[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
THE U.S. WOOD PRODUCTS INDUSTRY:
FACILITATING THE POST COVID-19 RECOVERY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON CONSERVATION AND FORESTRY
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
JULY 21, 2021
__________
Serial No. 117-13
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
45-627 PDF WASHINGTON : 2021
-----------------------------------------------------------------------------------
COMMITTEE ON AGRICULTURE
DAVID SCOTT, Georgia, Chairman
JIM COSTA, California GLENN THOMPSON, Pennsylvania,
JAMES P. McGOVERN, Massachusetts Ranking Minority Member
FILEMON VELA, Texas AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice ERIC A. ``RICK'' CRAWFORD,
Chair Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York DOUG LaMALFA, California
BOBBY L. RUSH, Illinois RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN, DAVID ROUZER, North Carolina
Northern Mariana Islands TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire DON BACON, Nebraska
CHERI BUSTOS, Illinois DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona CHRIS JACOBS, New York
SALUD O. CARBAJAL, California TROY BALDERSON, Ohio
RO KHANNA, California MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida TRACEY MANN, Kansas
J. LUIS CORREA, California RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota MARY E. MILLER, Illinois
JOSH HARDER, California BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa KAT CAMMACK, Florida
KIM SCHRIER, Washington MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia
______
Anne Simmons, Staff Director
Parish Braden, Minority Staff Director
______
Subcommittee on Conservation and Forestry
ABIGAIL DAVIS SPANBERGER, Virginia, Chair
FILEMON VELA, Texas DOUG LaMALFA, California, Ranking
CHELLIE PINGREE, Maine Minority Member
ANN M. KUSTER, New Hampshire SCOTT DesJARLAIS, Tennessee
TOM O'HALLERAN, Arizona RICK W. ALLEN, Georgia
JIMMY PANETTA, California TRENT KELLY, Mississippi
J. LUIS CORREA, California DUSTY JOHNSON, South Dakota
KIM SCHRIER, Washington MARY E. MILLER, Illinois
BARRY MOORE, Alabama
Felix Muniz, Jr., Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
LaMalfa, Hon. Doug, a Representative in Congress from California,
opening statement.............................................. 4
Spanberger, Hon. Abigail Davis, a Representative in Congress from
Virginia, opening statement.................................... 1
Prepared statement........................................... 3
Submitted statement on behalf of National Lumber and Building
Material Dealers Association............................... 61
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 6
Witnesses
Schienebeck, Henry, Chair, Governmental Relations Committee,
American Loggers Council, Gilbert, MN.......................... 8
Prepared statement........................................... 9
Dauzat, Caroline, Co-Owner, Rex Lumber, Graceville, FL........... 20
Prepared statement........................................... 22
Submitted questions.......................................... 63
Imbergamo, William, Executive Director, Federal Forest Resource
Coalition, Washington, D.C..................................... 26
Prepared statement........................................... 28
Macdonald, Iain, Director, TallWood Design Institute, Oregon
State University, Corvallis, OR................................ 30
Prepared statement........................................... 32
Submitted question........................................... 64
Supplementary material....................................... 63
THE U.S. WOOD PRODUCTS INDUSTRY:
FACILITATING THE POST COVID-19
RECOVERY
----------
WEDNESDAY, JULY 21, 2021
House of Representatives,
Subcommittee on Conservation and Forestry,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:02 a.m., in
Room 1300, Longworth House Office Building, Hon. Abigail Davis
Spanberger [Chair of the Subcommittee] presiding.
Members present: Spanberger, Pingree, Kuster, O'Halleran,
Panetta, Schrier, LaMalfa, DesJarlais, Kelly, Johnson, Miller,
Moore, Thompson (ex officio), and Baird.
Staff present: Grayson Haynes, Ross Hettervig, Martin
Prescott III, Felix Muniz, Jr., John Busovsky, Patricia
Straughn, Erin Wilson, and Dana Sandman.
OPENING STATEMENT OF HON. ABIGAIL DAVIS SPANBERGER, A
REPRESENTATIVE IN CONGRESS FROM VIRGINIA
The Chair. This hearing of the Subcommittee of Conservation
and Forestry entitled, The U.S. Wood Products Industry:
Facilitating the Post COVID-19 Recovery, will come to order.
Welcome, and thank you for joining today's hearing. After
brief remarks, Members will receive testimony from our
witnesses today and then the hearing will be open to questions.
Members will be recognized in order of seniority,
alternating between Majority and Minority Members and in order
of arrival for those Members who have joined us after the
hearing was called to order.
When you are recognized, you will be asked to unmute your
microphone and you will have 5 minutes to ask your questions or
make a comment. If you are not speaking, I ask that you remain
muted in order to minimize background noise.
In order to get to as many questions as possible today, the
timer will stay consistently visible on your screen.
Good morning. Thank you for being here today for today's
hearing, ``The U.S. Wood Products Industry: Facilitating the
Post COVID-19 Recovery.''
The U.S. wood products industry directly employs about one
million people and contributes more than $5 billion in state
and local taxes. In my home of Virginia, we have 16 million
acres of forested land and forest-related businesses contribute
$156 million to our state's economy each year and it supports
more than 27,000 jobs.
