Forest Products Companies Research Articles

A Summary of COVID-19 Pandemic Assistance to US Forest Products Companies

Abstract Forest products and timber harvesting businesses were severely affected by the COVID-19 pandemic. This article describes how forest products companies used Paycheck Protection Program (PPP) loans to keep over 487,000 workers in the forest industry on payroll through the pandemic. This article also summarizes the Pandemic Assistance for Timber Harvesters and Haulers (PATHH) program, payments provided to timber harvesting and hauling businesses that experienced losses in revenue in 2020. Timber harvesting and hauling companies that received a PATHH payment reported US$1.27 trillion in total revenue lost between 2019 and 2020 because of the COVID-19 pandemic.

Long-Term Timber Contracts in the Southeastern United States: Updating the Primer Valuation Framework

AbstractTimberland ownership has drastically changed in the United States since the 1980s, driven by the divestitures of vertically integrated forest products companies. Having sold their timberland, forest products companies have exposed themselves more to the risk of raw material supply. To hedge against this risk, forest products companies usually use long-term timber contracts (LTTC). The objective of this article is to update the valuation framework for LTTCs proposed by Shaffer (1984) by including alternative option price models and refining the estimates of some key economic variables. In particular, conditional volatility from the generalized autoregressive conditional heteroscedasticity model and quasi-conditional volatility from rolling estimation windows, in addition to simple standard deviation, are used for the volatility estimates in the option pricing models. Contrary to the previous result by Shaffer (1984), our analysis suggests that LTTCs that were once profitable for forest products companies in the 1980s are no longer so under current market conditions. This is primarily because both timber price volatility and the risk-free interest rates have declined significantly. Thus, to be better off, forest products companies need to either lower the administration and management costs of those LTTCs or rely more on the open market for timber procurement.Study Implications: Forest products companies have traditionally relied on long-term timber contracts (LTTC) negotiated with forest landowners to mitigate the risk of raw material supply. The value of these LTTCs highly depends on the economic context. This research provides some insights into the valuation of LTTCs in the southeastern United States. Forest products companies can use this updated framework to aid their decisionmaking in timber procurement.

Adoption of Information and Communications Technology in the Turkish Forest Products Industry: A Case Study

Aim of study: This study explores the adoption of information and communications technologies (ICTs) and current and potential ICT use in forest products industry. Based on the perceptions of the respondents, the paper investigates the underlying factors affecting the adoption of ICT. 
 Area of study: Case study is conducted in Düzce province where nearly all types of forest product enterprises are conducting business operates. 
 Material and method: Face-to-face interviews were conducted with owners and/or engineers of forest products companies. A questionnaire was developed with three main sections, including 20 questions and 81 judgments. Data on the study parameters were coded and analyzed using SPSS software.
 Main results: The three major constructs of these factors, based on the purposes of ICT use, were identified as business productivity, information exchange and customer communications. Increased access to current industry news was the principle benefit expected by the respondents from the Internet use, followed closely by enhancement of the company image and facilitation of banking transactions. According to the study, information and communications applications were more common than e-business and e-commerce use in the forest products industry. 
 Research highlights: The forest products industry should plan to develop and implement ICT strategies focusing on increased business productivity, competitiveness and profits, in addition to efficient customer and supplier communications and expanded markets.

Ownership Changes and Harvesting Patterns Associated with the Forest Products Industry in West-Central Alabama from 1984 to 2014

Since the beginning of the 1980s, vertically integrated forest products companies have divested their forestland with much of the new ownership being real estate investment trusts (REITs) and timberland investment management organizations (TIMOs). These new landowners and their associated behavior of intensive timber management and higher and better use conversion has given rise to issues such as land-use change, fragmentation, and conservation. To better gauge harvesting patterns and ownership changes associated with the divestment of forestland by forest industry and the arrival of TIMOs and REITs on the forested landscape, eleven Landsat scenes were used to detect harvest activity within the Alabama counties of Bibb, Hale, Pickens, and Tuscaloosa from 1984 to 2014. Detected harvesting activity was paired with county parcel data and then classified based on landowner type: REITs, TIMOs, forest product industry, government, and non-industrial private forest (NIPF) landowners. Overall harvest trends showed a decrease in harvest rates from 1984 to 2005 with a slight increase in harvest rates after 2005. Per scene interval, acres harvested were highly variable for NIPF and relatively stable for forest industry during this time. Government ownership maintained relatively low and stable harvesting behavior throughout the study period. Acres harvested by REITs was relatively low. TIMOs showed an ever increasing rate of harvest within the study area until the last scene interval (2011-2014).

