The state’s forest products industry showed signs of improvement in 2011 but a full recovery is a ways off, according to University of Montana researchers.
Production, employment and wages stabilized in Montana last year after a sharp decline in 2010, but the current figures are still roughly half of what they were during the peak year of 2005, according to a report released by UM’s Bureau of Business and Economic Research on Thursday.
“Montana’s forest industry will continue to deal with a combination of local and regional factors that make major recovery in the near term unlikely,” said Todd Morgan, director of forest industry research at the BBER.
Morgan said the slow recovery from the recession and ongoing U.S. housing slump are still hampering the industry.
Total Montana lumber production in 2011 was approximately 499 million board feet, down roughly 1 percent from 2010 and down 50 percent from its 2005 level.
According to BBER’s quarterly reports on the industry, the number of production workers employed in Montana mills during the fourth quarter of 2011 was 1,567, off by less than 1 percent from the third quarter. Approximately 2,050 (57 percent) fewer production workers were employed in Montana mills during 2011 than 2005. Job losses from curtailments and permanent mill closures during the post-boom period are reflected in the state’s forest industry employment figures.
Production wages at mills were $14.2 million during the fourth quarter of 2011 compared to $14.5 million in the third quarter. The quarter-to-quarter drop in wages is largely due to shortened holiday workweeks, temporary curtailments and other efforts by mills to keep costs down while still retaining employees, the report said. Total 2011 production wages were $57.5 million, up approximately 2 percent from $56.3 million in 2010.
Log prices in Montana have remained relatively flat the past three years. The BBER report said the expected demand for logs at Montana mills over the next 60 days is good, while mills deal with the continued lack of demand for their finished products. Local log prices have not risen as much as in the Pacific coast region, which enjoys ready access to international markets. Montana mills could face higher log prices from competition with exporters.
More than two-thirds of the state’s mill managers reported a significant shortage of raw material. Few mills have full log yards, and several mills are still actively purchasing timber to ensure a sufficient log inventory going into spring, when the ground is usually too soft and wet for logging.
Estimates do not include several thousand workers in logging, trucking and related jobs.