Author: BLISS PubID: ANR-0602

Title:

TIMBER AND THE ECONOMY OF ALABAMA

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ANR-602, Reprinted June 1995. John Bliss, Extension Forester, and Ken Muehlenfeld, Extension Director, Alabama Forest Products Development Center

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Timber and the Economy of Alabama

INTRODUCTION

Alabama's first residents called themselves "the thicket clearers," or "Ala Bamas." If those early native American residents revisited their homeland today, they would find that the "thicket"--Alabama's forestland--has grown beyond imagination in its size and importance to the region. The forest, once viewed as an impediment to agriculture, is now recognized as the backbone of the state economy. Trees from the forest feed an industry that directly employs more than 49,000 workers, indirectly provides employment for thousands more, and is the leading contributor to the gross state product.

The total contribution of the forest to Alabama's economy is more than that made by the manufacturing sector. The forest also provides a setting for hunting, fishing, hiking, and other outdoor activities; it is home to a diversity of animal and plant species; and it contributes to the quality of life of Alabamians in countless other ways. These benefits from the forest are not easily quantified, but are increasingly important to Alabama's citizens and the state economy. Additional research is needed to produce a comprehensive estimate of the value of these contributions.

Before looking at the dimensions of forest industry in the state, let's find out just how much forest there is in Alabama and who owns it.

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ALABAMA'S FOREST RESOURCE

Forest Acreage

The landscape of Alabama is dominated by forests, which cover 68 percent of the state's land area (Table 1). Two out of every three acres are covered with trees. While all regions of Alabama contain substantial forest acreage, the West Central and Southwest regions contain the highest percentages of forest land (Figure 1).

 Table 1. Acreage of Forest Land in Selected Regions of Alabama, 1990

Region	Total Land	Forest Land
	Thousand Acres
North	4,443	2,126
North Central	6,548	4,358
West Central	4,368	3,358
Southeast	9,008	5,919
Southwest	8,116	6,204
TOTAL	32,483	21,965
PERCENTAGE OF TOTAL		68 percent
Source: U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana, Resource Bulletins SO-149, SO-150, SO-153, SO-155, SO-156. Preliminary data used for North-Central region.

Figure 1. Forested land as a percentage of total land in selected areas of Alabama, 1990. (U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana. Resource Bulletins SO-140, SO-150, SO-153, SO-155, SO-156. Preliminary data used for North Central region.) [North = 48%; North Central = 67%; West Central = 77%; Southeast = 66%; Southwest = 76%]

Throughout the South, the acreage in cropland and pasture reached its peak around 1920. The spread of the boll weevil, depressed markets for agricultural commodities, and other factors led to widespread cropland abandonment during the 1920s and 30s. From the 1940s through the 1970s, programs of fire protection, technical assistance, research, and education expanded, and the forest resource grew. The South's forested acreage reached its peak of 197 million acres in 1962, then declined to just over 182 million acres in 1985. The area of forest in Alabama, which has been fairly constant for the past 4 decades at between 21 and 22 million acres, is projected to peak in another decade and then decrease slightly.

Forest Ownership

The vast majority of the forested acres in Alabama (about 95 percent) is privately owned (Table 2). The greatest portion (40 percent) is owned by miscellaneous individuals; 22 percent is owned by farmers, and 7.5 percent is owned by estates, trusts, and private sector entities other than forest industries. Important examples of such non-forest-industry entities are mining companies, pension funds, and insurance companies. These three types of owners--individuals, farmers, and non-forest-industry entities--are known as nonindustrial private forest (NIPF) owners. Altogether, NIPFs make up about 70 percent of Alabama's forest.

 Table 2. Ownership of Timberland by Ownership Category, Alabama, 1990*

Ownership Category	Thousand Acres	Percentage of All Ownerships
National Forests	605	2.76 percent
Other Federal	250	1.14 percent
State	212	0.96 percent
County and Municipal	95	0 43 percent
Total Public	1,162	5.30 percent
Forest Industry	5,500	25.08 percent
Farmer	4,765	21.73 percent
Misc. Individuals	8,872	40.45 percent
Other Corporate	1,634	7.45 percent
Total Private	20,770	94.70 percent
ALL OWNERSHIPS	21,932	100.00 percent
* Does not include productive forestland withdrawn from utilization. Note: entries may not add up to subtotals due to rounding. Source: U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana, Resource Bulletins SO-149, SO-150, SO-153, SO-155, SO-156.

