Published: May 29, 2007 11:29 pm            

Timber industry hits hard knocks

CHARLESTON — Shrinking interest in oak hardwood for building material and growing foreign competition have West Virginia’s $4 billion timber industry in a knot, officials say.

The average price of red oak lumber, the state’s most prevalent species, has dropped by at least 50 percent over the last year, said Greg Cook, deputy state forester.

Cook said state sawmills are cutting back on production but hope to hang on to nearly 30,000 employees. Timber owners are hanging on to their stands of red oak until the prices go up a little, limiting the supply to the sawmills.

It’s mostly because of a swing in customer preferences.

“People have gone to lighter-colored wood,” Cook said. “Red oak is out of trend.”

Red oak makes up about half of the state’s forests and nearly half of what sawmills produce.

The state’s supplies of maple, poplar and cherry trees, which are selling pretty well right now, aren’t enough to close the financial gap left by the disinterest in oak.

“With red oak being our primary species, it’s definitely hurt our industry,” said Dick Waybright of the West Virginia Forestry Association.

Waybright said the state’s timber industry is “as bad as it’s ever been.” The only people who are still profiting well off oak are Amish craftsmen, he said.

Meanwhile, Tom Inman, president of Appalachian Hardwood Manufacturers, Inc., says programs have been started to try to get furniture and home designers and buyers interested again in oak.

“The message is that oak is a terrific resource,” Inman said. “As fashion trends change, we are attempting to get ahead of that. It’s not the oak of the past.”

A group of lumber manufacturers have started “The New Oak Partnership” and are working on selling the species as time-tested, venerable and better for building than foreign woods, which might react adversely to the North American climate.

Since the partnership began, Inman said he already has noticed single-digit increases of orders coming into Appalachian sawmills for red oak.

“Have we turned the corner? No,” Inman said. “But I think we have stabilized.”

Inman said oak was the wood of choice from the mid-1970s through the early 1990s.

“In the mid-1990s, we saw consumers begin to tire of the golden oak color,” Inman said.

But Inman said he’s been seeing a lot of darkly stained furniture coming onto the market that would hide that.

Other North American species have gained in popularity, as have some foreign species, Inman said.

Foreign timbering and flooring and furniture manufacturing can be done a lot cheaper because of lower logging standards and inexpensive labor, a further burden on the West Virginia industry.

One of the best things about the oak species is its sustainability in the forests, Inman said. The U.S. Forest Survey did a recent survey that found that five oak trees are standing for every one that has either died or has been felled, Inman said.

State lawmakers were informed of the state timber industry’s problems during committee meetings earlier this month.

Waybright with the state Forestry Association says lawmakers are being asked to keep the timber severance tax at its current level and to take it easy on the industry when it comes to restrictions.

The current regular severance tax on timber is 1.22 percent on gross receipts. The regular tax funds the state Division of Forestry. That tax rate declined this year from 3.22 percent.

There also is an additional 2.78 percent timber severance tax that goes to pay down workers’ compensation debts.

Both taxes regularly yield about $5 million a year, according to state figures.

West Virginia has the highest timber severance tax rate per 1,000 board feet of production of any state east of the Mississippi River, according to last year’s findings of state experts working on a modernization of the state tax system.

The state levies a tax of about $5 per 1,000 board feet. The next highest is Virginia, which collects a little more than $1 per 1,000 board feet.

“We realize that we need to be paying our fair share,” Waybright said. “But we’re not an extractive industry. Timber is a renewable resource. We’re continually growing forests.”

Cook, the deputy state forester, said he has faith that West Virginia’s timber industry will weather the downturn.

“This is a strong industry in West Virginia, and these companies are not going to tuck their tails,” Cook said. “They’re going to hang in there.”

        

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