9.2
6.4
7.0
12.5
12.4
9.8
10.7
17.9
17.9
figures for the
regional
Northwest,
it was in
lumber industry was almost twice as concentrated as
nation
the
as
largest firms
a
in
whole.
the
Mead gives an account of
cut, two dropped from the
top
1963, leaving only six of those
For
twenty
firms,
and
Throughout
this
20
Weyerhauser
period
their timber was
completely.
Thus
by
who were on the top twenty in
example, between 1944 and
absorbed 21 formerly independent
28
the
Northwest in 1947. By 1963, eight were
absorbed by other firms, four closed down as
1947.
the
1960,
Georgia
Pacific
firms, U.S. Plywood absorbed
20
acquired
18 other firms.
Weyerhauser
production, both in the region and in
dominated
nation,
producing
seven times as much as the second largest
regional
producer,
and twice as much as the
national
producer,
19.
Mead,
p.
102.
20.
Mead,
p.
105
second
the
clearly
largest
24
produced 3.7% of
only
Weyerhauser
Georgia Pacific. And yet,
regional
production and 14.6% of the
national
21
(Of the top twenty regional firms in 1978 only
production.
the
total
Georgia Pacific, Weyerhauser,
St.
and
Regis,
International
Paper remain).
The previous
section on conditi ons of entry establ shed why
there were large numbers of small
why
firms in lumber mil
to
there was persistent pressure
firm s go
can
given
more concentrate d
leve 1
production.
of
demand
is to
increasing overall
supply.
more
drop
out,
those
If
can
they
for
within
room
firms
the only way
a
expand
to
firms
their producti on
increase
can
without
increase sup ply, prices
more
lef t can expand
supply.
increasing overall
production
larger
the
for
drop, and e rase th e potential
firms
thus, leaving
In a competitive market,
money
make
smaller
of business is another way in which an industry
out
become
Havi nc
exit.
and
i ng,
profits.
But
producti on
when
without
In the lumber and plywo od sectors,
be increased up to a point simply
by
addi ng
another production shift and doubling logging efforts.
In fact, between 1947 and
units
disappeared
1963,
71% of the total producing
in the Northwest. Ni nety-five
these were small mills that went out of business.
time, there was a 33%
decrease
percent
of
At the same
in the number of medium-small
21. Note that the drop in concentration between 1958 and 1960
shown on Table 1 can be accounted for by Georgia Pacific and
U.S. Plywood closing some of their 1arger mills acquired
during the earlier mergers.
25
mills, a 17% decrease ir the largest mills,
in medium-large
and a 45% increase
While there was a considerable amount
mills.
of closing and opening activity, producti on only declined by
22
about 10%.
These figur es indicate that a high dropout rate
among small firms most
concentration ratios of
1963,
contributed
likely
the
to the increasing
lumber indust ry between 1947 and
especially in the Douglas fir
region of
Western
Oregon
and Western Washington.
DISTRIBUTION OF LUMBER AND PLYWOOD
In contrast
the
to
production level,
the
lumber industry was
percent of all
handled
wholesale
surprisingly
of
side
the
that since firms were not yet in
there was little domination by any
as
the
This situation has
creating
Although there were
was
few
industry, it is fair to say
the
one
distribution
seller
or
busin ess;
group
of
chan ged significantly since 1960
largest companies entered the
themselves,
off the
production
lumber
the
Eighty- ffive
unconcentrated.
by independent wholesaler s.
at
level
distribution
the Douglas fir reg ion
statistics on this
sellers.
concentrati on
increasing
complete
timberland ownership to the retail
In summary, there were two main
distribution
vertical
busi ness
monopolies
from
outl et.
reasons
why
the
industry
began to concentrate fairly quickly in the 1950's. One is that
major companies were able
22. Mead, p.
to
expand
production by acquiring
107, 108
26
opportunity to make
gains (or excess profits) during
capital
this period of generally rising
merge
with
production and adding to
their
acquire
high
and
dropout
or
rate
by
gave them an
holdings
timber
Because their
existing firms.
small
prices,
they had the cash to
firms,
existin g
Second, the
reserve.
timber
firms
increasing
ga ve
firms
major
opportunity to expand production without negatively
supply, and subsequently price.
essentially these two factors
foundation for
the
future
I
have
working
argued
an
affecting
that
it
is
together
that set the
of
the industry
oligopolizat ion
which in turn has allowed it to undertake corporate strategies
of
diversification
and
verti cal
integration
to
mai ntai n
pro fits.
27
CHAPTER TWO
THE REGIONAL SHIFT
the
establish
between the
regional
shift in
to
place
taking
production,
Northwest and the South. The aggregate statistics
leaving
indicate that the lumber and plywood industry is
people in Western Oregon and Washington have or are
1982, there was a 36% decline
in
the
number
scheduled
of Oregon, between 1976 and
In the State
to lose their jobs.
the
In 1985 alone, 5,000
Northwest. The statistics are startling.
24% decline
is
structured, the next step in this thesis
is
industry
plywood
and
lumber
the
With a basic understanding of how
in the number of sawmills and a
of
plywood
and
mills.
veneer
According to the Western Wood Products Association, the number
1
A
of sawmills declined another 8% between 1982 and 1984.
similar trend is taking
not
extreme.
as
show that
place
in
Washington State, although
The Oregon Employment
Division
statistics
employment in the forest products industry (lumber,
1984.
plywood, pulp and paper) dropped 17.4% between 1978 and
These statistics indicate that the forest products industry in
Oregon
suffered
tremendous
and
apparently
recession,
losses
has
not
during
the
benefitted
1981-82
from
the
1. James 0. Howard, Oregon's Forest Products Industry: 1982,
Pacific Northwest Range and Experiment Station, Portland,
Oregon, Resource Bulletin PNW 118, October 1984.
28
there
are
regional s hift in
before the
recession.
this.
but
was
a
1arge
by
decision s
the
because
the
whose
firms
private
were
during
up
speeded
The other is that t he shi ft occurred
dominated
is
One is that there
that was already underway years
production
1981 recession,
was
industry
for
reasons
two
suggest
I
subsequent recovery enjoyed by most of the nation.
on -
corporate
production
location
strategies
aimed at maintaini ng the price/earning s ratios
their publ ically-held stock.
These
based
strategies
resulted
of
in
large mult i-plants operations in the Northwest whi ch could not
meet cost standards when the industry
repeated
recessions
exogenous
factors:
constraint
in
the
of
Canadian
public
timber.
was
to
the
with
two
su bjected
seventies,
co upled
competition
and
Consequently ,
supply
a
large
these
companies made decisions about capacity that affected a larger
number
of
For
plants and workers simultaneously.
Champion International
example,
in one move closed down eight plants in
Oregon, Washington, and Northern California in February, 1985.
This chapter documents
comparing
regions.
production
the
an d
Because most of
regional
employment
the
shift in
production by
figures
for
displacement
and
paper
are the focus
Howeve r, as mentioned in Chapter One,
of the large lumber and p lywood firms were
industry.
In
the
last
also
in
Some of this
most
the pulp
10 years most of
companies have been expan ding more in the pulp
than in solid wood produc ts.
two
in the Northwest
has been in lumber and plywood industries, they
of this analysis.
the
these
and paper area
regional
shift can
29
be
explained
by
the
large
firms
more
moving
manufacture of pulp and paper to offset
cycl ical
the
the
into
l umber
and wood products industry.
While the lumber and wood products component of
products industry
in
the
forest
the Northwest seems to be in a state of
decline, or at least significant change, the Southern U.S.
enjoying
a
resurgence
of activity.
Production
doubled in the South from 1960 to 1983
went from
nothing
of
lumber
and plywood production
in 1963 to 10 billion square feet in 1983.
Employment in lumber and wood products in the South
increased
by 8% from 1970 to 1983. Some of this
increase
fact
the South has been
that
since
fastest growing
is
the
early
1970's
is due to the
the
homebuilding market in the U.S. Other factors
are also relevant as I will discuss later.
Is the Northwest's experience part of an overall
the
national
regional
for est
shift
in
products
industr y?
production
taki ng
place
thesis
a
Northwest and the South? For this
defined as a signi ficant change (10% or
and
employment
between
two
definition, we can hypothesize
Or,
regi on s.
th at
th ere
between the declin e in one region rel ati ve to
in another.
This
disinvestment in
another.
relationship is
is
there
between
regional
more)
in
a
the
shift is
production
Accepting
is
in
decline
this
a relationship
the
genera lly one of
resurgence
a
gradual
one area by major firms and a reinvestment in
Based on the work of Harrison and Bluestone
a regional shift does not imply that
(1982),
plants close down in one
30
area, move and
in
reopen
another.
Nor
does
it mean that
and
get a job in
people who lose their jobs in one area move
The 1arge
the growing region.
the
have
they
because
are
the
ability to shift
multi-locati on
multi-plant,
firms
firms,
as
major
focus,
production,
opposed
to
being
smaller
independently owned firms which just go out of business
under
similar conditions.
It is
this
of
phenomenon
document in this chapter.
analysis.
the
two
years.
has
First,
I will
regional
There
three
are
analyze annual
parts
The figures clearl y show that in
steadily
gaini ng
plywood,
on the West,
and
in
similar, but not so striki ng trend is taking place.
will
use the results of
a
show
and
Northwest, parti cularly Oregon has
Finally, I will use anecdo tal
evidence
corporate publications to illustrate
have
been
this
last
the
25
South
lumber
a
Second, I
1970
and
the South has been gaining i'n employment
1980, to
the
to
shift-share analysis of changes in
employment, for the South and the Northwest between
that
will
production figures in
regions and inte rpret the changes over the
been
I
which
shi ft
shifting
their
been
from
declining.
interviews
and
that the major companies
investment
in
timberland
and
productive capacity from the Northwest to the South.
CHANGES IN PRODUCTION
There are two
major
commodities produced from trees: solid
wood products, such as lumber and plywood;
and
pulp,
which,
when mechanically combi ned with chemicals, can be manufactured
31
into a variety of products.
In Graph 1 on softwood lumber production, it is obvious that
the South has been sl owl y increasi ng production over the
26 years.
As menti oned in Chapter 1, the South was mostly cut
over by the 1930's. By
had
reached
resource.
capacity,
the
maturity,
The
but
South
it
early
giving
had always
had
Georgia
Pacific
1960's, second growth trees
the
South
retained
been domi nated by
operators or integrated with pulp
1963,
last
built
a
harvestable
some
small
productive
independent
and paper plants.
th e first plywood
Then
mill
Southern pine in Fordyce, Arkansas . This marked the
in
using
entry
of
the large forest products corporat ions into plywood production
in the South. From this date, as
in plywood
shown in Graph 2, production
began a steady climb.
Its outstanding performance
in the South was due to its compet itive price.
To understand how the forest products industry in the
has been able to
catch
up
South
to and in some cases overtake the
West, it is important to compare production statistics of
South versus the West. In softwood lumber, from
Southern
occasional
production
dips
in
slowly
but
production.
steadily
This
which will
be addressed later.
1960 to 1973,
increased,
growth
attributed to lower costs of production in the
the
pattern
with
is
South, a topic
Given that the South had lower
priced lumber and plywood than the Northwest, ceteris paribus,
it is possible to explain
how
its production during downturns
the South could have increased
(tied to homebuilding slumps)
32
.... ML
R PRO DI
CT
-f e~
(milli ra crF b-.rd
12
11
I;
i-f
i-i
-I:,
L
a
CI
E1
I;
1988
1
W st
W.
::x:I
t--
29
I
1
-I--
'1r
in
197 4
a rP:J
1 98 2
1978
-$'
U"] t.
1-
Graph 1
33
C P R-
PL
Naq LP:3rt--
li;i-zri!;; af
12
11
1Ci
I;
U
I-I
7
I-I
I-,
I-
a
Ti
:5
L
*zE
4
.3
I
o
1g.:5~j
IS-11E2
19.66
0
*~1Y~±~±
1 A--70
1., 74
S~m
1978
1!:- ET2
±1-
Graph 2
34
by explaining the differences in the peaks and valleys of each
region.
