Growing Stronger

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It was during an acceptance speech for the inaugural Sir William Schlich Memorial Award that Franklin D. Roosevelt famously called America's forests the “lungs of our land, purifying the air and giving fresh strength to our people.”¹

The president received the award in 1935 from the Society of American Foresters because of his “broad and outstanding contributions to the field of forestry.” As an avid outdoorsman and conservationist, he recognized the government’s role in protecting and promoting public timberlands. But he also challenged the industry’s leaders to do their part to ensure the health of those lungs.

“There is a new awakening to the importance of the forests to the country,” he said, “and if you foresters remain true to your ideals, the country may confidently trust its most precious heritage to your safe-keeping.”²

Roosevelt no doubt would be impressed by the strides the industry has made since then. In some ways, however, he also might be concerned about the future of forestry. By most measures, the health of American forests has never been better, but the questions surrounding the industry are as numerous as the nation’s pines.

The Sam M. Walton College of Business at the University of Arkansas recently brought a group of forestry leaders together to discuss the major trends affecting the industry. The participants included executives and former executives from the forest products sector, private land owners involved in growing, milling, and selling timber, industry association leaders, and university professors representing both business and agriculture.

In several hours of fast-paced, facilitated discussions at the Walton College at 2nd and Main in downtown Little Rock, Arkansas, the group took a hard look at the global trends affecting the industry and offered insights into how forestry leaders can respond and grow with the times.

“We’re looking around the corner,” said event sponsor Ray Dillon, the former president and chief executive officer of Deltic Timber Corp. “We’re looking for opportunities and we’re looking for threats.”

Rather than focusing on megatrends that affect almost every industry – things like the speed of change due to rapid technology advances, globalization of markets, or the influence of millennials and Generation Z on the marketplace – the discussions centered on the areas within forestry that are impacted most by such larger trends. And while many of the examples cited in the discussion naturally involved Arkansas, the issues and solutions transcended any one state.

Forestry Matters

Forestry remains a vital part of the economy in the United States. According to the American Forest & Paper Association, forest products account for “approximately 4 percent of the total U.S. manufacturing GDP, manufactures nearly $300 billion in products annually and employs approximately 950,000 men and women.”³

Businesses related to forestry directly support more than 1 million jobs, contributing more than $55 billion in payroll, according to a 2019 economic impact study commissioned by the National Alliance of Forest Owners. The gross domestic product connected to working forests – paper, lumber, furniture – is nearly $107 billion, or 5.7 percent of the total manufacturing GDP. Private timberland accounts for roughly $92 billion of the forest industry’s GDP contribution and $47 billion of the direct payroll.⁴

These contributions are particularly significant in the South, where forestry in 13 states contributes more than $49.5 billion. Forestry products manufacturing accounts for 16.7 percent of the total manufacturing GDP in Arkansas, more than any other sector. And Arkansas’ $3 billion contribution to the GDP from paper, wood, and furniture manufacturing accounts for 2.5 percent of the state’s GDP output, the highest of any state in the country.⁵

Forestry, of course, is a significant contributor to jobs in rural parts of the country. In Arkansas, for instance, the industry directly employs about 28,000 people. And these jobs pay well, with employees in the industry earning an average salary of $54,626 – more than the state ($40,185) or national ($52,423) averages.⁶

All of that is good news for the timber industry and the “lungs of our land.” But there are plenty of challenges as well. Forestry tends to be an industry with many parts that operate independently and spend very little on research. Margins are tight, which puts a squeeze on marketing and research dollars.

Large industrial forest products entities and Real Estate Investment Trusts like Weyerhaeuser Company often take the lead when it comes to innovation. While several of these companies own at least a million acres of forest land – and Weyerhaeuser owns nearly 12.4 million acres – they collectively own less than 4 percent of the privately held timberland in the United States.⁷ And unlike 30 years ago, these companies no longer are as vertically integrated, so they represent only one or two parts in the value chain.

Family and individual landowners, meanwhile, own roughly 95 percent of America’s privately owned forestry land,⁸ but they can be late adopters to new trends. Many individuals and families have sold their land to large companies in recent years, while others have sold to institutional investors that often are managed by a Timber Investment Management Organization. As a result, property owners have less connection to the actual land than in past years.

Like many industries, forestry also routinely deals with ever-changing challenges from regulations. Whether it involves how to manage or harvest a forest, manufacturing practices, insurance, or transportation, these regulations present a rising cost in time and money.

All of these realities were discussed by the group in Little Rock. And when the sawdust settled, they agreed that the forestry products industry faces significant challenges in three broad areas – labor shortages, timber oversupply, and marketing and new product development – and that marketing and new product development not only is a category of its own, but a large thread that runs through the fabric of the other two.