Factors that influence working forest conservation and parcelization

Ownership of private forestland is changing rapidly, especially in areas owned by industrial forest product companies. Following divestment by industrial owners, forested lands are increasingly likely to move from intensive timber production to subdivision of the land, development and other private uses, or alternatively to conservation under public tenure. This research follows a unique dataset of forestland properties previously owned by industrial and corporate owners in Wisconsin from 1999 to 2014. A multinomial logistic regression showed that divested lands were more likely to be publicly purchased outright if they were adjacent to water, adjacent to public land, not adjacent to roads, and had higher housing value, while in contrast the predictors of conservation easement acquisition were location in large blocks outside of zoned townships. Properties were more likely to be parcelized if they were adjacent to a paved road, adjacent to water, smaller, in a zoned township, and had fewer years remaining in their tax program enrollment. In an era of rapid industrial land divestment, these findings indicate an important role played by public policies, including preferential tax programs and funds for land and conservation easement acquisition, in shaping whether private forestland is parcelized, conserved under private ownership, or publicly acquired.

The taxation of privately owned forest land in Canada: A review of the taxation systems in all ten provinces

Canada has 400 million ha of forest land. Only 25 million ha (5%) is in private ownership. This private forest land is generally divided in two categories: 450 000 private woodlots covering about 15 million ha in the settled regions of Canada and about 5 million ha in larger blocks owned by pension funds, investors, and forest products companies. The private woodlots are subject to municipal or provincial property taxes. The provinces use several approaches to determine the level of tax to be paid. In some cases, the tax system is used to provide an incentive to manage the land. The property tax system offers a policy tool to encourage active management of the land and help ensure a healthy, diverse, and productive forest that contributes forest-related ecological goods and services to the community as well as timber to the local economy. It is in the long-term interests of rural communities that land remains in production and that forested land is managed to maintain the forest in a healthy condition and produce both forest-related environmental goods and services and timber to support the rural economy. A well-designed property tax structure based on incentives that is accepted as fair and is supported by taxpayers can help to achieve these objectives. The survey of provincial property tax systems shows several approaches to the application of property tax systems on forest lands. Property tax systems applied to forest land that are based on incentives to actively manage the land and are coupled with financial assistance for tree planting on idle land offer simple and practical ways to keep rural land in production. This is particularly true of marginal/sub-marginal land that has been cleared but is no longer used for agricultural production. Incentives help to ensure that forested land is managed to maintain the forest in a healthy condition and produce forest-related environmental goods and services (EG&S) as well as timber to support the rural economy.

Changes in Wisconsin’s Large Private Forests, 1999–2015: Land Ownership, Conservation, and Recreational Access

ABSTRACTForestland divestment by vertically integrated forest products companies (VIFPCs) has spurred significant forest ownership change. To illuminate these dynamics, we examined land sales after VIFPC divestment, subsequent acquisitions of conserved land, and trends in recreational access in Wisconsin. We documented changes from 1999 to 2015 with analysis of tax program records and profiles of the state’s largest investor owners, Plum Creek and The Forestland Group. Nearly all VIFPC land was sold to investors, public agencies, or smaller corporate and private owners. State tax and land acquisition programs buffered these changes: 70% of large private ownership land was retained in the forest tax program and another 16% was acquired by public and nonprofit owners. More than one-quarter of divested forestland was placed in conservation easements. Nonetheless, large private forestland open to public recreation declined by almost one-third. Investor strategies and conservation programs shaped the provision of forest benefits during ownership transitions.