And as we join today to talk about the opportunities within
our wood products industry and our forest lands, I must
acknowledge the raging forest fires bringing devastation to
much of the western United States, including in Mr. LaMalfa's
district and the districts represented by so many of our
colleagues on this Subcommittee and full Committee.
While our next hearing will dive directly into issues
related to forest fires, focusing on wood products industry
with our attention on the infrastructure and resource that is
America's forestland it is an important element of that larger
future conversation.
Like so many industries, the wood products industry
experienced severe and uneven impacts as a result of COVID-19,
and while some sectors of the industry maintained or even
increased economic activity, many sectors have been negatively
impacted through market pressures, supply chain interruptions,
labor shortages, and transportation challenges, among other
disruptions.
These effects have rippled through the supply chain, in
many cases adversely affecting landowners, harvesting and
holding businesses, processors, manufacturers, retailers, and
consumers.
Independent reporting suggest economic losses for various
sectors within the wood products industry have ranged upwards
of 40 percent. American consumers also saw the pandemic's
impact on the industry firsthand.
For many consumers, the pulp and paper sector was top-of-
mind during widespread shortages of tissue products, while the
lumber sector reported record high prices due to manufacturing
and processing constraints.
In the wake of the pandemic, Congress provided relief to
small businesses through various legislative packages, the
Paycheck Protection Program authorized by the CARES Act and
later extended in subsequent legislation, provided short-term
low interest loans to small businesses for payroll and
operating costs.
More recently, Congress authorized direct relief to the
industry through the Consolidated Appropriations Act of 2021.
This bill provides up to $200 million in relief to timber
harvesting and hauling businesses who have experienced a loss
of at least ten percent due to the pandemic.
Both the Ranking Member and I supported this effort and
wrote the Biden Administration to request that the relief be
released and questioning why months after the fund was created
the support still hadn't been released. I led a similar effort
with the Virginia delegation.
However, yesterday I was thrilled to see that the USDA
finally announced that applications for these funds will go
live tomorrow, July 22nd.
I would like to thank Secretary Vilsack and those at USDA
for their work in getting these funds to the timber haulers and
harvesters impacted by the pandemic, and our Subcommittee
stands ready to support USDA as these funds are disbursed to
make sure that those who need the relief are able to access it.
And as we turn the corner from the worst of the pandemic,
Congress has an important opportunity before us. All across
Capitol Hill and, certainly, in my district, we are talking
about the physical infrastructure needs of our country, and as
negotiations continue towards a potential bipartisan physical
infrastructure bill, our opportunity is to ensure that we are
putting resiliency, the next generation of climate-smart
infrastructure, and, importantly, our American forestry sector
at the forefront of that conversation.
Our forests as well as the products they support are
critical American infrastructure. They are natural
infrastructure. They are green infrastructure.
They sequester carbon while growing our economy, and the
innovative wood products that come from this industry present
tremendous opportunity.
The use of nanocellulose-infused concrete and cross-
laminated timber as examples present tremendous benefits and
opportunities.
They can reduce building weight, equal or exceed the
strength of traditional concrete or steel beams, all while
making use of an American domestic asset, and all while
reducing the embodied carbon footprint of our buildings, all
while expanding opportunities for rural communities and our
efforts to build a more resilient supply chain here in the
United States.
I am excited to hear from our witnesses about how Congress
can support infrastructure policy that protects our
forestlands, expands reforestation efforts, provides incentives
for the use of these innovative technologies and leads us into
the future.
I am also curious to hear from our witnesses today about
their experiences and challenges as a result of COVID-19,
whether the short-term relief has been helpful, how temporary
relief could have been better designed to weather the economic
downturns, and while the worst of COVID-19 is, hopefully,
behind us, being prepared for the possibility of future
disruptions and future challenges is always a good effort to
undertake.
I hope we can explore more durable policy options to ensure
the industry can thrive well into the future.
I look forward to hearing from our witnesses today
[The prepared statement of Ms. Spanberger follows:]
Prepared Statement of Hon. Abigail Davis Spanberger, a Representative
in Congress from Virginia
Good morning! Welcome to today's hearing--``The U.S. Wood Products
Industry: Facilitating the Post COVID-19 Recovery.'' The U.S. wood
products industry directly employs about one million people and
contributes more than $5 billion in state and local taxes. In my home
of Virginia, we have 16 million acres of forested land, and forest-
related businesses contribute $156 million to our state's economy each
year and support more than 27,000 jobs.
Like many industries, the wood products industry experienced severe
and uneven impacts as a result of COVID-19. While some sectors of the
industry maintained or even increased economic activity, many sectors
have been negatively impacted through market pressures, supply chain
interruptions, labor shortages, and transportation challenges--among
other disruptions. These effects have rippled through the supply chain,
in many cases adversely affecting landowners, harvesting and hauling
businesses, processors, manufacturers, retailers, and consumers.
Independent reporting suggest economic losses for various sectors
within the wood products industry have ranged up to 40 percent.
American consumers also saw the pandemic's impacts on the industry
firsthand. For many consumers, the pulp and paper sector was top-of-
mind during the widespread shortage of tissue products, while the
lumber sector reported record high prices due to manufacturing and
processing constraints.
