Timber business takes a fall
Published 9:12 am Wednesday, October 28, 2009
FRANKLIN—It will take some time to determine just how much International Paper Co.’s decision to close the Franklin mill will affect the local economy, but one economic sector — logging — is already feeling the pain.
“Loggers and landowners will definitely be affected by the closure,” said Terry Godwin, a forestry consultant with GFER Forestry Consultants PLLC. “Landowners will most likely see a reduction in the price they are paid for their pine and hardwood pulpwood.”
Godwin said IP is the largest consumer of hardwood pulpwood in the area. The company also purchases a large amount of pine pulpwood.
“Most timber tracts have hardwood pulpwood on them, and we now have to figure out what to do with it,” Godwin said. “There are other markets for pine pulpwood, but timberlands east of Franklin will see the largest cut due to transportation costs to the other markets. South and west of Franklin may see decreases in pine pulpwood, but fortunately the markets in those areas are strong.”
Chris Howell, a timber buyer for Blackwater Transport Inc. of Franklin, said about 85 percent of the timber his company handles goes to the Franklin mill. Most of that timber is also grown within a 50-mile radius of Franklin.
“With IP being taken out of the procurement loop, supply has completely overshadowed demand like no one has ever seen in the timber business,” Howell said. “Right now it’s just dire straits for everybody in the logging business because the other mills in our area do not have any additional room for consumption. They just can’t take the overflow of the wood that was being sent here (to Franklin).”
Howell said paper mills in Skippers, Emporia, Hopewell, Jarratt and West Point, as well as Roanoke Rapids, N.C., are among those within a 75-mile radius of Franklin that are being asked to take additional timber.
Fifteen sawmills in the area were also being approached.
“(These mills) if they’re not at, they’re close to full capacity,” Howell said. “They can’t take any additional wood flow from loggers who now don’t have an outlet for their wood.”
Said Godwin: “Many of our timberland tracts have a lot of hardwood pulpwood mixed with other pine and hardwood log products. We may see the majority of the hardwood pulpwood on these tracts left standing. This will hurt the logger by not having the product to haul and landowner by not getting paid for it.
“I know of several loggers that the closure will put out of business,” Godwin added.
Timber prices have tumbled since last Thursday’s announcement by IP that the mill would be closed by spring.
“I’ve got several landowners calling me that want me to come and appraise their timber,” Howell said. “I feel sorry for them. Thursday morning at 7, the timber had a certain value. By lunchtime, after the announcement, the value dropped by probably 40 percent.
“People are wondering how they are going to sell their wood and if it is going to be worth something to anybody,” Howell added. “(And) 50 miles from here there’s going to be so many loggers out there flooding the market.”
Godwin said it is important for landowners to continue to manage their forestland.
“We have all seen the devastating effects from wildfires and insect infestation that can occur if forests are not tended to,” Godwin said. “Things will be different going forward, but there are still options and markets for landowners.”