February 20, 2006
Waterlogged | Loggers and mills gauge the impact of the January thaw on wood supplies
By Whit Richardson
While a warm and snow-free January was a welcome surprise for some Maine residents, this winter's unseasonable weather caused the state's wood and paper industries to hold their collective breath. That's because winter is a crucial season for the industries in Maine dependent on the state's number one natural resource. And when the temperature hovers above the freezing point for most of January, warm and wet conditions can keep loggers out of the woods, slowing the flow of raw materials to those industries.
"Everybody depends on the winter harvest ˆ the mills depend on it for wood, the loggers depend on it for work and income," says Ron Lovaglio, the Skowhegan-based director of wood resources for Boston-based Sappi Fine Paper North America. "And when we don't have it, the whole infrastructure is impacted."
For loggers, the winter harvest is the most productive time of year, because the frozen ground allows them to get in and out of the forest without getting stuck in mud. For saw, paper and pulp mills, winter offers an opportunity to purchase and stockpile large amounts of wood to ride out the supply slowdown that comes when the inevitable spring
thaw turns the forests and access roads into mud-choked quagmires.
For example, Lovaglio estimates that Sappi obtains about 40% of its annual wood supply during the winter. But after a warm January that came on the heels of a wet fall ˆ northern Maine towns such as Allagash and Guilford broke rainfall records in 2005 by as much as 10 inches, according to the National Weather Service ˆ some mills are now scrambling to stockpile wood before the real mud season arrives, says Lovaglio. Sappi's own stockpiling is behind by 30% because of the warm and wet conditions, he says.
Not all mills are affected the same way by weather-induced log shortages, however. Over the years, as the paper and lumber industries have faced challenges like global competition and higher energy costs, some have changed business practices ˆ including inventory management practices ˆ in order to adapt. While mills that continue to keep a sizable inventory are able to ride out spot shortages with minimal concern, a mill that has decreased the size of its inventory to cut costs will be more vulnerable to hiccups in the weather, and could be forced to absorb increased prices for wood during these shortages. And facing higher prices for pulp wood is a prospect Maine's mills do not welcome, Lovaglio says, because the state's pulp wood costs already are among the highest in the country. (He declined to discuss specific prices Sappi pays for its wood.)
But while mill operators certainly could do without the unpredictable weather, to some degree they are used to having to ride out an uninvited mud season. "Unusual weather conditions are almost usual in Maine," says John Williams, president of the Augusta-based Maine Pulp & Paper Association. "The problem of getting wood out of the forest has been around for years."
Taking stock
When last year's autumn began breaking rainfall records, Limington Lumber Co. in East Baldwin started to worry about its ability to stockpile wood, according to Jim Henderson, operations manager for the mill. As a result, the company began aggressively buying what logs it could. Limington Lumber Co.'s current inventory of 1.5 million board feet of logs is about where it should be for this time of year, Henderson says.
Still, he hopes the mill will be able to stockpile a bit more wood before the regular mud season arrives in mid to late March. If warm temperatures return this winter, however, the mill may face problems down the line. "In the spring, if in fact we do get a long duration of mud season," Henderson says, "we may have to curtail production a little in the sawmill."
The issue of inventory management ˆ mills' traditional technique for weathering Maine's wet seasons ˆ has become trickier in recent years due to pressures such as increased global competition, increased energy costs and now higher wood prices. Mills are looking to cut costs in whatever ways they can, including keeping a smaller inventory. "[A smaller stockpile] doesn't tie their money up, and the markets change so quickly they're not stuck with a high-priced inventory selling it into a lowerpriced market," says Henderson.
Not all mills have been reducing their inventories, however. Tim Richards, wood yard and procurement manager at Madison Paper Industries in Madison, says the company has actually increased its inventory by 30% to 35% over the last seven years, since becoming a member of Maine's Sustainable Forestry Initiative. The program, which began in 1994 to promote good management practices for Maine's forests, seeks to limit logging in wet conditions, which can be environmentally destructive. The use of heavy machinery can tear up the ground, cause erosion and produce run-off. "The bottom line," Richards says, "is we have increased the amount of wood that we inventory to help get through wet times and to not encourage loggers to do things that aren't necessarily aligned with good environmental practices."
Lovaglio, who was the commissioner of the Department of Conservation under former Gov. Angus King, doesn't blame environmental regulations for the current quandary mills are facing. But he's also concerned the paper industry's struggles may continue well beyond this year's unusual temperature fluctuations. Adverse weather conditions, he says, are just another burden for an industry loaded close to the breaking point with increased costs of chemicals, energy and a state law, LD 730, passed last year that limits the use of Canadian loggers. "All those things combined serve to drive the price [of wood] up, and it's going to reach a point where the mills can't compete any more," Lovaglio says. "So then we have permanent and real issues besides spot shortages from weather."
