This category covers establishments primarily engaged in cutting timber and in producing rough, round, hewn, or riven primary forest or wood raw materials, or in producing wood chips in the field. Independent contractors engaged in estimating or trucking lumber, but who perform no cutting operations, are classified in nonmanufacturing industries. Establishments primarily engaged in the collection of bark, sap, gum, and other forest products are classified in SIC 0811: Timber Tracts ; SIC 0831: Forest Nurseries and Gathering of Forest Products ; and SIC 0851: Forestry Services.
Logging, among the oldest of American industries, has become one of the most controversial. Environmentalists have severely attacked harvesting practices, and they have scored significant victories. The strife between the industry and its opponents ignited in August 1990 when the federal government listed the northern spotted owl as an endangered species and developed rules to ensure its survival by protecting government forests in the Pacific Northwest. The net result was severe restrictions: logging was prevented within a 2,000-acre radius around a known spotted owl nest, the largest trees in that zone had to be left uncut around a 500-acre area, and logging was prohibited within a 70-acre area around a nest. Ever since, the industry has been engaged in ongoing court cases, political wrangling, and regulatory proceedings to retain logging rights on government lands.
To the dismay of conservationists, in the early 2000s President George W. Bush was working to reverse many environmental restrictions on the use of federal land that were imposed during the Clinton administration. However, in recent years conservationists have won many battles. For example, in 1999 the U.S. Forest Service barred roads and logging on more than 40 million acres of undeveloped land in federal forests. It also increased restrictions on logging and the timber harvest in Alaska's Tongass National Forest, one of the world's largest temperate rain forests. A number of attempts to challenge this particular ban on new road construction and logging have been made, including one by the Boise Cascade Corp. and several other parties. However, in December 2002 the 9th U.S. Circuit Court of Appeals upheld the ban, resulting in a win for conservationists.
Environmental groups also have won other recent victories. In Washington State, a number of timber sales in old-growth forests were blocked and others threatened because surveys had not been conducted on the endangered animal and plant species in the areas. Another conservation effort, intended to protect salmon and wildlife habitats, was expected to restrict logging on some 764,000 acres of private forest in Western Washington.
The conflicts have had a major impact on the geographic distribution of logging within the United States. The South and the Pacific Northwest have been the two traditional centers of U.S. logging. In the South, loggers have relied on private holdings, which account for some 90 percent of all timberland in the region. In the Pacific Northwest, however, much of the supply has come from federal forests. With harvesting down sharply on government-owned land, the Pacific Northwest has accounted for a shrinking portion of the nation's production. Western lumber production levels decreased slightly during the late 1990s, while eastern lumber production levels increased. However, by the early 2000s this shift appeared to have ceased. In both 2000 and 2001, the eastern United States accounted for about 63 percent of all lumber production, with the remaining 37 percent attributable to the western region.
The industry's health is tied to demand in the residential and light commercial construction sector and to foreign markets. Even though economic conditions were weak, by 2002 the industry stood to benefit from a strong housing market characterized by increased demand, higher home prices, and the lowest interest rates in approximately 30 years. Despite the easing of trade barriers through the North American Free Trade Agreement (NAFTA) and multilateral trade negotiations under the auspices of the World Trade Organization (WTO), exports declined $551 million from about $1.8 billion in 1997 to $1.3 billion in 2001. Over the same time period, imports increased $107 million, from $103 million in 1997 to $210 million in 2001.
A diverse group of economic entities and individuals are involved in logging. Among the participants are the giant, integrated forest products firms like Weyerhaeuser and Georgia-Pacific, which may own millions of acres of private timberlands; small sawmills that may harvest relatively few trees on federal lands for their own use; and independent cutters who are compensated according to the number of trees they are able to distribute to mills. Logging activities are thus distributed among different types of firms and individuals, but they can also be integrated with other operations within a single, large company.
