Flying Finns
"Minnesota is home to more fast-growing wood products companies than any other state in the nation."
Editor’s Note: Dr. James Bowyer is Director of the Forest Products Management Development Institute, a branch of Department of Wood and Paper Sciences in the College of Natural Resources at the University of Minnesota, St. Paul. He lectures widely and is considered an authority on energy consumption as it relates to structural building materials, including wood, steel, aluminum and concrete. John Krantz is Program Supervisor for Utilization and Marketing for the Division of Forestry, Minnesota Department of Natural Resources, St. Paul.
How does Minnesota’s timber industry rank in the state’s industrial hierarchy?
Forest products manufacturing is an $8 billion a year industry in Minnesota. On this basis, it ranks third behind machinery and computer services and electronic equipment and instruments. The value of forest products manufactured in Minnesota has increased annually since 1985 when it stood at $3.8 billion. (Fig. 1, Pg. 21)
How many Minnesotans does the industry employ?
About 61,000 currently, including about 9,000 in primary processing and about 52,000 in secondary processing. Pulp, paper and oriented strandboard manufacturers are the dominant employers, though door, window, cabinet and truss manufacturers are also major players. (Fig. 6, Pg. 26)
What the industry’s payroll, statewide?
Primary and secondary wages are $3.2 billion. Secondary paper manufacturing wages accounted for 58% of the total, $1.86 billion, while secondary wood manufacturers added another $858.6 million. Primary wood and paper manufacturers paid out $326.9 million and $65.4 million respectively. Industry wages have been increasing since 1981.
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| The mammoth chip pile and, in the distance, Boise Cascade Company’s International Falls paper mill. The mill employs more than 1,100 and produces about 1,500 tons of paper per day, including cut-size paper, roll form paper for envelopes, copy paper and a wide variety of business forms. Aspen is its primary species. Among its customers: Xerox, Staples, IBM, Kinkos and Canon. |
How does the industry stack up using basic income and employment measures?
Very well, but first let’s explain what basic income and employment mean. Basic industries are those that export their products or services to other regions, states or countries, thereby generating so-called “new dollars” for the areas in which they are located. This is important because the economy strength of every region or community depends on its ability to generate new dollars. Otherwise, the only money in a community is that which circulates between local businesses. These things said Minnesota’s secondary wood product and primary and secondary paper manufacturers generate 7.2% of all employment and 11.8% of basic income. By contrast, our highly prized high technology sector accounts for 11.4% of basic employment and 15% of basic income. (Fig. 5, Pg. 26)
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| Fig. 1—The value of forest products manufactured in Minnesota has been increasing annually since 1985 and topped $8 billion in 1996. The industry ranks third behind machinery and computer services and electronic equipment and instruments. Photographed here, the chip truck dump at Boise Cascade’s International Falls paper mill. Powerful hydraulic cylinders raise the loaded tractor-trailer until it disgorges its 50-ton load. Source: US Department of Commerce, Bureau of Economic Analysis. |
Would it be accurate to say that employment in Minnesota’s timber industry is concentrated in rural areas while technology employment is centered in urban areas?
No, not really. It’s true primary forest product manufacturers are concentrated in rural Minnesota, close to their raw material sources, but secondary manufacturers are concentrated in urban centers, which are closer to major Midwest markets. It is cheaper to transport softwood and hardwood lumber and particleboard long distances than it is to transport bulky finished products, like cabinets, windows, doors and furniture to distant consumer markets. Andersen and Marvin are among many lumber importers. Woodcraft, the No. 4 hardwood dimension lumber manufacturer in the nation, brings rough lumber from Kentucky, Tennessee and Wisconsin. Companies like Marvin, Andersen and Woodcraft stay here not just because of Minnesota’s proximity to major consumer markets but also because they can draw on a skilled, computer literate labor pool with a strong work ethic.
Are there any statistics that quantify the rural-urban dynamic?
Yes, there are. Primary forest product manufacturers are a major economic force in four rural Minnesota counties: Carlton (27.2% of basic income and 17.3% of basic employment), Itasca (30.6% and 22.7%, respectively), Koochiching (46.7% and 58.8%) and Roseau (50.4% and 53.8%). Secondary wood and paper manufacturers make major economic contributions to four urban counties: Ramsey (34.4% of basic income and 20% of basic employment), Washington (28.8% and 19.1%), McLeod (20.3% and 14.2%) and Sherburne (12.2% and 12.6%). (Fig. 5, Pg. 26)
What are Minnesota’s primary and secondary wood products?
