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Sunday
Feb262012

Where the wood flows . . . and why

 

By Joe Rankin

Forests for Maine's Future writer

 

You're driving down a Maine highway, following a logging truck that's teetering and swaying with a load of logs, belching diesel fumes, and, because your cell phone fell down between the seats, you have time to speculate about where those logs might be going.

 

A paper mill? Small sawmill? Big sawmill? The log yard 20 miles ahead? Your mind is rolling over the possibilities when you see a loaded logging truck headed in the opposite direction.

 

No, it does not make sense. In fact there was a comic who had a routine about that very thing. He always got a laugh.

 

The two trucks are part of the “flow” of Maine wood. But even calling it a “flow” implies a sort of riverine uni-directionality at odds with reality. A better word might be “churning.” Like its big sister, capitalism, the flow of wood in Maine is seemingly chaotic, self-organizing, yet constantly changing.

 

Verso Paper Mill in Jay. (Photo: The Rankin File)About 90 percent of Maine is forested, the highest percentage of any state, and huge chunks of the northern part of the state are pretty much contiguous forest, where there is little development except for gravel logging roads. The state's abundant forests have been a mainstay of its economy since European settlers came here. Today Maine has more forest than a century ago.

 

Some 500,000 acres a year are harvested, give or take – pines, spruce, fir, maple, beech, birch, hemlock, oak, aspen, larch. In 2010 that came down to: 14.6 million green tons, according to the Maine Forest Service's 2010 Wood Processor report, the final word on such things. But the state's forest products industry processed 15.4 million green tons of wood.

 

It ends up that Maine is actually a net importer of wood. Mull that over. The most forested state in the nation imports a lot of wood.

 

So, how does wood move through the state, into and out of Maine? And why?

 

“There are all these little stories about why wood flows the way it flows. There is a lot of common sense to it if you can drill down enough to take a look at it. It's economics . . . to a large degree it's market driven.”” said Kenneth M. Laustsen, the state Forest Service's biometrician. He's the agency's chief number cruncher, creating charts, graphs and spreadsheets on everything from acres harvested to harvest volumes.

 

In other words, it's what's in demand, where the wood is cut, what local prices are versus prices elsewhere in the region, the country and around the globe. In addition it's where the mills are located. Where the roads go. It's geography. It's weather. It's fuel prices. It's the value of the product. It's often China, if not the butterfly flapping its wings in China. It's currency exchange rates. And, of course, the health of the national and global economy.

 

To a certain extent trying to make sense of the big picture is a headache waiting to happen. It's much easier to look at it on a smaller scale, said Lloyd Irland, a forest economist and president of The Irland Group, because “it's different for each category of wood.”

 

A look at the flow in some sectors:

  • Hardwood sawlogs. There are few hardwood sawlogs sawn in Maine. Most go out of state. Top quality logs travel overseas, where they're peeled into sheets of veneer as thin as a paper clip. Maine lost many hardwood sawmills when the furniture industry moved out in search of cheap labor and the dowel mills and turneries closed in the face of cheap imports. Pallet makers, who use lower quality sawlogs, are struggling because there isn't enough industry left in the northeast that uses pallets, said Irland.

  • Softwood sawlogs: Maine harvested 618 million board feet of softwood sawlogs in 2010 and sent 181 million of that out of state for processing, while importing another 57 million. Most of the raw softwood logs that leave Maine go to Quebec, where border mills are ideally located near the vast forests that produce the logs. However, the strong Canadian dollar has made it more difficult for those mills to compete and some have gone under.
  • Biomass: Once a waste product bark and sawdust today are a resource, used, along with virgin wood chips and chipped construction and demolition debris, to fuel electric generating stations. Maine has quite a few of these, the rest of the New England states few to none. Because of this Maine imports a lot of biomass chips. Ironically, much of the electricity produced is sold to states like Connecticut and Massachusetts as “green” or renewable power.
  • Pellets and firewood: Firewood use goes up and down with the price of other fuels. With fossil fuel prices up, firewood is more popular than ever. Pellets, originally a way to use waste from hardwood flooring, blossomed into a sector that grew to use virgin wood as well. Maine's forest products industry processed some 206,000 green tons of firewood and pellets in 2010, only slightly less than the state produced.

