ANCA Adirondack forest industry supply - INRS 10.2016

Forest Industry Supply Chain
Assessment
.
October 12, 2016
Innovative Natural Resource Solution LLC
for the
Adirondack North Country Association

Counties
• Clinton
• Essex
• Franklin
• Fulton
• Hamilton
• Herkimer
• Jefferson
• Lewis
• Oneida
• St. Lawrence
• Saratoga
• Warren
• Washington
Innovative Natural Resource Solutions LLC 2

Forest Industry Supply Chain Assessment
• Task 1: Collection and analysis of USDA Forest
Inventory and Analysis data (FIA) on the forest
resource of the targeted New York counties
• Task 2: Landowner decision‐making and the
availability of timber for harvest in the region
• Task 3: Logging infrastructure
• Task 4: Transportation

For FIA Runs, we conducted:
• Full (no screens) assessment of resource
• FIA runs using some preliminary screens (slope, distance to
roads, etc.)
• Further analysis – using BPE and / or spreadsheet‐based
analysis – using further screens based upon NWOS and
stakeholder interviews

12,035,467
8,834,042
6,307,065
5,393,196
3,631,528
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
All Land Forestland Timberland FIA Screened
Timberland
BPE Screened
Timberland
Acres of Land by Screening Category

Standing Volume by Species,
Growing Stock ‐1993 and 2014*
(Unscreened)

Screened Forest Inventory & Analysis Results
• Based upon information and suggestions from a number of foresters,
regulators, land managers and conservation organizations in the region,
INRS conducted another assessment of the region’s forest resource,
estimating the resource only on timberland that met the following criteria:
• In private ownership (while timber harvesting can and does occur on
public lands, volume from this type of ownership is driven largely by
non‐market forces and is often not a reliable source of material for
forest industries);
• Is less than one mile away from a road (includes maintained woods
roads);
• Having a slope of less than or equal to 35 percent.

Eastern white and red pine
Spruce and balsam fir
Eastern hemlock
Other eastern softwoods
Select white oaks
Select red oaks
Hickory
Yellow birch
Hard maple
Soft maple
Beech
Ash
Cottonwood and aspen
Basswood
Growing Stock on Private Timberland by Species, Cubic Feet
Distance to Road <= 1 mile
Slope <= 35%

(5,000,000)
‐
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Eastern
white and
red pine
Spruce and
balsam fir
Eastern
hemlock
Other
eastern
softwoods
Select white
oaks
Select red
oaks
Hickory Yellow birch Hard maple Soft maple Beech Ash Cottonwood
and aspen
Basswood
Net Change (Total Growth ‐ Mortality ‐ Removals)
growing stock, all private timberland, <= 1 mile to road, <= 35% slope
cubic feet
Summary total = 78 million cubic feet increase per year (2.4 million tons) available

(60,000,000)
(40,000,000)
(20,000,000)
‐
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
Eastern
white and
red pine
Spruce and
balsam fir
Eastern
hemlock
Other
eastern
softwoods
Select white
oaks
Select red
oaks
Hickory Yellow birch Hard maple Soft maple Beech Ash Cottonwood
and aspen
Basswood
Net Change (Total Growth ‐ Mortality ‐ Removals)
sawlog portion, all private timberland, <= 1 mile to road, <= 35% slope
board feet
Summary Total = 341 million board feet annual increase available

Literature search – Family forest owner attitudes towards timber harvesting:
• Landowner attitudes and beliefs are more important to a landowner
deciding to harvest than are social influences (my neighbor did it) or
professional ones (foresters)
• Parcel size (i.e. bigger more likely), outreach activity participation
(attended workshop), harvest price, and distance from residence were
the most common significant predictors of harvesting intention
• In New England & New York, over 50% of family forest owners have
harvested timber on their land in the past
• Harvesting on family forest ownerships in New York has increased
dramatically in recent years and it should continue (2009 study).

Landowner attitudes and the National Woodland
Owner Survey (NWOS)
• 2013 NWOS is most recent
• 632 surveys for all of NY with 313 returned surveys
• Unable to query just 14 counties
• 44 different query results.

NWOS NY Major Timber Findings (private family forest owners with more than 10 acres)
• Over 65% harvested timber of some sort since they owned
their forestland
• Nearly 50% harvested sawlogs since they owned their
forestland
• At least 33% used a professional forester to help with harvest
• In last 5 years 64% harvested some timber for sale or personal
use
• In the next 5 years, 64% of forest owners say that they will
harvest timber for sale or personal use.

Northern Forest Biomass Project Evaluator
Northern Forest Biomass Project Evaluator model was created by INRS on
behalf of the North East State Foresters Association through grant support
from the USDA Forest Service.
• intended to be used as a decision support tool for analyses of wood
supply under different conditions for a geographic area
• Using FIA data as its core dataset, BPE estimates available timber
volumes over time for a specific geographic area based on a series of
parameter assumptions
• We’ve chosen 4 separate model runs.