In the wake of the pandemic, Congress provided relief to small
businesses through various legislative packages. The Paycheck
Protection Program authorized by the CARES Act and later extended in
subsequent legislation, provided short-term low-interest loans to small
businesses for payroll and operating costs. More recently, Congress
authorized direct relief to the industry through the Consolidated
Appropriation Act of 2021. The bill provides up to $200 million in
relief to timber harvesting and hauling businesses who experienced a
loss of at least 10% due to the pandemic. Both the Ranking Member and I
supported this effort and have written to the Biden Administration to
request that relief be made available as soon as possible.
Yesterday, I was thrilled to see USDA announce that applications
for these funds would go live July 22nd. I would like to thank
Secretary Vilsack and all those at USDA for their work in getting these
funds to those timber haulers and harvesters impacted by the pandemic.
Our Subcommittee stands ready to support USDA as these funds are
disbursed to make sure all those who need relief are able to access it.
As we turn the corner from the worst of the pandemic, Congress has
an important opportunity before us, as we consider options for more
resilient and climate-smart infrastructure. Our forests--as well as the
wood products they support--are critical green infrastructure that help
sequester carbon while growing our economy. I am excited to hear from
our witnesses about how Congress can support infrastructure policy that
protects our forestland, expands reforestation efforts, provides
incentives for the use of innovative wood products in construction like
nanocellulose-infused concrete and cross-laminated timber that reduce
the embodied carbon footprint of our buildings--all while expanding
opportunities for rural communities and building more resilient supply
chains in the industry.
I am also curious to hear from our witnesses today on the
challenges they have experienced as a result of COVID-19, whether
short-term relief has been helpful, and how temporary relief could be
better designed to weather economic downturns. Though the worst of
COVID-19 is hopefully behind us, we must be prepared for the
possibility of future disruptions. I also hope we can explore more
durable policy options to ensure the industry can thrive well into the
future.
I look forward to hearing from our witnesses today. With that I
would like to recognize Ranking Member LaMalfa for any opening remarks
he may have. Thank you.
The Chair. And with that, I would like to recognize Ranking
Member LaMalfa for any opening remarks he may have.
OPENING STATEMENT OF HON. DOUG LaMALFA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA
Mr. LaMalfa. Thank you, Madam Chair. I appreciate your
convening this hearing today and also your work in partnership.
I appreciate our ability to work on these issues together in a
bipartisan way, in a productive way. So thank you for that.
So good morning. Indeed, from furniture to baseball bats
and paper to lumber, our forests provide countless products and
essential feedstocks for many American industries.
Collectively, forest-related businesses support over one
million direct jobs and 2.9 million indirect jobs nationwide,
generating approximately $107 billion in GDP.
These industries are economic engines that provide rural
jobs and revenues to forest counties while also promoting
important forest health.
Active forest management encourages healthy forests and
will decrease the threat and severity of wildfire by restoring
forest stands to their natural conditions.
In 1987, our Federal forests saw more than 11 billion board
feet harvested. Last year, only 3.2 billion board feet was
harvested, almost \1/4\ of what had been normal. This has led
to more overstocking in our forests.
The COVID pandemic did create immeasurable challenges for
families and individuals, small businesses, and the economy
nationwide.
In countless ways to varying degrees, these difficulties
were felt in forest communities and throughout the various
industries within the forest products supply chain.
Over the past year, there has been considerable attention
on the lumber and housing industries as lumber prices, indeed,
have skyrocketed due to a dramatic and unexpected spike in
demand.
At its peak, lumber prices exceeded $1,600 per 1,000 board
feet, an increase of three to four times the historical prices.
While today's lumber prices are still somewhat elevated, it is
important to note that they have moderated somewhat recently as
supply-and-demand have slowly began to realign.
However, as this normalization continues to occur, COVID-19
has highlighted some of the issues that exist in the forest
products and lumber supply chains very importantly, such as a
lack of sawmill capacity.
We have seen so many sawmills drop out of the industry in
the last 20 to 30 years, as well as ongoing workforce and
transportation needs.
As we have today's discussion on issues impacting forest
products, we must also address the elephant in the room. I am
not sure it is really an elephant in the room these days
because it is so obvious for everybody. We will invite donkeys,
too.
The massive wildfires that are burning across California
and in the West and, really, it is no joking matter. It is tens
of thousands of new acres going up each day.
I believe the haze we have over Washington, D.C., right
now, is rooted in fires coming from California and Oregon, and
sending that smoke across the whole continent.
I believe we must be also talking about timber harvesting
and the need for more active management in our National
Forests, which all goes hand-in-hand with the issue of wildfire
and safety, as well as the supply chain we are talking about
mostly here today.
The wildfire crisis continues to wreak havoc on the West.
We should focus on practical solutions that will address
wildfire prevention, the declining health of our National
Forests, the overload of inventory in the forests.
Just tour California for a little while and you will see
the urgent needs of millions of Americans who live in these
areas.
The West is still reeling from the 2020 fire year, which
burned over 10 million acres of forest, and it appears that
2021 could be an even more difficult year as we have already
surpassed that number of fires and acres at the same point in
time last year, already 1 million acres burned, and it looks
like a very, very long season in front of us. God help us that
maybe it doesn't have to be.
We hope to have the Chief of the Forest Service and the
Chief of NRCS testify before the Subcommittee sometime this
year.
