WHITEFISH – A timber expert from the University of Montana painted an expectedly bleak picture of the state of the forest industry at the 38th annual gathering of the Montana Wood Products Association, though he highlighted several key market opportunities on the horizon.
On Sept. 23, Charles Keegan III, former director of forest industry and manufacturing research at UM’s Bureau of Business and Economic Research, spoke at the Grouse Mountain Lodge to a crowded room of regional forestry and wood products officials. The conference’s theme was “The Future of Fiber.”
Keegan’s presentation, titled “The Timber Industry Now and Into the Future,” said while there “could be additional mill closures in the state,” he anticipated a “decent recovery” for Montana’s wood products industry in 2012. The conference was also the Forest Resource Association’s western region fall meeting.
More specifically, Keegan discussed the opening of new market opportunities in energy, biochemicals and possibly carbon markets. He also said fire hazard reduction efforts are needed to clear dead trees and debris, which would put loggers to work.
Key to some of the emerging opportunities is mill residue, such as sawdust, log ends, bark, trim and shavings.
“Mill residue,” Keegan explained succinctly, “is the stuff that comes off the log after the primary product like lumber is manufactured.”
Keegan said there are more than 850 million dry tons of woody biomass on 20 million acres of timberland in Montana. Of that total, about 40.3 million dry tons on 3.6 million acres are potentially available for utilization, though 70 percent is located on national forests, which Keegan called “a bit of a concern in terms of availability.”
But while availability to live and dead trees in the state’s timberland may be constrained, Keegan described a demand for mill residue products, even with the shuttering of the Smurfit-Stone Container Corp. mill in Frenchtown.
Keegan showed a graph depicting a historically sizable gap between the demand for mill residue products and the actual amount produced in Montana. He also said there’s continual demand from the inland West, such as Eastern Washington.
Mill residue production largely follows the trends of timber harvesting. When fewer logs are sent to sawmills, less residue is produced. But when residue’s available, it’s eagerly utilized. And it’s less expensive than transporting products from the forest, Keegan noted.
Facilities, including sawmills, that require woody biomass for processing or heating often prefer mill residue over slash because it’s cleaner, according to a report by UM’s Todd Morgan, who is Keegan’s successor at the research bureau. Some Montana schools use mill residue in their boilers.
Keegan’s speech came shortly after the Western Wood Products Association announced that 2009 was the worst year on record for lumber production. Keegan described several mill closures and added, “literally every single mill in Montana curtailed” operations.
Keegan anticipates a “modest uptick” in building in 2011, followed by a decent year for lumber production in 2012. He said long-term demand should be strong for lumber products. Keegan also noted that the forest products industry in competing regions, such as British Columbia, is expected to decline. The sooner industry officials can forget about 2009, the better.
“I don’t have to tell people in this room,” Keegan said, “how awful market conditions were in 2009.”