Lumber and Wood Products
Historical Development
With trees growing down to the shores of navigable waters, the land around Puget Sound was described by early observers as a "lumberman’s paradise." In the 1850s, investors from California built the first lumber mills on the Kitsap Peninsula to supply the booming gold rush economy in California. Mills were soon established elsewhere in the Puget Sound. Between 1849 and 1859, lumber production had increased from four million board feet to 77 million board feet. The lumber industry in Washington did not grow substantially until 1883, when the North Pacific Railroad built a transcontinental line across the Cascade Mountains to Tacoma. The rail line opened up new markets to the east, not only for lumber, but also for agricultural products, and dramatically affected the course of events in Washington.
Significant developments in the early 1900s (Weyerhaeuser Company, the largest private-land owner in the state made its first land purchase and the Federal government establishes national forest reserves) and continued expansion resulted in Washington becoming the nation’s number one lumber producer in 1905 milling 3.9 billion board feet. Following World War I, Washington witnessed the last phase of the lumber industry’s "great expansion." The Roaring Twenties increased the demand for Washington lumber to its all-time peak of 7.5 billion in 1926. In addition to growth, the lumber industry experienced major diversification. Although lumber continued to constitute the principal product, shingles and other wood products (e.g., plywood, millwork) began to emerge as part of the industry.
Softwood Lumber and Plywood Production in Washington, 1970-1998
Sources: Western Wood Products Association and APA-The Engineered Wood Association
For more detail of above graphic
Like the national economy, the broad-based lumber industry suffered its hardest blow during the Great Depression. Lumber production fell precipitously in response to the steep decline in house construction and by 1932 mills in Washington were operating at one-fifth of total capacity. Although the Washington lumber industry rebounded in the late 1930s, it has never approached the record production levels achieved during the previous decade. Over the past sixty years, the lumber industry has exhibited ups and downs, but no long-term growth in production.
During the last five years, lumber production in Washington has averaged 3.8 billion board feet, about 11 percent of the nation’s total softwood lumber production. The lumber industry also declined in relative importance, having lost its position as the state’s leading manufacturing employer to aircraft and then later dropping to the number three manufacturer behind aircraft and food processing. This overall decline, however, was offset by the diversification and growth in other sectors of the lumber and wood products industry, principally plywood and veneer. Plywood production in Washington peaked during the early 1970s, producing more 11 percent of the nation’s output. Since then, Washington’s plywood sector has declined in both absolute and relative terms. While the national industry has exhibited modest growth during the last two decades, the state plywood sector has languished. Over the past five years, plywood production has averaged 1.1 billion square feet, representing about five percent of the national market share.
Employment in Washington’s Lumber & Wood Products
Industry, 1947-1998
Source: Washington Employment Security Department
For more detail of above graphic
Definition of Industry
The lumber and wood products sector is a component of the forest products industry, which is comprised of both timber production and primary and secondary processing of wood products. Following standard industrial classification procedures, the lumber and wood products sector is composed of 17 industrial categories. These can be organized into the following seven industry groups:
Logging (SIC 241): engaged in harvesting or cutting timber and processing rough primary wood raw materials.
Sawmills and Planing Mills (SIC 242): engaged primarily in producing rough, sawed, or planed lumber; hardwood dimension and flooring; and shakes and shingles.
Panel Board Mills (SIC 2435, 2436, 2493): engaged in producing hardwood veneer and plywood; softwood veneer and plywood; and reconstituted wood products such as particleboard, medium density fiberboard, waferboard, and oriented strandboard (OSB).
Millwork (SIC 2431, 2434, 2439): involved in millwork (including doors and windows, moldings, trellises, and railings; manufactured wood cabinets; and producing laminated and fabricated trusses, and other structural members.
Wood Containers (SIC 244) involved in making wood boxes, pallets and skids, and various other wood containers.
Wood Buildings (SIC 245): involved in producing prefabricated wood buildings and components and other manufactured housing.
Miscellaneous Wood Products (SIC 2491, 2499): engaged in treating wood with preservatives; and manufacturing miscellaneous wood products, such as wood dishes, clothes racks, rollers, dowels, stepladders, and yardsticks.
