The Forest Products Industry: Past, Present and Future

Transcription

1 The Forest Products Industry: Past, Present and Future Bob Smith Virginia Loggers Association 2017 Annual Meeting

2 Today s Discussion The Past The Present The Future

3 No single industry has had a greater impact on the development of the U.S. than the forest products industry. We built the U.S. We keep the economy going. We are vital to the economy of the US. (4 to 6% of GDP) You are vital to your local economy.

4 And the forest products industry depends on YOU!

5 The Past

6 Still the Past

7 In1621 a ship called the Fortune carried a load of logs and lumber to England from North America. Timber was one of our first exports. (From Andrews)

8 Pine Tree Riots The Pine Tree Riot was an act of resistance to British royal authority undertaken by American colonists in New Hampshire in 1772, placing it among the disputes between Crown and colonists that culminated in the American Revolution. [1] Their rebellion against the crown, which preceded the Boston Tea Party by 19 months, helped set the stage for the Revolution.

9 Some of the first sawmills in Jamestown, Virginia 1625.

10 Wood Frame Homes still exceed 90% of new home construction TODAY Average size > 2200 Sq.ft. >13,000 bf of framing lumber. > 6200 sq.ft. of panels. >2000 sq. ft. of siding. Approx. 15 cabinets. Approx. 15 windows. > 2000 sq.ft. of flooring LF of moulding Approx. 10 doors. Medium = $310,000

11 The wood pole brought communication and electricity to rural America 1837 Samuel Morse invents the telegraph Alexander Graham Bell invents the telephone the TVA was established the REA was established.

12 The mining industry depended upon wood timbers. Coal mining began in Iron ore and Copper found in Great Lakes region in Gold discovered in the West in 1848.

13 Promontory, Utah May 10 th, 1889 The Union Pacific and the Central Pacific Railroads Join. Wood ties connected our country!

14 We built our inland and coastal waterways.

15 The first cars were over 50% wood

16 At the beginning of the 20 th Century, Ford Motor Company was one of the largest timber owners in Michigan.

17 Timber bridges made travel possible

18 The First Airplanes were Wood THE ORIGINAL WRIGHT BROTHERS AEROPLANE THE WORLD'S FIRST POWER- DRIVEN, HEAVIER-THAN-AIR MACHINE IN WHICH MAN MADE FREE, CONTROLLED, AND SUSTAINED FLIGHT INVENTED AND BUILT BY WILBUR AND ORVILLE WRIGHT FLOWN BY THEM AT KITTY HAWK, NORTH CAROLINA DECEMBER 17, 1903

19 And Wood Pallets move the World! Since the beginning of time, wood has been used as a packaging material. Wood boxes were found in the tombs of pharaohs in Egypt. NWPCA

20 This was all done before.. The endangered species act. The radical environmental movement. Third party certification.

21 AND We have more forest land now than we had at the time of the War of Northern Aggression million acres million acres

22 The wood products industry keeps the U.S. economy going. According to the American Forest and Paper Association (AF&PA), the U.S. forest products industry employs about one million workers and accounts for approximately six percent of the total U.S. manufacturing GDP, placing it roughly on par with the automotive and plastics industry. The forest products industry is among the top ten manufacturing sector employers in 48 states and generates over $200 billion a year in sales and about $54 billion in annual payroll. AFPA

23 USDA Report Shows Growing Biobased Products Industry Contributes $393 Billion and 4.2 Million Jobs to American Economy "When USDA released the first-ever Economic Impact Analysis of the U.S. Biobased Products Industry last year, we were thrilled to see what a positive impact this sector was having on our economy, and this updated analysis shows that the sector is not just holding strong, but growing," Vilsack said. "America has an appetite for everyday products-including plastic bottles, textiles, cleanings supplies and more-made from renewable sources, and that demand is fueling millions of jobs, bringing manufacturing back to our rural communities, and reducing our nation's carbon footprint. As this sector is strengthening, so is the economy in rural America, where this year the unemployment rate dropped below six percent for the first time since USDA is proud to see such strong returns on our investment into the biobased products industry."

24 The Present

25 70% OF STRUCTURAL SOFTWOOD PRODUCTS AND 50% OR MORE OF GRADE HARDWOOD PRODUCTS ARE CONSUMED IN RESIDENTIAL CONSTRUCTION ( NEW PLUS REMODELING)

26 Total Housing Starts 2,000 1,750 1,500 SAAR = Seasonally adjusted annual rate; in thousands Total starts 57-year average: 1,443 mm units SF starts 57-year average: 1,025 mm units MF starts 52-year average: 420 m units 1,250 1, Total December Starts: 1,226 mm units SF Starts 2-4 MF Starts 5 MF Starts Source: 1/19/17

27 Hardwood Markets

28 12 Consumption of Hardwood Lumber by Major US Markets and Total Supply of Hardwood Lumber Consumption Supply Billion Board Feet Hardwood Market Report

29 From HMR

30 Railway Ties 12.9% Board Road/Mat Timbers 4.3% 2016 Flooring 8.6% Pallets 38.9% Cabinets 5.1% Millwork 5.1% Exports 19.7% Furniture 5.3% 2017 Hardwood Market Report Export = 19.7% of the volume of all Eastern US hardwood consumption and 45.0% of all grade lumber usage.