In the United States logging is older than the nation itself, and wood products have played a central role in the economy's development. The clearing and revival of the U.S. forest has been extraordinary. The land area of the coterminous United States is 1.9 billion acres. Between 822 and 850 million acres, or about 45 percent of the country's land area, was originally covered by forest. By 1920, owing to agricultural clearing, lumbering, and other activities, the original cover had fallen to about 470 million acres, of which only 138 million acres were original forest (some 250 million acres were significantly disturbed through grazing, cutting, and burning and could not sustain second growth, while 81 million acres were nonrenewable and nonrestoring). By 1977, however, because of better management, the suppression of fire, replanting, and other factors, the trend had reversed—the commercial forest had grown to 483 million acres. The U.S. Forest Service estimates that there were 490 million acres of timberland in 1992.
Logging in the great forests of the Pacific Northwest was started by the Hudson Bay Company at its Fort Vancouver trading post on the Columbia River in 1820. In 1825, the Royal Horticultural Society of London sent out a Scottish botanist, David Douglas, to the area; he returned to England with a sprig of what is now the most important commercial tree of these forests, the eponymous Douglas fir. Logging as an industry began in the region at the time of the Gold Rush, which produced a new market for timber in California. It was the timber barons from the East who saw the potential of the Pacific Northwest forests. Most famous among them was George Weyerhaeuser, who incorporated his company in 1900 in Tacoma, Washington. Often a pioneer in the industry, Weyerhaeuser began the practice of hand-planting new trees on clear-cut lands in 1938.
Most of the nation's timber supply has come from softwoods, which are used predominately in housing construction. In 1987, approximately 35 percent of the nation's softwood lumber came from sales of timber on federal lands in the Pacific Northwest. By 1992, that contribution had dropped to 25 percent. Sales of timber from federal forests in the region fell from 6 billion board feet in 1987 to 1.5 billion in 1992.
The curtailment of harvesting on federal lands had a disparate impact on firms in the wood products industry. In general, the major forest products companies performed poorly during 1991 and had mixed results in 1992, as the recession took its toll. In the first half of 1993, however, large firms that had extensive land holdings of their own recorded sharply higher earnings, as they benefited from the price increases that accompanied shrinking supply. Other companies, however, including many small sawmills without timber assets, faced increasing margin pressure as their raw material costs rose. In 1995 and 1996, wood product companies held their own in the face of continued flat prices. In 1995, wood chip demand from the paper industry and a strong level of Canadian imports created an oversupply of lumber and held back a return to stronger conditions. However, the paper industry demand for chips dropped, and an April 1996 Canadian lumber quota reduced the lumber supply.
The national recession during the early 1990s hurt the wood products sector badly, but as the recession waned, the industry began to recover. Due largely to the strength of higher housing starts and firmer timber prices, the wood products operations of the major forest products companies did better in 1992 and 1993 than in 1991. In the first half of 1993, profits at those companies that rely most heavily on wood products were up 179 percent from the same period in 1992. Nevertheless, the prospect of sustained cutbacks in the timber supply raised significant questions about the long-term health of the industry. In 1996, merger and acquisition activity was strong, with 5 million acres of timberland changing hands. Most of the land that changed hands was in the southern and western regions of the United States. About 7 percent of the estimated 68.6 million acres then owned by the industry were in those regions. Fifty percent of the 5 million acres that changed hands was in the South, 42 percent was in the West, and 8 percent was in the Northeast and Great Lake states.
Through the mid-1990s, smaller sawmill companies in the Pacific Northwest were hurt by contracting supply and continued to decline in number. Some observers blamed the companies since they tended to disregard forecasts, dating back to the 1970s, of a looming timber shortage during the 1990s. They also suggested that at the rate the loggers were cutting, the Pacific Northwest would have had severe supply problems by the year 2000, regardless of the spotted owlendangerment controversy.
Environmental constraints placed on logging in the 1990s reduced by 75 percent the amount of timber harvested from national forests in the United States. These logging restrictions did not have a major impact in most of the South, the Northeast, and North Central regions of the country. They did have a dramatic impact on the Pacific Northwest, which had supplied about half of the country's timber for wood products. The restrictions resulted in reduced production, and consequently the closing of some operations, and set off ongoing political and social problems for the industry. From their major victory in limiting logging in areas in which the spotted owl was found, environmentalists went on to secure habitat protection for other animal and plant species. Also, in the 1990s, the Forest Service began shifting use of national forests from logging to recreation, further limiting timber available to loggers.