To deal effectively with these challenges, leaders will have to acknowledge and address some of the industry’s historical shortcomings and make significant shifts in both their mindsets and their behaviors so they can better promote existing products and develop and promote new products like cross-laminated timber that will strengthen the industry for the future.

The Marketing Message

Trees hold a special place in the hearts and history of humanity. Not only do trees make great paper, lumber, and furniture, but really good analogies and metaphors, as well. Poets write odes to them. Musicians sing about them. And novelists, playwrights, and screenwriters cast them as central figures in their stories.

Think about the role of trees in popular culture throughout the years. Angry apple trees threw their fruit at Dorothy and Scarecrow in The Wizard of Oz. Bill Murray disguised himself inside a hallow tree to portray Agent 13 in the movie version of Get Smart. Winnie the Pooh lived in a tree in the Thousand Acre Woods. Pocahontas consulted with Grandmother Willow. Treebeard was the heroic eldest of the Ents in The Lord of the Rings. And Groot was a tree-like creature from another planet in Guardians of the Galaxy.

Some trees are scary and others are friendly, and at times the forest industry is absent from the narrative. Then there are movies like The Lorax, FernGully, Avatar, Over the Hedge, and Rio 2 where the forestry industry, directly or subtly, is cast as the villain.

Environmentalists and conservationists, meanwhile, have a history of addressing legitimate concerns about forestry practices, but often the forestry industry is viewed as an adversary and not a potential partner. It is easy for an us-against-them mentality to develop, despite the fact that environmentalists and forestry leaders share at least one common goal – the health and sustainability of forests.

The group we gathered discussed several narratives that have evolved. They suggested that these narratives may be impacting the labor shortage, consumer behaviors, the regulatory environment, and the trend toward product substitution.

There’s a common perception that just about any alternative to wood is more environmentally friendly than wood. One participant at the Little Rock meeting noted that he recently met someone at a conference who used a plastic name badge because she thought it was more environmentally friendly than paper. But the perception shapes much larger purchases, as well, especially when it comes to wood flooring and other building materials. The public’s perception also is affected when it comes to issues such as the damage logging trucks cause to county roads and the value of a career in timber-related businesses.

“We feel like we’re part of the solution,” one participant said. “But on every level, there’s someone out there who perceives our position differently.”

Another participant put it this way: “We have a sustainable, low-cost, environmentally friendly product, and people don’t want to use it. That’s a problem. There’s a disconnect.”

The Labor Shortage

Trends toward urbanization and a knowledge-based economy have put the squeeze on labor effective, rural-based careers in forestry, from those who manage the forest to millworkers to truck drivers. At every link in the forestry value chain, employers are in need of skilled, motivated, workers who want forestry-related work as a career.

The U.S. Bureau of Labor Statistics references four occupations specific to forestry – forest and conservation technicians (at least an associate’s degree), conservation scientists (at least a bachelor’s degree), foresters (at least a bachelor’s degree), and forest and conservation workers (at least a high school degree).

The Bureau of Labor Statistics projects “average employment growth for foresters and conservation scientists” between 2014 and 2024, and “slower-than-average growth for forest and conservation workers.” Employment rates for forest and conservation technicians is predicted to decline by 6 percent.⁹

There were around 53,600 logging workers in 2018, according the government agency, and it predicts a 14 percent decline by 2028. Those workers typically only need a high school degree to enter the profession and their median pay is at $40,650 a year.¹⁰

One of the biggest areas of concern for the forestry industry is the decline in available, qualified drivers. Forestry employs drivers in a number of capacities –bulldozers and other earth-moving equipment; logging equipment that skid, load, unload, and stack logs; and over-the-road trucks that haul logs to mills or factories.

With the exception of a few years during the Great Recession when demand for drivers was lighter, the trucking industry has struggled with a shortage of qualified drivers since 2005. In 2017, the industry was short 50,700 drivers, according to the American Trucking Associations, which forecasts a shortage of more than 100,000 by 2023 and right at 160,000 by 2028.¹¹ None of those estimates factor in changes to regulations, which have a significant impact on driver availability.

“Most of the time, regulations – like changes to truck driver hours-of-service – reduce industry productivity,” the ATA reports. “Reductions in productivity exacerbate the driver shortage as it requires more trucks, and more drivers, to move the same amount of freight.”¹²

While some changes to regulations might help ease the driver shortage, the leaders said others will require more time for training to keep existing and new drivers in step with certifications for keeping their commercial licenses.