An additional 25 percent of the private forestland in Alabama (5.5 million acres) is owned or leased by forest industries. These forests are managed to supply part of the wood needs of some 1,746 forest products-related firms in the state.

Only about 5 percent of Alabama's forestland is public land. Most of the state's public forestland is located in the Talladega, Bankhead, Conecuh, and Tuskegee National Forests.

Timber Inventory, Growth, and Removal

Timber volume increases through tree growth, natural regeneration, and tree planting. Timber harvesting, conversion of forestland to other uses, and timber mortality result in timber removals. When removals outpace growth over an extended period of time, timber inventory declines. Currently Alabama enjoys a substantial surplus of hardwood growth over removals. Hardwoods comprise more acres and more commercial volume than pines (Table 3). The state is experiencing a small deficit in softwood volume (Table 4), but this is partly a result of the way in which timber volumes are measured: only trees with a diameter at breast height (dbh) of 5 or more inches are included in the volume measurements reported here. Trees planted in the years immediately preceding the current inventory (1990) would not likely have reached the minimum size to be measured and are not recorded.

 Table 3. Inventory of Timber Growing Stock in Alabama, 1982 and 1990

Timber Category		1982	1990
		Million Cubic Feet
Softwood	Pine Plantation	1,422	2,442
	Pine Natural	9,793	8,404
	Other Softwood	208	263
Total Softwood		11,423	11,109
Hardwood	Soft	4,275	5,244
	Hard	5,696	6,730
Total Hardwood		9,971	11,974
Total Inventory		21,394	23,083
Source: U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana Resource Bulletins SO-149, SO-150, SO-153, SO-155, SO-156.

 Table 4. Periodic Net Annual Growth and Removals of Growing Stock in Alabama, 1990

Region		Growth	Removals	Surplus/Deficit
		(Million Cubic Feet)
North	Softwood	30.70	27.30	3.40
	Hardwood	64.20	30.40	33.80
North Central	Softwood	100.60	149.40	-48.80
	Hardwood	114.20	51.20	63.00
West Central	Softwood	96.50	135.60	-39.10
	Hardwood	94.50	79.70	14.80
Southeast	Softwood	194.70	204.80	-10.10
	Hardwood	157.50	102.30	55.20
Southwest	Softwood	238.30	202.80	35.50
	Hardwood	137.90	106.60	31.30
STATE TOTALS	Softwood	660.80	719.90	-59.10
	Hardwood	568.30	370.20	198.10
Source: U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana, Resource Bulletins SO-149, SO-150, SO-153, SO-155, SO-156. Preliminary data utilized for North-Central region.

The U.S.D.A. Forest Service estimates that by the year 2000 more than 60 percent of the South's softwood growth will be in pine plantations. This assumes substantial conversion of natural forests and non-forest land to pine plantations.

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MEASURES OF ECONOMIC ACTIVITY

Cash Receipts

One measure of the importance of forestry in Alabama's economy is the amount paid to landowners for their standing timber (stumpage). An estimate of the total value of stumpage sold in the state has been derived from timber severance tax records, regional stumpage prices, and acreage estimates. In 1989, more than one billion cubic feet of timber were harvested in the state, based upon (probably conservative) severance tax reports (Table 5). The estimated stumpage value of this crop was $365,975,000. Some $262,284,000 (72 percent), was received by farmers and other non-industrial private owners; forest industry received $88,563,000; and government received $15,128,000.

 Table 5. Volume and Value of Cut Forest Products in Alabama, 1989

Product	Volume	Unit of Measure	Stumpage Revenue	Delivered Value
			Thousand Dollars
Pine Sawtimber	1,359,748	MBF Scribner	219,220	330,206
Hardwood Sawtimber	248,303	MBF Doyle	20,076	43,211
Pine Pulpwood	4,378,472	Cords	72,037	211,542
Hardwood Pulpwood	3,737,364	Cords	39,802	153,826
Poles and Piles	52,893	MBF Doyle	14,746	18,392
Stumpwood	22,555	Tons	93	564
State Total	1,002 mil. Cubic Ft.		365,975	757,740
Source: Alabama Forestry Commission. 1990. Cash Receipt Report on Forest Products Harvested in Alabama for 1989.