Lumber markets improved in 1996 due to tightened lumber supplies and better pricing for lumber products. Housing starts increased 5 percent in 1996, aiding wood products sales. However, the industry also struggled against competing materials, namely steel for wood, in homebuilding. An increasing number of builders used steel-frame housing; an estimated 80,000 houses were built with the technology in 1996, compared to 800 houses in 1992. The availability of affordable wood products, however, dampened this building construction trend.
The Spotted Owl Controversy On June 26, 1990, the government listed the northern spotted owl as a threatened species under the Endangered Species Act. Unlike most other species protected by the Act, the spotted owl's habitat covers a much larger area: it ranges from southern British Columbia, Canada, to Marin County, California. Under the terms of the Act, more than 5 million acres of forests were designated as conservation areas; these generally contained conifers of mixed varieties that were more than 200 years old—old-growth forests.
Technically, logging was still allowed within the conservation areas as long as it did not threaten the spotted owl, but as a practical matter, much of the owl's habitat was off-limits to loggers. The U.S. Forest Service reported that in total it sold 4.45 billion board feet of timber in fiscal 1992—less than half of its sales in 1990. The agency managed to sell only 20 percent of the Congressionally approved volume in the Pacific Northwest and 40 percent in California. Most, if not all, of this shortfall stemmed from measures taken to protect the spotted owl and other species. Loggers cut 61 percent more national forest timber in 1992 than was sold during the year.
Some observers blamed the timber industry for its problems with the owl. They argued that the industry ignored the bird and tried to discredit research that showed the owl was truly endangered. They also said that the timber on the federal lands which the spotted owls inhabit represent public assets—assets that, in their view, have often been sold at below cost by the Forest Service and the Bureau of Land Management for the industry's benefit.
Many industry supporters, however, said there is much evidence that spotted owls of one subspecies or another are thriving on millions of acres of privately and publicly managed second-growth forests. They also noted that counts of the northern spotted owl have risen substantially over the past several years. They argued, additionally, that even if the spotted owl was indeed endangered, it did not provide sufficient reason to throw thousands of workers out of their jobs and destroy dozens of timber communities. The logging industry has fought for its livelihood through court cases.
Some observers within the industry and the environmental movement believe that efforts to save individual species are merely tactical devices in the battle to curtail logging. The environmental movement needed a weapon to shut down logging on federal lands, they say, and the Endangered Species Act happened to be conveniently at hand.
Environmentalists recognize that the total amount of woodland in the United States is not contracting—new plantings more than offset cuttings. Still, many are concerned that the way the nation's forests have been managed reduces biodiversity. When loggers cut down mixed forests with trees of different ages, they often replant with a single species (such as the Douglas fir, which reaches maturity in a relatively fast 50 years) of the same age. Some environmentalists argue that in a naturally regenerating forest, there are dead trees, clearings, old trees, and young trees, and each attracts its own group of plant and animal species. But when a forest consists solely of one tree type, all of the same age, only one set of species is attracted. Ecologists believe that this hurts the forest's ecosystem and leaves it prone to pest infestations.
In rebuttal, the industry's supporters pointed to the expansion in total timberland over the past 50 years and the millions of acres, including much old-growth (trees over 200 years old), in national and state forests that are protected from logging. They also called attention to the significant advances in forestry management over several decades. For example, after the volcanic eruption of Mount St. Helens on May 18, 1980, Congress, in 1982, established a 110,000-acre National Volcanic Monument. In this area nature would be allowed to take its course, and the land would be left undisturbed. On the acreage adjacent to it, Weyerhaeuser and other companies salvaged the downed trees and planted new seedlings. According to some observers, the result of this effort is a forest not significantly different from the original (pre-1980) cover below the slopes of the volcano. By 1992, many of the trees Weyerhaeuser had planted were already 25 or 30 feet high. Next door, the National Volcanic Monument was recovering much more slowly—but, some would argue, more completely.