Like others in the trucking industry, those in forestry find it particularly difficult to recruit new drivers outside of the traditional male, 40-and-older demographic. In fact, the forestry industry in general remains heavily male and increasingly older. Many rural communities where workers once commonly followed in the career footsteps of their parents now see an exodus after high school as students move away for college and then to larger cities for more technology-focused jobs.

Another issue affecting the driver shortage is the availability of affordable insurance. A report by industry analyst Forisk Consulting echoed a common complaint among logging companies: that it is “increasingly difficult to cover a driver.”¹³ Standard coverage is expensive and can be denied for  a “single, minor traffic violation,” the report said, and violations like a ticket for going more than 15 miles over the speed limit can invalidate a driver.

The Oversupply of Raw Materials

The amount of standing timber in the United States is steadily increasing, which continues to reverse a trend that began before America was a country and lasted roughly 250 years.

The estimated area of U.S. forest land dropped from 1,023 million acres (46 percent of the total land area) in 1630 to about 754 million acres in 1910 (34 percent), with the majority of the land converted to agricultural uses. During one 50-year period in the 19th century, an average of 13 square miles of forest was cleared each day.

It takes much longer to grow a tree than to cut one down, so reclaiming the forests has taken time. But there were 766 million acres of forest land in 2012.¹⁴ Arkansas, for example, has more than 1 billion tons of standing timber, a 17 percent increase since 2005, and it’s adding around 13 million tons of timber each year.¹⁵

The increase in timberlands, however, isn’t just a result of better silviculture – the art and science of establishing and maintaining sustainable, quality forests and woodlands. A decrease in demand for wood-fiber products has contributed to an oversupply of wood.

While demand for container-board and tissue is growing, demand for many paper grades like newsprint and printing and writing paper are in steep decline. Or consider the check. From 2000 to 2012, the number of transactions that were paid for with a check dropped from more than 40 billion to less than 20 billion.¹⁶ While that trend has leveled off for now, U.S. News & World Report still felt the need to publish a story (online) in 2015 that included six steps on how to write a check.¹⁷

In some cases, like with checks, the trend is due to consumer preferences. In others, like wood flooring, it’s due more to misconceptions about what is or isn’t the most sustainable product. Regardless, the industry currently faces a growing oversupply of timber.

Solutions

One of the other things President Roosevelt pointed out eight decades ago in his acceptance speech for the Schlich Memorial Award is that it takes time to grow a healthy forest.

“Forests require many years to mature;” he said, “consequently the long point of view is necessary if the forests are to be maintained for the good of our country.”¹⁸

A stand of loblolly southern yellow pine takes about 10 years to grow large enough for pulpwood and about 30-40 years to mature into harvestable timber. And introducing any new species of tree can take 20-30 years.

The industry obviously can’t stop planting and caring for the saplings that future generations will reap, but it also can’t look so far into the future that it neglects today’s rapidly changing markets. And it can’t expect the markets to adapt to the needs of the forestry industry.

“We can’t depend on people outside of our sphere to solve our problems,” one participant said. “We have to solve our own problems. In some instances, that takes innovation. In some, it’s re-investing in things like marketing and research.”

Given the trends the group identified, they agreed that the industry needs to innovate in a number of specific ways, including:

(Re)shaping perception: The challenges related to marketing can be narrowed to two interrelated categories – marketing that helps correct misconceptions about forestry and marketing that helps reshape consumer-driven behaviors.

“We have good messages around forest health,” one participant said. “Everything we do we can relate back to creating healthy forest. We need help taking those messages and making it credible.”

A word that came up over and over when it came to shaping and reshaping perception was partnerships.

Within the industry, companies and organizations need to present a united and consistent message about things like the benefits of forestry to the economy, the sustainability best practices that benefit the environment, and the positives about career options. But the industry also needs to work with those who aren’t directly involved in the industry – schools, universities, companies that benefit from timber, government policy-makers, non-profits, professionals who shape buying decisions (like architects) and, perhaps most importantly, conservation groups that historically have been seen as adversarial.

Building strong, fact-based relationships with third-party ambassadors provides opportunities for certifications and endorsements that give the messaging its credibility.

Some of these partnerships already exist and need to be supported or duplicated. The nonprofit Forest Proud, for instance, is a diverse coalition of family businesses, forest product companies, conservation and recreation organizations, universities, and government agencies working to advocate for and promote forestry and the forestry products industry.