In recent years, increasing interest has been directed toward the development potential of secondary wood manufacturers (also called value-added manufacturers or wood remanufacturers) in forest products-dependent regions. These manufacturers are a disparate grouping of various value-added segments, including millwork, kitchen cabinets, wood containers, prefabricated buildings, wood preserving, and structural wood members. Secondary wood manufacturers produce a wide variety of products including moldings, doors, window and door frames, trellis, cabinets, laminated trusses, treated lumber, wood containers, pallets and skids, prefabricated floors and sections, and innumerable miscellaneous products.
Primary wood manufacturers still dominate lumber and wood products in Washington, accounting for over three-fourths of the industry’s establishments and over two-thirds of the sector’s employment. Primary wood products of logging, lumber and plywood have been relative decline; whereas secondary wood products have gained employment. Growth, however modest, is occurring within secondary wood manufacturing. While overall industry employment has declined by one-fourth between 1981 and 1998, secondary wood manufacturers have increased employment by nearly two-thirds.
Number of Establishments in Washington’s Lumber & Wood
Products Industry, 1981-1998
Source: Washington Employment Security Department
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Number of Employees in Washington’s Lumber & Wood
Products Industry, 1981-1998
Source: Washington Employment Security Department
For more detail of above graphic
Size of Establishments of Washington Lumber & Wood Products
Industry, 1998
Source: Washington Employment Security Department
For more detail of above graphic
Industry Characteristics and
Issues
The lumber and wood products industry in Washington has changed significantly over the years. However, several industry characteristics and issues faced by the state industry have remained relatively unchanged throughout its history.
- Importance of national and foreign markets. The state lumber and wood products
industry has always been primarily an export industry, shipping products out of state. Raw
logs remain a significant part of the foreign export mix, though in recent years the
volume has declined. Other primary products of lumber, plywood, and panels have increased
their relative share of the export wood basket, while secondary ("value-added")
products has shown substantial potential. According to a recently published study, Foreign
Exports and the Washington State Economy, foreign exports from the lumber and wood
products sector amounted to $1.9 billion in 1995, more than a quarter of the
industry’s annual output. In 1998, foreign exports of lumber and wood products
amounted to $1.2 billion.
- Industry volatility. The lumber and wood products industry has been subject to wild swings in production and employment. Given its trade-dependency, the demand for wood products has been shaped by national and international forces. While the Great Depression and post-World War II imparted the greatest swings in lumber production, its volatility remains a characteristic of the industry because of its strong ties to the cyclical housing market. For instance, during the severe national recession between 1978 and 1982, U.S. housing starts fell nearly 50 percent—from 2.0 million units to 1.1 million units. Washington lumber and plywood production dropped from 4.2 billion board feet to 3.1 billion board feet and 2.1 billion square feet to 1.2 billion square feet, respectively.
- Timber supply. The availability of timber has played a crucial role throughout the history of the Washington lumber and wood products industry. For nearly a hundred years, timber supply in Washington did not constrain industrial development. The situation began to change around the turn of the century when the Federal government established national forest preserves. The era of cheap timber in Washington ended in the 1940s; relative prices for lumber and wood products more than doubled between 1930 and 1950. Although some have argued "[that there is] no chance the Evergreen State will ever run out of trees," state and federal policy changes enacted during the 1990s greatly restricted timber harvests on state and federal forests lands. Washington’s 1998 timber harvest of 4.0 billion board feet was one-third less than the 1970-98 average. Despite these harvest declines, the industry has become more efficient in converting raw wood materials to final products.
- Employment and productivity. Considering technological gains (which have improved labor productivity), and substantial harvest declines, it is not surprising that direct employment in lumber and wood products has also declined. However, employment declines are significantly lower than harvest declines. Lumber and wood products producers have concentrated in making labor more efficient, particularly because higher stumpage prices have resulted in timber becoming a higher portion of the finished product cost than labor.