Nationwide, when demand was high, prices went up
most of the productive capacity
of
it,
was
in use (even though some
especially in the West, was producing at
higher cost).
As
demand
was preferred by buyers.
the first
to
precisely
how
commodities and
slightly
Hence, the higher priced product was
of
product was the first to
a
slackened, the lower priced product
lose its market.
the economy pulls out
and
the
feel
When demand picks up again as
recession,
the
lower
the increased demand.
the price mechanism rations
priced
This is
different
priced
helps explain why Southern production did not
suffer as much during recessions.
Beginning with the 1974-75 recession,
the
South
began
experience more severe drops in lumber pr oduction tha n it
historically during na ti onal recessi ons.
drop in production was
not as severe as
Still,
that
of
the
to
had
South' s
the Pacific
Northwest (the West-Co ast and West-Inland on Graph 1) , and the
South's recovery was
consistently
relatively higher, tha n the
soone r, with the next peak
previous one
to the trend of peaks and troughs in
during
the
dropped off
the
especially compared
West.
For example,
1974-75
recession,
by
12.3% in the South compared to 14.3% for
the West-Coast
only
and
15.1%
for
softwoo d
West-Inl and
lumber
p roduction
product ion.
The
trend was much more ex aggerated in the 1980-82 recess ion
when
Southern production dropped off 13% compared to the to tal
West
production decline o f 35%. In 1980, lumber production
South finally passed both
the
West
Coast
and
West
in
the
Inl and
35
(although still
smaller than Coast and Inland combined).
in 1981 the South's total
total
Then
plywood production was more than the
Western production for the first time ever.
The reasons
for this a're explained in Chapter Three.
Conversely, lumber production
much more cyclical
since
the
early
There
were
increasi ngl y
rates and
seventies.
slump
troughs
they
did
which
make the
The two most import ant
in
1ev el
production
of
resi dential construction since
factors
1970
1975,
interest
were
As interest rates
and
1980,
mortgage
so
The ot her factor which influenced
o f production of bot h l umber and plywood
was
the
housing construction (as o pposed to financing costs).
Throughout
the
1970's,
doubling
inflation,
the
since
cos t of housing
1969).
but also to real
price
This
was
increases.
rose
Chapter One,
this was
due
pri m arily
prices, but labor costs were also r ising.
to
steadily
partly
The
lumber and plywood rose along with everything else.
in
troughs
new home construc ti o n became more expensive;
demand for ho us ing dropped.
(almost
West has experienced
in creased costs of construction.
fi nanci ng for
cost of
The
in
s everal
deeper.
rose, wh ich
the
the
fluctuation with a decidedly downward trend
corresponded to the
1967.
in
due
to
price
of
As
rising
Thus,
shown
stumpage
during
the
1970's, the West became the high pr iced production region.
As
explained above, during
slumps
product lost the market sooner,
deeper.
in
homebuilding, the Western
10 nger
and the drop was much
Again we can assume, ceteris paribus, that after each
recession in homebuilding, the West lost some
of
its
market
36
share to the lower cost South.
Now that we have an idea
of how and why production seems to
be changing between the two regions,
reasons for these changes?
what
are
The cost factors are
as a critical element in the South's increasing
Lindberg of the
that
framing
cheaper
in
priced in
Southern
lumber
the
the
(2
South,
South,
Forest
x
4
some
of
the
often
cited
share.
Carl
Products Association claims
and 2 x 6's) has always
and dimension lumber,
while
been
higher
has enjoyed a slight edge in delivered
price because of their proximity to the major markets (Eastern
and Southern
U.S.).
Also,
because
growth, the South has been adding new
more
efficient
mills
which helps
of
continued production
capacity in the form of
keep
costs
competitive.
Another factor affecting costs is that many of
the lumber and
plywood mills in the South are integrated with
pulp and paper
facilities--bark & milling residue can be used as raw material
2
in the pulp mills.
These cost factors are even more relevant
given
the
which
small
However
generally competitive nature of
as
differences in price influence
Chapter
Three
increasingly important as the
will
the
industry
buyers
explain,
costs
in
greatly.
became
industry changed and exogeneous
events affected their ability to be competitive.
Another factor which
is
influencing the South's ability to
2. Facilities can be integrated in the West also, but there is
so much more pulping in the South that its more prevalent
there.
37
mai ntai n
its
(periods
th at
competitiveness
are
during
industry) is t he invention of
wood
is
hard
particular ly
parti cul arl y
useful
like decks, fences, hot tub s,
most widely
of
the
homebui 1di ng
So uthern
copper
sulfate
recessions,
The
sol uti on
for outdoor applicati ons
the
and
Only two othe r species
Pine--neither
Red
of
as accessib le to the mill capacity
which
pine tend t 0 be
people
ten d
counter-cyclical,
to
add
as
appl ications
(i.e.
to
improvements
residences, instead of bui lding new hom es)
is
and the major
as Southern Pin e. Since the residential
treated
Pine.
used species in th is treatment process, because it
compare--Pon derosa
markets
recessions,
The southern pine is
etc.
has the best retention qual ities.
plentiful or
on
'treated'
chem i c al 1 y treated wi th a
which makes it
national
during
existing
its p roduction does
not suffer a,s much as the rest
of the softwood lumber market.
Consequently P, the stayin g power
of
keeps southE-rn
producti on
from
the
treated
fall i ng
off
pine
market
as drastically
during reces sions and helps it rebound more quickly
(i.e. when
coming out of a recession, people tend to increase
investment
slowly)
Thus the South gained an increasing share of the
production
of lumber and plywood at the expense of the West. Costs were a
key factor which became relevant
as
the
industry
structure
changed over time.
CHANGES IN EMPLOYMENT
Changes in employment patterns are the other indicator of
a
38
r egi onal1
shift
between the Northwest and
the
two
regions
not
are
merel y
3
technological
base
which
differences.
used
develop a shift
County
These
South.
differ ence i n production levels
changes substantiate that the
between
the
resu lt
the
of
To do this, I have adapted a data
Busi ness
Patterns
census data
to
share
analysi s of employment changes between
4
the South and the Northwest fro m 1970 to 1980.
What data was
not available from County Busin ess Patterns was made available
through
special
arrangements
Authority. The data is for
with
SIC
the
added into the classification a s
between 1970 and
because it
is
employment
1980.
impossible to
industry which are changing.
the Pacific
of
buildin gs,
two
is olate
which
was
1972, has been taken out
figures
This
Valley
24, lumber and wood products.
The category for mobile homes a nd wood
of the data so the
Tenn nessee
digit
would
data
specific
B ut, for both the
be
comparable
is a problem,
of
the
Southern
and
parts
Northwest States, a spotcheck of other employment
data sources indicates
that
employment in lumber and plywood
3. 1 had originally hoped to do a time series
on employment
changes between the Northwest and the South over the last 20
years at the 4 digit SIC
level.
Based on the production
figures discussed earlier it would have been enlightening to
compare
the employment statistics in softwood
lumber and
plywood for the same time period.
I could have seen exactly
how employment tracked production.
It may
also have been
possible to determine if there were increases in productivity
because employment
was going down or staying steady as
production increased. Unfortunately this was not possible.
There was not consistent enough data at this level for all the
southern states.
4. Con Schallau of the Pacific
Experiment
Station, U.S.D.A.
Oregon.
Northwest
Forest
Forest Service,
and Range
Corvallis,
39
manufacture, by far, make up the majority of employment in SIC
24, lumber and wood products, and the relationship has
stayed
stable since 1970.
Shift-share
economi c
an
is
analysis
technique
which
describes how 1ocal
employment in a specific
particular reg io n,
has c hange d over time, relative to changes
in national empl oyment.
composed of thre e
have
been
The
elemen ts:
changed
at
would
same
the
hav e
rate
changed
been had the
as
the
is
decreasing
shar e
share).
South.
shall
of
an indu stry
For my purposes,
indicator.
plywood
5
res ul t of
It
might
at
the
growth affect), what the
that
that
local
industry
(industrial mi x affect), and what part of the
employment
a
What the employment change would
in the state if th e industry had
change
in
changes in local employment are
all-industry nat i onal rat e (na tional
employment
industry,
nationally
change in local
area's
(competitive
the competitive
industry
share
increasing
or
or
regional
is
the
key
indicates whet her the production of lumber and
be
shifting
between
Within the differences in
the
the
Northwest and
competitive
examine how the three products (pulp and
share,
paper,
the
I
lumber
5. For the shift share analysis, the Pacific Northwest is the
states of Oregon and Washington. California is not included
because their primary wood resource is redwood trees which has
unique end uses, not always comparable to pine and fir.
The
South refers
to the states of Alabama, Arkansas,
Florida,
Georgia, Kentucky, Louisiana, Mississippi,
North Carolina,
South Carolina, Tennessee, Texas, Virginia, and Oklahoma.
6. Wood furniture is included only because in some states it
accounts for a large part of SIC 24.
40
6
and
wood
products,
differences in
in
industry
and
on a national
performance
level.
indu stry
Comparing re gi ons
expl ai ns
can
not
conclude
relationship
between
the
decline
increase in another.
anecdotal
in
To make this
is a causal
the re
that
from
However,
how regions are doing relative to each other.
this analysis we
the
to
is changing relativ e
region
the
for
These figur es show how
competitive share.
each
ac count
wood furniture)
region
one
the
will
I
connection,
and
draw
evidence from the interviews.
Results of the Shift-Share Analysis
The
results
of
employment in the
of
pu lp
and
nati onal
furnit ure ) grew only
At the same time,
forest products industry (made up
1umber
paper,
products in dustry is
the firs
further
wood
and
19 80.
the U.S. grew by 23. 1%.
declined by 1.6%, lumber and w ood
by 10.3%
and wood
we
can
employm ent
furniture
say
that
for est
the
a slow growth industry, noting that
t signi fic ant empl oyment growth in the industry
over 40 yea rs.
this might
products,
by 3.6% between 1970 and
increased b y 2.6%. Therefore,
is
wood
tot al emplo yment in
i ncrease d
products
and
slightly
in pulp and paper
Employment
that
indicate
analysis
shift-share
the
At th is
point ,
be the cas e; it
research.
presented in
Some
is
it is
a
possible
impossible
phenomenon
to
which
expl anati ons
tell
this
in
why
requi res
will
be
the next chapter
41
TABLE 3 --- SUMMARY OF THE SHIFT SHARE RESULTS 7
COMPONENTS OF EMPLOYMENT
ACTUAL EMPLOYMENT
1970
1980
%
Northwest
P&P
L&WP
WFurn
Total
Nat Growth
Comp Share
Ind Mix
I
29,220
110,516
4,834
144,570
27,863
112,833
3,723
144,423
-4.6
2.1
-22.9
-.1
6,529
24,695
1,088
32,312
-6,987
-13,339
-963
-21,289
-899
-9,038
-1,270
-11,207
174,853
236,173
149,674
560,700
197,780
255,083
167,704
620,567
13.1
8.0
12.0
10.7
39,072
52,774
33,440
125,286
-41,811
-28,505
-29,604
-99,920
25,665
-5,358
14,192
34,499
497,927
241,311
133,062
872,300
465,357
280,502
123,522
869,381
-6.5
16.2
-7.2
-.3
111,263
53,921
29,733
194,917
-119,065
-29,126
-26,317
-174,508
-24,768
14,396
-12,956
-23,328
P&P
L&WP
WFurn
Total
9,400
67,709
2,677
79,786
10,356
67,269
1,725
79,350
10.2
-.6
-35.6
-.5
2,100
15,130
598
17,828
-2,248
-8,172
-529
-10,949
1,103
-7,397
-1,021
-7,315
These
national
South
P&P
L&WP
WFurn
Total
Rest of U.S.
P&P
L&WP
WFurn
Total
Oregon
figures
disguise
some
major
differences in employment growth and decline.
in competitive
that there
consider
7.
may
the
Schallau,
regional
The differences
share between regions are the first indication
be
a regional shift taking place.
aggregate
figures.
(Table
3)
First, we
If all
three
1985.