We also need hearings on the very thoughtful forestry bills
that our Members have put forward this Congress, which are
designed to empower the Forest Service to better manage our
forests and reduce wildfire.
At its inception, the fundamental goal of our National
Forest System was active management of our National Forests to
provide the nation with a reliable source of timber and forest
products, indeed, the multiple uses that they used to
advertise.
The Forest Service must return to this model. Our job in
Congress is to provide them the authorities and resources to
proactively address this crisis while also being able to
fulfill all the other statutory mandates we have placed upon
the agency.
The forest products industry is an important partner with
both the Forest Service and our rural communities. With the
right tools and policies in place, we can encourage more
effective forest management, healthy rural economies, and a
vibrant forest products industry.
I want to thank our witnesses for being with us today. We
look forward to their testimonies, expertise, and your
recommendations on how we can fix these important issues.
I yield back, Madam Chair. Thank you.
The Chair. I would like to recognize Ranking Member
Thompson for his opening comments.
OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA
Mr. Thompson. Chair Spanberger, Ranking Member LaMalfa,
thank you both for convening today's very timely and incredibly
important hearing.
The forest products industry is critically important to
many rural communities, supporting both economic and forest
health. I look forward to hearing from our witnesses today to
discuss how this critical industry has been impacted over the
years and how we can support it.
As part of this discussion, it is essential that we also
consider the ongoing challenges before the Forest Service, the
great need for dramatically increased forest management and the
devastating wildfires that continue to burn the West.
With over 80 major fires burning in the West, more acres
and more fires have already burned this year than in the same
time last year.
The Bootleg fire raging in Oregon has now become the third
largest wildfire in the state's history and air quality is
being affected as far away as New York City.
There are urgent issues that must be addressed by the
Forest Service and this Congress, we need more active
management, and the Forest Service needs our support to do
that.
I very much appreciate today's discussion and the
recommendations from our witnesses to support the forest
products supply chain.
And thank you once again, Madam Chair and Mr. Ranking
Member, and with that I yield back.
The Chair. The chair would request that Members submit
their opening statements for the record so that witnesses may
begin their testimony to ensure that there is ample time for
questions.
I am pleased to welcome a distinguished panel of witnesses
at our hearing today. Our witnesses bring to our hearing a wide
range of experience and expertise, and I thank you all for
joining us.
Our first witness today is Henry Schienebeck. Mr.
Schienebeck was a self-employed logger and trucker for 32 years
prior to being named Executive Director of the Great Lakes
Timber Professionals Association in 2008. He leads the
organization in its mission of, quote, ``enhancing a multiple
use forest for future generations.''
Mr. Schienebeck also serves on the Wisconsin Council on
Forestry and Sustainable Resource Institute Board of Directors
and the American Loggers Council Legislative Committee in
addition to a number of other forest industry-related
committees and boards.
Our next witness today is Caroline Dauzat. Mrs. Dauzat is a
fourth-generation co-owner at Rex Lumber, a high-volume
southern yellow pine sawmill in Graceville, Florida. Rex Lumber
has been manufacturing forest products since 1926 and
specializes in southern yellow pine lumber.
The company has four mills--two in Florida, one in
Mississippi and one in Alabama. Mrs. Dauzat also serves as
President of the Apalachee Pole Company, Incorporated. She
received a Master's of Business Administration from Loyola
University and a Bachelor of Arts from the University of
Florida.
Our third witness today is Bill Imbergamo. Mr. Imbergamo is
the Executive Director of the Federal Forest Resource
Coalition, a position he has held since 2011. He has 30 years
of natural resource experience in Washington as an association
Executive Policy Analyst and senior Congressional staff member.
Prior to his current position, he served as professional
staff on the House Agriculture Committee, and then a senior
professional staff on the Senate Agriculture, Nutrition, and
Forestry Committee.
Mr. Imbergamo holds a Bachelors degree from the State
University of New York at Plattsburgh.
Our fourth and final witness is Iain Macdonald. Mr.
Macdonald is the Director of TallWood Design Institute, a
unique research and education collaboration between the Oregon
State University Colleges of Forestry and Engineering and the
University of Oregon College of Design.
The TallWood Design Institute conducts applied research and
provides outreach and education to professionals in the
architecture, engineering, construction, and wood products
manufacturing sectors.
Mr. Macdonald has been in his current role since 2016 and
has worked in roles supporting innovation in the wood products
industry for more than 20 years.
Welcome to our witnesses today. We will now proceed with
hearing your testimony. You will each have 5 minutes. The timer
should be visible on your screen and we will count down to
zero, at which point your time has expired.
I apologize if I have pronounced any of your names
incorrectly and I welcome you to correct me as part of your
opening statement. We will begin with Mr. Schienebeck. Please
begin when you are ready.
STATEMENT OF HENRY SCHIENEBECK, CHAIR,
GOVERNMENTAL RELATIONS COMMITTEE, AMERICAN LOGGERS COUNCIL,
GILBERT, MN
Mr. Schienebeck. Good morning, Chair Spanberger, Ranking
Member LaMalfa, and distinguished Committee and Subcommittee
Members.
My name is Henry Schienebeck and I appear before you today
representing the American Loggers Council based in Gilbert,
Minnesota, as Chair of the Government Relations Committee.
