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					The Future of Washington Forests
      and Forest Industries
   Stand Management Cooperative             April 26, 2007




               Larry Mason, Rural Technology Initiative
       The Future of Washington’s Forests
                 and Forest Industries
Commissioned by the WA State Legislature 2005


      Study Areas Include:
      1) Timber Supply and Forest Structure Study 1
      2) Competitive Position Study 2
      3) Economic Contribution Study 3
      4) Land Conversion Study 4
      5) State Granted Return on Investment Study 5



 PROGRESS REPORTS
 http://www.dnr.wa.gov/
          Washington Unreserved Timberlands
                                                         (thousands of acres)

    Ownership            Western Eastern Total
  ? USDA Forest Service    2208    2494 4702 ?
    Forest Industry        3732
                          3,389    829 4218
                                    878 4610
    Non-Industrial        *1668    1292 2960
    State                  1390     647 2037
    Native American         *310   1074 1384
    County and Municiple     194       7  201
    Misc. Federal             78    110   188
    Total                          6502 10988
                           9580 3959 16082
                          7029
Bolsinger, C. L., N. McKay, D. R. Gedney, and C. Alerich. 1997. Washington's Public and Private Forests. Resource Bulletin PNW-RB-218, USDA Forest
 Less Roads, Buffers, Etc.
Service, Pacific Northwest Research Station.                                             5800                          3600 ~9400
*USDI Bureau of Indian Affairs. 2004. 2004 Status of Forest Management Inventories and Planning. USDI, Bureau of Indian Affairs, Division of Forestry, Branch of Forest
Resource Planning.
                        North Puget Sound




      North Coast



                                            Central


South Coast
                    South Puget Sound
                                                      Inland Empire




                     South West




   Washington Timbersheds: Five Westside and Two Eastside
              Westside Forest Type Distribution 1990

Westside Forest Types
                  Nonstocked, 3%
                  Other
              Hardwoods, 6%
     Red Alder, 18%                            Douglas-fir, 43%


          Other
     Softwoods, 8%
                   Western
                 Hemlock, 22%




   • Management   Intensities
   • Harvest Implications
   • Land Conversions
             Western Washington Harvest Volumes 1990 - 2002

           Western Washington Share of Timberland                                                        Western Washington Share of Timberland
             Ownership and Harvest Volume 1990                                                             Ownership and Harvest Volume 2002
                        Total Harvest Volume = 4,646 MMBF                                                             Total Harvest Volume = 2,667 MMBF
80%                                                                                          80%

70%                                                                                          70%

60%                                                                                          60%

50%                                                                                          50%

40%                                                                                          40%

30%                                                                                          30%

20%                                                                                          20%

10%                                                                                          10%

0%                                                                                             0%
      Native American   Forest Industry   Private Small        State       National Forest          Native American   Forest Industry   Private Small         State       National Forest

                          Percent of Acreage   Percent of Harvest Volume                                                Percent of Acreage    Percent of Harvest Volume



        Year                                              Ownership Type – Volumes in Million Board Feet

                        Native                            Forest                       Private                  State                   National                Total
                        American                          Industry                     Small                                            Forest
        1990            37.6                              2,974.0                      557.7                    573.1                   504.0                   4,646.3
        2002            26.8                              1,937.0                      296.8                    397.8                   8.3                     2,666.9

Source: DNR Timber Harvest Report 2002
                  Western Washington Private Forest Age Class Distribution
        900,000
        800,000
        700,000
        600,000
        500,000
Acres




        400,000
        300,000
        200,000
        100,000
             0
                     0-9       10-19       20-29           30-39            40-49   50+
                                          Ten Year Age Class
                                        Industry   Small Private   Tribes
                    Western Washington Industrial Forestlands by Timbershed

        1,200,000

        1,000,000

         800,000
Acres




         600,000

         400,000

         200,000

               0
                      North Coast   South Coast   North Puget   South Puget   Southwest
                                                    Sound         Sound
          Land Allocation Questions - Weighted Average for Industrial Respondents


                                                                                                  %
           What percentage of industrial forestland in western
           Washington would you estimate is covered by roads, rock,
    1)                                                                                           8.2%
           wetlands, water, and other areas not capable of growing
           timber?