42
sectors of the forest
national rate for all
products
industry
had
grown
industries between 1970
South would have gained
125,286
and
at
1980,
the
the
and the Nort hwest
employees
32,312. However, since the indu stry had a growth
rate so much
the industri al mix f actor
lower than the national growth rate,
for each region was negative (Table 3).
Holdin g other
factors
constant, the South would have increased its s hare of
nati onal
employment
national
in
forest
growth
and
product s
industry
account the South's actual
59,867 jobs.
by
34,499
mix
The Northwest, by contrast,
by
obs.
When
are ta ken
effects
net job growth
its share of national employmen t
j
even
was
into
greater:
would have decreased
11,207
but
jobs,
national growth and industrial mix effects are added
actual net decline was only 147 jobs.
the
in,
when
the
The rest of the nation
also experi enced a precipit o us decline in competitiv e share of
the
forest
2,919 jobs.
products indus try,
resulting in
loss
actual
of
These figures indi cate that although the industry
was growing slowly
at
the
national
level,
the
South
was
gaining an increasing share of the industry, while t he Pacific
Northwest experienced a dec reas ing share, as did the
the nation.
rest
of
The difference between the declining sha re of the
Pacific Nor thwest and the increasi ng share of t he Sou th was an
indication of a possible regi onal sh i ft.
Forest
Eco nomist
Jay
O'L aughl in
industry is not going to die in
8.
Interview,
who
This
s tates
is sup ported by
that
"...the
the Northwest, it's just that
0'Laughlin.
43
8
future growth will
take
place
in
the
South."
understand what is going on between and
within
data must be disaggregated by regio ns and
by
To
really
regions,
sectors
the
within
the forest products industry.
When we break down the forest
component
industr ies,
products
industry
it becomes evident that
into
its
of
the
most
discrepancy betwee n regional shares was in pulp and paper (see
Figure 2). Looking at the
Northwest's
pulp and paper, there would have been
jobs, but when you add
effects, their net
in
loss was
competitive
share
a relative loss of
in
899
national growth and industrial mix
even
more:
1357 jobs, i.e.
the
reason they lost more jobs was because the industry nationally
was
experiencing
negative growth.
paper account ed fo r 74% of
South.
Holdi ng
competitive
0 ther
share
the
factors
In the
constant,
of the national pulp
their
and
growth and industr ial mix factors added
j obs.
pulp
and
total increasing share in the
would have gi ven t he South 25,665 jobs, but
only 22,927
South,
This shows that the
increasing
paper
industry
with the national
in, job
growth
Northwest
was
was
losing
its competiti ve sh are of the pulp and paper industry while the
South was gai ni ng.
industrial
competitive
confirmed in
mix
Without the benefit of national growth and
e ffects, their respective gain
share s
the
would have been even
case
studies
which
and
greater.
loss
of
This
is
show Georgia-Pacific,
Boise Cascade and Weyerhauser doing most of their expansion of
pulp and paper in the South, during the seventies.
44
F-,I.-I LP
2i:'
Ri" P ER- E
r.. -mrn r.--+irk
P''
Afit
-
---
:7
Lii
-J
---
f
LID
Er.-
Ld.
a...i....:
-X,..........
FRMst
of U.S.
Pk-.rarthw
.. :...r...u..
st
'-1 Lrt h
FiEG IQ N'7
Figure 2
45
Lumber and wood products
( Fi gure
forest products i ndustry.
the
effects, they gained
2,317
employees during
and
They
Thus,
job s.
they
period
this
3)
have
would
although they gained
losing competitive
were
wood prod ucts.
Interestingly
was also losing share in lumber and wood products.
would
share
lost
nati onal growth and ind ustrial mix
9038 jobs, but due to
in competitive
for 81% of
declining share of national employment in the
the Northwest's
share in lumber
accounted
operations,
the South
Their loss
have meant a loss of 5,358 jobs,
but because of national growth
and
industrial
mi x
effects,
they had an actual net job gain
of 18,910 jobs.
Th e
gain
in
employees
share,
is
both
due
to
regions, e ven
industry growth are positive.
competitive
losing
that both national growth
fact
the
while
in
and
As Figure 2 indicate s, the rest
of the nation is increasing its share of
nati onal
in lumber and wood products, a phenomenon which
net job increase of 39,191 jobs, the bulk
employment
amounted to a
of the growth coming
in lumber and wood products.
Based on my research, this
production
increased
in
trend
is
Great
the
corroborated
Lakes
area of
by
the
plywood
substitutes, waferboard, and oriented strand board, and by the
production of the other
wood
products
included
(other than softwood lumber and plywood).
in
A cursory
SIC
24
look
at
three and four digit level employment data suggest that 85% of
the employment in lumber and plywood has been in the Northwest
and the
South,
the kitchen
while the rest of the nation produces most of
cabinets,
hardwood
flooring,
hardwood
plywood
46
....
R&
BE
CTSEP LOYMET
DPR
Ca3M F"-dE.-e+
.S -
'14
12
10c
L
Cl-c:
CCV
UP -,f
4
Z.C
1-1
C-1
L.
C~~.
-4
-- 1
F-msd a::f
LU.S.
Na- rt h w es;t
LS.-n.
RiEGIONS
Figure 3
47
etc.
which make up the rest of SIC 24.
more difficult
is
In other words, it
see
to
shift between the Northwest and the South, because
happening in the rest
of
dominance of softwood
lumber
figures
employment
SIC
in
nati o n.
the
the
between
Northwest
and
24,
we
the
the
that
assume
can
in competitive sha res
Sout h
do show up when
lumber
Mid-South
The
had
detailed below when I disaggr egate
the
lumber and
would
be
When
regions.)
is
y ou
4), the South's share of
take out the Mid-South (as in Figure
employment
a
wood products whi ch
and
was larger than the Northwest 's. (The expl anation for this
national
the
Louis iana, and Arkansas) are
South.
separated from the rest of th e
share in
the
and the South's competit i ve
Mid-Southern states (Mississi ppi
decreasing regional
given
However,
d iffe rences
The
of what is
and plyw ood in their respect ive
differences between the North west
shares were related.
of a
evidence
increasin g by 4,834
wood products; when national
jobs
in
growth and industrial
mix effects are added in, the South actually gained 22,851 net
jobs.
Another
competitive
factor
which
shares
competitive shares.
competitive
share
getting smaller?
is
For
enters
the
analysis
this
of
greater,
can
rest
not answer
analysis
the
movement
of
in
is the Northwest's loss in
while
Or, are they both losing to
the competitive share of the
share
direction
example,
getting
into
the
is
or gaining from
of the nation?
these
South's
questions.
This shift
Although
48
3mpetitive
--c'
1
h.:r..:
1 970
-
19~
-
6-
z1
I
_
_
UJ4-
Cl
-. 4. -
-- S -
R
t of LI..
Ua..t h(N
Md-S
FE IINS
Figure
4
49
beyond the scope of thi s research, in Chapter Three some ideas
about
future
trends
will
be
explored.
from
1980
to
1984,
employment data
Northwest is currently
did
losing
it
appears
Finally, because
that
and
relative
it
seems
plant
cl osi ngs
during
re doing rel ati ve to the South. As mentioned,
all of the
southern
regi on
The
sh are.
suffere d
Mississippi)
and
wood
piroducts.
of
lumbE,r
marked by th e first
and
share
Schallau
plywood
blocks of fee-ownerst ip timber avail abil
quickl y
bought
up
by
companies.
Consequeritly, the
center
renewed
of
Louisiana
of
of
result
the
in
and
forest
the
that
the
the
mi 11
Arkansas in 1963, bui lt by Geo rgi a Pacific.
were
increase
as serts
plywood being in
S;outhern P ine
not
to a signifi cant decrease in
Mid-South's decreasir ig share was the
resurgence
sa me
(Arkansas,
dec reasing
primari ly
products ind ustry due
lumber
a
the
enjoyed
Mid-So uth
the
to look a t how Oregon and
relevant
Washi ngton
regional
the
I am particularly interested in why Oregon
seems to be experiencing so many
10 yea rs,
sketchy
employment much faster than it
1970 and 1980 both in actual jobs
between
9
shares.
1ast
Based on
ere
initial
mid-South,
in
Fordyce,
were
large
a. the ti me and
arge
Mi d-Sout h
corporate activity
Existing sawmills had to compete with new
fore st
became
in
th e
fores t
plywood
9.
Bureau of Labor Statistics,
Employment,
Earninqs: States and Areas, Bulletin 1370-18.
the
they
products
initial
products.
mills
Hours,
for
and
50
Most 0 f the existing sawmills were older and
sawtimber.
labor intensive i n
their
production
techniques.
more
Thus these
mi 1 ls had to pa y a higher price for the resource, putting them
at a
distinct dis advantage.
Subsequently, the decline in the
num ber of sawmi 11 employees and number of mills
the Mid-South rel a tive to the rest of
al so states tha t delivered prices were
197 9, in the Mi d-S outh. Consequently,
Pin e plywood
increased in
10
South.
Schallau
the
higher
most
from
of
1977
the
to
Southern
m ill s constructed during the 1970's were located
out side the Mid -So uth. In fact, some plywood mills had
in the Mid-Sout h during the same time.
the Mid-South
matured
This
closed
indicates
that
ahead of the rest of the South and had
begun to decline.
Texas had a particularly 1arge
share in forest products.
employment
in
both
pulp
Texas'
and
portion
of
the
increasing share of national
paper
and
lumber
products, would have amounte d to an increase of
but with national
amounted to
South's
an
total
growth
increasing
and
11,479
wood
jobs,
and industrial
mix effects actually
increase of 13,432 jobs.
This was 33% of the
increasing competitive share and
28%
of
the
South's increasing share of pulp and paper and lumber and wood
products.
In part, this dif ference was due to Texas being the
fastest growing market in the South. In fact, Jay
O'Laughlin,
10.
Con Schallau,
What's This About
The Forest
Industry
Shifting To The South, paper presented to 1985 Southern Forest
Economics Workers Workshop, University
of Georgia, Athens,
Georgia, March 13-15, 1985.
51
a forest economist
market
is
now
at
Texas
growing
A.
faster
resource and soon Texas will
& M.
than
states that the Texas
the locally
be importi ng lumber
available
and
plywood
from other areas in the South.
Turning to the
the overall
Northwest,
competitive share in
pul p and paper declined by a r elative value of 899 jobs,
would
have
been an inc rease of 1,103 jobs in
whi ch
and
Oregon
a
decre ase of 2002 jobs in Washi ngton. But, when national growth
and
industrial mix effe cts ar e included,
1ost
a net 2313 jobs and Orego n gained a net 956 jobs.
In lumber and wood products
share
in
decrease.
the
Northwest
In fact,
have lost 7397 jobs,
mix,
is
82% of the decreasing
accounted
for
but
due
1972
Product.
Although
by
national
the
Oregon
in
would
to national growth and industry
Thi s decreasing
seems
share
li ght o f the fact that in 1980, lumber
and wood p roducts ac counted for 37% of all
constant
ac tual 1 y
i n the sh ift share ana lysis, Oregon
Orego n only los t 440 jobs.
especially important
Washington
doll ars)
and
lumber
and
8.5%
of
plywoo d
manufacturing
State
Oregon's Gross
were
a
portion of the manuf acturing economy of the state,
(in
signifi cant
they
been decli ning as a percentage of manuf acturing, from
45%
have
in
11
1970 to 36 % in 1983.
These
figures appear to reinforce the
inferences from the shift share analysi s that the industry
in
11.
Oregon
Economic
Development
Business
Department,
Information Division, November 1984,
Oregon
Estimated Gross
State Product by Industry, 1970-1983.
52
L UM. ERA EF8: WC1D
Canm etit r.it
P R DL
:TS
S h,:- res 1 970 - 1 '.~.I'
I
I-'
-1 ,
'~1
-,~
-
La]
-c
I.
6,rE
-.
Cr-"
,r-
LiJ
-7-
S2
-1 0
-I
L
~1
_______________________________________________
Ci re-- r
Northwest
in gta n
Wae
FEOGA NS
PULP .
P.A P ER EP I'LO( Y E T
Cam Mnp-titri Kt Shares 1 970 - 1980I
-.-
0.
