Logging Industry in the United States: Employment and Profitability

Abstract

This study analyzed logging industry employment and profitability in recent decades in the U.S. based on Occupational Employment Statistics (OES), Quarterly Workforce Indicators (QWI), Quarterly Census of Employment and Wages (QCEW), and Timber Product Output (TPO) Reports. The logging industry in the U.S. has experienced reduced employment with an aging workforce over the past two decades. The changes might be related to increased productivity from mechanization, combined with reduced demand for logging, but estimates of capital and labor productivity for logging are not available. To overcome the data limitation, a simple and cost-effective economic model, Economic Input-Output Life Cycle Assessment (EIO-LCA) Model, was applied to estimate the profitability of the entire industry at a state level. It was found that the reduced demand and increased operating costs led to poor profitability and a wave of closures of logging firms but also accelerated the adjustment in the logging industry. Serious challenges facing the forestry sector include the lack of an effective monitoring tool for the logging industry, structural shortage of logging labor, and rising operating costs.

The impact of rapid fuel costs inflation on Arkansas’ logging sector

“…In this scenario, the logging firms continued to produce to pay fixed costs, such as capital loans on equipment, while possibly incurring a loss. A similar trend was observed after the 2008 recession when, in the short term, logging firms would run without making profits if they could cover variable costs (He et al 2021). While not supported by efficient economics practice, the concept of "working harder and longer" in difficult times is a quite human response to a cash flow problem.…”

“…The literature suggests that the major challenges faced by the logging sector in the U.S. in the last 20 to 30 years are structural shortages of logging labor and rising operating costs (He et al 2021). At the same time, the effects of high fuel prices also have important ramifications in the workforce of logging contractors; for example, Moldenhauer and Bolding (2009) reported that the high fuel price led to a diminishing workforce.…”

“…Logging is the crucial link between forests and wood products manufacturing, which in Arkansas supported 61,000 jobs and created a state GDP of 6.5 billion (Tian and Pelkki 2022). Recent fuel price changes have a direct impact on the logging operating costs (Baker 2022) and thus the profitability of the logging sector (He et al 2021).…”

Evaluating the impact of wood flow management software on administrative costs and efficiency for wood suppliers in the Southeastern U.S.: a case study of Timber Resource Analytics and Contract Tracking software

“…Existing literature indicates that the primary obstacles encountered by the U.S. logging sector over the past two to three decades involve structural deficiencies in logging labor availability and escalating operational expenditures (He et al 2021). By addressing existing gaps in the literature and building upon previous research on efficiency in wood supply chains, this study contributes to the knowledge base essential for informed decision-making in the sector.…”

Examination of upstream supply chain and logistics issues in the US logging industry

“…Therefore, they play a vital role in the supply chain. Previous research points out that this critical link has gradually been weakened by the shortage of log truck drivers (Conrad IV, 2018; Gc et al, 2020; Koirala et al, 2016; Malinen et al, 2014) owing to a broad spectrum of structural factors, including decreasing profit margin (Casavant et al, 2009), increasing operating costs (He et al, 2021), variability in the availability of markets (Koirala & Kizha, 2017), lack of proper internal marketing strategies (S. L. Taylor & Cosenza, 1998), long waiting times in harvest sectors (Koirala et al, 2016), and high sawmill turnaround times (Conrad IV et al, 2018b). Most of these problems are interrelated, and decreasing profit margins result from multiple exogenous and endogenous factors (Conrad IV et al, 2018b) that the logging companies have limited control over, which we elaborate on below.…”