           What percentage of industrial forestland in western
    2)     Washington is unavailable for management because of                                   0.4%
           voluntary reserves?


           What percentage of industrial forestland in western
    3)     Washington is unavailable for management because of                                   9.5%
           regulatory constraints?




  Total                                                                                         18.1%


n =16; respondents are western WA WFPA member companies ≥ 10,000 acres of forestlands. Total 3.6 MM acres.
                     Western Washington Industrial Management Intensity Forecast Comparison 1990-2006

          100%


          90%


          80%


          70%


          60%
Percent




          50%


          40%


          30%


          20%


          10%


           0%
                 Natl Regen   Plant      Herb       Fert         Gen           all PCT   all CT   PCT/CT   No Mgmt
                                                              Treatment
                                                      1990 Forecast    2006 Forecast
                2006 Western Washington Timber Harvest by Species
                          Reported by Contract Loggers of Logging Activity by Harvest Type
                                                   Percentage




          45%
          40%                                                     Selective        Regeneration
                                                                  Cut/Commercial   Harvest 65%
          35%                                                     Thin 35%


          30%
Percent




          25%
          20%
          15%
          10%
          5%
          0%
                DF      WH        RA        BC        WP         RC           GF             BM
                                               Species
                                      Western Washington Nursery Planting Stock by
                                                  Species 1998-2006
                             100%

                             90%

                             80%
Percent of Total Seedlings




                             70%

                             60%

                             50%

                             40%

                             30%

                             20%

                             10%

                              0%
                                    1998   1999   2000    2001     2002   2003    2004     2005   2006
                                                                   Year
                                                  DF     WH   SS    RC    GF     NF   RA
                              Average Annual Available Timber Volumes: Industry Forests
                             Historic Harvest Volumes (5-Yr) and Projected Inventory (10-Yr)
                     6,000

                     5,000
                                               Historic                            Projected
Million Board Feet




                     4,000

                     3,000

                     2,000

                     1,000

                        0
                             1965- 1969- 1974- 1979- 1984- 1989- 1994- 1999- 2004- 2014- 2024- 2034- 2044- 2054-
                             1968 1973 1978 1983 1988 1993 1999 2003 2013 2023 2033 2043 2053 2063
                                                              Harvest Interval




Sources: DNR Timber Harvest Report 2002, FIA age-class data, UW/WFPA Management intensities Survey,
Chambers 1980 DNR RPT 41.
                           Average Annual Available Timber Volumes: Industry Forests
                          Historic Harvest Volumes (5-Yr) and Projected Inventory (10-Yr)
                                           w&wo Industry Conversions
                      6,000

                      5,000
                                                Historic                            Projected
 Million Board Feet




                      4,000

                      3,000

                      2,000

                      1,000

                         0
                              1965- 1969- 1974- 1979- 1984- 1989- 1994- 1999- 2004- 2014- 2024- 2034- 2044- 2054-
                              1968 1973 1978 1983 1988 1993 1999 2003 2013 2023 2033 2043 2053 2063
                                                               Harvest Interval

                                                      Industry             Ind w/Conversion




Source: Gray et al. 2005. PNW-RB-246
West Side Question:
          This        or   This?
Eastside Forest Types
                                                       Douglas-fir/Western
                                       Hardwoods, 5%      Larch, 46%
                Other Softwoods, 10%

         Lodgepole Pine, 7%




              Ponderosa Pine, 33%




• Forest health & climate change
• Fire/carbon/bioenergy
• Mill Closures
            Eastern Washington Harvest Volumes 1990 - 2002