Harnessing Compass to Gyroscope in Protected Areas Planning in Nova Scotia, Canada: The Colin Stewart Forest Forum

To address the integration of science and politics for environmental conservation, Kai Lee wrote a powerful book in 1993 entitled Compass and gyroscope. The compass represents the science of adaptive management and the gyroscope represents the politics of principled or bounded negotiation. As the twenty-first century dawned, environmental groups and forest-products companies in Nova Scotia intuitively knew that they needed a process combining these two elements to develop joint recommendations to the government on new protected areas in the province while mitigating impacts on the provincial wood supply. They initiated the Colin Stewart Forest Forum for this purpose and engaged in intensive analyses and negotiations from 2004 to 2009. The Forum delivered a report to the Government of Nova Scotia in which some 269,000 ha of land were identified as high priority for conservation, including an initial first slate of proposed protected areas totalling 58,000 ha of land with high conservation value but low impacts on wood supply. To demonstrate the power of linking competent technical analysis with principled negotiations, we describe the Forum process and reflect on several themes important in biasing such a process for success. Our analysis confirms the utility of strong attention to both the compass and the gyroscope in environmental conservation.

Perceptions of Virginia's Primary Forest Products Manufacturers regarding Forest Certification

Abstract Some forest products companies have enrolled in forest certification and chain-of-custody certification programs due to a perceived increase in demand for certified products. The results of studies on certification conflict in regard to whether certification provides a competitive advantage and enhances market access. There is a lack of information regarding forest industry perceptions of forest certification, including potential barriers and challenges. To address these shortcomings, a survey was mailed to forest products manufacturers in Virginia to study their opinions about forest certification. The majority of respondents believed there were few benefits to certification programs; in particular, a majority perceived limited to no benefit with regard to market share, exports, future demand, and gaining a competitive edge. A similar number also reported that they associate little to no environmental benefits or improvements to company image associated with certification. The top barriers to certification identified by forest products manufacturers were that certification systems do not add value to their products and there is a lack of certified raw material. The top challenges that certification faces in regard to acceptance by manufacturers included limited to no perceived financial benefit and lack of market demand. The barriers and challenges identified will likely have to be overcome to increase the number of firms enrolling in certification programs.

Industrial Timberland Ownership and Financial Performance of US Forest Products Companies

This study presents an empirical analysis of the relationship between industrial timberland ownership and financial performance of forest products companies in the United States. Based on the structure-conduct-performance model of the industrial organization theory, we develop and estimate a three-stage least squares model system that links timberland ownership with performance. Our results show that holding timberland improves a forest products company's profitability and lowers its systematic risk. Still, these benefits cannot overcome the costs induced by institutional arrangements, leading most forest products companies to divest their timberlands.

Methodology for biorefinery portfolio assessment using supply‐chain fundamentals of bioproducts

AbstractGiven the emergence of innovative processes in recent years for the manufacture of bioproducts from second‐generation biomass, a range of unique biorefinery strategies are likely to be implemented by forest product companies in the coming years. No matter what biorefinery strategy is employed, to compete in the longer term, it will be critical to have a supply‐chain adapted to the targeted products. In order to meet customer needs and at the same time be cost‐competitive, there are trade‐offs to be made between responsiveness and efficiency in several areas of the supply chain, such as production and customer service. This paper reviews supply‐chain characteristics and competitive factors for various bioproducts. An approach that can be used by decision‐makers during early‐stage design is presented, suitable for screening‐out less promising options based on their supply‐chain characteristics. Fundamental aspects such as the differentiation of products, their possible green advantage, biomass procurement, and process characteristics are discussed within five categories: bioenergy, biofuels, commodity biochemicals, fine and specialty biochemicals, and biomaterials. Several examples of biorefinery strategies are discussed to illustrate these concepts.

Identifying Market Opportunities for Appalachian Forest Products Companies in Central America

Identifying Market Opportunities for Appalachian Forest Products Companies in Central America

The Legitimacy of CSR Actions of Publicly Traded Companies Versus Family-Owned Companies

Corporate social responsibility (CSR) is one of the ways through which companies gain legitimacy. However, CSR actions themselves are subject to public skepticism because of increased public awareness of greenwashing and scandalous corporate behavior. Legitimacy of CSR actions is indeed influenced by the actions of the company but also is rooted in the basic cultural values of a society and in the ideologies of evaluators. This study examines the legitimacy of CSR actions of publicly traded forest products companies as compared to family-owned forest products companies. Results indicate a lower legitimacy for CSR actions of publicly traded companies than for family-owned companies. The study also examines the effect of social responsibility orientation (SRO) of evaluators on the legitimacy accorded to companies' CSR actions. We found that SRO was negatively associated with legitimacy, especially for women. Perceived profitability of companies was negatively associated with legitimacy of CSR actions for publicly traded but not for family-owned companies.