"Everybody depends on the winter harvest ˆ the mills depend on it for wood, the loggers depend on it for work and income," says Ron Lovaglio, the Skowhegan-based director of wood resources for Boston-based Sappi Fine Paper North America. "And when we don't have it, the whole infrastructure is impacted."
For loggers, the winter harvest is the most productive time of year, because the frozen ground allows them to get in and out of the forest without getting stuck in mud. For saw, paper and pulp mills, winter offers an opportunity to purchase and stockpile large amounts of wood to ride out the supply slowdown that comes when the inevitable spring
thaw turns the forests and access roads into mud-choked quagmires.
For example, Lovaglio estimates that Sappi obtains about 40% of its annual wood supply during the winter. But after a warm January that came on the heels of a wet fall ˆ northern Maine towns such as Allagash and Guilford broke rainfall records in 2005 by as much as 10 inches, according to the National Weather Service ˆ some mills are now scrambling to stockpile wood before the real mud season arrives, says Lovaglio. Sappi's own stockpiling is behind by 30% because of the warm and wet conditions, he says.
Not all mills are affected the same way by weather-induced log shortages, however. Over the years, as the paper and lumber industries have faced challenges like global competition and higher energy costs, some have changed business practices ˆ including inventory management practices ˆ in order to adapt. While mills that continue to keep a sizable inventory are able to ride out spot shortages with minimal concern, a mill that has decreased the size of its inventory to cut costs will be more vulnerable to hiccups in the weather, and could be forced to absorb increased prices for wood during these shortages. And facing higher prices for pulp wood is a prospect Maine's mills do not welcome, Lovaglio says, because the state's pulp wood costs already are among the highest in the country. (He declined to discuss specific prices Sappi pays for its wood.)
But while mill operators certainly could do without the unpredictable weather, to some degree they are used to having to ride out an uninvited mud season. "Unusual weather conditions are almost usual in Maine," says John Williams, president of the Augusta-based Maine Pulp & Paper Association. "The problem of getting wood out of the forest has been around for years."
Taking stock
When last year's autumn began breaking rainfall records, Limington Lumber Co. in East Baldwin started to worry about its ability to stockpile wood, according to Jim Henderson, operations manager for the mill. As a result, the company began aggressively buying what logs it could. Limington Lumber Co.'s current inventory of 1.5 million board feet of logs is about where it should be for this time of year, Henderson says.
Still, he hopes the mill will be able to stockpile a bit more wood before the regular mud season arrives in mid to late March. If warm temperatures return this winter, however, the mill may face problems down the line. "In the spring, if in fact we do get a long duration of mud season," Henderson says, "we may have to curtail production a little in the sawmill."
The issue of inventory management ˆ mills' traditional technique for weathering Maine's wet seasons ˆ has become trickier in recent years due to pressures such as increased global competition, increased energy costs and now higher wood prices. Mills are looking to cut costs in whatever ways they can, including keeping a smaller inventory. "[A smaller stockpile] doesn't tie their money up, and the markets change so quickly they're not stuck with a high-priced inventory selling it into a lowerpriced market," says Henderson.
Not all mills have been reducing their inventories, however. Tim Richards, wood yard and procurement manager at Madison Paper Industries in Madison, says the company has actually increased its inventory by 30% to 35% over the last seven years, since becoming a member of Maine's Sustainable Forestry Initiative. The program, which began in 1994 to promote good management practices for Maine's forests, seeks to limit logging in wet conditions, which can be environmentally destructive. The use of heavy machinery can tear up the ground, cause erosion and produce run-off. "The bottom line," Richards says, "is we have increased the amount of wood that we inventory to help get through wet times and to not encourage loggers to do things that aren't necessarily aligned with good environmental practices."
Lovaglio, who was the commissioner of the Department of Conservation under former Gov. Angus King, doesn't blame environmental regulations for the current quandary mills are facing. But he's also concerned the paper industry's struggles may continue well beyond this year's unusual temperature fluctuations. Adverse weather conditions, he says, are just another burden for an industry loaded close to the breaking point with increased costs of chemicals, energy and a state law, LD 730, passed last year that limits the use of Canadian loggers. "All those things combined serve to drive the price [of wood] up, and it's going to reach a point where the mills can't compete any more," Lovaglio says. "So then we have permanent and real issues besides spot shortages from weather."
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