Montana's forest products industry: current conditions and 2010 forecast.

• Author: Morgan, Todd A.

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Operating Conditions

Economic conditions for Montana's forest products industry went from very bad in 2008 to dreadful in 2009. Lumber consumption in the United States was at its lowest level since the current statistical series began in 1950. Annual U.S. housing starts, which reached 2.1 million in 2005, fell to less than 1 million in 2008. In 2009, housing starts fell to just over 550,000 units, their lowest level in more than six decades. In response to the ongoing declines in housing, lumber prices dropped nearly 50 percent from 2005 to 2009 (Figure 1).

The federal stimulus program was perceived by most Montana wood-processing executives as not having much benefit for their firms. However, 25 percent of executives responding to the Bureau's annual survey indicated their firm did benefit from the stimulus program. Most firms that reported a benefit said they received a low-interest loan from the government, while only a few indicated having more work as a result of stimulus activities.

2009 Sales, Employment, and Production

In response to the market conditions of 2009, every sector of Montana's forest products industry was negatively impacted and virtually every major mill and most small mills in the state closed or curtailed operations. This caused substantial drops in sales, production, employment, and labor income from 2008's already low levels.

Total sales value of Montana's primary wood and paper products was approximately $550 million (rob the producing mill) in 2009. Sales were down about $160 million, or almost 25 percent from 2008, and were about $625 million lower than 2005, when sales were just under $1.2 billion (Figure 2). Total forest industry employment during 2009 was about 7,070 workers (including the self-employed), down by about 20 percent from the revised 2008 estimate of 8,840 workers. Labor income in Montana's forest industry was less than $275 million during 2009, about 30 percent lower than 2008.

Lumber production in 2009 fell to an estimated 415 million board feet lumber tally. Production was down almost 60 percent from the 2005 level, more than 35 percent lower than 2008, and was at the lowest level in more than five decades (Figure 3, page 32).

Montana's timber harvest volume during 2009 was an estimated 305 million board feet (Scribner), the lowest timber harvest on record since 1945 (Figure 4). The harvest from private lands fell more than 50 percent from 2008, in large...