A second important measure of the value of the forest crop is its value at the first processing point. This is the value of the logs delivered to a sawmill, pulp mill, or similar processing plant. It reflects the value of harvesting and transporting the timber as well as the value of the stumpage. In 1989, the value of all delivered forest products in the state was estimated to be $757,740,000 (Table 5). Cash receipts from delivered forest products exceed those of all other agricultural crops combined and make timber the second ranking agricultural commodity, behind broilers.

Other measures of the contribution that timber-based manufacturing activities make to the state economy are reported every 5 years in the Census of Manufactures by the Bureau of the Census, U.S. Department of Commerce. The Census presents statistics on employment, payrolls, value added, and value of shipments for establishments primarily engaged in manufacturing. Manufacturing is defined as the mechanical or chemical transformation of substances into new products, and the assembly of component parts of products. The Standard Industrial Classification (SIC) categories reported here are those which the U.S.D.A. Forest Service uses to compare the forest products sectors of southern states: Lumber and Wood Products (SIC 24), Furniture and Fixtures (excluding non-wood products) (SIC 25), Paper and Allied Products (SIC 26), and Gum and Wood Chemicals (SIC 2861). Data for Alabama on Gum and Wood Chemicals (SIC 2861) and Wood Television and Radio Cabinets (SIC 2517, a sub code of SIC 25) are not available or are withheld to avoid disclosing operations of individual companies.

Employment

Employment in the forest products sector reflects the health of the forest economy and changes in the technology of timber harvesting and processing. The Census of Manufacturers indicates that 49,300 Alabamians were employed in forest products manufacturing in 1987, placing the industry among the top four manufacturing employers in the state (Table 6). This figure does not include all jobs involved in managing the forest resource, such as foresters and forestry technicians. Nor does it include forest-based non-manufacturing jobs such as those associated with recreation or retailing. The Alabama Forestry Commission estimates that the total number of forest-based jobs in 1987 was more than 65,000.

Table 6. Estimated Employment in Timber-Based Manufacturing Activities, Alabama, 1977 and 1987 (entries may not add up to subtotals because of rounding)

SIC CODE	INDUSTRY	1977	1987
		Thousands
24	Lumber and wood products	23.8	26.2
241	Logging	3.8	5.7
242	Sawmills and planning mills	8.7	7.5
243	Millwork, plywood, and structural members	5.1	6.0
244	Wood containers	0.9	1.0
245	Wood buildings and mobile homes	3.5	3.7
249	Misc. wood products	1.7	2.3
25	Furniture and fixtures	4.3	4.7
2511	Wood household furniture	2.7	3.2
2512	Upholstered household furniture	1.2	.50 - .999
2521	Wood office furniture	0.2	.25 - .499
2541	Wood partitions and fixtures	0.2	0.4
26	Paper and allied products	18.5	18.4
261	Pulp mills	.15 - .249	1.3
262	Paper mills	8.1	8.7
263	Paperboard mills	4.8	3.8
265	Paperboard containers and boxes	1.0 - 2.49	2.2
267	Misc. converted paper products	3.7	2.3
	State Total	46.6	49.3
Source: U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana, Resource Bulletins SO-149, SO-150, SO-153, SO-155, SO-156.

Payrolls

As more and more of the state's timber resources are processed into finished products, the amount of salaries and wages paid to employees involved in the processing rises. Payrolls in the Paper and Allied Products group are larger than those for the Lumber and Wood Products and the Furniture and Fixtures groups, on both an average per-employee basis and overall. In 1987, wages and salaries in timber-based manufacturing in the state totalled $1.07 billion (Table 7). This represents an increase of 25 percent, adjusted for inflation, over the 1977 payroll.