             Eastern Washington Share of Timberland                                                         Eastern Washington Share of Timberland
               Ownership and Harvest Volume 1990                                                              Ownership and Harvest Volume 2002
                          Total Harvest Volume = 1,157 MMBF                                                               Total harvest Volume = 862 MMBF
 45%                                                                                            45%
 40%                                                                                            40%
 35%                                                                                            35%

 30%                                                                                            30%
 25%                                                                                            25%

 20%                                                                                            20%
 15%                                                                                            15%

 10%                                                                                            10%
 5%                                                                                             5%
 0%                                                                                             0%
       Native American   Forest Industry   Private Small        State       National Forest           Native American   Forest Industry    Private Small       State       National Forest

                           Percent of Acreage   Percent of Harvest Volume                                                 Percent of Acreage   Percent of Harvest Volume



       Year                                            Ownership Type – Volumes in Million Board Feet

                     Native                                Forest                       Private                 State                     National              Total
                     American                              Industry                     Small                                             Forest
       1990          144.7                                 462.7                        152.5                   84.2                      313.3                 1.157.4
       2002          292.3                                 334.6                        112.8                   58.7                      64.0                      862.4

Source: DNR Timber Harvest Report 2002
                       Past Harvest & Future Available Timber Volumes for Eastern
                        Washington: All Public and Private Vs All Private (Decadal
                                      Annual Averages 1965-2063)
                1400

                1200

                1000
      MMBF/Yr




                800

                600

                400
                           Historic                                        Projected
                200

                  0
                        1965-   1974-   1984-      1994-     2004-      2014-     2024-      2034-     2044-     2054-
                        1973    1983    1993       2003      2013       2023      2033       2043      2053      2063

                                           All Public/Private         Native, Small, Large Private


Sources: DNR Timber Harvest Reports 1965-2003, FIA & CVS Inventory Data; Tribal, Industry, Small Private Forestland Managers
                                                        Five Year Running Average Temperature and Precipitation Trends
                                                                      for Eastern Washington (1899-2006)

                                             19.0                                                                             32.0

                                             18.5
    June, June Aug Average Temperature (C)




                                                                                                                              30.0




                                                                                                                                     Pre-growing Season precipitation (in)
                                             18.0
                                                                                                                              28.0
                                             17.5
                                                                                                                              26.0
                                             17.0
                                                                                                                              24.0
                                             16.5
                                                                                                                              22.0
                                             16.0

                                             15.5                                                                             20.0

                                             15.0                                                                             18.0
                                                1899   1909   1919   1929   1939   1949   1959   1969   1979    1989   1999

                                                         June, July, Aug temperature      pre-growing season precipitation




Source: DNR, Oneil
                                                  Mortality by MPB in ponderosa and lodgepole pine in eastern
                                                          Washington from 1979-2004 (tallied 1980-2005)
                                      4,500,000                                                                    12.0

                                      4,000,000
                                                                                                                   10.0
                                      3,500,000




                                                                                                                          Mortality/acre (Trees/Acre)
          Total Mortality (# trees)




                                      3,000,000                                                                    8.0

                                      2,500,000
                                                                                                                   6.0
                                      2,000,000

                                      1,500,000                                                                    4.0

                                      1,000,000
                                                                                                                   2.0
                                       500,000

                                             0                                                                     0.0
                                             1979          1984         1989           1994       1999          2004
                                                                                Year


                                                        # Trees killed by MPB     # Trees/acre killed by MPB




Source: DNR, Oneil
Without treatment, dry fuels, drought,
and hot summers mean catastrophic
wildfire in eastern Washington
                     2006 Forest Fires
Total WA ~ 400,000 acres         Total US > 9.8 million acres




                                           Source: NOAA, EPA, US Census, NIFC, RTI
East Side Question:

                      This


                      Or


                      This
Source: TSS Consultants, http://www.cc.state.az.us/utility/electric/EPS-TSSC.pdf
 WA Biomass and Bioenergy Potential by Feed Stock Type




