Montana's forest products industry.

• Author: Keegan, Charles E.
• Position: Industry Overview

Two factors improved in 1996 - lumber prices and timber availability - but they did not lead to increased production or employment. After a near recession in 1995, prices increased sharply in the first few months of 1996 and, during the last three quarters, were nearly 30 percent higher than 1995 . The increases were due to a much improved U.S. economy and housing industry, improved overseas markets, and restrictions on Canadian softwood lumber entering the United States.

National forest timber sale volumes increased, ending a four-year slide . Much of the increase in the national forest timber program was due to the temporary, now expired, salvage rider which exempted certain sales from some environmental review procedures.

Despite these improved conditions, total forest industry employment fell from 10,600 to about 10,300 workers and lumber production was down by about 5 percent from 1995 levels . Some lumber producers increased production in 1996, but there was a sawmill closure and a number of mills curtailed operations.

Plywood and paper markets were weaker in 1996 but producers did not reduce employment.

The decline in lumber production, in the face of greatly improved prices, is due primarily to the lingering impact of sharp reductions in timber availability during the 1990s and continuing uncertainty over timber availability from the national forests.

Outlook

Market conditions for lumber and plywood in 1997 should be about on a par with 1996, with a slightly weaker U.S. housing industry but improved commercial construction activity and continued improvements in overseas markets. Paper markets...