Forest Service's Young-growth Timber By George Woodbury September 18, 2014
With the current old-growth timber in Alaska, our sawmills can produce various high-value products that offset some of the disadvantages we face compared to our competitors – tougher terrain, higher energy cost, colder temperatures, distance from markets, smaller labor pool, etc. When we transition to young-growth timber we will lose most of the high-value products and we will have to find significant cost savings to keep our operations competitive. Harvesting young trees sooner can look good on a net present value analysis depending on what assumptions you make about future markets, future products and future interest rates, but it also means a huge drop in volume, thus a huge drop in economy of scale. Harvested at age 55, the timberlands might produce 15 million board feet per acre, but in another twenty to thirty years, those same timber stands will produce about 45 million board feet per acre. An adequate economy of scale is one necessity that must be restored in order for the timber industry to be competitive. The 2009 Beck report, commissioned by the Nature Conservancy, based some of their work on a young-growth mill that utilizes only 23 million board feet annually, but we don’t know of any young-growth hemlock or spruce mills of that size, certainly there must not be many. What we hear mostly is that the modern small-log mills that we will have to compete with utilize 100 million board feet of small logs annually or more. We used to have many logging and sawmill operations, but now there are very few and our economy of scale is gone. The lack of a regional equipment dealer in Southeast Alaska was mentioned at the recent Tongass Advisory Committee meeting. We spoke with Modern Machinery in Washington State and they explained that they would have to have about a million and a quarter dollars of business each month in order to have a successful dealership located in our region. Working with our loggers, we estimate that roughly 300 million board feet of logging and related road construction would be needed to generate the monthly business level that Modern Machinery described. Similar calculations can be made for trucking operations, barging operations, construction operations, etc. and various estimates can be made for the minimum annual volume needed for a viable economy of scale, but all of them will be higher than 35 or 50 or even 100 million board feet. The existing young-growth stands won’t provide this kind of timber volume, especially if the trees are harvested before they are mature. At the recent Tongass Advisory Committee meeting, the State did a good job of explaining the poor economics of our current, immature young-growth timber. The government has invested a lot of public funds in developing healthy young-growth stands in Southeast Alaska and we don’t want to see that long-term effort and the future of our industry squandered in a political scheme that is certain to fail. One solution would be to perform some commercial thinning in the young-growth stands and allowing some of those logs to be exported and some to be manufactured, while continuing to supply the promised old-growth timber to sustain our timber industry. This scenario would allow the industry to remain profitable while learning how to best utilize the young growth and would have minimal impact on the long-term growth potential of the young-growth stands. This is a more reasonable path to a successful transition to a young-growth manufacturing industry. George Woodbury
Received September 16, 2014 - Published September 18, 2014
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