OLMIS

by Brian Rooney
Published Jun-10-2008

Introduction The Forestry and Logging Industry by the Numbers An Industry That is Important to Rural Areas Declining Again After a Period of Stability Support Activities for Forestry Outlook

Oregon is one of the world's great tree-growing areas. The state's soils and climate provide ideal conditions to grow such commercially viable species as Douglas fir and ponderosa pine. Forests cover more than 30 million of Oregon's 61 million acres – almost half of the state's landmass.

The Oregon Department of Forestry (ODF) estimates logging totaled 4.3 billion board feet in 2006. While much of this timber feeds Oregon's wood products industry, creating jobs and income, many jobs are also created from the planting, growing, and harvesting of this resource. These jobs are particularly important to Oregon's rural economies, often representing one of the few sources of high-paying jobs.

The Oregon Employment Department (OED) uses the North American Industry Classification System (NAICS) to classify industries. Logging is in the agriculture, forestry, fishing, and hunting sector.

Industries in NAICS 113 – the forestry and logging subsector – grow and harvest timber on a long production cycle, generally of 10 years or more. Timber production requires natural forests or suitably large areas of land that are available long term. Oregon's often mountainous and remote terrain, in both public and private ownership, provides that land base.

The forestry and logging subsector is made up of three industries:

• Timber tract operations,
  
• Forest nurseries and gathering of forest products, and
  
• Logging.

According to the OED's covered employment statistics, the subsector's 1,034 reporting units – generally considered worksites – employed 11,423 people statewide and added about $511 million in payroll to Oregon's economy in 2006. Graph 1 shows employment had been stable between 2001 and 2005, but has trended downward since – likely due to the slowdown in housing construction in the western part of the U.S.

Of the total, 7,628 were employed in the private sector while 3,795 were employed in government. Most of the government employment was in federal government at 3,563 while the rest was in state government.

Covered employment is a count of workers covered by Oregon's unemployment insurance (UI) program. Self-employed individuals are generally not included in the program and, therefore, not counted. However, the U.S. Census Bureau produces nonemployer statistics. A nonemployer business is one that has no paid employees, has annual business receipts of $1,000 or more, and is subject to federal income taxes. In addition to covered employment, the forestry and logging industry had 1,832 nonemployers in Oregon in 2005. Gross income for these companies was $118,159,000. Although there is no further industry breakout, it is likely many of these self-employed were involved in timber tract operations and the gathering of forest products.

Graph 1 also shows the seasonal nature of industries in forestry and logging. Employment generally grows throughout the spring and peaks in August. Employment often stabilizes for a month or two in the fall before dropping off as winter rains begin.

Table 1 shows the forestry and logging subsector is dominated by logging companies, which totaled 852 reporting units and 7,222 employees in 2006. The logging industry, with a statewide annual average wage of $39,693 in 2006, pays above the average wage of $38,070 for all industries. Major occupations in this industry include loggers, equipment operators, truck drivers, and fallers and buckers. A few companies in the logging industry use heavy-lift helicopters. Logging shows a similar seasonality to the overall subsector.

The second-largest group of employment in forestry and logging is timber tract operations, employing 4,083 on an annual average basis in 2006. Timber tract operations employment is dominated by government employment. There are 3,563 federal workers and 210 state workers that manage government forest lands. The remaining 310 are in the private sector. In addition to forest workers, many occupations in this industry are managerial or professional and require a high level of education. Wages, therefore, are relatively high – $54,162 on an annual average basis in 2006.

The industry with the least employment in the forestry and logging subsector is forest nurseries and gathering of forest products, with only 11 reporting units and covered employment of 118. Many of the occupations in this industry are seasonal nursery work, which contributes to the low annual average wage of $25,759. The covered employment numbers for this industry may be low since many of the entities that gather forest products are sole proprietors or family operations that are not covered by UI law. An ODF list of nurseries that produce native forest seedlings can be found by visiting  www.oregon.gov/ODFand clicking on the Private Forests link.

Approximately 90 percent of the employment in the forestry and logging industry is outside of the Portland metropolitan area (Graph 2). In general, the areas that produce the most timber also see the most employment in forestry and logging. All of the top 10 timber harvest counties are in Western Oregon (Table 3). Correspondingly, two of the top areas of employment in forestry and logging are the Willamette Valley and Southern Oregon. The North Coast is somewhat of an anomaly since all three of the counties in this region are in the top 10 for harvests, but employment is only 8 percent of the statewide total.