One way to help fund better marketing messaging, the group said, is to make better use of the “checkoff” program through the U.S. Department of Agriculture. These programs collect funds from commodity producers and use the money for research and promotion of the commodity. Advertising campaigns created in this manner for other industries brought America such slogans as, “Milk Does a Body Good,” “Pork. The Other White Meat,” “The Incredible, Edible Egg,” and “Beef: It's What's for Dinner.” The Softwood Lumber Board was established in 2011 and is responsible for the “Think Wood” campaign, but efforts to create a hardwood program were shut down in 2015.

The group also recommended partnerships with schools to educate students at a young age about all aspects of the forestry products industry.

Companies also need to invest more into marketing research for accurate data on consumer views, needs, psychographics, attitudes, and preferences, and then spend more to use modern marketing methods to share positive, fact-based stories. These efforts need to include an emphasis on transparency throughout the value chain. Providing an open window into the industry’s practices, including the mistakes made along the way, creates trust in the marketplace.

The marketing strategies used throughout the industry, the group said, should lean more heavily into lessons learned from trend-setting organizations outside the industry. Under Steve Jobs, for instance, Apple set the standard for marketing that focuses on the company’s “why” and not so much on its features and benefits. Marketing innovators like Apple provide a blueprint for sharing the heart of the forestry industry, and not just the facts.

Increasing demand for raw materials: The Domtar Mill in Ashdown, Arkansas, once was the largest check producer in North America. While it still produces paper, checks no longer represent much of its business. On the other hand, it now produces fluff pulp used in products like diapers and advanced fibers used in biomaterials.

The future of the forestry products industry depends partly on doing a better job of marketing its traditional products in traditional markets, but also on developing new revenue streams – new products and new markets. As the Ashdown mill exemplifies, the industry is good at shifting from one product to another or extending the process chain. But it’s slow to develop new products itself, to pursue new markets, or to creatively find new ways to monetize its existing resources.

Perhaps the most innovative idea mentioned in the Little Rock meeting was forest credits for carbon sequestrations. “Forests are the answer to the carbon problem,” said one participant. So why not get paid for contributing to the solution? This would require a commitment to keep sections of forest land in place for specific periods of time and third-party partnerships with nature conservatory groups for certification. But it would create income from trees that are still in the ground.

Here are few additional ideas the group identified for addressing the oversupply trend:

• Develop or promote innovative uses of land. This could include traditional approaches such as leasing land for recreational use, as well as non-traditional ideas like building revenue streams around eco-tourism, parks, ziplines, and solar energy.
• Work with local, state and the federal governments to amend regulations that inhibit the amount of wood that can be used, and to require public groups to consider locally sourced wood for building projects and justify decisions to use alternative materials.
• Promote southern timber in foreign markets, perhaps with programs similar to farm aid. This could include providing financial aid for foreign businesses and helping create wood processing facilities in developing countries. It also involves the continued support of groups like the Southern Forest Products Association, which for more than 30 years has partnered with the USDA to promote southern pine products around the globe.
• Research the needs and wants of consumers. Research helps identify trends and new markets and is important in every sector of the industry to drive innovations in harvesting, manufacturing, process, genetics, and product development.
• Benchmark innovations (in marketing and new revenue streams) against the efforts taking place in other industries. For example, what do cranberry farmers in the northeast have in common with a Real Estate Investment Trust that owns millions of square feet of industrial warehouses? Both are using solar panels to generate income from electricity – one over and around its existing fields and the other on the rooftops of its warehouses. How might the forestry industry take advantage of the sky that watches over its timberlands?

Labor shortage: The days of carrying a 40-pound chainsaw and 5 gallons of gas into the woods to harvest timber are mostly gone. Now workers often sit in an environmentally controlled cab operating a $300,000 piece of heavy equipment with a joystick while listening to a podcast or music on an MP3 player.

Many jobs in the forestry products industry are still physically hard work, and some are dangerous, but the realities typically don’t align with perceptions. There are well-paying jobs for college graduates, and upward mobility for skilled workers without a degree who are willing to show up, work hard, and learn from experience. So, once again, marketing is part of the solution to the industry’s labor shortage.

“We have to get past the perception that these aren’t good jobs,” one participant said. “We need young people to want to stay home or come into this industry.”

The industry traditionally pulls employees from families in the rural areas near the timberlands and sawmills. That’s still fertile recruiting ground, the group said, especially if companies will invest more in workforce training initiatives and job fairs at high schools and colleges.

Recruiting efforts, however, need to expand to nontraditional groups – especially veterans, women, minorities, and legal immigrants.

Again, this involves marketing, but it also involves more industry unified efforts to shape responsible policies in government around immigration or to coordinate on recruiting efforts so that forestry is better representing in places where job candidates look for employment.