4
-n
-
-
- -1
:1
LiJI
-1.2
Lii
0a
-1
1.4
--
Northwest
LIr;anc r
I
!hri ng
r
n
5E GIONSi
Figure
5
53
Oregon is losing competitive share even though there was
only
a net
fel t
loss
of 440 jobs.
This decline was most strongly
when Georgia-Pacific moved their corporate
from
headquarters
Portland, Oregon to Atlanta, Georgia in 1982. Although founded
in Georgia, its largest base of solid wood operations had been
in the Northwest since 1954. To quote Georgia
annual
1982
Pacific's
report:
"As a small
company, Georgia-Pacific moved its
headquarters from Georgia to the Pacific Northwest
in the 1950's just as that region's plywood industry
began
its steep growth curve.. .In
1982,
this
commitment
to
growth
brought
our
corporate
headquarters back to Georgia, to the focal point of
today's growth sectors.
The Sunbelt has
truly
become our company's new growth area as well as our
country's most rapidly expanding region."
Washington's loss of competitive
products
w as
not
nearly
share
great
as
Washington' s de clining share would
1641 jobs,
as
have
lumber
to
the
presence
of
and wood
Oregon's.
Although
a decrease of
meant
the national growth and i ndu strial mix
them an abs ol ute net gain of 2,757 jobs
attributed
in
effects gave
This co uld be partly
We yerhauser' s
corporate
headquarter s in Washington State, which expanded significantly
during the 1970 's, including a new tech nology cen ter employing
800 people
and a $400 million
cap ital
expansion
Washington whi ch began in 1974. It incl uded
four
wood
pro ducts
of
explanation
Weyerhauser 's
1976
and
manufacturin g
increased
1980
Washington grew
the
from
in
The
to
of
log
e xport
in
and
other
Washington
the log exp 0 rt bu si ness.
number
81
sawmills
fa cilities.
emplo yment
dominance in
11
program
is
Between
operati ons
in
134. Log exports tend to sustain
54
employment during
downturns, because when the price of lumber
drops domestically, so does the price of logs and the Japanese
(the main importer) buy more when the price is down.
no t
Although
c oncl usi ve,
think
I
shift-share an al ys is support my
regional
shift
primarily
shares of each region.
the
on
of
pulp
accounting for 50%
and
1980,
it
increased its
of
paper
its
share of national
competitive sh ares between
by
empl oyment
regions,
taking
paper
was
the
U.S.
Between 1970
13%.
It
also
25%
to
28%.
empl oyment from
a shift in employment to
was
in
the national production.
increased
the
The South has long been
ma nufacturing
Even though em ployment in pulp and
there
and
Northwest
The most pro nounced change was
and
this
comparing the competitive
place in the p ulp and paper industry .
the center
of
the re was a
that
hypothesis
in employment between
South. This is based
resul ts
the
slow
growing,
By
comparing
the South.
we can conclude that the
South's growth was at the expense of other regions.
In the lumber and wood products areas, the national
was growing, albeit slower than the
industries from 1970 to
in
absolute
numbers
average
growth
industry
for
all
1980. Therefore, employment increased
in
all
regions.
But
the
competitive
shares indicate that the Northwest was losing a large chunk of
its
regional
share.
competitive shares,
regions,
the
Although
the
South
was
gaining
when you divide the South by geographical
Mid-South
was
declining
faster
than
Northwest. When we exclude the Mid-South from the analysis,
the
it
55
becomes apparent that the
rest
increasing its competitive
Northwest
both
have
of
share.
the
South
was
Because the South and the
softwoods,
which
can
interchangeably for pulp and paper and lumber and
can conclude
that
the
actually
be
used
plywood,
I
South gained shares at the expense of
the Northwest.
In
summary, although the national
is growing slowly at the national
is losing its competiti ve share,
Considering how
products.
the economy
of
Oregon
level,
lu mber and wood
the industr y has been in
dominant
and Washington for the 1ast 40 years,
are significant differe nces
Within these overall
between
and
regions
between sectors of the forest products industry.
shift share analysis te lls us what trends
it
does not
taking place.
Northwest
the Pacific
especially in
there is much cause for concern.
over time,
industry
forest products
tell
us why
the
were
observed
However, I believe that when you
trends
especially
Although the
taking
place
changes are
put
together
the results of the shif t share and the production figures over
time,
you
do
get
a good
'snapshot'
of
what
changes
are
occurring.
These findings were reinforced by my interviews (see pageA2)
with industry representatives.
things:
1)
The
companies
The
interviews
are changing their
confirm
product
emphasizing pulp and paper over lumber and wood products.
They
are
shifting
their
operations
out
of
Northwest and into the South, largely because of
the
two
mix,
2)
Pacific
recent
cost
56
reduction measures to keep earnings up.
57
CHAPTER THREE
INDUSTRY STRUCTURE AND COSTS
In this Chapter I will
examine
why
the
established in Chapter Two is ta king pl ace.
cited reasons for this shift are costs.
and transportation costs
in
shi ft
production
The
0 ften
most
Lower labor, reso urce
th e South were unanimo usl y ci ted
1
by the industry representatives
shifting production to the
as the reason
Sout h.
for 20 years.
so
that
narrowing.
of
major
in
Indeed, Southern costs are now
the
hetween
differential
closures
in
the
West,
are
ver y
influential
on
Nort hwest
rising
qu i ckl y
act ual 1 y
is
we se e evi dence
simultan eous
expansion of capa city in the Sou th? I contend
factors
the
regions
So why, during the 1ate 1970's do
pl ant
are
these costs have
However,
been significantly lower in the South than
they
why
with
that while cost
management
beha vi or,
especially in reg ards to maintai ning profitability, they al one
do
not
e xpl ai n
understand
the
regional
To
do
we
this
the 1ong-range struc tural change occur ri ng in
forest pro ducts i ndustry,
important,
shift.
and how
it
why
it suddenly
makes cost
must
the
factors
i nfluences the spatial distribution of
production of lumber and plywood.
In establishing the
change on
location
significance
behavior
of
corporate
structural
of firms, I draw heavily on Ann
1. Interviews: Corey, Ewert, Elling,,
58
Markusen's theory
sectors.
Each
of the profit cycle evolution of industrial
sector
progresses through
a
After a period of normal profits, individual
sector
make
period
of
profit
firms within
decisions that determine whether
normal-plus
Markusen contends
profits
that
or
commonly restores normal-plus profits.
strategic decisions
about
how
profitability,
these
decisions
and
they
to
is
a
have
a
profits.
strategy that
Individual
increase
the
enter
normal-minus
oligopolization
cycle.
firms
make
their company's
specific
spatial
manifestations in the location of production.
After a long period
fierce competition
and
plywood
these
new
of
'less-than-normal
profits', due to
among thousands of small
firms, the lumber
industry began to concentrate.
firms
in
the
postwar
years
The
led
growth
to
specific
strategies to keep their profitability increasing:
integration or product line expansion,
vertical
of
horizontal
integration,
and diversification into related and unrelated sectors.
These
strategies have profoundly changed the structure of the lumber
and plywood industries in the last
rural communities throughout the
35
years
and
hence
the
Pacific Northwest where most
of the mills were located.
In other words, the structural
change
plywood industries was dominated by
forest
products
companies
who
the
in
the
and
lumber
emergence
produced a variety
of
1arge
of
related products, the most important being pulp and paper.
these companies expanded
their
operations
wood
As
and product 1 i nes
59
during
the
sixties
and
early
increased
steadily
(after
a
sixties).
However,
their
much
classified
companies
economy
them
as
the
low
period
expanded
conglomerates
ill-prepared
during
seventies,
their
profits
during the
operations,
by 1970, left
the
which
the
for the macroeconomic shocks
1970's. During
early
seventies,
major
to
the
several
recessions, with their predictable construction slumps, caused
profits to fluctuate wildly.
The extreme case was represented
by Boise Cascade. Too widely diversified and highly leveraged,
by 1972,
they required a major reorganization and divestiture
to stay in business.
Simultaneous with the
turbulence
of the seventies were two
key exogenous events that influenced the speed and
the
regional
shift.
(exacerbated by
Increased
competition
from
of
Canada
favorable exchange rates in recent years) and
a constraint on timber supply in the Northwest
concern over costs during a
large corporations.
the Southern
timing
Also,
markets
in
period
the
increased
the
of profit squeeze for the
explosive
economic growth of
the last 15 years gave the Southern
lumber and plywood plants a transportation cost advantage over
the Northwest.
Due to their conglomerate
profits,
way
major
structure
and
the volatility of
minimizing costs became increasingly important as
to stabilize operations and increase profitability.
strategies
emerge.
One
was
to
increase
efforts and investment in the pulp, paper and
paper
a
Two
marketing
products
60
side
of
their
operations.
The
other
was
to
improve
productivity, through what Massey
calls
technical
The two strategies resulted
changes in production.
intensification
in the closer integration of lumber and plywood
paper operations
marginal
in
the
South,
and
the
and
with pulp and
closing
down
of
or unprofitable operations, which were located mainly
in the Northwest.
Because
over
concentrated in
55
percent
1umbe r
of
multiplant firms
mill
jobs
were
by 197 7, corporate decisions
to cut back production or close mi lls in the Northwest has had
devastating effects on the
lumber economy.
rural
The most extreme
commu nities
dominated by a
examp le
this
Vals etz,
razing of the entire town of
of
Boise
Cascade Corporation in 1984, when they deci ded to c lose
thei r
was unprofi table.
it
by
the
the
plywood plant because
Oregon
was
The s ame
company
is currently making maj or investments in the South.
In this chapter, I
w ill
chronologically
document the long
run structural changes that took place in the forest
companies.
figures,
crisis
Then
I
by lo oking at profits, employment and output
will argue that the industry was in
during
the
1970's
restructuring of the industry.
minimization by way
the South,
of
which
resulted
a
state
in
of
another
This restructuring led to cost
integrating
production facilities in
and closing down older facilities in the Northwest,
and hence are why a
the 1970's.
products
Finally,
re gi onal
I
will
shift in production occurred in
show
how
the
strength of the
61
unions
in
the
Northwest,
competition
from
Canada,
the
environmental movement in the Northwest and the new market
the South influenced the speed
and
timing
of
the
in
regional
shi ft.
STRUCTURAL CHANGE IN THE FOREST PRODUCTS INDUSTRY
The 1950's
Although there is no
profits during the
direct
early
1900's,
industry was in the marginal
because of the level
information
on lumber company
can
we
assume
profits stage for
of competitiveness of
that
the
a long period,
the
industry
and
the large number of firms.
Following World
prolonged
period
War
II, the homebuilding industry enjoyed a
of
growth.
suburbanize, the trend
and
shopping
was
centers.
to
As
Sales of lumber
reached a peak
in
and
the
began
plywood,
The
around
number
1947.
of
firms, Georgia Pacific,
and U.S. Plywood
disperse
markets
and
productio n
the
to
take
plentiful
its first
plywood plant in
advantage
Northwest
Venturing from its southern origins,
the
three
largest
of high
timber
firms
By the late
and
Weyerhauser
basic
construction,
1940's, some firms were multi-plant,
to
to
As demand increased, so
plywood.
Northwest
and
commercial
f rom this boom.
did the price of lumber
country
build single-family dwellings
components in residenti al and light
obviously bene fitted
the
,
began
growth
resource.
Geor gia Pacific purchased
Bellingham,
Washington
in
1947.
62
U.S. Plywood, originally a New York City company, expanded
the West Coast in 1937, and into South
during
the thirties.
to
Carolina and Wisconsin
Weyerhauser, founded in the
~Northwest,
purchased southern timberland in 1956. Plywood was the fastest
growing commodity, replacing lumber
but
it
in many contruction uses;
could only be produced in the Northwest
because
the
machines that peeled the logs only utilized the large straight
Douglas Fir. This was an added incentive
for firms to move to
the Northwest.
For
reasons
cited extensively in
growing concentration in
the
During this period three
lumber
Chapter
One,
there
industry between 1954 and 1960.
and
plywood leaders emerged
who dominated the forest products industry for the next
decades--Georgia
Pacific,
was
Weyerhauser,
and
U.S.
three
Plywood
(U.S.P. merged with Champion Papers in 1966 to become Champion
International).