31 Estimates of Consumption of US Hardwoods % Change 2015 % Change 2008 Pallets % -6.7% Furniture % -36.9% Exports % 83.9% Millwork % -38.9% Cabinets % -64.1% Flooring % -9.4% Railway Ties % 14.7% Board Road/Mat Timbers % 24.8% Total Estimated Consumption % -7.1% 2017 Hardwood Market Report

32 1.4 US Domestic Consumption of Hardwood Lumber Flooring Cabinets Furniture Moulding/Millwork Billion Board Feet Hardwood Market Report

33 Softwood Markets

34 Softwood Lumber Markets

35 U.S. Lumber Domestic Consumption by end-use. BBF (Annual rate)

36 Per Capita Wood Consumption China World OECD USA In cubic meters per capita Source: China Timber Import Export Co/Hardwoodmarkets.com 2008

37 U.S. Pulpwood Demand Pine Pulpwood Demand Hardwood Pulpwood Demand

38 It is a Global Economy

39 Middle Class Outside the U.S. Expected to Double By 2020 Approaching 1 Billion Households Worldwide commodity consumption will be impacted Foreign households w/real PPP incomes greater than $20,000 a year (in millions of households) Middle class in developing countries projected to increase 138% by 2020 vs. just 15% in developed countries in 2009 Developing countries 200 Developed countries (ex US) Source: Global Insight s Global Consumer Markets data as analyzed by OGA From Mike Snow at AHEC

40 Middle Class in Developing Countries Could Reach 616 Million Households By 2020, Up 138% From 2009 Levels 25% of households in these countries are middle class. By 2020, this could increase to 49% and the impact on food consumption will be large Developing countries with fastest growing middle class China India Brazil Indonesia Russia Egypt Thailand Mexico Turkey Vietnam Philippines Iran Poland Nigeria levels Proj gains by Households with real PPP incomes greater than $20,000 (in millions) 40 Source: Global Insight s Global Consumer Markets data as analyzed by OGA From Mike Snow at AHEC

41 U.S. hardwood lumber exports, top 5 destinations % 45% 40% European Union-27 Canada China Vietnam Mexico 35% 30% 25% 20% Source: USDA FAS Graph: Hardwood Market Report 15% 10% 5% 0% Courtesy of the Hardwood Market Report 2015

42 Softwood Export Council 2016

43 Softwood Export Council 2016

44 The Future The future ain t what it used to be! (Yogi Berra).

45 New Markets Cross laminated timber and mass timber construction.

46 What is Cross Laminated Timber? Cross: each layer is crossed or runs 90 degrees to previous layer Laminated: Each layer is typically 2x (1.5 inches rough, dressed) and bonded with adhesive Timber: Creates a large section of wood usually used as panel

47 Virginia Tech s Connection Collaboration with Southern Virginia Higher Education Center (SVHEC) to investigate use of SYP for CLT USDA grant to investigate potential of Low-value hardwood lumber for CLT Our Approach has been to Collaborate to provide the Wood Material and Engineering Experience to Support our Partners

48 When they are willing to put on the outside, they are more willing to put wood on the inside.

49 Applications of CLT Recent CLT structures Integrated Design Building, UM at Amherst, MA Designed by Leers Weinzapfel Associates (5 LEED Gold projects, 2007 AIA firm of the year, over 65 national and regional design awards)

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51 Heat Treated Wood

52 Recycled Pallets

53 Wood Bioenergy Wood Pellets

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55 Physicist Richard Feynman, the father of nanotechnology /what/definition What is Nanotechnology? Nanotechnology is science, engineering, and technology conducted at the nanoscale, which is about 1 to 100 nanometers. Nanoscience and nanotechnology are the study and application of extremely small things and can be used across all the other science fields, such as chemistry, biology, physics, materials science, and engineering. 6th-15th Centuries:Vibrant stained glass windows in European cathedrals owed their rich colors to nanoparticles of gold chloride and other metal oxides and chlorides; gold nanoparticles also acted asphotocatalytic air purifiers.

56 Source: M. Snow, AHEC

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58 Global Green Building Materials Market Will Reach $255B in 2020 NDM Columns (02/24/17) Glenn, Martin The global green building materials market had an approximate value of $127.5 billion in 2014 and is expected to total $255 billion in 2020, growing at a combined annual growth rate of about 12 percent between 2015 and 2020, according to a new Zion Research study. The study also calculated the market had a total volume of 5,500 kilo tons in Green building systems such as LEED, the ICC 700 National Green Building Standard, and Building Research Establishment Environmental Assessment Method are likely to fuel demand for green building projects. North America and Europe are experiencing strong growth in the green buildings market thanks to environmental concerns, increasing awareness about environmental sustainability, and national, state, and municipal edicts and policies implemented in these regions. North America comprised the biggest regional green building materials market in 2014, encompassing a more than 40-percent share in total green building materials volume consumed in that year. The insulation segment made up more than 23 percent of the total volume consumed in 2014, and this trend should be sustained for the duration of the forecast period. Interior finishing should be the fastest growing segment as many green building materials are supplanting conventional materials for interior finishing operations.

59 AHEC LCA Study Deliverables: Compile Life Cycle Inventory data Compile data in line with internationally recognised protocols for use in regional databases such as: European Reference Life Cycle Data System (ELCD) The US Department of Energy Life-Cycle Inventory (LCI) Database LCA-National Project in Japan To cover major exported US hardwood species From point of extraction through to point of delivery in the EU and Asia From Mike Snow at AHEC

60 The Future While the 19 th century was the steel century, the 20 th century was the concrete century, it is quite possible that the 21 st century will be looked back as the WOOD century. Michael Green

61 So what does it mean for the your business? Economic indicators favor increased construction of forest products. Social indicators favor increased construction of homes. Mass Timber Construction with CLTs will open multistory commercial construction that will increase the use of wood. An increase in the middle class around the world will favor the increased consumption of forest products. Wood being recognized by decision makers as an environmentally friendly material will favor its increased used.

62 So what does it mean for the your business? It s a great time to be in the forest products industry!

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64 Bob Smith Department of Sustainable Biomaterials College of Natural Resources and Environment Virginia Tech