U.S. Softwood Lumber Production and Housing Starts, 1964-1998
Sources: U.S. Census Bureau and U.S. Forest Service
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Washington Timber Harvest and Total Lumber & Wood Products
Employment, 1970-1998
Sources: Washington Department of Natural Resources,
U.S. Bureau of Economic
Analysis
For more detail of above graphic
The labor force in the lumber and wood products sector is dominated by operatives and laborers. Common lumber and wood products occupations within this group are wood machinists, machine operators and feeders, cabinet makers, assemblers, millwrights, industrial truck operators, truck drivers, and general laborers. Forestry occupations are also important in lumber and wood products, primarily due to the inclusion of logging activities. Although roughly two-thirds of lumber and wood products workers are within the operatives and laborer grouping, a sizeable share of employees are classified as forestry. Occupations within forestry include fallers and buckers, choke setters, log handling equipment operators, and logging tractor operators.
Table 1
Occupational Profile of Lumber and Wood Products Workers in
Washington,
1998 and 2008
Source: Washington Employment Security Department
Estimated 1998 |
Projected 2008 |
|||
| Lumber & Wood, SIC 24 | Estimated Employment | Percent of Total Employment |
Projected Employment |
Percent of Total Employment |
| Managerial & administrative | 1,878 |
5.2% |
1,826 |
5.4% |
| Professional, paraprofessional & technical | 1,467 |
4.1% |
1,536 |
4.5% |
| Sales & related occupations | 598 |
1.7% |
586 |
1.7% |
| Clerical & administrative support | 2,370 |
6.6% |
2,057 |
6.1% |
| Service occupations | 333 |
0.9% |
276 |
0.8% |
| Agriculture, forestry & fishing | 4,639 |
12.9% |
4,437 |
13.1% |
| Production, operating & maintenance | 6,117 |
17.1% |
5,684 |
16.7% |
| Operators, helpers & laborers | 15,298 |
42.7% |
14,574 |
42.9% |
| Undefined occupations | 3,143 |
8.8% |
3,016 |
8.9% |
| TOTAL | 35,843 |
100.0% |
33,992 |
100.0% |
Current Status and Contribution to State’s Economy
Over its 145–year existence, the Washington lumber and wood products industry has grown from a handful of lumber mills with scores of loggers and laborers on Puget Sound into a large and diversified industry of sawmills, plywood and veneer plants, special product millwork plants, prefabricated wood building companies, and reconstituted wood products and structural wood member plants.
In 1996, the lumber and wood products industry produced an estimated $7.0 billion of output. The lumber and wood products industry employed 34,692 people and paid wages in excess of $1.18 billion during the year. In 1998, the lumber and wood products was the state’s third largest manufacturing sector (2-digit Standard Industrial Classification), behind transportation equipment (which includes aerospace, shipbuilding, and motor vehicles), and food processing. In terms of state’s share, lumber and wood products accounts for 10 percent of manufacturing output, 9 percent of manufacturing employment, and 8 percent of manufacturing covered wages.
The average lumber and wood products industry worker in 1998 earned an annual salary of $34,955.