BPE Scenario Runs
Available Timber after Existing Harvesting (green tons)
550,000 550,000 550,000 550,000
1,796,000
1,510,000
1,282,000
2,095,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Run 1 ‐ Constant Run 2 ‐ Reduced Growth Run 3 ‐ Increased Demand Run 4 ‐ Increased Forest
Growth
2016 2036

Understanding Market Cycles
• The region has a number of markets for wood
• Pulp and paper mills
• Biomass electricity facilities
• Wood pellet mills
• Firewood
• Sawmills
• There are also demands on the resource from outside of the region
• Each of these markets faces (somewhat) unique economic drivers
• Markets drive wood demand, not logging infrastructure (though
logging infrastructure can certainly limit supply)

Pulp & Paper Mill
Biomass Electricity
Wood Pellet

Energy Markets Can Change Quickly
And when they do, markets for biomass chips, wood pellets, and firewood can all change
$‐
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$‐
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
Jan‐14
Feb‐14
Mar‐14
Apr‐14
May‐14
Jun‐14
Jul‐14
Aug‐14
Sep‐14
Oct‐14
Nov‐14
Dec‐14
Jan‐15
Feb‐15
Mar‐15
Apr‐15
May‐15
Jun‐15
Jul‐15
Aug‐15
Sep‐15
Oct‐15
Nov‐15
Dec‐15
Jan‐16
Feb‐16
Mar‐16
Apr‐16
May‐16
Jun‐16
Jul‐16
Electricity Heating Oil
Electricity –Average RT $/MWh
Home Heating Oil ‐$/gallon

The world changes quickly
Winter 2015
• Pulp mills operating at normal
capacity
• Electricity prices high
• biomass plants operating as much as
they can
• New biomass plant at Black River
• Oil prices high
• Strong demand for wood pellets
• Strong demand for firewood
• Pulp mills from PA, ME and Canada
all looking for wood in the region
• Markets wide open
Today
• Pulp mills operating at normal
capacity
• Electricity prices low
• Seasonal curtailments and operation
below capacity at biomass plants
• Oil prices low
• Low demand for wood pellets and
firewood
• Latent supply left from a warm winter
• Other regions not pulling wood
from the Adirondacks
• Markets on quota

Phone Interviews conducted:
• Phone interviews with logging companies, trucking
companies, forestry companies and mills
• 24 interviews conducted
• Dozens of questions asked of each interviewee.

Do we need more loggers?
Troubling…both answers are correct

Logging Capacity in the Adirondacks
• There are enough loggers and equipment to meet today’s market
needs
Many markets on quota, so some underutilized capacity
• Just +/‐ 18 months ago, logging capacity strained
If markets returned to prior levels, there would be enormous strain on
the existing capacity to meet demand
• A much bigger issue looms
A meaningful portion of the workforce and leadership plans to leave
the business in +/‐ 5 years
They are on their last set of equipment
When this happens the region faces a significant logging shortfall.

Are people entering or leaving logging?
• Some loss to retirement, other industries
• Prison guards
• Construction
• Some firms are downsizing
• Perhaps permanently moving from two crews to one
• This means some jobs will be lost
• In current market, loggers told us they are not investing in new
equipment, and not needing new people.

Capital for Logging Equipment
• Every logger we spoke to said that they currently had access to capital
at attractive rates
Local banks
Equipment dealers.
• Just because they have access to money does not mean they are
using it
Most said they currently have the equipment configuration they want, and
would not add new equipment until age required or markets strengthened.
• We spoke to suppliers with a combined production of ~450,000 tons,
a substantial portion of the region’s market.

Mill Support for Logging Infrastructure
• Providing a market is providing support for loggers
A stable market is even better, but often beyond control of the mill
• The days of company logging crews are (pretty much) gone
• Some mills providing MOUs for future volume purchases, loggers
using this as part of dealing with lenders
Often non‐binding, expressions of intent
• One facility provided a financing program to add chipping capacity to
existing logging firms
Equipment loan paid off through debits to wood payments
Often a re‐allocation of capacity, but not wholly new capacity.

Dealing with Local Communities
• In general, loggers, truckers and mills expressed that communities were
neutral or supportive of timber harvesting and trucking
Probably more neutral, but that’s positive
Heard some concerns about specific communities > how do we handle in the report?
• For roads and bridges…
Some specific complaints, because bridges were being fixed and upgraded
Nobody could name a location that was a real problem / bottleneck / drive around
that was not part of current construction
Seasonal restrictions (mud season) very real – most truckers said they knew how to
deal with this and generally found towns cooperative
• Weight limits in New York are viewed as good
• Some desire for increased trucking capacity (Canadian B‐Trains).

Logger Training Programs
• Designed for people currently
logging
• Chainsaw Operation, Safety, &
Productivity (Game of Logging)
• Environmental Concerns (Forest
Ecology & Silviculture); and
• Adult First Aid & CPR
• Continuing education
requirements
• Well‐liked by current loggers
• Required lots of “on the job”
training time
• A nascent program, funded
beginning of this year
• Designed to bring new people into
the industry
• May offer some continuing
professional development as well
• Mechanical harvesting
• Purchased a simulator
• Get a student “60% there”
• Opportunity for industry to help
shape the program.

Trucking
• At current market demand, clearly enough trucks and drivers
• However, anecdotally this appears to be the first bottleneck
in the supply chain
If demand increased, not enough trucks to supply all markets
Was an issue this year during mud season, when truckers face
changed operating hours and mills get tight on wood
• Trucking a highly transferrable skill set (to other trucking)
Seems like this would aid liquidity – people come and go as
markets change
Appears to be a one‐way street – away from forest products.

Innovative Natural Resource Solutions LLC
Charles Levesque
• levesque@inrsllc.com
• 603‐588‐3272
Eric Kingsley
• kingsley@inrsllc.com
• 207‐233‐9910

ANCA Adirondack forest industry supply - INRS 10.2016

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ANCA Adirondack forest industry supply - INRS 10.2016