Table 7. Estimated Payrolls in Timber-Based Manufacturing Activities, Alabama, 1977 and 1987 (entries may not add up to subtotals because of rounding)

SIC CODE	INDUSTRY	1977	1987
		Million Dollars
24	Lumber and wood products	207.5	404.9
241	Logging	34.6	76.6
242	Sawmills and planing mills	70.4	117.9
243	Millwork, plywood, and structural members	47.3	98.3
244	Wood containers	6.7	11.6
245	Wood buildings and mobile homes	32.6	62.3
249	Misc. wood products	15.9	38.2
25	Furniture and fixtures	32.8	47.4
2511	Wood household furniture	20.1	39.9
2512	Upholstered household furniture	8.9	na
2521	Wood office furniture	2.0	na
2541	Wood partitions and fixtures	1.8	7.5
26	Paper and allied products	299.2	617.6
261	Pulp mills	na	49.3
262	Paper mills	138.0	331.9
263	Paperboard mills	86.3	141.5
265	Paperboard containers and boxes	na	43.2
267	Misc. converted paper products	49.0	51.6
	State Total	1507.9	3659.3
Source: U.S. Department of Commerce, Bureau of the Census. 1980, 1990. 1977 and 1987 Census of Manufacturers, Geographic Area Series--Alabama.

Value Added

Value added is defined as the difference between the cost of raw materials purchased by a firm and the value of the products it sells. For example, a paper company turns pulpwood into paper. The difference between the value of the pulpwood and other raw materials purchased and the value of the paper sold is the value added by the manufacturing process. Value added is perhaps the best single measure used to compare the economic importance of various industries and regions. It represents the value that is created within a state by an industry--an industry's contribution to the gross state product. The value added in timber-based economic activities in Alabama in 1987 was $3.7 billion (Table 8). In real terms, the 1987 value was 53 percent greater than the 1977 value. The pulp and paper industry continues to make the largest contribution to the value added by the sector (Figure 2).

Table 8. Value Added in Timber-Based Manufacturing Activites, Alabama, 1977 and 1987 (entries may not add up to subtotals because of rounding)

SIC CODE	INDUSTRY	1977	1987
		Million Dollars
24	Lumber and wood products	474.5	951.6
241	Logging	92.4	182.8
242	Sawmills and planing mills	153.7	309.7
243	Millwork, plywood, and structural members	113.8	225.5
244	Wood containers	12.8	22.9
245	Wood buildings and mobile homes	60.7	110.5
249	Misc. wood products	41.1	100.2
25	Furniture and fixtures	67.1	97.5
2511	Wood household furniture	40.7	81.5
2512	Upholstered household furniture	20.1	na
2521	Wood office furniture	3.3	na
2541	Wood partitions and fixtures	3.0	16.0
26	Paper and allied products	966.3	2610.2
261	Pulp mills	na	310.6
262	Paper mills	385.6	1269.2
263	Paperboard mills	293.1	613.8
265	Paperboard containers and boxes	na	95.2
267	Misc. converted paper products	219.4	321.3
	State Total	1507.9	3659.3
Source: U.S. Department of Commerce, Bureau of the Census.1980, 1990. 1977 and 1987 Census of Manufacturers, Geographic Area Series--Alabama.

Figure 2. Value added in manufacturing of lumber and wood products and pulp and paper products, Alabama, 1947-1987. (U.S.D.A. Forest Service 1988, U.S. Department of Commerce, Bureau of the Census. 1990).

Value of Shipments

A final measure of economic activity is the value of shipments. The value of shipments is the total value of all materials sold by the forest products industry, whether they are sold within the state or shipped out of state. It includes the value of materials sold to consumers, as well as materials sold to other forest products firms for further manufacture. The value of some products is counted when they are sold to a second firm for further manufacture and counted again when the final products are sold. The total value of forest products shipments in the state in 1987 was $7.4 billion (Table 9). This represents a 41 percent increase, adjusted for inflation, from the 1977 value of shipments.

