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Authors: John Perez-Garcia, J. Kent Barr, Jean M. Daniels
The study produced an assessment of the lumber manufacturing sector. It analyzed the changes in this sector and its relation to timber harvest levels. The study's objective was to determine whether Washington 's sawmilling sector can expand or not, given a projection of future timber harvest levels.
We analyzed the Washington State Department of Natural Resources mill surveys from 1968 to 2002. The analysis first defined five timbersheds in western Washington and two timbersheds in eastern Washington . The study then focused on an analysis of capacity utilization by the sawmilling sector. We produced trends of utilization rates and discussed potential reasons why the rates have changed over time and among timbersheds. Periods of high prices were related with periods of high utilization rates, with exception. During the 1980's, there occurred a shutdown of capacity that improved the average utilization rate for the sector following a collapse of high lumber prices in 1979. Currently, the average utilization rate is at historically high levels as one might expect given the strong U.S. housing sector. Lumber prices have recovered from a short period of lower prices, and they are currently at near-high levels providing impetus to the high capacity utilization in the sawmilling sector. We also found differences in the utilization rates among the timbersheds, and they are presented in the body of the report.
We followed the capacity utilization analysis with an assessment of log consumption. Log use by the sawmilling sector within respective timbersheds was compared with the timber harvest level. Except for the South Coast, Southwest and eastern Washington timbersheds, sawmills were now, by far, the main consumer of the harvest level. Substantial amounts of saw logs continue to move from one timbershed to another. In 2002 approximately 600,000 mbf of timber was transported across timbershed boundaries to be used by sawmills in other timbersheds. Timber heading to Oregon continued to be significant, and logs imported from British Columbia were now occurring.
We examined the potential supply of timber for western Washington timbersheds. The complexity of projecting uneven-aged stands found in eastern Washington limited the analysis to western timbersheds. While the projection was considered preliminary, it was a useful first step to gauge the wood availability required to maintain or expand the sawmilling capacity in western Washington. Further sensitivity analysis is required but was beyond the scope of this phase of the research. The projections indicated that current harvest levels can be sustained, and in the South Coast timbershed, the harvest level can be increased over the next several decades. There did not appear to be any indication that the harvest level will fall below the current level of 2.8 billion board feet. Timber inventories in all timbersheds revealed a significant growth in volume in older age classes given the projected harvest level suggesting there exists the potential for a higher, future harvest level if these forested lands were made available for timber production.
Our projections assumed current harvesting conditions will continue to exist into the future. One conclusion we draw from the analysis is that the biological potential of the timber land itself will not likely be a constraining factor in future timber harvest levels. Rather, regulatory and land-use factors are more likely to impede a harvest level that coincides with the biological potential of the forested lands.
There are important policy implications from our findings. Lumber manufacturing in Washington has become the principal consumer of wood fiber in the state, and we projected, given their current high rates of capacity utilization by existing mills and the biological potential for increasing harvest levels, that lumber manufacturing can expand. While Washington 's forest products sector has changed substantially due to the significant decline in timber harvest level over the past decades, the sawmilling sector has maintained its level of use of the harvest during this time. There has been a substantial decline in the number of sawmills, and the volume of log that crossed timbershed boundaries continues to be significant, but still, lumber manufacturing, a sector that consumed a small percentage of the log harvest level 20 years ago, is now the predominant end-user of logs harvested in Washington, and it is in a position to grow. The change in the composition of the forest sector was not driven by a substantial growth in lumber manufacturing but rather the decline in timber harvest levels and its impacts of the other forest sectors in Washington, primarily log exports.
The lumber manufacturing sector has not been without its share of change however. There has been a consolidation of milling capacity, and with it, a reduction in the amount of labor employed by sawmills. Lumber mills in Washington have transitioned from a large number of smaller-sized mills capable of utilizing a wide range of log sizes to a consolidated sector that utilizes smaller logs with more capital and less labor. There is also much less mill-type diversity within the sector.
We conclude that harvest levels in the future are such that they should allow for lumber manufacturing to expand. We support this conclusion with the facts that capacity utilization rates have been high during the past decade and that timber harvest levels in Washington have adjusted to a lower level than in previous decades. The harvest level simulations suggested that current harvest levels are sustainable into the future over a couple of rotations. The simulations assumed conditions today will continue into the future. For this reason, further work is needed to assess changes in land-use patterns and regulatory constraints that may impact future timber harvest levels from Washington 's forested lands.
