Montana's forest products industry: current conditions and 2011 forecast.

• Author: Morgan, Todd A.

Operating Conditions

The dreadful economic conditions experienced by the country's forest products industry in 2009 improved somewhat during 2010. Lumber consumption in the United States remained at historically low levels, although softwood lumber exports increased by more than 50 percent. Annual U.S. housing starts, which fell to 554,000 units during 2009--their lowest level in more than six decades--rebounded slightly to 587,000 units for 2010. In response to rising exports and a small uptick in housing starts, lumber prices were approximately 27 percent higher than during 2009 (Figure 1).

Montana's sawmills, plywood, and reconstituted board facilities showed modest increases in output during 2010 from very low levels in 2009. However, the January 2010 closure of the Smurfit-Stone Container linerboard facility in Frenchtown cost the state's forest products industry its largest single employer and largest user of wood fiber. Permanent closures also continued to impact the state's log home industry. Logging employment was relatively stable from 2009 to 2010 after sharp declines from 2008 to 2009. Additionally, several hundred Montana forest industry workers were kept active conducting much needed road and trail restoration, forest health protection, and hazardous fuels reduction, aided by more than $70 million in federal stimulus funds and a variety of federal, state, and private lands projects.

2010 Sales, Employment, and Production

Total sales value of Montana's primary wood and paper products was approximately $325 million (fob the producing mill) during 2010. Sales were down about $225 million or 40 percent from 2009, and were about $850 million lower than 2005, when sales were just under $1.2 billion (Figure 2). Total forest industry employment during 2010 was about 6,840 workers (including the self-employed), down by about 3 percent from the revised 2009 estimate of 7,060 workers. Labor income in Montana's forest industry was estimated to be less than $265 million during 2010, about 7 percent lower than 2009. Among Montana's remaining sawmills, lumber production in 2010 actually increased from 2009 levels to an estimated 480 million board feet lumber tally. Production was still down more than 50 percent from 2005 levels and almost 30 percent lower than 2008 (Figure 3).

[FIGURE 1 OMITTED]

[FIGURE 2 OMITTED]

[FIGURE 3 OMITTED]

[FIGURE 4 OMITTED]

Despite the numerous stimulus-supported activities, which included little commercial timber...