Table 9. Value of Shipments of Timber-Based Manufacturing Activites, Alabama, 1977 and 1987 (entries may not add up to subtotals because of rounding)

SIC CODE	INDUSTRY	1977	1987
		Million Dollars
24	Lumber and wood products	1219.0	2558.5
241	Logging	200.3	549.4
242	Sawmills and planing mills	402.2	771.9
243	Millwork, plywood. and structural members	277.9	549.9
244	Wood containers	26.2	53.1
245	Wood buildings and mobile homes	205.2	323.0
249	Misc.wood products	107.3	311.1
25	Furniture and fixtures	133.1	204.3
2511	Wood household furniture	79.7	169.7
2512	Upholstered household furniture	39.4	na
2521	Wood office furniture	7.2	na
2541	Wood partitions and fixtures	6.8	34.6
26	Paper and allied products	1981.9	4662.6
261	Pulp mills	na	591.6
262	Paper mills	725.9	2082.3
263	Paperboard mills	619.6	1161.2
265	Paperboard containers and boxes	na	269.9
267	Misc. converted paper products	464.4	557.5
Source: U.S. Department of Commerce, Bureau of the Census.1980,1990.1977and 1987 Census of Manufacturers, Geographic Area Series--Alabama

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COMPARISON WITH OTHER INDUSTRIES

By any measure of economic activity, the forest products industry in Alabama is very large: by most measures it is the largest manufacturing industrial group in the state (Table 10; Figure 3). It has more establishments than any other industry: 30 percent of all the manufacturing establishments in the state are in the forest products sector. It is a leading employer, second only to apparel and other textiles, accounting for 14 percent of all manufacturing jobs in the state. Payrolls of the forest products industry exceed those of all other manufacturing industries and account for 15 percent of the state total. The paper and allied products category alone generates the largest value added of any industry, and the forest products sector as a whole is responsible for 20 percent of the value added generated in the state. The value of shipments of forest products dwarfs that of all other manufacturing industries in the state. Forest products industries also led all other manufacturing industries in new capital expenditures for 1987 with almost $286 million. Chemicals and Allied products were next with new capital expenditures of just under $217 million.

 Table 10. Comparison of Leading Alabama Manufacturers,1987

Industry (SIC code)	Number of Establishments	Number of Employees	Payroll	Value Added	Value of Shipments
		Thousands	Million Dollars
Lumber and wood products (24)	1543	26.2	404.9	951.6	2558.5
Furniture and fixtures (25 ex. 2514, 2522, 2542)	127	4.7	47.4	97.5	204.3
Paper and allied products (26)	94	18.4	617.6	2610.2	4662.6
Forest Products Subtotal	1764	49.3	1069.9	3659.3	7425.4
Textile mill products (22)	220	33.4	545.8	1452.3	3162.9
Apparel and other textiles (23)	397	58.3	644.6	1328.0	2662.2
Primary metal (33)	152	22.7	616.8	1598.3	4643.7
Fabricated metal (34)	495	23.3	460.8	1012.6	2128.7
Chemicals and allied products (28)	167	10.7	339.9	1697.7	3433.7
Rubber and misc. plastics (30)	146	17.8	492.2	1188.6	2246.5
Food and kindred products (20)	264	27.9	457.1	1134.6	3895.4
All Industries in Alabama	5843	347.3	6962.5	18652.1	40901.4
Forest products as percent of total	30	14	15	20	18
Source: U.S. Department of Commerce, Bureau of the Census, l990. 1987 Census of Manufacturers, Geographic Area Series--Alabama

Figure 3. Comparison of manufacturing industries in Alabama, 1987. (U.S. Department of Commerce, Bureau of the Census, 1987).

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THE FUTURE

Timber Demand

The forest products industry has clearly gained in importance to Alabama's economy over the decades. The growth of Alabama's forest industry over the years has resulted in ever-increasing demands on our timber resources. Not only does Alabama supply paper and wood products to U.S. markets, but foreign trading partners are looking to Alabama and other southern states to satisfy their growing demand for forest products as well. The forest industry has responded to these market opportunities by investing heavily in new production capacity. From 1984 to 1989, the forest industry announced investments of more than $5 billion in new and expanding plants. In 1989, $1.8 billion of new forest industry projects were announced (Figure 4). These industry expansions mean that more timber than ever will need to be harvested from Alabama's forests during the coming years. It is estimated that Alabama's 1993 timber harvest will be approximately 15 percent above the level of just 5 years earlier (Figure 5).

Figure 4. Forest industry investment in Alabama, 1984-1990. (Alabama Development Office Announced New and Expanding Industry, 1984, 1985, 1986, 1987, 1988, and 1989. Montgomery, Alabama).