The ALC is a national trade organization providing
exclusive representation for timber harvesting and hauling
businesses across the United States.
I report today that the impact of COVID-19 is severe enough
that for the first time in my lifelong history as a logger,
timber harvesters and haulers found it necessary to ask the
Federal Government for financial assistance.
Except for toilet paper, tissue paper, face masks, paper
gown products, the forest products manufacturing including
sawmills, building material manufacturers, and printing paper
producers drastically curtailed or stopped production at the
beginning of the pandemic.
While we are thankful the Federal Government determined
timber harvesting and hauling to be essential, it is
understandable that with stay-at-home orders, product demand
was unpredictable, which had an immediate negative impact on
the industry's ability to purchase raw material produced by
timber harvesters.
As the pandemic evolved, the appetite for homeowners to
implement do-it-yourself projects increased sharply and demand
for building materials skyrocketed.
Contrary to what many believe, timber harvesters and
haulers have not benefited from the record high finished
product prices.
This is especially true for Michigan, Minnesota, Wisconsin,
where wood consumers have closed their doors because of COVID,
causing an overabundance of raw material. It became a supply-
and-demand market on both the raw material end and finished
product side of manufacturing.
It is important to understand that, like farmers, these
small family-owned and -operated logging and timber hauling
businesses are capital intensive and generate income only when
product is delivered to market.
Reduced prices for raw material, coupled with increased
operational costs, particularly fuel, has resulted in a ten to
40 percent loss in revenue for many companies compared to the
same 2019 time-frame.
Proof of an approximately $1.8 billion loss in revenue is
supported with multiple studies and surveys which are included
in the full testimony. The ALC survey showed 61 percent of
loggers received financial help from the Paycheck Protection
Plan.
Timber harvesters and haulers are very appreciative of
having PPP funds available and their lenders are as well.
Without additional COVID relief, the generational businesses
will continue struggling financially to survive.
If they fail, the nation will be hard pressed to find
individuals willing to make the investments required to keep
wood fiber supplied to manufacturers of products we all use
daily.
The Consolidated Appropriations Act allows the Department
of Agriculture to provide up to $200 million in assistance for
timber harvesting and hauling businesses. Through no fault of
their own, the Farm Service Agency has no experience in dealing
with timber harvesters and haulers.
USDA and the Forest Service and FSA worked diligently to
make these funds available, which happened yesterday, as was
pointed out, and we greatly appreciate their efforts.
In addition to clean air, healthy forests provide clean
water, wildlife habitat, and generate billions of dollars worth
of well-paying forest industry jobs in rural America.
Healthy forests and healthy forest industry go hand-in-
hand. One cannot effectively exist without the other. Post
pandemic, economic recovery is challenged logistically by
limited transportation capacity.
ALC continues advocating for safer, more efficient
transportation with the introduction of H.R. 2213, the Safe
Routes Act. This legislation will allow states to authorize
truck weights on the Federal interstate equal to state-approved
local road weight limits.
The timber industry grows and harvests trees just like
other agricultural commodities. Recognizing the timber industry
as agriculture would provide silviculture parity with
agriculture.
To maintain and improve America's forests for maximum
social benefit, including climate change, sequestration of
carbon, supportive of rural economies and recreation,
sustainable forest management must continue to improve.
Forest management is possible only with a secure
professional logging workforce. In addition, recognizing new
technologies like laminated and cross-laminated timber and
biofuels industry will promote investment in facilities to use
wood and produce new value-added products.
These recommendations will have minimal fiscal impact and
are simply policy and legislative changes to support climate
change initiatives, reduce fossil fuel consumption, improve
forest health, and contribute significantly to post COVID-19
wood products industry recovery.
That will end my testimony.
[The prepared statement of Mr. Schienebeck follows:]
Prepared Statement of Henry Schienebeck, Chair, Governmental Relations
Committee, American Loggers Council, Gilbert, MN
Chair Spanberger, Ranking Member LaMalfa, and distinguished Members
of the Subcommittee on Conservation and Forestry, my name is Henry
Schienebeck. I am the Governmental Relations Committee Chair for the
American Loggers Council, the Executive Director for the Great Lakes
Timber Professionals Association (GLTPA) representing Michigan and
Wisconsin, and a former self-employed logger who has worked in forest
industry for the past 47 years. I appear before you today representing
the American Loggers Council (ALC). The ALC is the only national trade
organization providing exclusive representation for timber harvesting
and timber hauling businesses across the United States of America.
I report to you the impact of COVID-19 is severe enough that for
the first time in my life-long career as a logger, timber harvesters
and haulers have found it necessary to ask the Federal Government for
financial assistance. Except for toilet paper, tissue paper, face
masks, and paper gowns, forest products manufacturers including
sawmills, building material manufacturers, and printing paper
producers, drastically curtailed or stopped production altogether when
COVID-19 turned into a pandemic. While we are thankful the Department
of Homeland Security determined timber harvesting and hauling as
essential, it is understandable that with stay-at-home orders, product
demand was unpredictable which had an immediate negative impact on
industries ability to purchase raw material from timber harvesters.