A Case Study to Determine Drivers and Barriers of Appalachian Forest Products in Central America

The purpose of this research was to determine drivers and barriers of Appalachian wood product competitors in Central America. Potential market opportunities for Appalachian forest product companies in Central America were evaluated and strategies were developed to increase exports of Appalachian wood products to Central America. The findings support the claim that United States forest product companies have not put enough effort into marketing forest products to Central America. Forests in El Salvador, Panama, and Costa Rica are limiting harvests and the industry lacks support from the government, reducing the amount of raw material and production. Inconsistencies between Appalachian and Central American wood products industries (e.g., dimensions) act as a barrier to the efficient exchange of wood products. The best market strategies for Appalachian forest products companies to increase sales into Central America are: partner with local wholesalers, offer higher value-added products, and maintain similar pricing with competition. An outside source of wood is needed to meet the needs of growing regional infrastructure.

VALUING A TIMBER HARVEST CONTRACT AS A HIGH‐DIMENSIONAL AMERICAN CALL OPTION VIA LEAST‐SQUARES MONTE CARLO SIMULATION

Abstract Industrial timberland ownership in the United States has shifted substantially in the last 20 years. Having sold their fee‐owned timberlands, forest products companies relied heavily on the open market for raw timber. To reduce their exposure to market risks, however, forest products companies have been using a number of supply chain instruments, such as timber harvest contracts. As these vehicles become increasingly important to the forest industry, it is necessary and important to determine their economic values. In this study, we treated a 3‐year timber harvest contract on a 30‐year‐old loblolly pine plantation as a high‐dimensional American call option and calculated its value by the least‐squares Monte Carlo simulation technique. The estimated values of such a contract ranged from $1,693/ac to $1,984/ac under two timber price assumptions. With reasonable starting timber prices and strike price in the simulation, random timber prices led to higher contract values. Results from this study can help private landowners, timber brokers, and forest products companies better manage their business risks.

Institutional Pressures and an Evolving Forest Carbon Market

ABSTRACTIt is estimated that 87 million acres of forestland in the United States (US) is managed by private industrial forestland owners (nearly 14% of the forestland nationwide). Private industrial forestland owners include forest product companies, Timber Investment Management Organizations (TIMOs) and Real Estate Investment Trusts (REITs). Current regulatory and voluntary carbon markets, as well as proposed national emission reduction legislation, in the US make provisions for substantial carbon offsets from domestic forestry projects. This research employs the theory of planned behavior by means of an online questionnaire in order to survey large industrial forestland owners (>30 000 acres) regarding intentions to manage forestland for carbon sequestration and trading. Quantitative results suggest that very few organizations (18%) were managing forestland for carbon values. Attitudes towards carbon sequestration and trading were significantly influenced by the managers' beliefs that emission reduction legislation would become law and that US forest carbon offsets can be used as a legitimate climate change mitigation tool. Qualitative results revealed that most organizations are taking a passive approach to carbon sequestration and trading until a suitable regulatory framework emerges and carbon prices provide the conditions for a sound investment. The researchers suggest that, given the size and scope of the climate change phenomenon as well as the multifaceted and unified mitigation strategy required to address it, the development of functional carbon markets will be an iterative process and may require a global carbon framework that reflects the globalized nature of the forest economy. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment

Shifting Private Timberland Ownership in South Carolina: Implications for Management Intensity

Beginning in the late 1970’s forest industry timberland gained the eye of financial investors. Diamond International and Crown Zellerbach were early firms that were purchased for the “break-up value” of their timberland. Timberland was perceived as undervalued by investors and made forest industry firms attractive takeover targets. This started a process where forest industry divested of its timberland. Some firms formed separate entities for its timberland base. Acquisitions and mergers became popular in the industry. Some forest industry companies converted to real estate investment trusts, for tax and defensive reasons. Large institutional investors became interested in timberland as means to diversify their portfolios and increase financial performance. Timber management investment organizations developed to manage and procure timberland for these institutional investors. Today little of the forest industry timberland remains with vertically-integrated forest products companies. South Carolina’s forest industry timberland decreased by about 800,000 ha since 1993 (or nearly 90%). This has implications for the state’s timber supply. Forest industry timberlands were some of the most productive and intensively managed forests in the state. We address how forest management might change on this timberland and how long-term timber supply might be impacted in the state.