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Authors: Juha Niemela, Heikki Julin, Paul Smith, David Cohen
Background and Purpose
This research is based on the following strategic issues facing the softwood lumber industry in Western North America: 1) the economic importance of the lumber industry for Western North America; 2) factors affecting the operating environment of the industry; 3) changes in customer needs; and 4) the need for information in the area of strategic planning.
The main purpose of this study is to provide information regarding the marketing strategies employed by Western North American sawmills. The results of this study will aid strategic planning in the Western North American lumber industry, and its purpose will be achieved by describing the marketing strategies used in the Western North American lumber industry and by comparing and contrasting the marketing strategies employed by U.S. and Canadian lumber producers.
The theoretical background for this research is based on extensive research work reported by several authors in the area of strategic planning and marketing strategies. The concept of marketing strategy, especially that used in operationalization, has its theoretical and methodological base in the work by professor H. J. Juslin at the Department of Forest Products Marketing in University of Helsinki in Finland. This concept examines marketing strategy based on strategic decisions concerning: products, customers, market areas and competitive advantages. The generic competitive strategies are assessed based on Porter's (1980) model.
The data for this study were collected via personal interviews during the first half of 1991. A purposive sample of 79 companies was selected and a personal interview was conducted with 81.0 percent of the companies that were contacted. The data were analyzed using univariate methods of analysis. The results are presented mainly in two categories, namely the Western U.S. and British Columbia, Canada.
Profile of Respondent Companies
The production of respondent companies represented 65.4 percent of the total lumber production in the targeted area in 1990. Over two-thirds of the production was commodity products in both countries. British Columbia firms exported a much higher proportion of theft production (6.5 times) than the responding firms in. the Western percent. However, 92 percent of the commodity products produced in British Columbia were exported to the U.S.
According to annual gross sales, responding firms were represented by relatively more small and big companies in British Columbia than in the Western U.S. In both countries, the companies interviewed concentrate on serving just a few types of customers. The five major customer types identified buy 92 percent of the production in both countries.
The present production of companies reflects strategic decisions they made in the past This might explain the differences found between production figures and product strategies. The present product strategies should be actualized in the future. The product strategies give a clear indication that 9ompanies in British Columbia are moving from commodity products to spe¬cialty and custom-made products. in the Western U.S., commodity products are still being emphasized quite heavily; however, some indication of a move toward specialty and custom-made products can be observed.
According to customer strategies, companies in both countries are rather selective when choosing the customers to be targeted. Western U.S. companies are more selective versus responding firms in British Columbia. That is somewhat surprising, because Western U.S. companies continue to emphasize a commodity product strategy.
Regarding market area strategies, companies in both countries are very selective in choosing their market area. Western U.S. companies are perhaps more selective compared to responding firms in British Columbia, according to the interview results.
Connections Between Marketing Strategies And Marketing Functions
The marketing strategies are realized through marketing structures and functions. Marketing structures are marketing organization, planning and information systems, contact channels, and channels of physical distribution. Marketing functions can be divided into contact functions (personal contacts, marketing communication and market information) and product functions (product planning, pricing and physical distribution). The functional levels are presented in this study through the measurement of export marketing channels, product development and collection of market information.
Exports of products were divided into 12 different export marketing channels. British Columbia exports 85 percent of its production (most to the U.S.) compared with only 13 percent of responding U.S. firms' production going to international markets. In general, British Columbia companies seem to be using somewhat more direct contacts with end-users and they also use more domestic agents than companies in the Western U.S.
Over half of the companies in the Western U.S. and over two-thirds in British Columbia are pursuing continuous and systematic product development The companies with no product development (less than 15 percent of all responding firms) are found among the companies that are applying a commodity products strategy, a specialty products strategy or a combination of these two., The most important stating point for product development in both countries was to more effectively utilize raw materials and adapt production to raw material possibilities. For companies applying a specialty products strategy, raw materials seem to be an even more important stating point than for companies applying other product strategies.
In general, responding firms did not perceive a great deal of difficulty in connection with research and development. The largest problems in the Western U.S. appear to be the economic resources and the organization of research and development In British Columbia the largest problems are technological and economic resources.
In both countries, most of the companies are collecting market information either continuously or occasionally. Also in both countries, companies applying a commodity product strategy or a specialty product strategy appear to be more occasional and casual in their collection of market information.
Connections Between Marketing Strategies and Profitability of the Companies
In the Western U.S., over 70 percent of the responding companies were profitable, whereas in British Columbia under half of the companies were profitable in 1990. Only 37 of the 64 responding firms in both countries provided information on their profitability. The connections between marketing strategies and profitability were not found to be statistically significant