During
this
same
established their dominance in
the
became the top three producers.
their lumber
time,
these
Northwest.
They
firms
also
By 1960, they
concentrated
most
of
and plywood production in the Northwest, because
most of the firms they were acquiring were located there.
Northwest was also where
the
major
The
companies expanded their
timber holdings
During the 1950's, Georgia Pacific was the success story
the industry.
Even
Weyerhauser, Georgia
though
Pacific
a
quarter
had
the
1959, they had a 58% higher return on
the
size
highest
of
of
giant
profits.
In
equity than U.S.Plywood
63
and an 80% higher return than Weyerhauser.
In
fact,
Pacific was one of the most profitable companies
industry during the
characterized
late
Georgia
non-conformist.
1950's.
used
American
Popular business magazines
Pacific President Owen Cheatham
In a financially
conservative
borrowed heavily to buy timber which in turn
flow
in
Georgia
as
industry,
a
he
generated a cash
to acquire or build at least 43
manufacturing
or
distribution facilities during the 1950's.
A signifi cant step in the changing structure of
and plywood
the
lumber
industry was the expansion of Georgia-Pacific and
Weyerhauser into the manufacture of pulp and paper in the late
1950's. The pulp and paper industry had grown
the
post
war
years,
especially
with
rapidly
the
during
expansion
distributio n systems like supermarkets which increased
for packagi ng.
reached
an
In 1956, sales
all
time high.
and
existi ng
companies
Paper was considered one
and
Union
anticipatio n o f
the profit
plant in
Internat ional
the
most
Paper,
began
to
expan d
continued growth in the indust ry.
In 1957,
To led o,
pulp, went
Bag-Camp,
po tential,
the industr y.
like
Consequently,
of
of
Crown
Regis, Champion, Mead, West Vi rginia Pulp and
Zellerbach, St
Paper,
demand
profits in pulp and paper
most profit able American industries.
the
of
capacity
in
Because of
other wood based compani es also entered
Georgia Pacific built
Oregon.
into paperboard,
Weyerhauser,
a
kraft
paper
al thou gh already into
wood-fiber (rayon), and packaging
during the 1950's.
64
larger paper companies expanded
Simultaneously, some of the
into solid
Lumber, the Pacific
Coast's
second largest producer in 1956,
and
Another example:
between 1955 and 1961,
new
several
companies,
which
of
plywood.
and
lumber
production
the
beginning
the
to
market
their
expanding their timber base, extending
West,
Long-Bell
purchased
Paper
International
wood.
St. Regis acquired
plywood
lumber and
were
20
operations in the Northwest.
lumber
and
plywood production was a successful strategy for at 1east
two
Integrating
reasons
pulp
and
paper
with
operations
w ood
of
it in creased the efficiency
First,
Pul pi ng utilized a much smaller tree than lumber
or
and mos t importantly pul ping utilized the parts of
to p,
the
lumber and plywood
prod uction.
product s is countercycli cal,
plywood,
the
tree,
"leftov er"
are
branches, and sawdust, which
use.
from
Second, the demand for paper
offsetting the cyclical nature of
lumber and plywood, and thereby giving companies a pr oduct mix
which
could
insulate
them
against
business
cycles.
Hi stori cally this had been the case, and it continued to be so
through the 1970's.
By the late 1950's, the pulp and paper
by
overcapacity
due
to
new
entrants
capacity of the major paper companies.
1957
and
industry was plagued
and
After a
the
slight dip in
1958, demand for paper continued to grow,
fast enough to keep up with all
the new capacity.
situation
and
occurred
in
lumber
plywood
increasing
but
not
A similiar
manufacturing.
65
Banking on a continued building boom,
their lumb er
in
had
they
for
cri ti cal
intensiven ess
highly
pulp
and pa per .
the
paper
profitable
and
both)
its
causes
capacity
maintain
Historically,
production
investment in new plant
business c ycles.
the
and
levels
industry
during
competition,
profits
peak
the
of
lead time resul ted in
which
the
of
in turn exacerb ated
during economic recessions .
essentiall y what happened
of
ini tiated
has
capacity coming on line at the nad ir
cycle, cau s ing price
is
or
demand
profitable
equipment
90%
in
com petitio n as
price
However, construction
addit ional
the declin e in
slack
severe
cap ital
ov er
Production
consequently
to
struggle
companies
beca use
i ndustry;
especi ally
was
Overcapacity
requi red that plants run at 90% of
overcapaci t y (or
the
capacity, but not at the rate that
plywood
be minimally profitable.
to
order
and
the major firms expanded
This
was
the late 1950's except that
during
demand continued to increase as predicted, but not
enough
to
keep up with capacity expansion.
There are distinct spatial
manifestations to the integration
of pulp and paper and lumber and plywood manufacturing.
and paper had always been
Southern Pine was
perfect
centered
in the South, because the
pulping wood.
Georgia Pacific and Weyerhauser entered
industry, however, their first
because that
plants
When companies like
the
were
pulp
and
paper
in the Northwest
was where their most extensive timberlands were.
The Northwest location also gave
Western
Pulp
market.
However,
them
the South
an edge in serving the
remained
the
largest
66
In 1966, the South
producer.
80% of all U.S. pulp,
produced
paperboard, and three times as much as
2
region in the U.S.
paper
At the same time, the paper companies who were
in
the
South, expanded their operations
mostly in lumber and
Western
lumber
situation
putting
plywood,
markets.
them
by the end
So
where most of the
existed
to
companies that produce both pulp
and
of
concentrated
the
and
Northwest,
the
the
to
closer
1950's
major
forest
paper
and
a
products
solid
products had operations in both the Northwest and
The South specialized in pulp
other
any
and
the
wood
South.
paper and the Northwest in
lumber and plywood.
Theoretical Analysis of Integration into Pulp and Paper
Based
on
Markusen' s
theory
of pro fit cycle,
the
1umber
industry was in a peri od of decl ine dur ing the 1950's, because
declini ng.
employment was steadil y
improvements in the
basic
1963, to acc ount for
j ob
techniques.
by the
high
Part
i.e.,
found no techni cal
mill i ng ope ration between 1947 and
loss th roug h
changes
in
pr oduction
of this emplo ymen t l oss was probabl y caused
dropout
employment 1oss
Mead
was
rate
due
of
to
sma 11
inten si fication
where production is reorganized
without any major technical
firms.
to
innovations.
be
Howev er
some
of pro duction,
more
e ffi cient
Unfortunately I have
2. Herbert
Northrup, The Negro
in the
Paper Industry,
Philadelphia: University of Pennsylvania Press, 1969.
67
of
documentation
no
except
this
that
unions
well
were
established in the Northwest by 1954. Generally as unions keep
pressure
on
wages
effectively
and
organized
and
plywood,
although
output was
growing
due
lumber
people were producing more
1 umber
in
Hence
employers find ways to use fewer employees.
pla11ts,
new
fewer
steadily,
to intensificati on of
the production process.
Markusen's
theory
would employ strategies to
decl i ne,
managers
profits.
Us ual 1y this
sense,
not form.
did
to
firms did ex hibit specif ic
not compete on the basis
the
c ontinued
1 hey
fought
Firms did
the
role
di sti nqui shi ng
of
Then,
themselves
for
market
price
shares
takers in
by compe ting
At
most
to
this
became crucial
in
the compan ies as industry leaders, because
0f
strategies
and maintain pr of itabi 1ity.
increased their market share within
because
the
were so volatile, prices changed
busi ness
thei r abi 1ity to maneuver
these firms
others
in
demand
acquire exiE sting firms a nd by building new capacity.
point
a
t he large
because if they had
Because supply and
fou nd
with
differentiate
oligopoly-like behavior.
indu stry
firms
anc
markets.
in the pure
during the fifties,
of price
would have fol lowed suit
lumber and F lywood
product
However,
homogeneous commodity.
rapidly
oligopolies,
This was mainly due to
inabilit y
t he
and
their
independen t mills, (for reasons cited in chapter
existence of
1),
bolster
happen through the form ation of
lumber and plywood,
In
oligopolies.
would
of
period
a
would predict that during
Fi rst
the indus try.
of the profits they made from doi ng
so,
they
68
were
able
to
expand
into
pulp and paper in an
effort
to
increase profits.
The 1960's--Diversification
By the early 1960's,
there
was
both lumb er and plywood, and
cut prices to keep
Because o f
the
oper ating
0f
length
firms
ha d
their
Accordingly,
during
ruthlessly
(Se e
up.
which
i s fair to call
it
low
relatively
managers must
in
ca pacity
Although they were not
squeeze".
p aper.
suffered as firms
time
experienc ed reduced prof it s,
and
pul p
particularly i n paper,
profits,
tremendous overcapacity in
Graph
these
th is
3)
firms
a "profit
actually losing money, these
ret urns
on
equity.
Corporate
increase returns i n order t o attrac t investment
stock, which in
expansion and growth.
turn
g ives them funds f or continued
Consequently,
these
managers
usually
are forced to consider short-term strategies to increase their
price/earnings ratios.
The major strategy of the forest products companies
increase their earnin gs by vertically integrating.
for this was to provi de a
and pape r operations.
was in
acqui re
to
The reason
market for the output of their pulp
With price competition as severe as
it
t he early sixt ies, it certainly made sense for firms to
major
operatin g
marke ts,
capacity.
enhance control
The
was
basic
assuring that
they
could
In this way corporations
maintain
attempted
to
over their economic environment.
method
of expansion
was
through
acquisition.
69
Theories of market structure and economic per formance cite two
Fi rst,
reasons why firms choose to expand by acquisi tion.
plant becomes avail ab le at a reasonable price,
another firm's
acqui ri ng it
may
be
cheape r
than
Second, acqui ring existing pl ants
seri ous
already
situation
of
do es
the valu e of
pulp
would
In
and
undoubtedly
and
paper,
of
converti ng),
expansion on the
depressed
lumber and plywood
new
h ave ex acerbated the e xisting problem of
case
plant.
not
making their purchase pri ces reasonable;
the
new
contribute to an
3
For
forest
over capacity.
the profi t squeez e
both
a
building
products compa nies,
firms,
if
paper
capacity
overcapacity.
side
(like
paper
a cquisition was a quick and easy way to guarantee
markets.
Although Weyerhauser, Geo rgia
continued
to
acquire
turned to vertically
Pacific,
1umber
Boise
and plywood mills,
integ rating
of the tremendous varie ty
and
of
products
in
focus
the
on the paper side.
end
Ca scade
Be cause
paper,
many
companies sought to car ve o ut market niches in specialty paper
products.
Forbes
Magaz ine
"production-minded pape rmen
put more emphasis on sa Il
es
your
customers
4
markets".
This
find
new
stratE gy
suggested
plagued
and
uses
was
91,
that
paper
especially
"You have to hel p
and
create
attractive,
Market Structure
Scherer, Industrial
3. F.M.
Performance Rand McNally, Chicago, 1980.
4. Forbes Magazine, vol.
1962
with overcapacity s houl d
marketing.
for
in
new
si nce
and Economic
No. 1, January 1, 1963, p.
52
70
S4c o t t P Per an d Kimberly-Clark
had
continued
profi t
to
earn
siqueez e.
marke tin
were
the
only companies that
good profits during
Scott
Paper
had
done
this
so by
five-year
effectively
and distributing their well-known trademarked "Scott
Tissu e". Their
market niche kept earnings high even though the
commo dity part
of the industry suffered from overcapacity.
Consequently, during the 1960's there was a strong expansion
by
forest
products
facilities.
firms
Weyerhauser
Georgia-Pacific
into
paper
product
converting
the
packaging
business.
entered
acquired
corrugated
container
grocery bNag and sack plant, and several
operations.
office
other specialty
Boise Cascade acquired an envelope
facility and soon
after,
products.
Boise
plants,
a
paper
manufacturing
began to manufacture and distribute
also
got into composite
cans
and
lumber and plywood production, vertical integration
had
packaging ventures.
In
been going on
Cascade
had
for
some
been
ditstribution network.
time.
expanding
Georgia
Pacific
their
building
and
Boise
products
By 1965, Georgia Pacific had 84 retail
distribution centers where they sold their own products, along
with
building materials of other companies.