Source: WSU, WA DOE
This?   OR   This?
                         WA Forest Products Jobs/MMBF/Year by Sector and
                                      Timbershed (1998-2004)

                 30.00

                 25.00
Jobs/MMBF/Year




                 20.00

                 15.00

                 10.00

                  5.00

                  0.00
                         NC      SC         NPS        SPS         SW           EC     IE
                                                  Timbershed

                                  Logging   Sawnwood   Other Mfg   Furniture   Paper
6,000 Loggers in Washington         Harvest
Annual Payroll = $250 million
Employment = 1.84 loggers/MMBF/Yr
WCLA Survey Highlights             – 98 Respondents ~ 900 MMBF/Yr




    Average contract logger is over 50 years of age

    1995: 82% had health insurance but today: 53%
    Skilled workers are much harder to find than 10 years ago
   13% make money; 48% break even; 40% lose money
Washington Comparative Harvest Costs and Cost Multipliers with
             Regen Harvest Cost as the Baseline
Harvest              WCLA 2006                 DNR 2006                    Ave WCLA & DNR                Lippke 1996
Type
                 Cost/MBF   Cost Mult    Cost/MBF        Cost/MBF    Cost/MBF       Cost Mult       Cost/MBF       Cost Mult
Regen - Grd          $ 69           1         $ 67              1            $ 68               1              -               -
Regen - Cable        $138           1         $ 93              1            $116               1              -               -
Regen – 50/50        $104           1         $ 80              1            $ 92               1        $150                  1
Select - Grd         $160         2.32               -           -              -               -              -               -
Select - Cable       $231         1.67               -           -              -               -              -               -
Select – 50/50       $196         1.89               -           -              -               -              -               -
Thin – 50/50         $250         2.41        $175            2.19           $213         2.32           $275            1.83



                                    Harvest Type            Logging Cost Change
                                                            2006-1996 Cost/MBF
                                    Regen - Grd                        -
                                    Regen - Cable                      -
                                    Regen – 50/50                    ($58)
                                    Select - Grd                       -
                                    Select - Cable                     -
                                    Select – 50/50                     -
                                    Thin – 50/50                     ($62)
                                       WCLA Survey Response
                               What are your company's five-year goals?

                35%
                         30%
                                  48% are leaving logging!
                30%
                                        22%
                25%
% Respondents




                                                                                       18%
                20%
                                                      13%
                15%
                                                                  11%
                                                                             7%
                10%

                5%

                0%
                      Diversify Out   Specialize   Get Smaller   Expand    Maintain    Retire
                       of Logging                                         Status Quo
 Haul
More than 1 million loads/year
150 million miles
2400 Truck Drivers
Annual payroll = $100 million
Employment = 0.65 Drivers/MMBF/Yr
 70% of Truckers are independents
 Average trucker is over 50 years of age
 Skilled workers are much harder to find
         than 10 years ago




                                                                           Contract Vs Company Log Truck Preference

                                                                 80%

                                                                 70%

                                                                 60%
                                                 % Respondents




                                                                 50%

                                                                 40%

                                                                 30%

                                                                 20%

                                                                 10%

                                                                 0%
                                                                       contract truckers           company truckers               both
Source: WCLA Survey, Timber purchasers survey,
NW Truckers Coop, Log Truckers Conference
                                                                                           Timber Purchasers   Contract Loggers
                   A Comparison of Log Truck Registrations for WA- In State,
                               WA- Interstate, and OR- In WA

           2,500


           2,000


           1,500
# Trucks




           1,000


            500


              0
                   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006

                                        WA/In State      WA/Interstate      OR/WA

                             2006 - OR Trucks = 1593, WA Trucks = 1325
                               No. of WA Trucks down 36% since 1998

WA DOT, WA DOL, and ODOT
12,000 mill workers in Washington       Sawn Wood
Annual Payroll = $480 million
Employment = 4.3 mill workers/MMBF/Yr   Manufacture
Average years in business = 60
Average No. Employees = 192
Average Production = 200MMBF/Yr
Sales are 98% domestic
Average worker age = 43
Skilled workers hard to find




