Putting Timber Mill Closures in Perspective

(Please Note: In mid-January, American Timber Company in northwest Montana announced it was going to close its doors due to a lack of timber from National Forest lands. On the same day, Plum Creek Timber Company announced that it was spending $69 million dollars to expand its fiberboard plant just down the road from the slumping American Timber.)

By Thomas Michael Power Chairman of Economics, University of Montana

The closing of the American Timber mill northwest of Whitefish has been disturbing to many of us. The drama of a business with a long local history closing its doors and auctioning off its equipment leaves us anxious about where the economy is headed and what may be in store for our own and our neighbor's livelihoods.

Some have been quick to offer very scary interpretations: They blame the shutdown on the drastic decline in timber harvests from federal lands that they say is strangling the timber industry and forcing the closure of one mill after another. Given the importance of timber in Western Montana's economic base, they insist that it is only a matter of time before the whole regional economy is forced into a tailspin by the shutoff of the flow of timber from our National Forests to our mills.

There are several factual threads to this argument that are worth investigating. First, just what role has federal timber supply played in supporting wood products jobs and overall employment? Harvest off of federal lands in Montana peaked in the late 1960s, 30 years ago. But forest products employment did not peak until ten years later, in 1978, by which time federal harvests had already been cut in half. Total timber harvested in Montana, both public and private, did not peak until 1988, 20 years after federal harvest peaked, but in 1988, despite the peak total harvest, forest product employment was several thousand jobs below its peak level. Clearly industry employment does not mechanically follow federal timber harvest or, even, total timber harvest.

On the Flathead National Forest, timber harvest has also fallen for 30 years except for a brief recovery during the mid-1980s. In 1998, harvest from National Forest lands was a mere 10 percent of what it had been in 1969. Despite this long-term decline in federal harvest, real earnings in wood products in Flathead County has increased since 1969, not decreased, and has been relatively steady for two decades. Meanwhile, the Flathead economy has boomed despite the loss of access to most of the federal timber. While federal timber harvests were down almost 90 percent, employment almost tripled, adding 30,000 new jobs. The population supported by the economy grew 84 percent. Something similar was taking place across Western Montana. Federal timber harvest has been down dramatically, but employment in forest products has largely been stable at between ten and twelve thousand workers over a 30-year period. Of course, most of the Western economy boomed, too, despite the declining access to that federal timber.

It certainly has been true that a significant number of wood products jobs have been lost over the last decade, almost 700 if we measure from the peak level of production in 1988. Small mills in the Bitterroot, Missoula, Flathead, Mineral, Granite, and Lincoln counties have closed. To some, this suggests that the region's economic base is shriveling. But that is not the case. Even some wood products mills are expanding, such as the Plum Creek fiberboard mill in the Flathead. While 700 lumber jobs were lost over the last decade, 3,500 jobs, five times as many, were added in non-lumber durable manufacturing. This includes the 800 jobs at the Semitool plant in the Flathead and the 700 jobs at the Jore tool production facility in the Mission Valley. Non-lumber durable manufacturing now provides almost as many manufacturing jobs in Montana as wood products do. This is primarily due to the steady growth in durable manufacturing outside of wood products, not to declines in wood products employment itself.

We are told that these mill closures are wiping out all of our "good" "high- paid" jobs. But that is not the case either. The average pay in the 1,500 machinery and instruments manufacturing jobs that have been added over the last decade is almost identical to that in wood products. Construction pay is also similar to what is paid in wood products and, over the last decade, 15,000 additional construction jobs have been added.

If you track individual wood products workers as they leave that industry, you find that they largely move into either construction or other manufacturing. Although their pay initially declines about 12 percent, within five years it is as high or higher than the level enjoyed before the shift.

Over the last decade we have also added 10,000 health service jobs, 1,200 trucking jobs and 500 communications jobs, all at average pay similar to wood products. We are not just losing well-paid jobs; we are also creating new ones at an even faster rate. That has not always assured rising average real pay because real pay in all types of jobs, including pay in wood products, has been depressed.

The layoff of 145 workers and the permanent closure of a business with a 70-year history is certainly a serious loss to the region. It is not, however, a sign that the economy is unraveling or that we would all be better off if we allowed a return to the clearcutting rampage of two or three decades ago. It was that damaging over-cutting that led us as a people to insist that timber harvest be reined in and that our public lands be protected as forests rather than managed solely as lumber warehouses. We now see the values of the whole forest and not just commercially valuable trees. We should keep that vision. It will serve our economy and our children well now and in the future.

Thomas Michael Power is Professor of Economics and Chairman of the Economics Department at the University of Montana. He is the author of Lost Landscapes and Failed Economies: The Search for a Value of Place (Island Press, 1996).