The Smart Money: Forestry and related industries

Posted Wednesday, July 31, 2013 in Analysis

The Smart Money: Forestry and related industries

by Gina Hamilton

This is the third part of a five part series on Maine's economy, looking at some of the largest industries in Maine, their challenges and opportunities. 

The forestry industry in Maine has changed dramatically over the years, from the historical times when timber was floated down the Kennebec and Androscoggin to mills in Lewiston, Auburn, Lisbon, and Brunswick, as well as Augusta, Gardiner, and Skowhegan, to the great shipbuilding days when wooden sloops were manufactured in towns like Bath and East Boothbay, using several tall timbers as masts, to the days when a major use of forestry product was wood pulp paper, manufactured in northern towns such as Millinocket, to the modern day, when entrepreneurs are stepping up to start new green industries, such as wood pellets, and cellulose insulation.

Regardless of the end use of the product, the beginning of the story occurs in the northern woods.

Logging is still a way of life in northern Maine; however, the number of people actually working in logging has fallen dramatically in the last 50 years or so.  A 1999 survey said that of the 4,000 people working as loggers in the north woods, almost 3,000 of them are Mainers; another 900 or so are Canadians, and the rest come to work for the logging season on H-2 visas.  Prior to 1945, tens of thousands of people were employed directly in the logging industry, as lumberjacks in the woods, or as river rats driving the logs down to the mills.  Those jobs have vanished as timber is carried on trucks and rail cars; even in the woods, the number of people working on the trees is decreasing due to mechanization. The state study stated that it would be impossible, even with higher wages, to encourage more Americans to enter the industry, and yet, there are jobs going unfilled.

Some jobs in the woods pay very well, while others do not.  For example, "chokerman", an entry-level position in which the worker puts a ring around the fallen timber to get it ready to be moved, can earn very little ... perhaps less than $30,000 per year, while hookermen may earn about $45,000, and high-end cutters, who have to have their own insurance and tools, may top out at about $65,000.  Forestry workers work about 40 weeks every year, according to the state study. 

Forestry jobs are learned in the woods, on the job, and most Maine forestry workers have only a high school education.  Chokermen move up as their skills increase and higher-paid jobs become available.

Part of the reason why forestry isn't attracting as many unemployed young people as a career is the remoteness of the working situation, and the fact that life in the woods during the cutting season ... often in a trailer or camper, working sunrise to sunset most of the year ... is very isolating. It is an industry that is nearly 100 percent male.  It is also work that may not be steady; mills may slow down based on their own economic analyses, and the workers in the woods may be laid off intermittently when this happens.

Lumber milling is still a large part of what happens to the raw logs.  There are several large sawmills in Maine, some with their own retail establishments.  An example is Hancock Lumber, with three sawmills in the state employing 450 people, and 12 retail lumberyards, employing thousands.  Their sister company, Hancock Land Company, produces much of the sustainable timber they use.  From a large, old corporation like Hancock to small local sawmills, such as Higmo in West Bath, sawmills employ a little over 1,500 Mainers, down from nearly 3,000 just  ten years ago. The losses are due to increased mechanization, primarily.  On the positive side, very few Mainers are injured in sawmill accidents anymore, because the machines are doing the dangerous work.

Paper is still being made in Maine, but job losses in the paper mills have been much more dramatic. When jobs are lost in paper mills, hundreds lose their jobs at the same time.  In 2003 alone, Maine lost 1,116 paper mill jobs, many of those due to changes in the newspaper industry. As newspapers downsized, or went to the web, and as advertisers went to other forms of media, including the internet and television, the paper that was once necessary for newspaper print was simply not necessary, and the giant employers shed jobs.

The worst may be over, but job losses in the paper industry sector are still forecast for the future.  Today, about 7,300 Mainers are employed in the paper and pulp industry. And last month, NewPage mill in Rumford furloughed 120 employees for a week in an effort to save money, after having just cut 50 jobs.  As the industries that the paper companies serve continue to change, the paper mills ... and ultimately, the loggers in the woods ... will also feel the pinch of those changes.

However, there are bright spots for Maine's forestry future.  One of those spots is wood pellet production.

Maine is poised to use biomass for more than heating in the future ... it could use woody byproduct to make cellulose-based ethanol for transportation, cooking, and other uses, for instance.  So far, no one has stepped up to do that on a large scale.  However, Maine does use its woody waste to make wood pellets.

Using wood pellets for heat used to be a secondary form of home heating, but with high oil prices, fluctuating propane costs, and relatively low wood pellet costs, many Mainers are making the switch to wood pellets for full-time home heating.  Primary heating with wood increased 96 percent in Maine from 2000, according to the 2010 census.  Some of that is firewood, but a large percentage is wood pellets.  Pellet stove purchases in Maine have jumped, as have wood stove purchases.  Part of the reason for an increased interest in pellets has been the continuation of federal tax credits for replacing oil burners with pellet stoves. Part of it is that pellets are perceived as "greener" than oil; the wood that goes into pellets was until this year or last processing atmospheric carbon, and the pellet manufacturers purchase from timber companies that replant young trees to replace those taken down.  But the biggest reason is the cost.  A household that uses three tons of pellets over a heating season may spend $700 to keep their home at the same temperature as someone who spends $1,500 in oil heat, or $1,100 in propane heat.

Whatever the rationale, pellet manufacturers in Maine have responded.  There are currently four in-state pellet manufacturers, which employ thousands of Mainers, and another is being built in Eastport.  There are several biomass boiler projects for large institutional organizations - hospitals and schools -  also being built that will use wood pellets.  More than 350 Mainers are employed to build those.

Cellulose is also used for insulation.  As homeowners are getting the message about the connection between high amounts of R-values in home insulation and a decrease in heating bills, inexpensive cellulose is the insulation of choice.  Maine wood products are used in the manufacture of this type of insulation.

The timber industry is changing in Maine, there is no question about it.  There are already many fewer jobs from start to finish, and some aspects ... forestry, sawmills, and paper mills ... will likely see decreases due to mechanization of the industry, or changes in the industry the mills support. 

However, Maine's forestry industries are beginning to see some bright spots, too.  The growth in the wood pellet sector and in the cellulose insulation sector will replace many of those lost jobs eventually, while helping Mainers to eliminate the need for costly oil heat and uncertain propane heat.  Whether those sectors will be able to provide enough jobs to sustain the industry remains to be seen.




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