Global competition closes Texas sawmills/paper mills

07/07/04



Abitibi-Consolidated closed two of its newsprint mills in East Texas early this year, this one in Lufkin and the other near Houston. (Cary Sims Photo)

Full size image available here.

OVERTON, TX While Texas' consumption of hardwood and softwood wood has increased increased in the last two decades, the number of sawmills and paper mills has decreased.

The mill closings have resulted in large loses in jobs and revenue to East Texas communities, said Dr. Darwin Foster, Texas Cooperative Extension forestry specialist.

The number of mills both large and small, has decreased, but as larger mills have become computerized and automated, they have also become more efficient. Less wood is wasted to produce lumber, paper and other wood products.

More efficient means less need for labor. With many communities depending heavily on the forest products industry, these changes present serious challenges, Foster said.

For Texas, timber represents $12.9 billion in direct industry output, a number which includes money received for harvested trees as well as wholesales prices received for wood products. The total economic impact is an estimated $22.1 billion per year. In East Texas, brings in 35 percent of the region's agricultural income. This translates to 80,000 wood-based jobs and $2.9 billion in wages and salaries yearly.

Lost mills also means changes for those growing timber, as automated sawmills need less timber, and have little use for smaller trees. Paper mills, of which two were lost, also used smaller trees, Foster said.

Timber growing is a long-term venture. Many growers counted on the mills continuing to need all their timber, even smaller trees that are periodically thinned so larger trees can grow.

Ironically, as Texas mill capacity has remained about the same, Texas' demand for wood has increased several fold. From 1982 to 2003, softwood consumption increased from 380 million cubic feet to 488 million; hardwood consumption from 70 million to more than 111 million, according to a U.S. Forest Service inventory.

In the same time period:

  • The number of small sawmills decreased from 56 to 43;
  • Large sawmills from 20 to 14;
  • Paper and paperboard mills from seven to four; and
  • Wood treating plants from 27 to 10. The number of particle board mills did increase from zero to five, taking some of the loss from plywood mills. And the number of hardwood veneer mills remained the same.

    With increased demand for more product, why aren't the number of mills increasing?

    The answer, Foster said, is complex, having largely to do with the economy becoming global and the cost of doing business in the United States. Higher labor and transportation costs combined with increased emphasis on environment quality have made southern U.S. sawlog prices some of the highest in the world. The total cost of producing pine sawlogs in the United States is 150 percent higher than that of Sweden and 300 percent of Brazil.

    Ed Barron, associate director of the Texas Forest Service, cites newsprint prices as an example of the global interdependency.

    In the early 2000s, Asian newsprint paper mills, using recycled paper, began coming on line. These mills supplied Asian markets and didn't compete with U.S. mills for domestic markets but did have a big effect on U.S. exports. The result was oversupply and reduced prices. Also a factor was changing reading habits of the America public. Increased competition from electronic media reduced the need for newsprint, Barron said.

    In response, Abitibi-Consolidated closed two of its newsprint mills in East Texas early this year, one in Lufkin and the other near Houston. The closing of the Lufkin plant alone meant 580 lost jobs.

    Despite these factors, Barron and Foster remain positive about the outlook of the East Texas timber industry. The remaining larger mills are modern and efficient. East Texas produces some of the highest-quality pine lumber in the world. As the U.S. economy appears to be recovering from the recession, the timber industry is poised to take advantage of expanding demand.

    "I think we've seen the worst and we're now well positioned," Barron said. "But we are unlikely to see a significant number of new mills open in the near future."

    Source: Eurekalert & others

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