Economics of the Timber Industry

What would happen to the price of lumber if all that talk to bring timber harvests on public land back to the boom year levels becomes reality?

By John Marshall

Your cover story (Sep. 10 Beacon: “The Trials of Montana Timber”) gives a good picture of how the timber industry has evolved domestically. The side bar to the story says it all, the rapid shift in two years, 1985-1987, when the move to cutting timber on private land jumped 51 percent. This was the start of the period when companies like Georgia-Pacific and Weyerhauser moved out of harvesting on public land to private land, and with good reason. At that time the public was first being made aware that many of the timber sales made on public lands during the boom years in were being made below cost. The U.S. Forest Service was losing money throughout the Pacific Northwest with taxpayers picking up the tab, i.e. socialized logging. Few if any want to talk about this aspect of the decline of timber harvest on public land.

Then there is the rise of timber producers throughout the world that had little effect on the global lumber market in the 1980s and 1990s, but now do. Now they can grow marketable timber faster, with cheaper labor costs than anyplace in the U.S. In a world market investment capital flows in the direction where goods can be produced faster and cheaper, hence little new investment in states dependent on public lands for timber.

Finally, the question to the domestic timber industry puzzle no one, not even those currently in or gunning for public office, wants to ask or answer in today’s world timber market: What would happen to the price of lumber if all that talk to bring timber harvests on public land back to the boom year levels becomes reality? Smart money says lumber prices would get hammered with only the cheapest producers surviving, none of which are in Montana.

John Marshall
Hot Springs

Stay Connected with the Daily Roundup.

Sign up for our newsletter and get the best of the Beacon delivered every day to your inbox.