Which Forest Industry Firms Use the Most Wood in the United States?

2 12 2011

The “80/20 rule” – also called the “Pareto principle” for Italian economist Vilfredo Pareto – posits that approximately 80% of your results or effects derive from 20% of the causes.   Look around and examples materialize.  80% of your revenue comes from 20% of your clients.  20% of your job will take up 80% of your time.  80% of the time your newborn cries at night occurs due to 20% of the potential reasons.  Pareto made the original observation in 1906 when he noticed that 20% of Italy’s population owned 80% of the land.

This management rule of thumb provides a means for quickly assessing profitability, risk, control and capacity in a business or an industry (which helps prioritize work). In the forest products and timber industries, we see examples of this rule in our research associated with timberland ownership, end product market share, and factors driving prices, especially at the local level.  However, nationally, industries may reflect more or less concentration.  Let’s consider the use of wood in the United States.

In 2005, Forisk Consulting began collecting mill-specific wood demand and capacity data in the United States.  Today, our team manages an ongoing research program that collects and confirms data on 3,196 announced and operating wood-using forest industry and wood bioenergy mills throughout the US. [One product that we provide to clients from this research is a mill database that supports shapefiles for analyzing wood baskets and timberland investments, and making maps for spatial analysis.]

In a given year in the US, approximately 2,300 forest industry firms consume ~500 million green tons of wood.  Which firms use the most?   The accompanying table includes the top 10 US companies based on potential wood use.  The list includes wood use at full capacity for mills labeled as open in our database as of July 2011.  Full capacity for the industry currently sits just short of 600 million green tons.

The top 10 comprise ~241 million tons per year of capacity (actual wood use represents 70-90% of this, depending on products produced and time period).  The top 10, which represent less than 1% of the firms, account for ~40% of the wood using capacity.   The top 10% of the firms (~230 firms), account for ~85% of the wood using capacity in the US forest products industry.

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Despite Wet Weather, Pine Grade Markets Recover; Use of Woods-Direct Chips Increasing

23 04 2010

Southern demand for pine grade timber raw materials rebounded 6.1% during the 1st quarter of 2010, according to the Wood Demand Report, after reaching five-year lows the previous quarter.  Data providers reported that “markets have turned around” while others confirmed restarting production during the past few quarters.   Several mill managers expressed concern that, while markets improved, they feared that mills may overproduce in the near-term, thereby suppressing potential price recovery for end products such as lumber and plywood.

Pine pulpwood demand increased 1.1% South-wide during the quarter at both pulp and OSB mills.  In addition, the 1st quarter produced the highest reported consumption of in-woods chips for both pine and hardwood since 2006.  Consumption of both products has increased gradually over the past few years.

Looking ahead, we expect increasing consumption to continue.  Pulpwood demand in the US South is projected to recover in two years and reach pre-decline highs by 2013, according to the ForiskForecast.  Demand by pulp and paper users will be modest, and OSB producers will “consume more as the housing market recovers,” according to Dr. Tim Sydor, Forisk’s Forest Economist.  The primary growth in pulpwood demand will be from wood bioenergy customers.  We project wood bioenergy producers in the South will consume a pulpwood equivalent on par with OSB producers by 2015.





Wood Bioenergy: March/April 2010 Summary

15 04 2010

According to the March/April summary of Wood Bioenergy South, as of April 14, 2010:

  • 130 wood-consuming bioenergy projects have been announced in the US South.
  • In total, these projects represent potential, incremental wood use of 46.6 million tons/year by 2020.
  • Based on Forisk analysis, projects representing only 18.9 million tons/year pass basic viability screening.

Click on figure for the detailed downloadable summary.





Wood Bioenergy: February 2010 Summary

25 02 2010

The EPA validated Forisk’s technology screen this month when it announced that it lowered its 2010 mandate for cellulosic ethanol production from 100 million gallons to 6.5 million gallons – a 94% drop in production targets.

According to the February summary of Wood Bioenergy South, as of February 24, 2010:

  • 129 wood-consuming bioenergy projects have been announced in the US South.
  • In total, these projects represent potential, incremental wood use of 47 million tons/year by 2020.
  • Based on Forisk analysis, projects representing only 18.7 million tons/year pass basic viability screening.

Click on figure for detailed downloadable summary.





Wood Bioenergy: January 2010 Summary

27 01 2010

According to the January summary of Wood Bioenergy South, as of January 26, 2010:

  • 126 wood-consuming bioenergy projects have been announced in the US South.
  • In total, these projects represent potential, incremental wood use of 46.4+ million tons/year by 2020.
  • Based on Forisk analysis, projects representing only 18.5 million tons/year pass basic viability screening.

Click on figure for detailed downloadable summary.





Forisk interviewed on NPR regarding outlook for the timber industry

25 01 2010

ATLANTA, GA (WABE) – In recent years, Georgia’s timber producers have fallen on tough times. But a new forecast shows the

worst could be behind them. WABE’s Jim Burress reports.

The South’s demand for timber between 2006 and 2009 fell by nearly a third. That’s largely due to a decline in new housing starts.

The decline forced some timber producers out of business, while others continue to struggle, says Brooks Mendell, president of industry analyst Forisk Consulting.

“We’re at the bottom. We have folks that have managed down their inventory and are generating just enough cash to keep rolling.”

Producers may not have to wait much longer. Forisk just released its long-term timber price forecast, which shows prices rebounding by 17-percent through 2011.

Because timber production and prices reflect regional demand, Georgia could see the biggest improvements among Southern states.

In Georgia alone, timber production is between a $20-billion and $30-billion a year industry.

Jim Burress, WABE News.




Sawtimber Prices Expected to Recover in 2010-2011 for US South, yet results vary by state

21 01 2010

Turbulent times characterized by plummeting pine sawtimber prices could soon be over for timber sellers.  Forisk’s new stumpage price forecast signals climbing prices for pine sawtimber in the US South beginning in 2010.  The ForiskFORECAST pine sawtimber price forecast, which includes state-by-state forecasts through 2020, and the “Forecasting Timber Prices” workshop provide insights for timberland owners, investors, and wood procurement managers in planning future pricing and management strategies as lumber and plywood markets recover.

Click for detailed news release