However, the percentage of statewide employment does not tell the whole story. Location quotients provide a more in-depth look at the relative importance of an industry in each region. Location quotients compare the percentage of employment in an industry in a region to the percentage of employment in that industry in a larger area, in this case the entire state. A location quotient above one in a region indicates a higher relative importance for an industry compared with the rest of the state. Using the above regions, the location quotients for the North Coast and Southern Oregon were highest, at 3.0 and 2.8, respectively. Eastern Oregon is next at 2.0 followed by the Willamette Valley at 1.3. The location quotient for the Portland metro area is 0.2.

Although some of Oregon's largest logging companies are near metro areas, more than half of the reporting units are relatively small outfits located outside of major metro areas. Because of high wages and the prevalence of companies in rural areas, logging jobs are particularly important to rural economies.

The industry declined with timber harvests through much of the 1990s. From 1990 to 2000, private-sector forestry and logging declined from 15,774 jobs statewide to 12,887, a loss of 2,887 jobs or 18 percent. During that period, timber harvests in Oregon declined from 6.2 billion board feet to 3.9 billion board feet.

The decline was due largely to environmental concerns and the resulting decrease of harvests from public lands. In 1990, the ODF reported 48 percent of timber cut for the lumber and wood products industry came from public lands. Over time, restrictions took a toll, and harvest from public lands in Oregon dwindled to 16 percent of the total in 2006.

Some of the decline in employment was due to increased mechanization. A simple way to look at the efficiency created by mechanization is to look at the volume of timber harvested per logging worker. There was an average of 544,000 board feet harvested per logging worker in 1990. In 2006 that figure had risen to 599,000.

After a period of relative stability starting in the late 1990s and carrying through 2005, employment in forestry and logging is declining again, this time in response to slower home construction especially in the western U.S. Between 2005 and 2006, annual average employment fell by 605 jobs or about 5 percent. It is likely that some of these jobs will return as national home construction returns to more normal levels.

The high level of forestry activity in Oregon also creates demand for a support activities industry (NAICS 1153). In 2006, support activities had covered employment of 4,149 and a total payroll of $113,364,435. In addition, there were 553 nonemployer businesses with gross income of $23,411,000 in 2005. Included in this industry are firms that replant forests, fight forest fires, thin forests, and provide information to the timber industry.

Annual average covered wages in this industry were below the all industry average at $27,329 in 2006. Seasonal, sporadic, and part-time work are prevalent, bringing down the annual average.

Graph 3 shows this industry, like forestry and logging, is highly seasonal. The year usually starts with tree planting in the late winter and into spring depending on the slope and elevation. Firefighting then picks up in the summer, usually peaking around August.

Companies involved in forest firefighting often try to keep crews busy through slow fire seasons by cutting and piling brush on federal lands. The federal Healthy Forest Restoration Act of 2003 eased environmental restrictions on thinning public forest land and may lead to more jobs thinning when crews are not fighting wildfires.

Another major portion of the support activities industry is replanting forests after logging. In 1971, Oregon enacted the Oregon Forest Practices Act, making it the first state in the nation to set rules to ensure continuous harvest of timber on public and private lands. As a result, according to the ODF, millions of seedlings are planted in Oregon each year. Of the total, more than 2.5 million are planted by the federal government, while more than 2 million are planted on state lands.

The support activities industry has become very mobile, with Oregon companies planting trees, thinning brush, and fighting forest fires throughout the Pacific Northwest and beyond. Some Oregon companies in this industry take part in all three of these activities, often far from Oregon. As Cassandra Moseley of the University of Oregon's Ecosystem Workforce Program points out, "A company can do all three in an area once they have the transportation and people that are willing to work hard."

Employment projections show that the logging industry is expected to decline by about 200 jobs or 3.0 percent between 2006 and 2016 – a much slower decline than has been experienced in recent decades. Other industries within timber production such as timber tract operations and support activities for forestry are expected to add jobs over the same time period, compensating for some of the loss. With relatively high wages for rural areas, these industries should remain an important part of Oregon's economy, especially Oregon's rural economy, into the future.