 WA is #2 Producer in US 40%
 plan to expand         0% will
 pay for certified logs



 Sawmill Survey: 34 Respondents, 4.2 Billion BF Production
                                   Washington Lumber Production,
                                  Timber Harvests, and Log Exports
                                             1992-2002
                           6000
      Million Board Feet


                           5000
                           4000
                           3000
                           2000
                           1000
                              0
                               92
                                    93
                                         94
                                              95

                                                   96
                                                        97
                                                             98

                                                                  99
                                                                        00
                                                                             01
                                                                                  02
                             19
                                   19
                                        19
                                             19

                                                  19
                                                       19
                                                            19

                                                                 19
                                                                      20
                                                                           20
                                                                                20
                            Lumber Production          Timber harvest        Log Exports


Reductions in log exports offset reductions in timber harvest for sawmills
                            Historical Lumber to Log Overrun Ratios for
                            Western and Eastern Washington Sawmills

          2.5                                    Spotted Owl

            2


          1.5
  Ratio




            1


          0.5


            0
              70

              72

              74

              76

              78

              80

              82

              84

              86

              88

              90

              92

              94

              96

              98

              00

              02

              04

              06
           19

           19

           19

           19

           19

           19

           19

           19

           19

           19

           19

           19

           19

           19

           19

           20

           20

           20

           20
                                                 west    east


          Closure of inefficient mills, improvements in technology, and shift to
               second growth result in overrun gains (west but not east).
Source: DNR Mill Survey, RTI 2006 Survey
                                    Log Price and Sale Net Log 2003-2006

                  $580                                                                                    $350
                                                $323                  $565
                  $560                                                                        $558        $300

                  $540                                            Coast Lumber Return
                                                                                                          $250




                                                                                                                  $/MBF LBR Scale
$/MBF Log Scale




                                                                  Net Log (right side)
                  $520                          $516                  $205                                $200
                                $192
                  $500
                                                                                                          $150
                  $480          $479
                                                                                              $107        $100
                  $460    Coast Log Price                                     East Log           $440
                  $440
                          (left side)                                         Price                       $50

                  $420                                                                                    $0
                             2003            2004                2005                    2006 -$40
                                               Log Price         Margin
                                                                                                          East Lumber
                                                                                                          Return Net Log
                                                                                                          (Not Good!)
                     Year      Lmbr Price
                   2003              $301       Westside Over Run = 2.23
                   2004              $376
                                                Eastside Over Run = 1.34
                   2005              $345
                   2006              $298           Source: Random Lengths, Log Lines, NW Management, Future of WA Forests
Washington Forest Products Manufacturers - 2006
Pulp and Paper




      8,500 Pulp and paper workers in Washington
      Annual Payroll = $450 million
      Employment = 2.5 paper workers/MMBF/Yr
Washington Forest Products Manufacturers - 2006
                            No. of WA Pulp Mills & Pulp Export Facilities and
                                  Total Annual Production 1989 – 2002
                       20                                                                                         25


                       18
                                                      45% Reduction in Domestic Production
                                    21.5 MMBDT
                                                      71% Reduction in Export Production
                       16                                                                                         20


                       14




                                                                                                                       Million Bone Dry Tons/Year
Number of Facilities




                       12                                                                                         15


                       10                        17 Domestic Mills                  11.8 MMBDT


                       8                                                                                          10
                                                                                              12 Domestic Mills
                       6


                       4                                                                                          5
                                   3.5 MMBDT

                       2
                                                                                    1 MMBDT
                                                 2 Export Facilities
                                                                                              1 Export Facility
                       0                                                                                          0
                                 1989                                             2002
                                        Export             Domestic    Domestic     Export
Forest Industry Summary


40,000 direct jobs & $1.7 billion in payroll

            100,000 indirect jobs


Gross Business Income (2005) = $14.6 billion

				
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