In February 1993, news reports indicated that the Clinton administration was trying to modify the policies of the Department of Interior (DOI) so that "national train wrecks" (in the words of DOI Secretary Bruce Babbitt), like the one over the spotted owl in the Pacific Northwest, could be averted in the future. Instead of protecting single species, the DOI would seek preventive measures to insure long-term protection of whole ecosystems and all of their species. The theory behind such an approach is that conservation and business interests are better served by preplanning the fate of entire ecosystems before any single species is threatened.
Winners and Losers Cutbacks of harvesting on federal lands has had a diverse impact on industry participants. Some believe that the largest companies—at least those with substantial timber holdings of their own—have been less than vigorous in fighting curtailments of logging on federal land. These firms have huge plantations of genetically improved trees, which afford them ample supply. Their reliance on federal sales of old-growth trees is relatively small, and the spotted owl does not appear to thrive on their own second- and third-growth forests. It has been argued, therefore, that these companies have been willing, and even happy, to accept restrictions on logging of federal lands.
Small, independent sawmill owners, on the other hand, have relied since World War II on public lands to supply the old-growth logs that can be turned into specialty products. The trees they used were often as much as five centuries old; consequently, they were often inhabited by the spotted owl. The trees that have been engineered by big corporations are but a tenth the age and only half the height of the old-growth trees. Often they are too small for the saws andconveyor belts of the old-time sawmills.
The South Level terrain, frost-free winters, and numerous highways made logging much easier in the South than it was in the Northwest. Trees in the region grew faster because of the relatively warm winters. Since most of the South's acreage was logged years ago, there is little of the old-growth forest that has aroused such strong environmental opposition in the Northwest. Most notably, some 90 percent of Southern timberland is privately owned.
The conflicts between the environmentalists and timber interests that halted logging in much of the Northwest have been comparatively rare in the South. The two sides have actually worked together to balance environmental and economic concerns. Georgia-Pacific (which moved its headquarters from Portland, Oregon, to Atlanta, Georgia, in 1982 and became an important presence in the region) believed in the mid-1990s that it was successfully dealing with the red-cockaded woodpecker, which some saw as a potential "spotted owl" of the South. Others, however, believed it was only a matter of time before the environmental movement began to be more aggressive in opposing logging in the South.
The Asian economic crisis hindered industry growth during the late 1990s. Reductions in Japanese demand for wood products, especially for housing applications, meant a reduction in exports to that country and contributed to oversupply in the United States. Imports and the growth in forest product capacity in emerging countries, which protected themselves with high tariffs, also contributed to oversupply. Imports of forest products, which topped exports by $2.9 billion in 1994, jumped to $9.4 billion in 1998 and were projected to continue their steady growth. The top five export countries in 1997 were Canada (22.0 percent), Japan (17.5 percent), Germany (8.0 percent), the United Kingdom (6.7 percent), and Mexico (5.5 percent). The top five import countries were Canada (83.5 percent), Indonesia (3.6 percent), Brazil (3.2 percent), Mexico (1.4 percent), and Chile (1.1 percent). The U.S. forest products industry saw the easing of trade barriers as critical. Government negotiators work to equalize international trade; however, a tariff agreement presented at the World Trade Organization meeting in December 1999 was not acted upon. The agreement would have eliminated tariffs on paper products between 2000 and 2002 and on wood products between 2002 and 2004.
By the early 2000s, U.S. lumber production was falling. Production levels, which totaled 46.6 billion board feet in 2001, had decreased from 49.4 billion board feet in 2000 and 50.6 billion board feet in 1999. In 2001 the eastern United States was responsible for about 63 percent of the nation's total production, led by Georgia, Mississippi, Arkansas, Alabama, and North Carolina. The west accounted for about 37 percent of all production, led by Oregon, Washington, California, Idaho, and Montana. Oregon and Washington were by far the industry leaders, accounting for 13 percent and 10 percent of all production, respectively.
By late 2002 the Bush administration was proposing to make significant changes to rules established by the Clinton administration that covered the use of more than 190 million acres of federal land in 44 states for commercial endeavors like logging. As the New York Times explained, the proposed changes would "give managers of the 155 national forests more discretion to approve logging and commercial activities with less evaluation of potential damage to the environment." Environmentalist groups criticized the proposal for catering to the logging industry, while a spokesperson for the American Forest & Paper association downplayed negative environmental implications and praised the plan for allowing forest managers to better control wildfire outbreaks.