Investigation of the Effect of Organoclay Additives on Mechanical Properties of PF resin and MPB-OSL using Creep Behavior Analysis and IB Test

ABSTRACT The effect of organoclays on the mechanical properties of cured phenol formaldehyde resin and oriented strand lumber made from Mountain Pine Beetle killed pine strands was analyzed. Three organoclays were used: a natural montmorillonite, hydrophobic organically modified 10 A, and hydrophilic organically modi-fied 30 B. The oriented strand lumber samples were less creep deformation as well as improved internal bonding strength by adding organoclays in the order of 10 A 2% > MMT 2% > 30 B 2% > control. Furthermore, time-temperature superposition (TTS) analysis was proved to be able to predict the long-term creep behavior of MPB-OSL samples. Keywords : creep behavior, organoclay, internal bonding, MPB-killed pine, oriented strand lumber (OSL), time-temperature superposition (TTS) 1. INTRODUCTION Lodgepole pine (Pinus contorta) is a major wood species used to produce wood composites in Western Canada. However, approximately 4.2 million hectares of the total 8 million hec-tares of mature lodgepole pine in the central in-terior of British Columbia has been infested by the Mountain Pine Beetle (MPB, Dendroctonus ponderosae Hopkins) (Morford et al., 2004; Natural Resource Canada, 2004). To maximize the value from the pine forests, most forest product companies in the province have been harvesting green timber. This will inevitably re-sult in an enormous amount of MPB infested wood, potentially not suitable for traditional wood products. However, the large amount of MPB infested wood could be utilized for wood composite products, one possible end-use being oriented strand lumber (MPB-OSL) (Feng et al., 2007; Oudjehane et al., 2008∼2009).Recently, nano-fillers have been receiving significant attention due to their ability to im-prove mechanical properties and thermal stabil-ity of composite materials (Pinnavaia et al., 2000; Lei et al., 2006; Lin et al., 2005; Lei et al., 2007) Organoclay/polymer composites have exhibited dramatic increases in strength, barrier

Water profiles of the forest products industry and their utility in sustainability assessment

Sustainability has become a key element of environmental management programs at most forest products companies. However, describing sustainability in terms of natural resource use and management can be challenging, owing to the evolution of practices deemed to be consistent with the concept. This paper provides quantitative and qualitative assessments and discussion of water resources as they relate to the activities of the forest products industry. Water resource use and management from the forest, through manufacturing, and on to potential effects of treated effluents on receiving waters is considered. Important findings from this work are that forests act to process precipitation into high-quality surface waters, and in North America, most surface waters are derived from forested areas. Forest management can affect water quality, but the use of forestry best management practices greatly minimizes harmful effects. Manufacturing of pulp and paper is water-use intensive relative to most other industries, although the amount of water consumed (i.e., evaporated or exported with product or residuals) represents a small fraction of the overall water used. The potential for treated effluent to affect receiving water systems has been widely investigated, and while effects are sometimes observed, aquatic community structures most commonly are not altered by well-treated mill effluents. Water profile results and water sustainability metrics are also briefly compared.

Integrating product portfolio design and supply chain design for the forest biorefinery

Supply chain (SC) design involves making strategic long-term decisions for a company, e.g. number, location and capacity of facilities, production rates, flow of material between SC nodes, as well as choosing suppliers and markets. The forest biorefinery is emerging as a promising opportunity for improving the business model of forest product companies; however it introduces significant challenges in terms of mitigating technology, economic and financial risks—each of which must be systematically addressed in the SC design. In this regard, product portfolio definition and technology selection are two important decisions that have rarely been considered in a systematic SC evaluation. This paper presents a methodology, in which product/process portfolio design and SC design are linked in order to build a design decision making framework. According to this methodology, design of “manufacturing flexibility” links product/process portfolio design to SC design, through a margins-based SC operating policy. Techno-economic studies along with scenario generation for price and demand changes representing market volatility are employed in the methodology.