It depends on who you listen to or read as to whether you think the economy is up, down or just flat-lined. If you look at the forest industry, you may think that the economy is headed down for the current time.

Forestry as an industry has always led in the Southern states as being either the first, second or third manufacturing industry. In some states, oranges and tourism beat it down to third, while in other states, forest is No. 1.

In the past three years, there have been more closings of doors by forest industries than in my 26 years as a forester. There used to be Kiser Lumber Co., Infinger Lumber Co., Tally Corbett in Springfield and Tally Corbett in Fairfax, Coastal Lumber Co. in Denmark and Marsh Lumber Co. in Pamplico. These companies are GONE!

Canal Wood in Orangeburg and Walterboro closed its doors, plus it laid off 12 timber buyers across North and South Carolina. Tyler Plywood Mill in Florence closed its doors three years ago because of competition with Russia and other countries.

Tyler Plywood (Dan) told me the company could not compete in a global market with the costs: health care for workers, worker compensation, OSHA standards, family medical sick leave, etc. The countries with which it was competing did not have all of these extra costs, which drive up the cost of the end product. He further said that if a Russian would come over here (Florence, S.C.) and offer him a price for his mill equipment, he would sell it as there is no one in the United States wanting to buy used equipment. (I keep a piece of their plywood in my office.) Other companies also laid off timber buyers.

Grant Forest Products has not started running full speed in Fairfax. Grant Forest Products in Manning has not opened. In fact, construction there has halted indefinitely.

One large company in Georgia closed its doors a year ago, expecting to open back up within six months -- but it has not. The reason for closing was the sale of the end product was not covering the cost of producing the end product. In other words, they were not making a profit.

Two other companies that pull wood out of Orangeburg County have lowered their pay for employees. All employees, from CEO to the hourly wage-earner, have been asked to take a 15 percent pay cut in order to keep the doors open. Another mill laid off the second shift.

Loggers are having a hard time as well. Each company (usually) has its own set of loggers. They do use other loggers especially in specific situations. As these companies close or are slowing down in production, there are loggers out there without anything to log.

As I have written before, the average logger has about $60,000 go through the business per month. The larger operation may have as much as $200,000 plus go through a business per month. Some of the loggers in the Upstate have gone out of business. Most likely, they have had to declare bankruptcy. Most loggers have about $750,000 to $2 million invested in equipment; thus, if they do not have most of the equipment paid off or have a rich relative, they most likely went into bankruptcy, adding to the bank problems.

Fuel cost is up for everyone, but loggers, like farmers, depend upon fuel to run equipment and to haul products to the mill. However, the mills have been steadily cutting what they will pay for saw timber and chip and saw. Thus the loggers have been caught in the “big squeeze.” To add salt to the injury, their insurance has gone up. Remember from my article on loggers, they not only have to insure their equipment and employees (workmer compensation) but carry $500,000 liability to go into the mills.

Look at all of the mills above that have shut down and the forest industry offices that have been closed. That is secretaries, managers, mill workers and timber buyers out of work. Then there are copy machine repairmen, insurance salesmen, car and truck salesmen, accountants, truckers to truck the end product to a destination, bookkeepers, mill equipment repairmen and salesmen, etc. These people have less work and less income unless there are new businesses to take up the slack. Then look at the industry tax base that is no longer there contributing money back to the counties in which they were located. Some of the offices were rented, thus, someone is out of that rental income.

Right now, all of the companies I have talked to are doing their best to keep their loggers going. They are buying pulpwood at above what it takes for their company to make a profit in order to keep loggers. Now, if they keep cutting their profit margin down, then they, too, may be looking at more layoffs or closing the doors.

Why is all of this happening? I am not an economist with the answers, but there are some things that came together like the huge Storm of the Century.

In 2003, I wrote about the emerging foreign markets such as Brazil and Russia. Russia had built nine new sawmills and have a huge forest to cut down. In Brazil, they can raise a pine tree in 10 years. Their forest industry has boomed until U.S. herbicide markets have moved to have offices in Brazil.

In 2004-2005, the housing did begin to slow down as interest rates crept up, but there was still a boom market going.

2005, Hurricane Katrina and her sisters hit the Gulf Coast. Our Hurricane Hugo took in one night what we would use in 30 years and we managed to salvage 25 percent. Katrina took a lot more and the forest industry in that state had goals of salvaging 85 percent on private lands and 70 percent on public lands. That is a HUGE amount of wood flooding the market that could not be used all at one time. Some of that lumber may still be in storage because the demand is down.

Most of the volume went to making paper, Oriented Strand Board (OSB) and chemicals, but a lot of it was used in solid wood products.

Oil refineries were hit by the hurricanes and there became a shortage, not in oil but in refined oil.

2006, interest rates went up a little and housing starts started to decline more. By 2007, people started defaulting on their loans and housing values started declining across the nation. Interest rates went lower to help people with floating interest rate loans.

To recap this: Other countries with cheaper costs are competing with us, the hurricanes put a huge amount of wood on the market, gas and diesel went up, causing a ripple effect of everything going up, the housing market exploded, with lenders and buyers in trouble, decreasing the demand for building.

My crystal ball says, “Who knows when this will turn around.” So far, I have heard:

1. After the presidential election.

2. In a year or two.

3. In three years or more.

Timber prices will go up again. Like always, I want to remind you to thin your timber and have it growing so you will be ready to take advantage of higher timber prices. If you do not thin and have your timber ready for the market when conditions improve, you will be taking advantage of higher pulpwood prices.

Beth Richardson is an agent with Clemson Extension Service in Orangeburg County.

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