SIC 0831
FOREST NURSERIES AND GATHERING OF FOREST PRODUCTS

This category covers establishments primarily engaged in growing trees for purposes of reforestation or in gathering forest products. The concentration or distillation of these products, when carried on in the forest, is included in this industry. Forest products typically gathered are: balsam needles, ginseng, huckleberry greens, maple sap, moss (including Spanish and sphagnum varieties), teaberries, and tree gums and barks. The industry also includes forest nurseries; rubber plantations; gathering, extracting, and selling of tree seeds; lac production; and distillation of gums, turpentine and rosin, if carried on at the gum farm.

NAICS Code(s)

111998 (All Other Miscellaneous Crop Farming)

113210 (Forest Nurseries and Gathering of Forest Products)

Industry Snapshot

The U.S. forest products industry (FPI) produces about $260 billion worth of goods annually according to the American Wood Preservers Institute. The industry employs approximately 1.3 million in the planting, growing, managing, and harvesting of trees and in the production of wood and paper products. The FPI ranks among the top 10 manufacturing employers in 46 of the 50 states, with an annual payroll of around $46 billion, although between 1997 and 2002, the industry shuttered 72 paper mills and trimmed 32,000 jobs. Oregon, Washington, and California are the largest timber producing states, accounting for roughly three-fourths of Western timber production in the early 2000s. Timber is also the South's largest agricultural product, employing one of every nine southern manufacturing workers.

About one-half of the United States is covered with trees. This represents about two-thirds of the presettlement forested land in the country. Two-thirds of America's forest land, or about 500 million acres, is classified as timberland, or forest capable of growing 20 cubic feet of wood per acre per year. Of this, roughly 30 percent is owned by the federal government and by state and local governments, while about 60 percent is in relatively small tracts owned by individuals, and the remainder is owned by the FPI. About 4 million tree seedlings are planted in the United States daily.

Organization and Structure

The term "forest products industry" is used to describe all industries dependent upon forest products including the lumber, wood pulp, and paper industries and those activities covered by SIC 0831. However, those activities covered by SIC 0831 are a relatively small part of total FPI activities.

Since the mid-1950s, the forest products industry shifted from a proliferation of companies operating in specialized areas toward a consolidation of operations within large, diversified conglomerates with national and international interests. Reflecting these patterns, most forest nurseries and operations involved in the gathering of forest products became affiliated with larger operations in the parent industries of SIC: 6519 Timber Tract Real Estate or SIC 2411: Logging. Furthermore, in 1986 the standard industrial classification (SIC) system itself was altered to reflect industry trends toward less specific groups. That year, SIC 0831: Forest Nurseries and Gathering of Forest Products was created by merging three formerly independent forestry-industry categories: SIC 0821: Forest Nurseries and Seed Gathering, SIC 0842: Extraction of Pine Gum, and SIC 0849: Gathering of Forest Products, Not Elsewhere Classified.

Background and Development

In 1995, approximately five new trees were planted for every American. Approximately 43 percent of these 1.6 billion seedlings were planted by the FPI. Naturally regenerated trees totaled in the millions. In the 1980s and early 1990s, forest nurseries were affected by increased efforts at global reforestation. Fighting on behalf of cleaner air, endangered species such as the northern spotted owl, and the ecological preservation of old-growth and tropical forests, environmental groups gained tremendous clout. Regarding the spotted owl, only 200 pairs were known in the 1970s, but by early 1992, approximately 3,510 owl pairs were known. In 1995, estimates in California alone were as high as 8,000 pairs. In addition, numerous studies tied the effects of deforestation to depletion of the earth's protective ozone layer and the subsequent warming of atmospheric temperatures. Tree nurseries kept up with increased reforestation efforts. During fiscal 1990, public and private forest owners in the United States regenerated 2.86 million acres by tree planting and artificial seeding. Most forest products companies developed third-generation seedlings to genetically maximize growth, height, shape, and resistance to drought and disease on their tree farms. Such seedlings often yielded increases of 50 to 60 percent per acre of timber. From 1985 to 1995, forest product companies spent more than $100 million on wildlife and environmental research, employing more than 90 wildlife biologists. During this time, approximately $400 million of land (about 1 million acres) was donated by the FPI for conservation, recreation, and social causes. In 1994, the industry aligned itself with the U.S. Department of Energy to create Agenda 2020, which is an effort to address environmental and productivity improvements during the next century.

Many of these efforts were aimed at reversing a decline in U.S. forest acreage that began in the early 1970s and continued well into the 1980s. It is estimated that the United States lost nearly 1.5 million acres of forest land each year during this period. However, reforestation efforts began to take hold in the 1990s and U.S. forest depletion dropped to about 500,000 acres annually. Despite these efforts government sources still predicted a 4 percent decline in U.S. forest land by 2040. Also continuing into the twenty-first century was the ongoing conflict between those forces that want to use public and private forest land for environmentally conscious purposes and those forces that are market driven. Activists were also beginning to rally against genetically modified trees, fearing that wind-borne pollen, which could travel up to 600 kilometers, would trigger unanticipated hazards.

Approximately 95 percent of the bark and wood residues from producing lumber and plywood were used for energy and other products. By some estimates more than 90 million short tons of paper and paperboard were used every year in the United States by the 1990s. By then, Americans recovered about 45 percent of all paper used in the United States, and the paper industry had set a goal to recover more than half of all paper in use by the year 2000. By the late 1990s, Americans were using, on a per capita basis, 749 pounds of paper annually, or the equivalent of a tree 100 feet high and 16 inches in diameter.

