“Maxed Out on Efficiency”: Logger Perceptions of Financial Challenges Facing Timber Operations

Abstract

Loggers play critical roles in forest management and resource production, yet supply chain pressures can challenge their economic sustainability. We examine logger perspectives on efficiency, financial challenges, and potential solutions from two contrasting perspectives: 1) business strategy and 2) treadmill of production, a sociological critique of resource production that links economic and ecological sustainability. To provide in-depth perspectives based on lived experiences, we conducted interviews with professional loggers and other stakeholders, focusing on firms with mechanized cut-to-length systems in Wisconsin and Michigan's Upper Peninsula. Our qualitative analysis revealed the intersection of factors that help explain financial stress. Loggers work on contract or buy stumpage from landowners and then sell to mills. Perceived challenges included competition in stumpage markets, relationships to mills that disadvantaged small firms, debt from mechanization, and site access through variable environmental conditions. Loggers worked to increase efficiency and production volume, though some loggers expressed the limits of increasing efficiency and production for improving profitability. Proposed solutions to reduce financial stress included long-term mill contracts, access to loans, and improved financial literacy. Nonetheless, individual firm efficiency will not address structural challenges such as loggers' role in the supply chain between landowners and mills.

Evaluating Profitability of Individual Timber Deliveries in the US South

“…Indeed, studies have found that the average log truck involved in a crash is five or more years older than other heavy trucks [12,44]. Third, some companies continue operating when they are losing money as long as their cash flows are positive [29][30][31]. These companies are said to be "running on equity".…”

“…In some cases, timber transportation may serve as a "loss leader" for an otherwise profitable logging or timber purchasing business [11]. In other cases, companies may operate unprofitable businesses when cash flow is positive, even though the company is losing money because of unrecovered depreciation [29][30][31]. These businesses are said to be "running on equity".…”

Characteristics and Concerns of Logging Businesses in the Southeastern United States: Results from a State-Wide Survey from Alabama

“…Logging businesses in the southern US have historically favored the adoption of new technology and machinery to maintain or enhance production levels in the face of labor shortages [48]. However, the cost of the specialized machinery that allows for operating at the same production efficiency with lower employment in logging crews continues to increase due to various factors including global supply chain issues [16].…”

“…Mill issues including low prices and payments, outages and slowdowns, low or strict quotas, procurement problems, and preferential treatment of some logging companies were frequently cited as challenges. Mill quotas, in particular, are a historic complaint for logging businesses throughout the US [7,10,16,18] and have been for many years. These quotas present a market-based cause for underutilized production capacity for logging business crews, indicating that there is an oversupply of available timber within the area.…”

“…(3) mill issues (such as quotas and uneven relationships) [15,16]; (4) increases in operating, equipment, and labor costs [17]; and, most recently, (5) the impact of COVID-19 on individual companies and the industry as a whole [18,19]. Understanding how these issues emerge and change over time and the importance and priority placed on them by logging business owners can help us better assess how the health, status, and needs of the logging industry are evolving, and whether educational, policy, or economic interventions have had any effects.…”