Cascade built a distribution
both
retail
lumber
network
yards and
in
wholesale
Likewise,
Boise
the West, including
warehouses.
strategy gave the companies a guaranteed market
for
some
their otrtput, and also got them into the profitable retail
This
of
and
wholesale business.
71
As the major
companies
acquired new enterprises to capture
opportunities for increased
profits,
they
also continued to
expand their basic pulp and paper capacity.
1960's ,I they concentrated
existi ng faciliti es,
Becaus e of their
major
on
making
firms cont inued to acquire timberlands.
the
resource
Paci fic and Weyer hauser. So Boise
added substantial ly to
their
timber
their
pulp
and
paper
increasi ngl y to the South where
plentiful.
1966. Subsequen
with Southern Natural Resource
complex in
assets
Louisiana.
of
Stu mpage prices
lumber
and
Thus, particularly
compan ies
operations,
timberlands
were
turned
cheap
and
Cascade mad. its first purchase of southern
Boise
timberland in
Plywood
Between 1959
holdings.
in the Nor thwest, where most of the
rising
Boise
Georgia
U .S.
and
p1 ywoo d productio n was s till concentrated.
for
of
base
Cascase
all of the
Neither
and 19 66, U.S. P1ywood t ripled their acreage.
were
a cquisitions.
major
depende nce on the timber resource
Cascad e nor U.S. Plywood had
early
and modernization of
expansion
whi le still
During the
Southern
(In 1983
Natural
Sy,
they formed a joint venture
to develop a
Bo ise
pulp
Cascade
Reso urces,
and
acquir ed
solidifying
paper
the
their
southern operations)
At
the
same
Weyerhauser,
severa 1 of the
time,
Boise
Cascade,
and
companies,
Champion
acquired timberland or cutting rights a broad.
the most aggressive in this st rategy.
land or were involved in
Venezuela,
Guatemala,
joint
ventures
Japan,
France,
By
International
Weyerhauser was
1966,
in
especially
they
Canada,
South
owned
Belgium,
Africa
and
72
Southeast Asia.
Champion
International
acquired substantial
holdings i n Brazil. Western Canada, with a tremendous softwood
resource,
became
corporatio ns.
a
prime
area
expansion of
for
American
Several firms located pu lp, paper and
sawmill
operations in Canada during the 1960's.
The
motivation
to
acquire
t imberlands in the
South
primarily to feed the
pulping
o perations
T he lumber
and plywood
there.
industries had staye d pretty much concen trated in
the Northwest, because that was the only place where
which was the fastest growing
could
industry,
be
co mponent
produced.
the
of
Finally,
in
plywood,
so lid
1963,
Pacific built the first Southern Pine plywood mill
Southern
remarked
that
Pine
trees.
Several
breakthroug h in
this
production marked the
entry
of
my
Southern
wood
Georgi a
in Fordyce,
Arkansas. They had developed mach inery to continously peel
smaller
was
the
int erviewees
pine
plywood
of the corporate forest products
firms with solid wood operations into the South.
Because of the growing labor costs due
the Northwest and
the
to
unionization
in
continually rising stumpage costs, the
forest products firms were motivated to develop the technology
which could produce
Pine.
Georgia
plywood
Pacific
breakthrough, but because
timber
in
the
South,
production quickly.
not
of
they
from the less expensive Southern
only
made
the
technological
their large blocks of fee-owned
were
able
to
expand
plywood
In fact, by 1970 they dominated enough of
the Southern Pine plywood production to have the Federal Trade
73
Commission successfully prosecute them
market.
for
monopolizing
As a settlement, Georgia Pacific agreed to
20% of their assets into a
new
Eventually other companies
gained
company,
spin
Louisiana
access
the
off
Pacific.
to the technology,
and there was steady growth in Southern plywood production.
were
companies
during
diversifying
also
forest
integ ration,
vertical
strict
Besides
the
distinction between diversifying and vertical
to
diversification
pape r
in
slightly fuzzy, especially
1960's.
The
integration
converting.
mean involving the firm
products
in
is
I consider
a
different
sector with different production met hods and competitors, even
though the sector may be related to their
The best
the
commodity.
example of related diversi fication is expansion into
chemical
business.
The pulping process produces
chemicals which can be processed
Pulping
primary
also
an d
sold
requires chemicals in the
Forest product companies
both
developed
for
and
expansion
other
uses.
production
pro cess
chemicals
for thei r
own use in pulping and for sale to others.
a form of product line
several
Although initially
verti cal
integration,
participation in this industry meant new faci 1ities, processes
and competitors.
It a lso eventually
further expand into un related
etc.
field
In Georgia
drew
manufacture
them
of
Paci fic's
into
areas
led
some
like
companies
to
polyv inylchorides,
case, exp ansion into the chemical
other
pol ystyrene
prof itable
are as
insu lation
and
Geographically this meant acquiring
New Jersey, Ohio, and Houston,
like
the
polymers.
or building facilities in
Texas.
74
Forest products companies also
fields.
International
Paper
Champion
International
went
Pacific
acquired
Weyerhauser,
foreign
more
ventures
Weyerhauser
has
diversified
went
into
gypsum
than
any
and
l.and
become
one
into
into
unrelated
medical
supplies;
furniture;
and
manufacturing
other
facilities.
company,
expanded
into
Since
1968,
development.
of
the
largest
housing
commercial development companies in the country.
real estate development division had
subsidiary
and
corporation.
become
They
had
also
entered
the
and
By 1984, its
a
included a mortgage company
Georgia
wholly
and
an
owned
annuity
wholesale nursery
business and salmon ranching.
Historically
products
a
financially conservative
companies
acquisitions.
industry,
issued preferred stock to
Finally
forest
finance
their
during the sixties, they began to take
5
on long
debt
is
term debt to finance continued expansion.
a
projections
common
of
method
of
financing
Long-term
expansion
continually increasing sales give
firms
when
the
projected ability to pay off their debt.
The economy experienced
steady
growth
during the sixties,
and the strategies of vertical integration and diversification
began to pay off.
Profits began to increase
price/earnings ratios went
up.
The demand for packaging and
publishing exploded in the U.S. and abroad.
5. Forbes, vol.
and, thus, their
As
a result, all
91, January 1, 1963.
75
the major companies had record sales
1968, and 1969. In 1969,
Forbes
and
earnings
Magazine
1967,
in
predict ing
was
a
possible resource shortage in anticipation of continued growth
in the demand for paper and wood in the seventies.
Spatial Manifestations of Vertical
The
co ncentration
of
the
Integration
forest
products
industry
verti cal integration dispersed production in two ways.
existing
paper
con version
products
companies
were
plants
ususally
acquired
by
located
near
centers and marke ts, mainly in the Northeast. Often
companies did
bui ld new facilities,
paper
operati ons
1960's,
many
and
paper
to
both
to
the
the eastern market s.
converting
California to take advantage
of
when
facilities
were
and
During
the
built
located
converting plants were
Second, the production of wood-based
demanded
in
the
new timberlands.
commodit ies
integrated for est
This
meant
product
Northwest,
that
companies
by
the
1970
had
less
all
there.
continually
Since stumpage pri ces were
North west, companies sought out
Southern timbe r.
in
growing western market.
the
but
paper
the
pul p
the
few
forest
population
The pulp to supply these facilities came from
very
First,
tended to be in the
they
South because of their accessibility
the
via
rising
expensive
the
c0 nsiderable
major
land
holdings in the South and the Northwest. However, the southern
timber had little impact on the lumber and plywood
industries
until the technological breakthrough that allowed them to make
plywood from Southern Pine.
76
Finally, labor must have had
a
considerable
influence
on
location decisions, but I have no documentation on this period
regarding
the importance of labor cost differentials
the two regions.
were concerned
labor costs.
However, we can assume that
companies
The
that
about stumpage costs were also concerned about
Decreasing the cost of labor or stumpage has the
same effect of increasing the return on equity (all
equal).
between
else being
following chart shows the relative importance of
the costs of production in lumber and plywood.
Percentage of Costs
Factor of Production
Lumber
Timber
Labor
Materials
Energy
Fixed
Plywood
72%
15
6
4
3
Total
46%
22
17
9
6
100%
100%
Obviously timber costs are
the
labor is second and must have
location decisions,
been
most
important factor, but
germaine
to
the
firms'
espec ially when wages were half as much in
the South as they were in the Northwest. Most importantly, the
Northwest was heavily uni onized and the South was not.
costs were more a part
of
Labor
plywood production than of lumber,
which partly explains why Georgia
Pacific
was
motivated
to
produce plywood in the South.
Profit cycle theory predicts that
will
increasing
concentration
generally slow dispersion of production, but the rate
is
dependent
on
industry.
"Sectors highly sensitive to natural resource costs
the
"relative"
degree
of
oligopoly
in
the
77
are
likely
to
displ ay
greater
growth
volatility.
Their
patterns
both
of regional dispersion may show greater unevenness,
6
spatially and
temporally."
These
tendencies
did
overconcentrate the
i ndustry in the Northwest, because it was
there that the compani es owned
industry was centered.
South,
firms
some
Pacific's monopoly,
companies
timberlands
Later when plywood
relocated
most of
remained
and
there;
the
was
the
made
because
other
of
Therefore,
differences
the
cost
the
Georgia
cutting
their
timber during a time o f rising stumpage prices, the
make a profit on
in
major forest products
in the Northwest. By
operations could still
plywood
lumber
*were
own
Northwest
plywood.
and
mitigated
by
other
on
their
events.
However,
continued
expans ion
Northwest timberlands.
the cutover land
in
put
more
demand
Even though companies were
the
that it takes to grow a
given the 40 - 60 years
Northwest,
Doug las Fir to usable size meant they
were cutting faster than the
land
could
replenish.
assured of future supply many of them began
resources elsewhere,
cheaper and the
lumber
and
especial ly in
replacement
while concentrating
beginning to disperse,
6. Markusen, p.
the
acquiring
South
in
the
West,
be
timber
Thus,
especially in
land
ownership
albeit
unevenly, to the South.
and
To
where land was
growth cycle was shorter.
producti on
plywood,
replanting
production
were
4.
78
M"," EASU F? ES
ANNUAL PR OFITABI LITY
Fcr.2-
430
P rodu
c=± %C .- ,rpir
ie
2z
:26
24
20
Lii
i i
r
5
14
.O
1 21 0
4
2
19 73i
7
1 92
1 , 79
197
174
14
13
-I-
12
Cl
10 9-r
rrIE,
I
4
21 ---7
1981
9197
Weyerhauser 0
Georgia-Pacific 4-
Champion
O
1
Boise-Cascade
84
&
79
The 1970's
After pr ofitable years in 1967, 1968, and 1969,
products
companies
expansion and growth.
forest
economic
continued
anticipating
were
the
Their optimism was due to ri sing demand
in paper products and packaging and the increasing demand
"baby
housing from the
buying
years.
growth,
the
However,
instead
starts
housing
the
depressed
erratic
conclusion;
of
the
predicted
(see graph 3).
were
down.
way
For
This
1umber and plywood markets.
homebuilding took off, but pulp
These
approaching their home
for est products indu stry experienced
coaster" effect o n earnings.
1971,
now
boomers",
p rofits
"The
real
seem
and
to
paper
of
a
next
reasons
why
the
profits
year,
losses.
Piore and
Sabel's
the
conglomeration
could
not
For those risks arose not
distributed across
7
but from shocks to the economy as a whole."
demand,
in
suffered
from business accidents, randomly
Besides wildly fluctuating
"roller
example
movement... was th at the risks it sought to contain
be reduced throug h diversification.
steady
predictably
The
confirm
shortcomi ng
for
there
of the forest
were
products
declined during the 1970's. As discussed above, all
markets,
structural
companies
the
major
firms had expanded with breakneck speed, diversifying into
7. Piore and Sabel, p.
197
80
many
areas, some of which had not proved to be profit
8
centers.