Our primary products are pulp, paper and oriented strandboard (OSB). Together, these products account for 70% of the harvest. Though the number is declining, there are still about 700 small sawmills statewide. Of these, the largest 100 mills account for 80% of lumber production statewide. Measured in terms of fiber consumption, our primary manufacturers rank as follows: Potlatch Corporation (OSB, lumber and paper), Boise Cascade Corporation (paper), Blandin (paper), Champion International (paper) and Lake Superior Paper Industries (paper).
On the secondary side, Minnesota is home to more fast-growing wood products companies than any other state in the nation. According to Wood & Wood Products magazine, we lead the nation in wood-frame window manufacturing, (Andersen and Marvin rank No. 1 and No. 3, respectively), we’re the No. 2 manufacturer of kitchen cabinets, and we rank third in the production of store fixtures and architectural millwork. Wood & Wood Products named 12 Minnesota companies to its 1998 list of 100 wood manufacturers with the highest percentage of sales growth. Among them: Lexington Manufacturing, Artifex, Siewert Cabinet and Fixture, Ron’s Cabinets, Northern Contours, Colonial Craft and Woodcraft Industries.
Where do Minnesota’s pulp, paper and lumber manufacturers get their wood?
The harvest comes mainly from Minnesota forests. Our so-called “timberland base” spans 14.8 million acres. Private individuals own 40% of it, and provide about 50% of the wood fiber consumed annually by our state’s manufacturers. The state owns 21% of all timberland and counties and municipalities own another 17%. Together they account for another 30% of the harvest. Federally owned National Forests comprise 17% of the timberland base and account for 7% of the harvest. Industry lands, which account for 5% of the land base account for 10% of the harvest. Tribal lands account for about 2% of the harvest. (Fig. 2, Page 22)
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| Fig. 2—Minnesota’s timberland base spans 14.8 million acres. Individuals own the largest share (40%) and industrial landowners own the smallest share (5%) Together, they account for 60% of the state’s annual harvest. Photographed here, a recently completed harvest on Blandin Paper Company land near Grand Rapids. Aspen and balsam were removed and red pine was saved to provide shade for white pine seedlings that will be planted beneath them. Source: Minnesota Forest Statistics, 1990, USFS. |
What tree species are most widely used by Minnesota manufacturers?
Aspen is the species most in demand, by far. It accounts for 95% of the fiber consumed by our OSB manufacturers and about 55% of the fiber used by pulp and paper manufacturers. Combined, spruce and balsam fir account for about 50% of the fiber consumed by our paper manufacturers. Our sawmill industry, which is not large by western standards, nonetheless leads the nation in the production of aspen lumber. It also utilizes jack pine, red pine, red oak and several other species. Our secondary manufacturers, especially Anderson and Marvin, rely heavily on ponderosa pine lumber imported from the Black Hills and Intermountain regions. (Fig. 3, Pg. 23)
Minnesota also has a small hardwood sawmilling industry, doesn’t it?
Yes it does. It isn’t large compared to its competitors in the eastern U.S., but about 7% of our annual harvest is in hardwood sawtimber. Our secondary industry also imports a good deal of its lumber from the Appalachian region. Most of it is used in pallets, crating, cabinet parts, molding, picture frames and several other niche markets.
And aren’t you a big manufacturer of Christmas wreaths?
We certainly are. In fact, we lead the nation in the production of Christmas wreaths. It is a $20 million a year cottage industry. Many families assemble wreaths in their homes, then sell them to distributors. Balsam fir boughs gathered in northern Minnesota are also trucked to the Twin Cities. Women of Asian descent do much of the final assembly work, painting cones and tying ribbons. Minnesota-made wreaths are distributed nationwide.
Minnesota’s modern-day forest products industry seems a far cry from the industry that was here at the turn of the last century. How has the industry changed?
In 1900 and for several years thereafter, Minnesota led the nation in lumber production, but by 1930 the harvest was miniscule. The industry we have today uses trees that grew after 1930. We’ve made the transition from a white pine dominated sawtimber industry to an aspen dominated pulpwood industry.
You’re telling us Minnesota’s forest products industry derives its wood from forests that have grown to maturity since the Great Depression?
That’s right. But our lumber and pulpwood industries owe their existence to very different Depression-era events, though in both instances we have the federal government to thank.
The Civilian Conservation Corps (CCC), which was part of President Roosevelt’s plan for employing destitute, able-bodied men, planted millions of pine trees on abandoned farm and forestland in Minnesota. Then in the 1950s, the Federal Soil Bank planted another 40 million pine seedlings annually on private land to control soil erosion. Our modern-day pine industry makes its living from these forests.