Minnesota and Wisconsin were impacted further with the announcement
that two of the region's largest consumers of roundwood pulp would
close their doors due to the impact of COVID 19. (Press release
attached). The announcement to close the Wisconsin Rapids, Wisconsin
and Duluth, Minnesota paper mills owned by Verso, came to GLTPA's
office on June 9th, 2020, at 8:45 a.m. By 9:15 a.m. the same day, all
shipments of wood to these mills were completely halted. In fact, some
producers were told that if their trucks were more than an hour away,
they would be turned around and sent back with their cargo.
The regions timber harvesters and truckers were shocked and in
disbelief that something like this happened. The Wisconsin Rapids mill
alone, which employed between 800 and 900 workers, consumed
approximately twenty five percent (25%) of the areas roundwood pulp.
Ultimately these closures, coupled with the curtailment of lumber and
building material production, created an oversupply of raw material.
The imbalance of supply-and-demand resulted in reductions for the
delivered price and the slashing of quotas for raw material added to
the harvesters and haulers entered a state of panic. Timber harvesters
and haulers are paid by production and only when raw material is
delivered to the mill do they receive compensation. They must produce
and deliver wood volume to generate income.
Stimulated by the pandemic, the sale of toilet paper and other
household paper product purchases escalated to the point shortages
occurred and purchases were limited to one product per customer per
visit. Along with the paper shortage the appetite for homeowners to
implement do-it-yourself projects increased sharply and demand for
building material skyrocketed along with prices for this material.
Contrary to what many believe, timber harvesters and haulers have
not benefitted from the record high finished product prices. This is
especially true in Michigan, Wisconsin, and Minnesota where wood
consumers have closed their doors because of COVID. It is important to
understand that, like farmers and ranchers, these small, family owned,
and operated logging and timber hauling businesses are capital
intensive and generate a very modest 1% to 3% profit on an annual
basis.
It is not unusual for a two- or three-person timber harvesting
operation to have $3.5 million worth of equipment on a bank loan. This
does not include the daily operating capital needed for fuel,
insurance, parts, and other consumables. Without COVID relief for these
generational businesses to survive, the nation will be hard pressed to
find individuals willing to make the investments required to supply
wood fiber to manufacturers of products we all use daily.
Reduced prices for raw material coupled with increased operational
costs, particularly fuel, has resulted in a 10% to 40% loss in revenue
for many companies compared to the same 2019 time-frame. Proof of this
loss is supported in two ways. The American Loggers Council began an
annual logging business survey on November 1, 2020 and followed up with
an additional survey on January 15, 2021. The 2021 survey included
general questions about how the COVID-19 pandemic impacted operations.
Detailed answers from the questions are included as Exhibit A in this
testimony.
In general, the survey results show sixty nine percent (69%) of
logging businesses surveyed reported the pandemic had either a somewhat
or very negative impact on their businesses. Sixty one percent (61%)
reported getting some relief from a Federal relief program with the
majority of those who participated stating relief funds came through
the Paycheck Protection Plan (PPP). Twenty six percent (26%) of the
businesses did not participate in any Federal relief fund program as of
December 31, 2020. Ninety-five percent (95%) of the businesses surveyed
supported efforts to secure additional funding for timber harvesting
and timber hauling businesses. Also, please know that timber harvesters
and haulers are very appreciative of having PPP funds available and we
are quite certain their lenders are as well.
In addition, the ALC contracted with Forest2Market to conduct a
study on the actual losses incurred by the industry due to the COVID-19
pandemic. The study, attached as Exhibit B shows a loss of
approximately $1.8 Billion to the industry because of the pandemic
related loss of markets for raw material.
On December 27, 2020, the Consolidated Appropriations Act became
law and included language allowing the U.S. Department of Agriculture
to provide up to $200 million to assist those timber harvesting and
timber hauling businesses that have lost 10% or more of their revenue
from January 1, 2020, through December 1, 2020, compared to the same
period in 2019. The lack of parity between agriculture and silviculture
is the main reason for the delay to access of the $200 million for
timber harvesters and haulers. Through no fault of their own the Farm
Service Administration (FSA) has no experience in dealing with timber
harvesters and haulers however, USDA, USFS and FSA are working
diligently to make these funds available, and we greatly appreciate
their efforts. When available, these monies will aid timber harvesters
and haulers in recovering from the pandemic induced losses and keep
them from losing their businesses.
The Role of Forest Management in Addressing Environmental Concerns
Healthy forests are vital to addressing climate change. Healthy
forests are those which have been sustainably managed for multiple use,
and are growing live, healthy trees of all ages which sequester carbon.
Dead and dying trees, caused by insect and disease infestation, and
catastrophic fire, contribute to carbon emissions. Sustainably managed
forests are a major contributor to carbon sequestration and climate
change mitigation which is why the U.S. and much of the world have
joined the Trillion Tree Initiative. In addition to clean air, healthy
forests provide clean water, wildlife habitat and generate billions of
dollars providing well-paying forest industry jobs and outdoor
recreation in rural America.
The most effective way to maintain healthy forests is through
forest management. This is proactively accomplished with trained
logging professionals and land managers guided by fully vetted
management plans. Timber harvesting provides the raw material to
produce forest products such as paper, boards, biomass-based fuels, and
other products used every day by all people. Forest products from
harvested and processed timber ``store'' captured carbon well beyond
the life of the trees that absorbed it. Healthy forests and a healthy
forest industry go hand-in-hand. One cannot effectively exist without
the other.
