09/13/2012 by Ed Coghlan
California economy: Timber industry getting back on its feet
California’s beleaguered timber industry has had some good news recently. Gov. Jerry Brown signed legislation this week enacting a new consumer tax on lumber sales. The win for lumber companies is the law will also restrict legal damages for wildfires. And last month, it was reported that California timber sales are actually up in 2012, reversing a five year slump in what was once a booming industry in California.
The Governor’s action was well received by the timber industry.
“This bill makes our company more competitive with out-of-state businesses and strengthens our industry," said a statement printed in the L.A. Times from Red Emmerson, president of Sierra Pacific Industries, the state's largest timber company. "Governor Brown’s leadership brings California the first major reform to the timber industry in decades, improving California’s business climate for years to come."
In talking with industry representatives, the turnaround is welcome but the term that Arne Hultgren, California Resource Manager for Roseburg Forest Products used was “cautiously optimistic”
Their caution is understandable. The bottom dropped out of the timber industry in late 2007 as the housing bubble burst. Now, in California, the housing crisis hurt more than just the timber industry. Around 700,000 construction jobs were lost as the state’s developers stopped building.
The timber industry has been hit especially hard.
Thirty years ago, there were 130 mills in California doing business all around the state. That number has dropped to 25, all but one of them north of Stockton, California.
Obviously, it wasn’t just the economy that has hurt the industry. State and federal regulations have hampered the industry.
“In California, there are three to four different state agencies that oversee the industry,” said Hultgren. “Each has a different set of rules which makes it very expensive to do business in California.”
Hultgren says that to prepare a very detailed 250-page State Environmental Impact Report on a timber project will take a year to write and get approved and cost nearly $50,000.
Hultgren and other timber industry leaders understand the need for regulations. They just think the state needs a uniform set of standards as is the case in many other timber states.
“Those states tend to have defined best practices in timber management and spend their money in inspections during the actual projects,” said Hultgren. “In California, the industry is front loaded with regulations which makes it more expensive.”
As for a real industry turnaround, it's more of a wait-and-see game right now.
“Plainly if the housing sector starts to come back, we will do better,” said Hultgren. “That won’t happen until there is more certainty that the economy is really recovering.”
In the meantime, the secondary product sector is doing better. Particle board plywood, clean chips turned into paper and biomass plants that create energy are all industry sectors that are doing pretty well.
“We try to waste nothing in a tree,” said Hultgren who attended the recent California Economic Summit which concentrated on increasing job creation and improving the state’s economic climate.
Like many industries, Hultgren said a streamlined and consolidated permit process and developing a state best management practices could really help his industry recover.
In the meantime, slowly recovering timber sales and the fire liability relief the industry received in the freshly signed legislation have Hultgren and his colleagues a little more hopeful.