  • Pulpwood: Maine has fewer paper mills than a few years ago, but the ones still here need raw materials. Maine is a net importer of softwood and hardwood pulpwood, with some coming from as far away as the north shore of the St. Lawrence River, said Laustsen. It used to be that softwood pulpwood was king. Now Maine paper mills use twice the amount of hardwood pulp as softwood pulp.

 

Periodically, Maine's shipping of raw wood to other states and countries surfaces as a political issue.

 

A log concentration yard in Central Maine. (Photo: The Rankin File)Folks in the forest products industry still remember former Gov. Angus King saying that no tree should leave Maine with its bark on. It was a memorable quote, but . . .

 

“Given the international context, given we're not an island, total self sufficiency, processing every stick here is not possible,” said Irland. “We depend on shipping a lot of our product somewhere else. A lot of the debate about us shipping wood out ignores the fact that we depend on a lot of wood coming in.”

In fact, say the experts, Maine does pretty well at getting value out of wood.

 

“Maine has the capacity to take single stick of wood and send it to a number different places. We have sawmills, pulp mills, pellet mills, biomass plants,” said Laustsen. “There's a lot of internal state demand for wood products.”

 

And that internal demand explains the seemingly counter-intuitive situation of logging trucks passing in the night loaded with seemingly identical types of logs.

 

“These mills are always jockeying to find the cheapest raw material,” said Laustsen. They say, 'so why should I fight with a mill 20 miles away when I can go 20 miles the other way and get wood out of New Hampshire. There's always that tension. “

 

When it comes to creating competitive tension, Irland notes that Maine's paper industry “is competing with itself” for raw material, since many paper mill co-generation plants are burning the same sorts of chips to produce power that the mill's pulp mill is cooking into paper fibers.

 

“The markets used to be neat and segmented. But not anymore. Which is why you can't tell from looking at a load of wood where it's going,” said Irland.

 

Maine wood imports and exports 1990 to 2010 (Chart: Maine Forest Service 2010 Wood Processor Report)You'd think that diesel prices might be a big factor governing how far it's worth hauling sawlogs, or chips, or pulpwood. But it's not that simple.

 

“A lot of people are hauling wood 100, 120 miles and hardly batting and eyelash anymore. And hauling it right past the woodyards of other people who are buying the identical product. And this is true of the lowest value product, topwood that's been chipped for biomass. We used to say it was the high value stuff that was hauled long distances. Today even the lowest value stuff is going long distances,” said Irland.

 

Some of that is due to haul-back arrangements that allow a trucker to drive loaded in both directions, said Laustsen.

 

While it's true that Maine still does a fairly good job processing the tremendous quantities of wood it produces and imports, it's also true that profound changes in the global economy over the last 30 years have led to a massive shift in products and the loss of some markets.

 

“There are fewer sawmills and fewer paper mills. The ones remaining are quite strong. They're the survivors. Nonetheless, whenever you lose a mill you are losing some demand, which, in the long run could adversely impact landowners who would like to have people competing for wood and keeping the prices at a good level,” said Earle D. “Chip” Bessey, the president of E.D. Bessey & Son, a Hinckley-based buyer and seller of logs and a man who's been involved in the log trade for more than three decades.

 

Bessey witnessed the closure of Ethan Allan and Bethel Furniture Stock and other furniture manufacturers and the loss of the state's dowel mills, which he said reduced demand for white birch.

 

“The new markets are biomass, fuel chips, pellets. All these things are low value items. It's nice to have a market for low value material. But we always thought pulpwood was a low grade material. This is several steps below pulpwood in value to the landowner. As a landowner I'm concerned as we lose the opportunity for adding value on the high end because it means the overall value of the timber we produce is lower.”

 

The lesson for forestland owners, Bessey said, is never to assume that the value of your trees will go up.

 

“If you own enough woodland to worry about I'd just keep up with it,” he said. “If there is something that is mature or dying or decaying I'd keep it moved. It's like housing. People thought the value of houses would never go down. The value of wood may remain steady, it may not.”

 

Joe Rankin writes, works his woodlot, keeps 50 hives of honeybees and does market gardening in New Sharon.