Forest management is a renewable, sustainable cycle of growing
trees, harvesting trees, converting them into products and includes
both natural regeneration and reforestation by planting. As seen with
global imaging the United States now has more forested land than it did
100 years ago, and more trees are grown annually than are harvested. Of
note, is that tree harvesting, and removal occurs on less than two
percent (2%) of forest land annually as compared to Three percent (3%)
of forest land disturbed annually by natural events such as insects,
disease, and fire.
Increasing timber product utilization through new technology and
product development can facilitate the Post COVID-19 U.S. Wood Products
Industry Recovery. As an example, Cross Laminate Timber (CLT) ``Mass
Timber'' construction technology has developed structural timber
products comparable to steel and concrete products for use in multi-
story building construction. Additionally, cellulosic forest-based bio-
crude has been developed utilizing wood waste residuals, biomass and
unmerchantable timber that can supplement or replace fossil fuel in
refineries or boiler systems.
Infrastructure Bill Support for Wood Products Industry Recovery
The Post Pandemic economic recovery is being challenged
logistically by limited transportation capacity. It is similar in the
timber industry. The American Loggers Council continues advocating for
safer, more efficient transportation with the introduction of the
``Safe Routes Act''. This legislation would allow for states to
authorize truck weights on Federal interstates equal to local and state
road weight limits. When passed into law, this legislation will reduce
the number of trucks on local roads and reduce driver hours by reducing
the number of truck trips necessary to transport timber. Reduced truck
trips will reduce fossil fuel consumption and exhaust emissions.
Similar Federal legislation has been enacted in Minnesota and Wisconsin
for specific corridors.
The American Timber Industry grows and harvests trees similar to
how other agricultural commodities are grown and harvested. However, it
is not always classified or afforded the same benefits other
agricultural commodities receive.
As an example, standing timber is considered an agricultural
commodity, yet timber harvesting and hauling timber is not considered
an agricultural activity. A Virginia Pine can be harvested as a
Christmas tree and receive recognition as an agricultural activity. If
the same tree is harvested and transported to a pulp mill or sawmill it
does not qualify as an agricultural activity. The ALC requests
consideration be given to provide parity between silviculture and
agriculture.
Wisconsin is the first state to establish a co-op of timber
industry stakeholders to purchase closed mills and reopen them. This
structure would be like farmers and ethanol co-op's and allow for the
vertical integration of the logging and trucking supply side within the
entire forest products process. Federal support and assistance for the
timber industry to implement this new business model will contribute to
the stabilization and recovery of the American timber industry.
To maintain and improve America's forests for maximum social
benefit including climate change mitigation, sequestration of carbon,
support of rural economies and recreation, sustainable forest
management must continue to improve. Forest management is possible only
with a secure, professional logging work force to perform the work. To
have such a work force, forest products industry is needed to absorb
the vegetation being grown in the nation's forest. Every consideration
must be given to provide new technologies such as laminated and cross
laminated timer, and the emerging biofuels industry, the ability to
acquire raw material. This in turn will promote investment in
facilities to produce value-added products.
These recommendations will have minimal to no governmental fiscal
impact but are simply policy and legislative changes that will support
climate change initiatives, reduce fossil fuel consumption, improve
forest health, address supply chain disruptions, improve transportation
safety, and contribute significantly to the post COVID-19 wood products
industry recovery.
Again, thank you for allowing the ALC to provide testimony
regarding the impacts of the COVID-19 pandemic on timber harvesters and
haulers. We look forward to working with Members to ensure a speedy
post pandemic recovery for the timber harvesting and timber hauling
sector.
I am happy to answer any questions.
Attachment
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
[http://investor.versoco.com/2020-06-09-Verso-Announces-Necessary-
Actions-to-Offset-Unprecedented-Market-Decline-Due-to-COVID-19]
Verso Announces Necessary Actions to Offset Unprecedented Market
Decline Due to COVID-19
Miamisburg, Ohio, June 9, 2020/PRNewswire/ \1\--Verso Corporation
(NYSE: VRS) today announced that it is taking immediate actions to
offset unprecedented market decline due to the COVID-19 pandemic and to
reposition the company for future success.
---------------------------------------------------------------------------
\1\ http://www.prnewswire.com/.
---------------------------------------------------------------------------
Verso will indefinitely idle paper mills in Duluth, Minnesota, and
Wisconsin Rapids, Wisconsin, while exploring viable and sustainable
alternatives for both mills, including restarting if market conditions
improve, marketing for sale or closing permanently. The decision to
reduce production capacity is driven by the accelerated decline in
graphic paper demand resulting from the COVID-19 pandemic. The stay-at-
home orders have significantly reduced the use of print advertising in
various industries, including retail, sports, entertainment and
tourism. According to Fastmarkets RISI, North American printing &
writing demand fell by 38% year-over-year in April, and operating rates
are expected to drop well below 70% during the second quarter.
``It is critical that we maintain a healthy balance sheet and focus
on cash flow, while balancing our supply of products and our customers'
demand,'' said President and Chief Executive Officer Adam St. John.