The overall paper and forest products industry was on the upswing between spring 1997 and fall 1998. However, this recovery over previous years was set back by the Asian economic crisis. The driving force behind this improvement was largely due to increased activity in paper and packaging. But as this economic sector retreated markedly in late 1998, the wood products sector, which had been slow earlier, began picking up. This revival continued especially through the second quarter of 1999.

Exports have played an increasingly important role in the FPI. In fact, according to Standard & Poor's, 65 percent of the industry's shipment growth between 1988 and 1998 came from export sales. In 1998, exports by U.S. paper manufacturers totaled $13.7 billion. Although this was down 5.5 percent from 1997, that year tallied the second highest total on record. These exports represented 8 percent of the industry's 1998 shipments. Industry exports of paper, pulp, and various forest products totaled 12 million tons in 1998, down from 13 million tons in 1997.

It is estimated that in 1998 the FPI employed about 20.4 million workers. Many of these workers were classified as forest products technicians and forestry technicians. The former performed supervisory and technical jobs, mostly for private companies that operated lumber mills or manufactured wood products. Salaries for this classification ranged from $18,000 to a little more than $21,000. Forestry technicians aided professional foresters in the management of forest resources and work for government agencies as well as private companies. The pay scale for this job classification varied greatly, from $12,500 to $28,000 a year, depending on education and experience.

Another job classification in the FPI was that of Forester. Foresters worked for private industry and government agencies and performed a wide variety of tasks. Foresters were required to have a bachelor's degree and many had masters and doctorate degrees. The average starting salary for foresters ranged from $19,500 to nearly $43,000 depending on education. In 1997, the average salary for federal foresters, including those in supervisory positions, was $47,600.

Like many other sectors of the U.S. economy, the FPI went through a process of acquisitions and mergers in the late 1990s. Major transactions included a $6.5 billion merger between Jefferson Smurfit and Stone Container in 1998. The resultant Smurfit-Stone Container Corp. became the world's leading paper based packaging company. In 1999, International Paper Co. acquired Union Camp in a stock deal valued at $7.9 billion, and Weyerhauser reached an agreement to purchase Canada's MacMillan Bloedel for $2.45 billion. According to economist Richard Diamond these industry mergers and acquisitions were driven by a number of motives including economic efficiency, diversification, self-defense, and market power.

Current Conditions

In the United States, the largest timber holding companies also are the largest forest nursery and forest product gatherers. In 2003, some of the largest forest product companies were International Paper, which acquired Champion International in 2000 and boasted 2003 sales of $25.2 billion and 91,000 employees; Weyerhaeuser, with sales of $19.8 billion; Boise-Cascade, with sales of $8.2 billion and 24,111 employees; and Smurfit-Stone, with sales of $7.7 billion and 38,600 employees. Kimberly-Clark, with sales of $14.3 billion, is a major manufacturer of personal paper products, but in 1999 it began divesting itself of its timberland operations. In June of that year, for instance, the company sold 460,000 acres of timberland in Alabama, Mississippi, and Tennessee to Joshua Management LLC for approximately $400 million. As of 2004, Kimberly-Clark was planning to spin off its paper, pulp, and timber assets as a separate entity.

Despite the preeminence of these giant companies, many of which are major paper manufacturers, the FPI also is populated with small nurseries, maple syrup producers, owners of small timbered tracts who have them logged for personal income, and even individual ginseng gatherers. Other small companies focus on unique products, such as, sphagnum peat moss, bark nuggets, and mulches. Because of the diverse nature of the SIC 0831 classification and the fact that much of the economic activity represented by it comes from individuals and small cottage industries, comprehensive economic statistics are difficult to come by.

One niche of the FPI that does get reported is maple syrup production. In 2002, U.S. forests produced 1.4 million gallons of maple syrup worth $38.3 million. Total

production was up from 1.0 million gallons in 2001, but down from 1.5 million gallons in the mid-1990s. New England states produced nearly $23.1 million worth of maple syrup, with Vermont leading with 500,000 gallons. Between 2001 and 2002, maple syrup exports increased from 4.61 million gallons to 4.67 million gallons, while imports grew from 1.04 million gallons to 1.39 million gallons. Maple syrup prices declined from $28.61 per gallon to $27.56 per gallon over the same time period.

Ginseng is a medicinal root that traditionally has been gathered in the wild and exported to China and other Asian countries. Most gathering is done by individuals under permits issued by states. Although wild ginseng commands the highest prices, the herb also is cultivated on farms.

Further Reading

Arzoumanian, Mark. "Overvalued Dollar Threatens Paper Industry." Paperboard Packaging, May 2002, 42.

Diamond, Joseph, Daniel Chappelle, and Jon Edwards. "Mergers and Acquisitions in the Forest Products Industry." Forest Products Journal, April 1999, 24-35.

Forest Products Industry. Forest Products Industry Analysis Brief. Washington DC: Energy Information Administration, 31 August 2000. Available from http://www.eia.doe.gov/emeu/mecs/iab/forest_products.html .

"Outlook 2000 Looks Promising." Pulp & Paper. January 2000, 39-59.

Routson, Joyce. "North American Industry Outlook Bright Over Next Two Years." Pulp & Paper, January 2000, 36-48.

Western Wood Products Association. WWP: Western Wood Products Association. Portland, Oregon: 10 October 2003. Available from http://www.wwpa.org .

U.S. Department of Agriculture. New England Agricultural Statistics Service: Maple Syrup. Concord, NH: New England Agricultural Statistics Service, 2003. Available from http://www.nass.usda.gov/nh/maple.htm .