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September 20, 2016

Report: Maine's forest economy fell $1.3B since 2014

Courtesy / Maine Forest Products Council
Courtesy / Maine Forest Products Council
Patrick Strauch, left center, executive director of the Maine Forest Products Council, leads MFPC members on a tour of the Robbins Lumber Co. woodlot in a 2014 file photo.

Maine's forest industry at a glance

Paper exports: $599 million in 2013, $484 million in 2014, $461 million in 2015. Percentage change: 2013-2014, -19.27%. Percentage change: 2014-2015, -4.67%

Rank among total state exports: No. 1

Forestry products exports: $199 million in 2013, 2014 and 2015. Rank among total state exports: No. 5

Wood products exports: $879 million in 2013, $761 million in 2014, $737 million in 2015. Rank among total state exports: No. 11

Total jobs (direct and indirect): 33,538, which is 4.13%, or 1 out of 24 jobs in Maine, associated with forest products industry

Top five counties for employment: Aroostook (4,600 jobs); Somerset (4,325); Oxford (4,175); Penobscot (3,787); Franklin (3,351)

Source: Maine Forest Products Council

The total economic impact of Maine's forest products industry fell from $9.8 billion in 2014 to $8.5 billion in 2016, according to a new report released Monday by the Maine Forest Products Council at its annual meeting in Orono.

That's not surprising, given the closure of five paper mills in the last two years and the shutdown of two biomass energy plants this spring. Reflecting those closures, total payroll fell from $2.1 billion in 2014 to an estimated $1.8 billion in 2016, with direct jobs declining from 16,551 in 2014 to an estimated 14,563 in 2016.

Total state and local taxes paid fell from $318.5 million in 2014 to an estimated $278.4 million in 2016, according to the 2016 Maine's Forest Economy report, which was commissioned by the Maine Forest Products Council to update its 2013 report.

"We've always wanted to know our numbers. It's really important to know whether we're gaining or losing ground in this industry," Patrick Strauch, executive director of the Maine Forest Products Council, told Mainebiz in an interview after the annual meeting. "What we're showing is that we can respond to good economic times [eg., the $9.8 billion total economic impact in 2014] but we also know we have to respond to the challenges facing this industry as well. So the message we want to convey is: we haven't died. We're still a $8.5 billion industry, which is where we were in 2011, but it's clear the world is changing around us."

The report uses an industry standard input-output model that accounts for both direct and indirect economic impacts. Mindy Crandall, an assistant professor of forest management and economics at the University of Maine, computed the 2016 estimates to give the report more of a real-time snapshot of the industry than it would have had due to the lag time in official reporting of some metrics.

Strauch said Maine's remaining paper mills are making significant capital investments to remain competitive, in some cases to diversify with new products for which there is strong global demand.

Innovation is key to future

"They're not just thinking about the new lines of paper they can get into, they're looking at different products that are on the horizon," he said. "They're identifying the new chemical extractives such as cellulosic sugars that can be pulled out of wood and made into chemicals. Plastics made out of petrochemicals don't tend to biodegrade, so there's a growing worldwide interest in finding ways to get a more organic, bio-based plastic."

Stephen Shaler, director of the School of Forest Resources at UMaine, who moderated a panel discussion on cross-laminated timber at the annual meeting, highlighted the growing interest globally in using new types of wood products such as CLT, which involves gluing layers of wood together under pressure to form panels up to 50 feet long that are exceptionally strong. There are now four CLT manufacturing plants in North America — two in Canada and two in the United States, in Montana and Oregon.

"It should be technically possible to produce CLT in Maine," Shaler wrote in his contribution to the report focusing on new uses for wood. "It's made from softwood dimension lumber and Maine is the largest manufacturer of softwood lumber in the Northeast with close proximity to the huge New York-Boston market."

Strauch said the panel discussion and the essays contributed to the report by various stakeholders highlight the many ways that Maine's forest products industry already is reinventing itself to meet the rapidly evolving global economy.

"We have an incredible sustainable resource in this state," he said, referring to Maine's 17.6 million acres of forest, 89% of the state's land, with 8.3 million acres being certified as sustainably managed by independent auditors. "Our challenge is to find our way as we go into the next generation. We're going through a tough time. But it's not a disaster. We still have a critical mass of businesses cranking away. We know what the numbers are, we know our challenges. We need to build that road map that will get us through this transition so that we can grasp the opportunities that are out there."

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