Alabama’s 22 million acres of commercial forests help the state’s economy stand tall. The state’s forests are the nation’s second-largest timberland and each year supply $12 billion worth of wood and paper products for countless industries.
Furthermore, the forestry industry generates income for more than 250,000 Alabama landowners, provides direct employment for more than 46,000 workers and indirect employment to thousands more. Most of all, forestry creates $19 billion worth of economic impact for the state. Every county is home to at least one of the state’s 670 forest products manufacturing operations.
While declining housing starts and an increasingly paperless society have taken a toll on lumber, furniture and paper producers across the country, the industry in Alabama is rising to the challenges. By exploring new global markets and adopting new business strategies, industry leaders are proving that they really do see the forest for the trees.
“We have very innovative business owners in this industry,” says Chris Isaacson, executive vice president of the Alabama Forestry Association. “Our companies have made strategic adjustments to operate effectively in this environment and are poised to be even more successful when the economy turns around.
Making an Investment
McShan Lumber is one of those companies. Established in 1907 in west-central Alabama, this family-owned sawmill produces high-grade Southern yellow pine lumber. Traditionally, 20 to 25 percent of their products have been exported. According to Mark Junkins, McShan’s sales manager, that number has climbed to 60 percent as the company cultivates more overseas customers to make up for the declining domestic market.
Convinced that they will be well positioned when housing starts to recover, McShan is currently making a $4.5 million capital investment in its operation.
“We have an exceptional and abundant forestry resource in Alabama, and the world is looking to our state to supply the products they need,” says Grover Allgood, vice president of procurement at McShan. “We’re taking this opportunity to make significant facility upgrades that will position us to meet the increasing global needs and to be ready when the domestic market returns.”
Logging New Business
The Westervelt Co., based in Tuscaloosa, has business operations in the timber, wood products, ecological services and renewable energy sectors. Joe Patton, vice president of wood products for the company, explains that Westervelt worked diligently to identify and cultivate new opportunities in export markets even prior to the economic downturn.
In fact, Westervelt Renewable Energy recently broke ground on a new facility near Aliceville that will produce wood pellets that can be burned to produce power. The plant is scheduled to begin production in November 2012. Its first two customers are large utility companies in Germany and The Netherlands.
“The development of our renewable energy platform will see an increase in international commerce, since primary global consumption for wood pellets as a fuel source occurs in Europe,” says Patton.
Lean & Mean
Ken Muehlenfeld, director of the Forest Products Development Center at Auburn University, says that although this has been a challenging time for the industry, there are benefits to the fact that producers have become leaner and meaner.
“We’re ending up with a strong cross-competitive manufacturing base,” he explains. “I’m optimistic that when the market comes back the industry will be in a good position.”