Boise Cascade suffered a 52% decline
in their
average five year earnings within two years;
of
the
most
profitable
Boise-Cascade
exposed
was
diversified operations,
timber.
companies
So when prices of
during
through
and
a
they had been one
the 1960's.
high
widely
debt,
percentage
low
But
of fee-owned
rose sharply in the late
stumpage
sixties and a homebuilding recession hit
in
1970
and
1971,
their profits plummeted.
In lumber and plywood,
the
large
firms
Furthermore, 1arge plants were easie r to
production.
a
plants.
anal yst,
Industry
struc ture
corpo rate
centralized
problem peculiar
Wal ter
decisions on
Mea d
log
thre e basic
by individuals.
There
human
which ulti matel y affect
the operation.
are
not
These peopl e are
The ability to supervise
these
falls as the le vel of output
lumber manufact uring
and
ot her
8. Forbes, col.
small
a production
Because of
is
steps,
processed,
ea ch involving
the profi tability
9eneral 1y
product
increases.
plants
but
enterpri ses as
Mead further
99, #1, p.
veneer,
well,
the
of
owners.
l ine decision makers
the firm is a large one and consists n0 t only
paper,
many
cites
which
manage
most pro fi tabl e way t o cut the log are made
the
judgment,
than
to lumber and p 1ywood companies.
the unique characteristics of eac h
"If
1arge
built
of economies of scale in
plants in the West to take advantage
from
had
of
plywood,
then
states,
several
pulp and
communication
150
81
between the
makers
peak
is
coordinator
further
considerations
and
9
removed."
suggest
production-line
He
that
no
decision
concludes, "The
obvious
above
economies
of
large-scale operations are avai lable to offset the deductively
10
indicated diseconomies of multi -plant operations."
In the
final analysis,
Mead backs up this statement with engineering
data on optimum plant size and concludes "...that the
firm size is
not multi-plant,
b ut
rather
that the single plant of optimu m size,
single
in
turn,
optimum
plant,
is
and
not likely
11
to exceed 140,000 board feet pe r eight-hour shift."
During
events
seventies, there were two
the
important
exogenous
profoundly influenced the structure
which
products industry.
One was
increasing
of
Canadian
forest
competition
and the other was the ascend ance of the environmental movement
in the Pacific Northwest. As graph 4 shows,
Canadian
during the 1970's . Ninety-four percent of
increased
timberland is publicly owned .
In
addition,
reforestation.
much
less
the
As a result,
expensive
transportation costs.
than
Canadian
The government sells it to mill
owners at extremely low pric es to ensure employment
areas.
imports
government
Canadian
domestic
assumes
lumber
10.
Ibid.
11.
Ibid.
p.
of
and plywood is
even
the
after
currency
devaluation has added to the Canadians' cost advantage.
9. Mead,
rural
the cost
lumber,
Since the mid-seventies,
in
In
a
24
82
and
competitive industry like lumber
plywood,
product has forced American firms to
produce
this low cost
as
cheaply
as
possible.
The second exogenous event was the increased activity of the
environmental
in
movement
mid-seventies.
the
Environmental ists were successful in getting the use of public
timberlands
areas.
reevaluated
to
consider
thousands of acres of timber,
wilderness
resulted in a moratorium for
activity
This political
additional
particularly
action restricted the supply of
public
in
Oregon.
timber
This
available
to
forest products companies, eventually sparking a bidding panic
in 1978 and 1979 which
drastically
increased
the
stumpage in the Northwest. Although there is no
document this,
price
of
way to easily
most observers agreed that the large companies
had already cut much of
their
12
caught in the price spiral.
fee-owned timber and many were
These two major factors put cost pressure on the industry at
a time when demand was fluctuating wildly.
went out of business or
firms
were
the
profitabili lty.
As
time,
scale
operations
exogenous
12.
back
events
Interviews:
fluctuations
in
them
like
Canadian
firms
The
large
factors
during
demand affected
I have shown, their
make
small
dramatically.
particularly susceptib le to cost
as
this
cut
Many
their
multi-plant,
particularly
competition
large
vulnerable
and
to
reduced
Ehinger, Scott, Hampton, Ewert, Schallau.
83
supply.
The result was that many of the Northwest plants were
only marginally profitable.
Many
and 1982, there was
decline in lumber mil ls and a 24%
a
36%
Between 1976
were closing.
decline in plywood mills in Oregon.
From evidence I have accumulated on the Northwest lumber and
plywood industry, there appears to be some other factors which
expl ai n
fi rms
major
why
First of a 1l,
Northwest
are
it
important variable in th e
is
1970's,
particul arl y
have alwa ys existed,
one can not argue that 1ower
for
cruci al
obv ious
that
costs
in
the
were
an
affecting. firms' behaviors.
differ e nc es between the South and the Northwest
However, cost
reason
deindustr ializing
labor
and stumpage.
to
the
South. Costs
became
to profitabilit y when exog eneou s factors imping ed
corporate pri ce/earni ngs rati os.
When
favo r
on
they were in a profit
squeeze situation, they abandoned t hei r marginally
Northwest mills in
So
costs in t he South were th e sole
moving
production
in
prof itabl e
of integrat ed lower cost faci 1ities
in the South. Jay O'Laug hl in is just c ompleting a study on the
1ocati on
of
southern
products companies.
for
mills
He says that the
by
the
where the firms
already
had
pulp and paper
major
number one reason
to locate a p1ywood pla nt was the
deci ding
especiall y in
pl ywo od
need
forest
ci ted
to
be
existing production facilities,
13
Yet another e xoge neous ev ent
increased the cost benef its of produci ng lumber and plywood in
the South. The fastest growing homebuilding market in the U.S.
13.
Interview,
O'Laughlin.
84.
has
been
the Sunbelt States for the last 10
giving goods
produced
in
the
South
a
years,
cost
thereby
advantage
in
transportation to the major markets.
Another
crucial
factor was the role
labor.
of
Although
these costs were much less in the South, labor did not seem to
be a cr itical
sugge st s
factor
that
when
profi tability and
before
the
mid-seventi es.
experiencing
firms were
cost competitio n in
My research
problems
with
the 197 0's, they wanted
to flee the unions as much as they wanted to t ake advantage of
l ower
wages.
companies
Unions made it
to
In
his
a
lower
for
maximum
strategy":
standard
Pacific,
was
he
of
told
millworkers
living
to
or
to
they
would
14
Southeast.
the
Wey erhauser and Boise Cascade are a sking the unions
in the Northwe st for
operating.
products
President Harry Merlo was
continue to lo se forest products jobs
Currently,
forest
1983, one company, Louisian a
Southern
either accept
for
operations
ou tr ight union busting.
engaged in
applying
their
maneuver
flexibility.
diff icult
In
"right-to-work "
major
wage
contrast,
laws
which
concessions
every
to
Souther n
effectively
keep
them
state
has
undermine
many
organizing attempts.
Most
of
the
major
productivity gains since
plywood industry,
in
companies
the
been
mid-seventies.
particular,
14. Peter Damman, "Anatomy of
6-12, 1985
have
a
had
emphasizing
The lumber and
a
production process
Strike",
In These Times. Feb
85
which virtually had not changed for 50 years.
Finally,
cost
factors and union troubles seem to have prompted companies
invest in
numerically
devices.
Bluestone and
introduced, not
controlled
Harrison
where
it
but in low wage regions
example,
in
1984,
facility in McComb,
Crown
Northwest. Two
and laser cutting
contend
that technology is
there is no unionization.
Zellerbach
Arkansas
opened
plywood
which only requires five people
to
be some disagreement about whether
closings are really affecting capacity in the
interviewees
said
that
the
maintained the same capacity, but in larger
increased
a new
For
including management.
Finally, there seems
the current mill
machines
can save money on high cost labor,
where
to run the entire mill,
to
efficiency
intensification of
both
the
Northwest still
plants,
and
through
production
technology
15
processes.
This
had
and
issue
remains a question for further research.
In
summary,
to explain the regional
between the Northwest and the South from
to see how the structure of the
prior
to
1970.
In
companies employed
Lumber
and
plywood
an
attempt
several
manufacturing of pulp and paper.
production
1970 to 1980, we had
to maintain
first
This
strategy, because both industries used
15. Interviews:
in
industry changed in the years
strategies
companies
shift
at
profitability,
different
expanded
proved
wood
as
a
times.
into
the
successful
their
major
Ewert, Hampton, Goetz.
86
resource, and pulp and
paper
and
However,
wood
products.
considera bly as a
result ,
did not keep
up
of
and
products
Next
profits
we
lumber
all
these
of
commoditi es sta y ed
and plywood.
find
the
A lthough
ma jor forest p roducts
and
conce ntrated:
fiel ds.
non-related
strategies, produc tion of
lumber and plyw 0od in the
i mprove
not
commodities increased, profits
companies di ver s ifying into related
Through
did
so companies moved vertical ly into
packaging and d istri buti o n
demand for most
countercyclical to 1umber
were
the
basic
pulp and paper in the South,
Northwest.
increasingl y,
But
the
major com pani es had timbe r holdings and pla nts in both regions
and throughout the U.S. The companies took on tremendous
debt
to finance this continued expansion.
When
the
macroeconomic
inflation, oil
shocks
of
the
1970's hit
supply embargo, and rising interest rates),
forest products companies were ill-prepared.
products companies were highly
and
had
many
(e.g.
large,
leveraged,
inefficient,
the
The major forest
very
diversified,
multi-pla nt
and
lumber
plywood operations, especially in the Northwest . Their prof its
went up one year and dropped drastically
the
most
Then
events
of
the companies kept expanding.
forced
increasing
them
to
competition
be
from
more
Howe ver
next.
exogen ous
two
cost-consci ous.
Canada
which
increasing share of the market for lumber
and
has
due
to wilderness redesignation.
supply was crucial, because these
same
large
si nce
plywood
The
an
taken
1975. The other was a decline in the supply of timber
Northwest
was
One
in
decline
companies
the
in
had
87
been overcutting their Northwest timberland and were forced to
turn to public sale when the prices rose.
The inefficient, multi-plant
were
modernized,
but
still
operations
were
not
in
the
very
Northwest
competitive.
Intensification and technological changes helped some, but the
strength of the unions in the Northwest
flexibility.
in
the
the
firms'
Also the fastest growing market in the U.S.
South,
advantages.
hindered
giving Southern
Consequently,
began closing
plants
was
transportation
as a cost cutting
cost
they
measure,
their Northwest plants, in favor of integrating
their lumber and plywood operations with the
pulp
and
paper
facilities in the South. Markusen states
"...if
oligopolies
retard
decentralization
in
earlier stages, they may accelerate the process in
later periods.
Oligopolized sectors as well as
competitive ones will be intensely interested in
cutting
costs,
increasing
productivity,
and
tightening control over labor in a profit-sqeeze
situation...Corporations will
thus
continue
to
disperse production to regions where unions are
absent and the business climate more favorable... If
this occurs hand in hand with cuts in output or with
significant new plant scale and technology16 the
aggregate spatial outcome will be relocation."
This is exactly
products
what
companies
overconcentrating
has
during
lumber
happened
the
and
with
1970's
plywood
the
and
major
1980's.
production
Northwest, even after plywood could be produced in the
the
forest
products
companies
began
to
forest
relocate
After
in
the
South,
their
production with a vengence.
16.
Markusen,
p.
47
88
CHAPTER FOUR
CONCLUSION AND RECOMMENDATIONS
In concluding
summarize
analyze
the
how
this
thesis
I
will
do
findings of the previous
the structural
three
changes in
industry have affected communities
in
three
the
the
things:
1)
chapters,
2)
forest
Northwest, and 3)
recommend actions for the State of Oregon to help
dependent
on
the
forest
products
products
industry
communities
deal with
the
ecomomic problems they have experienced.
First of all,
the lumber
and
plywood
industry
which
had
dominated the economy of the Pacific Northwest for 60 years is
experiencin g a region a1 shift in production from the Northwe st
to the Sout h. Between 1970 and 1980,
national
the lumber and plywoo d industry grew by 10%.
of lumber a nd plywood grew
by
15%
and
employment
Total
53%,
producti on
respectively
However, th e growth has been very uneven between regions.
pulp and pa per and in lumber and plywood,
period grew four time s faster in
in
1
In
employment for th is
the South than it did in the
Northwest. Finally in the 1980's, production of plywood in the
South surpassed production in the Northwest.