Conclusion

Adohi Hall, the newest dormitory on the University of Arkansas campus, opened in fall 2019 and provides an illustration of hope for those in the forestry products industry.

Adohi, a Cherokee word for “from the woods,” is the first large-scale mass timber residence hall project in the United States. The 200,000-square-foot building was constructed using cross-laminated timber panels, which typically consist of three-to-five layers of kiln-dried boards. The lumber is stacked with the grain running in alternating directions and bonded with adhesives to form a solid panel.

Such lumber originated in Europe in the early 1990s, and the first guidelines for using it were published in 2002 in Austria. It was used in the 2000s in Europe for single-family and multi-story housing, but it wasn’t until 2015 that it was incorporated in the national design specifications and international building codes in the United States.¹⁹

Peter MacKeith, dean of the Fay Jones School of Architecture and Design at the University of Arkansas, spent several years working and teaching in Finland and now is one of Arkansas’ biggest advocates for driving economic development using CLT. He recommended using CLT in the Adohi Hall project.

CLT panels were used in the floors and ceilings of Adohi Hall, while the columns and beams are made of glue-laminated pieces that are bonded with the grains in each layer running parallel.

Tahar Messadi, an associate professor of architecture in the Fay Jones School, and Cameron Murray, an assistant professor of civil engineering at the U of A, were awarded a $100,000 grant from the U.S. Endowment for Forestry and Communities to measure and analyze moisture in the CLT panel.

Messadi said the lightweight yet strong CLT panels not only are easy and quick to install, but their acoustic, fire, seismic and thermal performance is superior to other materials. They also generate almost no waste on the construction site. Along with the environmental advantages of wood, Messadi said CLT has the potential to become “predominant in the construction industry,” which, as Murray pointed out, is good for the forestry products industry.²⁰

“Mass timber is interesting because, not just in Arkansas, sustainability is a growing issue in the construction industry,” Murray said. “Concrete and Portland cement are hard on the environment. They can release a lot of carbon dioxide, whereas wood is a renewable resource. In Arkansas, we have an underutilized timber industry, so it’s a potential opportunity in the state to make panels here, or sell our lumber to places that make panels.”²¹

Another significant project for Arkansas is the new multi-building headquarters that Walmart plans to build over the next several years in Bentonville, Arkansas. Dan Bartlett, Walmart’s executive vice president for corporate affairs, says the new campus will be a picture of sustainability best-practices with, among other things, “regionally sourced building materials, including mass timber construction.”²²

To that end, Walmart, the Arkansas Economic Development Commission, and Arkansas Gov. Asa Hutchinson worked together to bring Canadian-based Structurlam Mass Timber Corporation to the state. Structurlam announced in December 2019 that it is investing $90 million to retrofit a former steel plant in Conway, Arkansas, so that it can begin producing cross laminated timber. Walmart is an investor in the project and, as its first customer, plans to use more than 1.1 million cubic feet of Arkansas-grown-and-produced mass timber in its new home office.²³

“We are excited about the technology and the additional opportunities for growth Structurlam brings with it to Arkansas,” Gov. Hutchinson said. “The company’s partnership with Walmart is an example of how this expansion will benefit our state’s timber industry.”²⁴

The forestry industry also figures to get a boost from the Anthony Timberlands Center for Design and Materials Innovation, which soon will become part of the Fay Jones School of Architecture and Design. John Ed and Isabel Anthony donated $7.5 million to the U of A in 2018 to help fund the 50,000-square-foot, $15 million center, which will help research and advance the innovative use of wood in architectural design, construction techniques, and product design.

The work done in the center, which is scheduled to be finished in late 2022, will serve the forestry industry well for years to come. But the facility itself also will have an impact because its innovative design will represent the work done inside. The competition for the opportunity to design the building is an indicator of impact the center will have. Sixty-nine architecture firms from 10 countries submitted preliminary proposals to design the center, and the six finalists included international firms from Denmark, Ireland, and Tokyo, as well as U.S. firms from Boston, Portland, and New Haven, Connecticut.

These types of projects matter not only in Arkansas but across all states that rely on the timber industry. They represent the results of research and new technologies and of partnerships with companies, universities, the government, and builders and architects. These are the types of stories that can change the narrative for the forestry products industry, increase demand for their raw materials, and breathe new life into the labor pool.

To make more such stories a reality, however, everyone involved in the industry – private landowners, foresters, saw mills, trucking companies, manufacturers, and association leaders – have to agree to work together and invest in their shared future.

If the lungs of our land don’t stay healthy, the rest of the body soon will suffer.