Figure 5. Historic and projeccted timber harvest, 1984-1993. (Forest Products Development Center. 1990. Wood Consumption Trends in Alabama. Auburn University, Alabama).

Timber Supply

Will Alabama's timber supplies be adequate to meet the growing demands of an expanding forest industry? Despite tremendous growth in wood consumption, Alabama's total timber inventory today is 14 percent larger than it was 20 years ago. There are signs, however, that the state's softwood inventory may be on the verge of reversing its long-term net growth trend (Figure 6). Because of the length of time required to grow timber, future timber supplies depend largely upon management practices employed today. And because of the ownership pattern of forestland in the state, management practices on nonindustrial private forestlands will greatly influence the extent, composition, and quality of tomorrow's forest.

Figure 6. Trend in removal as percent of net annual growth, Alabama, 1972-1990. (U.S.D.A. Forest Service, Southern Experiment Station, New Orleans, Louisiana, Resource Bulletins SO-149, SO-150, SO-153, SO-155, SO-156. Preliminary data used for North-Central region.)

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SOURCES

Alabama Agricultural Statistics Service. 1990. Alabama Agricultural Statistics: 1984-88 revised, 1989 preliminary. Bulletin 32. Montgomery, Alabama.

Alabama Forestry Commission. 1990a. Cash receipt report on forest products harvested in Alabama for 1989. Montgomery, Alabama.

Alabama Forestry Commission. 1990b. Unpublished data on historical severance tax records. Montgomery, Alabama.

Alabama Forestry Commission. 1986. Directory of Alabama's Forest Industries, 1986. Montgomery, Alabama.

American Pulpwood Association, Inc. 1989. Pulpwood Statistics. Publication #89-A-12. Washington, D.C.

McWilliams, W. H., K. L. Duncan, and J. S. Vissage.1990a. Forest Statistics for North Alabama Counties-1990. Resource Bulletin SO-149. U.S.D.A. Forest Service. Southern Forest Experiment Station. New Orleans, Louisiana.

McWilliams, W. H., K. L. Duncan, and J. S. Vissage. 1990b. Forest Statistics for WestCentral Alabama Counties-1990. Resource Bulletin SO-150. U.S.D.A. Forest Service. Southern Forest Experiment Station. New Orleans, Louisiana.

McWilliams, W. H., P. E. Miller, and J. S. Vissage. 1990a. Forest Statistics for Southeast-Alabama Counties-1990. Resource Bulletin SO-156. U.S.D.A. Forest Service. Southern Forest Experiment Station. New Orleans, Louisiana.

McWilliams, W. H., P. E. Miller, and J. S. Vissage.1990b. Forest Statistics for Southwest-North Alabama Counties-1990. Resource Bulletin SO-153. U.S.D.A. Forest Service. Southern Forest Experiment Station. New Orleans, Louisiana.

McWilliams, W. H., P. E. Miller, and J. S. Vissage. 1990c. Forest Statistics for Southwest-South Alabama Counties-1990. Resource Bulletin S0-155. U.S.D.A. Forest Service. Southern Forest Experiment Station. New Orleans, Louisiana.

McWilliams, W. H., P. E. Miller, and J. S. Vissage. 1991. Forest Statistics for North-Central Alabama Counties-1990. Preliminary unpublished resource bulletin. U.S.D.A. Forest Service. Southern Forest Experiment Station. New Orleans, Louisiana.

Muehlenfeld, K. J.1990. Wood Consumption Trends in Alabama. From presentation to Alabama Forestry Association 1990 annual meeting. Forest Products Development Center. Auburn University, Alabama.

U.S. Department of Commerce, Bureau of the Census. 1990. 1987 Census of manufacturers, MC87-A-1, Geographic Area Series-Alabama.

U.S. Department of Commerce, Bureau of the Census. 1980. 1977 Census of manufacturers, MC77-A-1, Geographic Area Series-Alabama.

U.S.D.A. Forest Service. 1988. The South's Fourth Forest. Forest Resource Report No. 24. Washington, DC. 512 p.

U.S.D.A. Forest Service. 1991. Unpublished preliminary revision of forest statistics forAlabama counties-1982. Southern Forest Experiment Station. New Orleans, Louisiana.

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