On the other hand, our pulpwood industry owes its existence to an abundance of aspen. During and after the Depression it overtook thousands of acres of abandoned farm and forestland. Intensive fire control efforts in Minnesota beginning in the 1930s led us to the forest we have today, giving aspen—which is quickly killed by fire—a great advantage over competing species. Minus frequent wildfire, it expanded its range and lived longer than it would otherwise have, providing an enormous resource for our modern-day pulpwood industries.
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Fig. 3—Most timber harvested in Minnesota is used in pulp, paper and oriented strandboard |
So the decision to exclude wildfire from Minnesota forests was an event of ecological and historic significance?
It certainly was. Before wildfires were controlled no thought was given to replanting white pine forests for fear the investment would be lost in a fire. So after Minnesota’s virgin white pine stands were nearly liquidated, the industry simply moved west, leaving three paper mills that lived off spruce harvested from bogs that were too wet to burn. With fire controlled our aspen forests began to grow in earnest after the Depression, though it would be years before the tree came to be recognized as a valuable lumber species. Then aspen and structural panels converged with construction of the Blandin Wood Products wafer board plant at Grand Rapids in 1979. Soon thereafter oriented strandboard (OSB) was developed and our modern-day forest products industry was born.
What role has technology played in the advancement of Minnesota’s wood products manufacturing sector?
A very important one, especially as it relates to oriented strandboard and lightweight, coated papers, but these technologies were also imported. Minnesotans simply took advantage of opportunities created first by an abundance of aspen, second by the availability of OSB technology and third by the federal government’s decision to list the northern spotted owl as a threatened species.
How did the spotted owl listing help?
Sky high Douglas-fir prices that followed the listing created huge marketing opportunities for OSB. In the early 1980s, and with the public’s blessing, our governor actively encouraged investments in OSB and papermaking. The state even launched an advertising campaign to recruit new wood product manufacturers. There was a real traffic jam around here for awhile.
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| Salvaging Potlatch-owned aspen blown flat during a July 4, 1999 windstorm. Note the canopies of white pine trees in the distance. The company decided to leave them behind to add species diversity to the aspen-dominant forest that will quickly regenerate itself on this site about two hours north of Cloquet. |
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Fig. 4—Annual net growth (gross growth minus natural mortality) |
Would it be accurate to say that technological advancements have improved wood fiber utilization meaning that very little of what is harvested is wasted?
There is no doubt about it. Advanced milling systems have made it possible to make useful products from wood fiber that would have been a disposal problem—and thus an environmental problem—20 years ago. Soaring disposal costs and strict disposal regulations combined to spur investments in technologies that utilize virtually every bit of wood fiber. Cogeneration plants that produce electricity from wood waste have helped a great deal, as have biomass power plants.
Since we’re now making wood products that didn’t even exist 20 years ago can we then say that technology has created at least as many jobs as it has eliminated through increased manufacturing efficiency?
Technology is a two-edged sword. Papermaking, for example, is much less labor intensive than it was 20 years ago. The same is true in pallet assembly plants, which are now almost fully automated. On the other hand OSB technology has spawned an entire industry that relies on aspen, a tree once considered junk wood. But it may be that technology’s most important contribution is in increasing productivity, which is the reason why our wood and paper manufacturers are doing so well. And because they are prospering, labor markets are tight. Not many people know this, but several thousand Asian immigrants now work in Minnesota’s forest product industry.
Can you estimate the amount of money the industry in Minnesota has spent on these advancements over the last decade?
Since 1980, at least $3 billion and probably more. Incremental investments are difficult to track.
Have these technological advancements affected the way Minnesota forests are managed?
Yes, in very significant ways. Mechanized cut-to-length harvesting systems have given landowners the tool they needed to thin overly dense red pine forests, promoting growth in residual trees while also creating habitat for plant and animal species that move into such forests after thinning. Concurrently, developments in small-log milling technology have created heretofore non-existent markets for small diameter trees.
There seems to be a good deal of interest in hybrid poplar and cottonwood. What’s driving interest?
Several factors come into play. For one, Minnesota’s farmers have been hard hit in recent years. Hybrid poplar looks to many like a good cash crop with a promising future, not just in papermaking but also in biomass energy production. Eight to ten years out, there will also be a gap in our aspen supply—meaning that papermakers will have to turn to species other than aspen. Hybrid poplar can fill the gap. Potlatch, Boise Cascade and Blandin have major investments in poplar research.