This regional shift is a
long
and complex story of change:
changes in industry structure, product emphasis, international
competition,
labor and technology, and markets and
politics.
1. Production figures were between 1970 and 1984.
89
The
1950's.
the
during
concentrate
companies also manufactur ed
industry
lumber
competitive
historically
pulp
By 1959, th e
began
large
lumber
paper products.
and
to
Since
1960, these large forest products companies (e g. Weyerhauser,
Champion
Georgia-Pacific,
price/earnings ratios.
maintai n
and
Their corporate struct ure became
more
attempt
to
usua l ly located in a
with corpora te headquarters
centralized,
facilities located in rural areas.
productio n
major city and
Northwest, lumber and plywood productio n was organized
In the
in
large muIti-plant operations which Mead demonstrated
not
the most efficient method of production.
As
dispersed
they
Pulp and paper
country.
Lumber and
pulpwood.
concentrated
Southern
plywood
other
to
in
were
built
new
parts of
the
firms, merged or
production
plentiful
and
cheap
other
acquired
companies
plants,
the
and
profits
an
in
diversification
integration
vertical
of
strategie s
adopted
have
Boise Cascade)
and
International,
the South, because
made
Pine
excellent
in the Northwest
concentrated
because the large, straight Douglas Fir was ideally suited for
lumber and plywood.
In 1963,
Georgia-Pacific developed a machine that could make
plywood
from
because
of
supply of
the
the
smaller
cheaper
Southern
Pine
tree.
southern timber and
the
Gradually
dwindling
privately-owned forest lands in the West, companies
began buying
southern timber and expanding lumber and plywood
production in the South.
90
In the
competition
1970's,
shocks
costs, and macroeconomic
of the large forest
Given their
cutover
were
on t he profits
Th
comp ani es were
They
accomplish.
also
well-established
in
unions
this was a
Northwest
the
previo usl y
had
In
Coincidental ly,
and
population
in terms
cost
reason transportation became another important
of
gro wing
For
1970's.
homebuilding market in the U.S. during the
more
effic ient
fastest
South was the
the
income,
addit ion,
it
made
difficult to intensify production and introduc e new,
numerically controlled machines.
and
Northwest
timber.
to buy expensive public
rati os
price/ earnings
of their low cost timber in the
most
forced
wreaked havo
keep
to
rising stumpage
multi-plant operat ions,
large,
to
task
difficult
Canada,
companies.
products
forced to cut costs in order
high.
from
this
var iable
between the two regions.
Because of their size and structure, many of the large firms
were unable to respond
the
strategy of
major
to
changing
the
as
cyclical
as
Simultaneousl y, they integrated lumber
production with their e xisting
the South.
Largely for
main
firms was to emphasize their pulp and
paper operations which were not
plywood.
The
market.
these
pulp
and
reasons,
lumber
and
and
plywood
paper operations in
they
began
to
close
their large Northwest p 1ants.
Consequent ly, the interaction
changes
in
industry
structure,
all
of
these elements,
corporate
increase pro fitability (P/E ratios) ,
strategies
e.g.
to
and exogenous events 1 i ke
91
recessions and Canadian competition, resulted in the companies
pursuing technological
to
Eventually these
cut costs.
help
and intensifying production
innovation
resulted in a major restructuring of the
to
industry: relocating production
measures
cost-cutting
and
lumber
the
plywood
non-union
low-cost,
South.
restructuring
To understand how the
communities in
production has affected rural
is important to
development
of
communiti es.
these
the Northwest, it
influenc ed
has
industry
the
how
see
lumber and plywood
of
of
Many
the
the
rural
communities 0 f Oregon and Washingt on began as timber towns
the turn of the century and have remai ned
as their maj 0 r source of
mills
were
concentrated
in
were
operations
and
owned
locally
the
large
th e
by
the
industry
these local
of
m any
of
most
As the
operated.
fifties,
bought
dependent on timber
Origi nally,
income.
at
lumber
companies,
e.g.
Weyerhauser, Georgia Pacific, etc.
Absentee ownership removed what little
been a cyclical industry,
expected
people
events.
were
slowdowns in
and
Lumber
had had over their economy.
and
plywo od
owned,
When mill s were loca 1ly
production.
Of ten
mill
and
once
open as long as they could,
a
period
had
always
mill clo su res and slowdowns were
closer to the decisions
would reopen after
control the community
of
i nvol vi ng
comm unity
closing s
or
owners would keep mill s
time.
cl osed
For
mills
us ual 1y
example,
John
Hampton, president of Hampton Lumber in Wi 11 ami na, Oregon said
92
he has
been
losing
But the
money since the 1980 recession.
combination of working closely with his unionized employees to
having reserves left
and
operations
run extremely efficient
from the late seventies when business was booming, has enabled
the
by
end
of
Champion
to
example
this
Contrast
1985.
hopes to be making money
Hampton
him to keep his mills open.
Connecticut.
International, who is headquartered in Stamford,
Western
In February, 1985, they closed five plywood plants in
Oregon
and
reorganize the solid
side of their company, integrating
wood
The
it with their southern pulp and paper facilities.
is control.
restructure
When large corporations
the community has little or no control over their
Mark usen gives
indust ry
reaso ns
four
dominat e regio nal
preoccupation of
starves the rest
which could
entrep reneurs
prov ide
decisions.
the
usually paying
if they are unioniz ed,
and
from locating there, 2) the
industry
of the
production,
an oligopolis tic
busi nes s climate,
especi all y
thus discoura gi ng other
havi ng
why
issue
production is problematic: 1)
indust ry dominate s the 1ocal
relatively high wages,
to
plans
announcing
California after
Northern
w ith
community
al ternative
0f
i ndustry
dominant
the
innovative
economic
lea dership
activity,
3) the
dominant indu stry monopo lizes most of the capital avail able in
the
communit y
leadership
a nd
4)
the
d ist orts the local
pr omi nance
pol itical
dependent com mun ities are part ic u arl y
events, because
they
relatively unskilled.
are
of
the
culture.
susceptible
co rporate
The
to
timber
these
so remote and their labor force is
Therefore,
they
are
not
attractive
93
locations for other business opportunities.
Because of this
control
over their
locally-owned mill
jobs.
If
By
fate.
communities have little
From a regi 0 nal.
closes, 50 to 200
Inter nati onal
Champio n
people lose their
mill
dependent situation
people
closes
1ose
may
five
the ir
mi lls, 2,0 00
case permanently,
jobs, in this
a
if
perspective,
unless
t he
sold and the new o wners hire back layed-off workers.
is
understandi ng
the
structure
structure of the companies, and their
a given region, a
accuracy
whether
pl anner
regi onal
there
of
industry,
the
configuration in
spatial
can
Profit cycle theory can predict
how
a
with
predict
be dis l ocation in
m ay
economy an d their
1evel
some
future.
will
perform
region
the
economically, based on the maturi ty of the industries
regional
the
in
the
of ol igopol ization.
In light of the c onclusions reached in this thesis, Oregon's
current problems of severe displacement in the forest products
industry are not ea sily solved.
First of all,
that any financial
incentives provided by the
concessions given
by
unions
the
are
is
it
State
going
to
unlikely
or
bring
wage
the
industry back to Or egon in the near future.
One obvious step for the State to take is
help diversify the economies
Of course
this
is
to
find a way to
of timber dependent communities.
not easy for the reasons mentioned above;
most community resources
are
already dominated by the timber
industry, and if the large companies
returned,
it
would
be
94
However, research should
presence.
difficult to resist their
begin on other industries which could be developed in place of
wood-based but
new ways to
Another possibility for research is to find
etc.
to commercialization and
lead
would
use wood cellulose that
furniture
cabinets,
like
value-added,
more
are
which
products
on
emphasis
lumber and plywood with an
employment
future
possibly, with strategic planning, provide
for these communities.
caused
In other words, if corporate ownership has
many
of
the problems being experienced in the forest products industry
in
today, then it is time to reg ain
Oregon
resource through local ownership.
Many m ills and timbcrlands,
currently owned by the large companies wh o are
are
the South, are for sale in Oregon. Some
The
local entrepreneurs
State
the
entrepreneurs buy the mills.
most
options
exciting
relocating
bought by
being
as
well
to
help
Worke r buy-outs are one of
to
available
guarantee
There are already successful examples of
ownership.
in
provide financing to
should
encourage worker or management buy-outs as
local
the
of
control
local
plywood
co-ops in Oregon. B ut, there are many uns uccessful examples of
worker buy-outs in the
done
in
worke r
quid
the
Any State funded programs
pro quos from the new owners in
and marketing
succe ssful
the extensive research
however
could help avoid the previous pitfalls of
field
buy-outs.
U.S.,
plans.
the
form
should
of management
This requirement is crucial
plants in the Northwest will
niche s or new products in order to
require
because new
need to develop market
compete with plants in the
95
South.
My research assures me that there
are
lumber and plywood and new uses for wood.
future
be
always
cyclical.
way
of
future,
and
However, with good management
and creative marketing these industries can still
and a
for
Lumber and plywood
are unlikely to be high-growth industries in the
they will
markets
provide jobs
life for many small communities throughout the
Pacific Northwest.
96
INTERVIEWS
Keith Balter, Analyst, Softwood
Inc., Lexington, Massachusetts.
Resources,
Data
Resources
of
Peter
Cardillechio, Doctoral candidate, Department
Forestry and the Environment, Yale University, New Haven,
Connecti cut.
Michael Corey, Vice-President, Corporate Planning,
International, Stamford, Connecticut.
Paul
Champion
Ehinger, Forest Industry Consultant, Eugene, Oregon.
Ki rk Ewert,
Idaho
Vice-President,
Boise
Mr. Goetzl, Economist, National
Washington D.C.
John Hampton,
Oregon.
President,
Cascade
Boi se,
Corp.,
Forest Products As soci ati on,
Hampton
Portland,
Enterprises,
Wal ter Jarck, Director of Forest Resources, Georgia-Pacific,
Atlanta, Georgi a.
Stamford,
W.R.
Krishnamurthy, Analyst, ITT-Rayonier Corp.,
Connecti cut.
Southern
Lindberg,
Economist,
Carl
Association, New Orleans, Louisiana.
Forest
Products
Department
Jay O'Laughlin, Assistant Professor,
Science, Texas A. & M. University, College Station,
of Forest
Texas.
Con Schallau, Economist,
Experiment Station, U.S.D.A.,
Denny
Ameri ca,
Scott,
Economist,
Portland, Oregon.
Phil
Shapiro,
California.
Member,
Pacific Northwest
Corvallis, Oregon.
Internati onal
Plant
Closures
Range
Woodworkers
Project,
and
of
Oakl and,
97
BIBLIOGRAPHY
and Distribution
Anderson, Robert G., "Regional Production
Patterns of the Structural Panel Industry", American Plywood
Association, May, 1984.
Faces
Wood-Products
"Northwest
Patricia,
Bellew,
Restructuring Due to Import Competition," Wall Street Journal
September 11, 1984.
for
Analysis
Economic
Regional
Avron,
Bendavid,
1974.
Publishers,
Praeger
York:
Practitioners. New
New
Concentrations,
Economic
John, M.,
Blair,
Harcourt, Brace, Jovanovich, Inc., 1972.
York:
The
Harrison,
Bennett
and
Barry,
Bluestone,
Deindustrialization of America, New York: Basic Books, 1982.
Blum, Lawrence, "Cutting Japanese Tariffs is Major Task of
U.S. Wood Products Industry," Foreign Agriculture, September,
1984.
Boise Cascade Corp.,
February, 1982.
Boise Cascade Quarterly, Volume 10,
#1,
Sales
Industry Looking at
Boyd, Jo Ann, "Troubled Lumber
Overseas as Its Salvation", National Journal, April 9, 1983.
Timber and Men:
al.,
et.
P.,
Carosso, Vincent,
Weyerhauser Story, New York: Macmillan Company, 1963.
Champion International, Inc.,
1984 Annual Report,
The
Stamford,
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