Table 2
Real Average Wages for Washington Lumber & Wood Products
Workers,
1981-1998 (1998 dollars)
Sources: Washington Employment Security Department,
U.S. Bureau of Economic Analysis
| Sector | 1981 |
1983 |
1985 |
1987 |
1989 |
1991 |
1993 |
1995 |
1997 |
1998 |
| Logging | ||||||||||
$36,472 |
$36,529 |
$33,122 |
$31,051 |
$31,147 |
$31,075 |
$31,988 |
$33,402 |
$34,443 |
$34,760 |
|
| Sawmills and Planing Mills | ||||||||||
$37,922 |
$37,384 |
$37,521 |
$36,477 |
$35,195 |
$35,780 |
$36,772 |
$38,513 |
$40,493 |
$41,714 |
|
| Millwork, Plywood & Str. Mem. | ||||||||||
$31,733 |
$30,030 |
$28,386 |
$26,883 |
$26,190 |
$25,416 |
$26,416 |
$26,522 |
$27,085 |
$27,987 |
|
| Wood Containers | ||||||||||
$23,569 |
$20,834 |
$21,488 |
$20,783 |
$17,781 |
$16,988 |
$17,295 |
$17,485 |
$18,674 |
$19,993 |
|
| Wood Bldgs. & Mobile Homes | ||||||||||
$31,077 |
$32,957 |
$29,726 |
$28,656 |
$27,582 |
$28,091 |
$28,322 |
$28,731 |
$28,135 |
$28,723 |
|
| Miscellaneous Wood Products | ||||||||||
$27,163 |
$26,396 |
$24,820 |
$23,314 |
$24,939 |
$25,939 |
$25,684 |
$26,794 |
$27,832 |
$31,610 |
|
| Primary wood products | ||||||||||
$36,651 |
$36,261 |
$34,947 |
$33,612 |
$33,151 |
$33,178 |
$34,439 |
$35,870 |
$37,843 |
$38,734 |
|
| Secondary wood products | ||||||||||
$28,154 |
$26,764 |
$25,390 |
$24,506 |
$24,013 |
$24,628 |
$25,264 |
$24,956 |
$25,304 |
$26,911 |
|
| Total, Lumber & Wood Products | ||||||||||
$35,344 |
$34,720 |
$33,086 |
$31,730 |
$31,167 |
$30,956 |
$31,921 |
$32,940 |
$34,224 |
$34,955 |
|
| Total manufacturing | ||||||||||
$38,352 |
$37,909 |
$38,024 |
$37,876 |
$37,338 |
$37,667 |
$38,018 |
$38,942 |
$40,954 |
$42,247 |
|
| Total nonfarm | ||||||||||
$28,783 |
$27,789 |
$27,313 |
$27,304 |
$27,167 |
$27,928 |
$28,575 |
$29,046 |
$31,504 |
$33,922 |
|
Average Hourly Wages for Washington Lumber & Wood Products
Workers, 1997
Source: Washington Employment Security Department
For more detail of above graphic
Economic Contribution of
Lumber and Wood Products to Washington State
The economic contribution of lumber and wood products on the state emanates from the employment, wages & salaries, and in-state expenditures for goods and services associated with the industry’s sales to final markets.
How important is lumber and wood products in Washington State? One set of studies looks at the relative proportion of a state’s lumber and wood products share of gross state product and compares it with the nation. The observation that a state’s share concentrates in lumber and wood products suggests that the state produces more than it needs and therefore exports the surplus. A simple measure used for lumber and wood products export is a location quotient, an index of production (or gross state product or employment) concentration which assesses an industry’s share of total production (production (or gross state product or employment) in a state. Production is put into index form by dividing its relative share in the state by the industry’s relative share of total production in the nation. An index number greater than 1 suggests that the state produces a surplus in the lumber and wood products sector which is exported elsewhere. Accordingly, an index number of 1 would indicate little or no trade while an index number less than 1 would suggest that the state imports lumber and wood products. In terms of gross state product, Washington lumber & wood products had an overall index of 2.5 in 1997, implying that a substantial portion of its production is shipped outside the state. In 1998, lumber and wood manufacturers exported products valued at $1.2 billion.
Gross State Product, like its national counterpart, is the broadest measure of economic activity. In 1997, Washington Gross State Product amounted to $172.3 billion, with lumber and wood products directly accounting for $2.3 billion or 1.3 percent of the state’s total. Lumber and wood products share of Gross State Product has declined between 1977 and 1997.
Washington Lumber & Wood Products: Location Quotient &
Share of Gross State Product, 1977-1997
Source: U.S. Bureau of Economic Analysis
For more detail of above graphic
Outlook
Employment in lumber and wood products is expected to continue to decline in both absolute and relative terms throughout the forecast period. By 2020, lumber and wood products jobs are projected to decline by 3.5 percent. Primary wood manufacturers are expected to bear the brunt of employment losses during the 2000-2020 period. Secondary wood manufacturers, however, will experience some gains in employment.
Washington Lumber & Wood Products Wage & Salary
Employment Forecast, 2000-2020
Sources: Washington Office of Financial Management,
Washington Employment Security
Department