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| Logger Kent Anderson stands atop his mechanical harvester in a state-owned timber stand northwest of Grand Marias. Mr. Anderson logs primarily for Grand Marias-based Hedstrom Lumber Company, one of the oldest lumber companies in Minnesota. |
Why will there be a gap in the aspen supply? Over harvesting?
Actually, it is the opposite. We haven’t harvested enough aspen. Remember, this is a species that wasn’t used much before 1980. As a result, we have almost as much aspen 1–10 years old as we have aspen that is 50-plus years old. The gap is in trees 20–40 years old. It marks the point in time when aspen was first harvested in significant quantities. By slowing but continuing the harvest in 50-year-old trees, the imbalance will gradually correct itself, meaning we will have a good distribution of aspen in all age classes.
With so much public interest in restoring white pine forests, what can we infer about the future of white pine as a wood product manufactured in Minnesota?
That’s a good question. In recent years, the replanting effort has been Herculean in scale, but surprisingly little thought has been given to the enormous costs associated with maintaining white pine stands. So will Minnesota taxpayers be willing to foot the bill? No one knows.
Increasingly, Minnesotans seem more interested in preserving publicly owned forests in no-harvest reserves. Going forward, what are the implications for these forests and will this sentiment impact the industry?
It is certainly true that a very vocal minority is interested in creating more noharvest reserves, but Minnesotans in general don’t support land lockups. The larger public interest is focused on how and when harvesting is done. The “how” question relates to logging impacts and a desire to minimize them, while the “when” question relates to a general desire to see more forests grow older.
A generation ago the timber industry collapsed because it ran out of wood, specifically white pine. Do you see this happening in Minnesota again?
It will never happen again. Annual net growth, which accounts for natural mortality, stands at 5.7 million cords, while harvesting stands at 3.7 million cords. So we have a comfortable 2 million cord a year surplus that is steadily building a much larger standing timber reserve. Both the volume and average diameter of trees are increasing. We also have several underutilized species—white birch, soft maple and tamarack—that all show great promise. Barring unforeseen events, Minnesota’s timber industry has a very bright future. (Fig. 4, Pg. 24)
Dr. Bowyer, we are aware of your particular interest in advancing the idea that the world ought to be using more wood, not less. Your position seems to be out of step with a public that has signaled its increasing interest in saving trees. Explain why you’ve taken this position?
In the emerging global economy nations should be increasing, not decreasing, their dependence on wood fiber because wood is renewable, recyclable, biodegradable and far more energy efficient in its manufacture and use than are products made from steel, aluminum, plastic or concrete. Furthermore, growing forests and the lumber they provide store large amounts of carbon dioxide that would otherwise escape into the atmosphere, adding to the potential for global warming.
What would you say is the biggest challenge facing Minnesota’s forest industry today?
Balancing the competing demands of forest users, beyond doubt We’ve made significant progress in this area, particularly as it relates to the relationship between our timber and tourism sectors. But as Minnesota grows and land becomes more valuable, and as competing uses intensify, it will become increasingly difficult for our lumber and pulpwood industries to acquire land and wood fiber at competitive prices. If we want these industries to continue to make huge capital investments in our state, we need to do everything we can to make certain there is sufficient wood available at prices that allow them to remain competitive in the global marketplace.
Forest Industry Basic Employment and Income
Fig. 5—Minnesota’s forest products industries employ about 61,000 people and account for 7.2% of basic employment in the state. These industries, which include primary and secondary wood and paper manufacturers, pay out $3.2 billion a year in wages and benefits, accounting for 11.8% of basic income statewide.
Basic industries are those that export their products or services to other regions, states or countries, thereby generating “new dollars” for the areas in which they are located. The economic strength of every community rests on its ability to generate new dollars. Otherwise, the only money in the community is that which circulates between local businesses.
The two maps on the right illustrate the impact of county-level industrygenerated basic employment and income. Note that the importance of the forest products industry varies from county to county. For example, in Roseau County 50.4% of basic employment and 53.8% of basic income are attributable to the industry. Other counties where the industry is especially important include Koochoching, 46.7% employment and 58.8% of income; Itasca, 22.7% employment and 30.6% income; Washington 19.2% employment and 28.8% income; and Carlton 17.3% employment and 27.2% income. Note too theimportance of the industry in the Twin Cities area.
Three sectors contribute more to basic employment statewide: services, excluding lodging and computer services, 21.7%; agriculture and fisheries, 14.2%; and high technology manufacturing, 11.4%. But only one sector contributes more to basic income statewide: “other manufacturing,” 18.6%. Source: Minnesota IMPLAN Group, and Dr. Con Schallau, forest economist.
human need to use natural resources is fundamental to our continued presence on earth."