By 2003, a great source of debate within the industry centered around the best way to address an increasing number of forest fires. In 2002 more than 7 million acres of land in federal forests had burned as a result of forest fires. Through its Healthy Forest Initiative, the Bush administration was seeking to "speed up fire-prevention efforts by reducing environmental studies and legal appeals of logging projects," according to the Associated Press. When Congress did not respond to the initiative, proposed in September 2002, the Bush administration attempted to achieve its forest-thinning objectives by streamlining the process of environmental reviews in certain locations. This action drew criticism from some environmental groups and was subject to a public appeals process.
While the clash between the timber industry and environmentalists (or preservationists, the term the industry prefers) has centered largely on the survival of the northern spotted owl in recent years, campaigns to protect other species may affect the industry in the future. Timber executives are also worried about the impact of logging on salmon. Because logging often damages the streams in which salmon spawn, the species could eventually become federally protected, an action that would further limit the industry in the Northwest.
The leading companies in the logging industry in the early 2000s included MAXXAM, Inc. and the Plum Creek Timber Company, Inc. MAXXAM is a holding company that had 2001 sales of $2.0 billion. Plum Creek Timber Company had sales of $598 million in 2001. The company, which has acquired the timber operations of Georgia-Pacific, owned some 7.8 million acres of timberland in 19 states. It also operated a number of wood-products conversion plants that produced lumber, plywood, and fiberboard.
Other companies with a stake in the logging industry included Crown Pacific Partners; Rayonier, Inc.; and Weyerhaeuser Company. Crown Pacific Partners owned nearly 525,000 acres of timberland and had 2001 sales of $593 million. Rayonier produced logs and other wood products for sale in 60 countries and managed some 2.3 million acres of timberland in the United States and New Zealand. Its 2002 sales totaled $1.1 billion. Weyerhaeuser Company was the world's largest private owner of softwood timber, with holdings in the southern United States and the Pacific Northwest, and had cutting rights to 32 million acres in Canada. It had 2002 sales of $18.5 billion.
In 2001 logging workers held approximately 73,560 jobs, down from some 82,000 in 1996. This total included roughly 47,000 log handling and equipment operators; 13,000 fallers; and 8,000 graders and scalers. In the late 1980s some 88,000 people were employed in logging. Self-employed workers account for one of every three logging workers. About 40 percent of logging workers are employed in the Southeast and about 25 percent are in the Northwest.
Logging occupations are physically demanding, and the work can be very dangerous. Many workers within the industry have suffered serious injuries and have had friends and relatives killed on the job. Hazardous conditions include falling trees and branches, strong winds, slippery or muddy ground, foul weather, poisonous plants, and snakes. These risks are apparent in workmen's compensation rates for loggers. In the mid-1990s in Maine, for example, they ran about $37 for every $100 in salary, compared to an average of $12 for carpenters.
Employment for logging and forestry workers is expected to fall slightly through 2010, although there will be a steady demand for lumber and other wood products. Mechanization of logging operations, improvements in logging equipment, and restrictions on the volume of public timber available for harvesting will continue to depress employment opportunities.
As a result of mechanization and automation, timber companies can log more efficiently while doing less harm to the environment. Huge "feller-bunches" have often replaced individual loggers in second-growth forests. These vehicles are built like tanks and have enormous "scissors" mounted on the front; they are able to snip mature trees and lay them down carefully to avoid smashing small, still-growing ones. Additionally, mechanized skidders that are used to haul logs out of the forest are being fitted with extra-wide tracks or oversized tires to spread their weight and reduce damage to the forest floor.
Timber companies are also experimenting with different forestry techniques. After harvesting, some loggers are leaving behind the odd mature tree, dead-sun-silvered trunks, and the usual litter of the woods. The hope is that, as new trees grow, their surroundings mimic what would follow a natural fire or windstorm, which a forest can survive.
Timber shortages and the possibility of higher lumber prices over the long-term are encouraging the creation of new offerings and the promotion of relatively inexpensive existing products. To fend off challenges, the industry is focusing on promoting such engineered wood products as oriented strand board and particleboard.
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