``After a comprehensive review of post-pandemic demand forecasts and
capacity, we made the difficult decision to idle the Duluth and
Wisconsin Rapids mills. We expect the idling of these facilities to
improve our free cash flow. The sell through of inventory is expected
to offset the cash costs of idling the mills.''
Verso expects to idle the Duluth Mill by the end of June 2020, and
the Wisconsin Rapids Mill by the end of July 2020, resulting in the
layoff of approximately 1,000 employees. Verso will continue to supply
graphic and specialty papers in roll and sheet form, as well as
packaging papers and pulp.
``Decisions to idle facilities are always difficult because they
impact employees, their families, and communities,'' said St. John.
``Verso is committed to treating all of our affected employees with
fairness and respect. As always, safety is our highest priority and
will be our primary focus during this difficult time.''
About Verso
Verso Corporation is the turn--to company for those looking to
successfully navigate the complexities of paper sourcing and
performance. A leading North American producer of graphic and specialty
papers, packaging and pulp, Verso provides insightful solutions that
help drive improved customer efficiency, productivity, brand awareness
and business results. Verso's long-standing reputation for quality and
reliability is directly tied to our vision to be a company with passion
that is respected and trusted by all. Verso's passion is rooted in
ethical business practices that demand safe workplaces for our
employees and sustainable wood sourcing for our products. This passion,
combined with our flexible manufacturing capabilities and an unmatched
commitment to product performance, delivery and service, make Verso a
preferred choice among commercial printers, paper merchants and
brokers, converters, publishers and other end users. For more
information, visit us online at versoco.com.
Forward-Looking Statements
In this press release, all statements that are not purely
historical facts are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements may be
identified by the words ``believe,'' ``expect,'' ``anticipate,''
``project,'' ``plan,'' ``estimate,'' ``intend,'' ``potential'' and
other similar expressions. Forward-looking statements are based on
currently available business, economic, financial, and other
information and reflect management's current beliefs, expectations, and
views with respect to future developments and their potential effects
on Verso. Actual results could vary materially depending on risks and
uncertainties that may affect Verso and its business. Verso's actual
actions and results may differ materially from what is expressed or
implied by these statements due to a variety of factors, including:
uncertainties regarding the duration and severity of the COVID-19
pandemic and measures intended to reduce its spread; the long-term
structural decline and general softening of demand facing the paper
industry; adverse developments in general business and economic
conditions; developments in alternative media, which are expected to
adversely affect the demand for some of Verso's key products, and the
effectiveness of Verso's responses to these developments; intense
competition in the paper manufacturing industry; Verso's ability to
compete with respect to certain specialty paper products for a period
of 2 years after the closing of the Pixelle Sale; Verso's business
being less diversified following the sale of two mills after the
closing of the Pixelle Sale; Verso's dependence on a small number of
customers for a significant portion of its business; Verso's limited
ability to control the pricing of its products or pass through
increases in its costs to its customers; changes in the costs of raw
materials and purchased energy; negative publicity, even if
unjustified; any failure to comply with environmental or other laws or
regulations, even if inadvertent; legal proceedings or disputes; any
labor disputes; and the potential those risks and uncertainties listed
under the caption ``Risk Factors'' in Verso's Form 10-K for the fiscal
year ended December 31, 2019 and Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2020, and from time to time in Verso's
other filings with the Securities and Exchange Commission. Verso
assumes no obligation to update any forward-looking statement made in
this press release to reflect subsequent events or circumstances or
actual outcomes.
Exhibit A
American Loggers Council 2020 Logger Survey
Q30 Has the coronavirus pandemic had a positive or negative impact on
your overall business operations?
Answered: 404 Skipped: 4
------------------------------------------------------------------------
Answer Choices Responses
------------------------------------------------------------------------
Very positive 3.71% 15
Somewhat positive 7.92% 32
Neither positive or negative 19.80% 80
Somewhat negative 41.09% 166
Very negative 27.48% 111
-------------------
Total......................... 404
------------------------------------------------------------------------
Q31 Do you support the American Loggers Council's or other logging
association's efforts in seeking relief for the logging and log
trucking industry during the pandemic?
Answered: 404 Skipped: 4
------------------------------------------------------------------------
Answer Choices Responses
------------------------------------------------------------------------
Yes 94.80% 383
No 5.20% 21
-------------------
Total......................... 404
------------------------------------------------------------------------
Q32 Did you receive any type of COVID related relief from a Federal
program for your business in 2020?
Answered: 402 Skipped: 6
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
------------------------------------------------------------------------
Answer Choices Responses
------------------------------------------------------------------------
Yes 60.95% 245
No 39.05% 157
-------------------
Total......................... 402
------------------------------------------------------------------------
Q33 What Federal relief program did you participate in?
Answered: 398 Skipped: 10
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
------------------------------------------------------------------------
Answer Choices Responses
------------------------------------------------------------------------
Payroll Protection Program 54.27% 216
Economic Injury Disaster Loan 4.77% 19
SBA Express Bridge Loan 2.01% 8
SBA Debt Relief 2.01% 8
Coronavirus Food Assistance 0.50% 2
Program
Did not participate in any 36.43% 145
Federal as-
sistance program
-------------------
Total......................... 398
------------------------------------------------------------------------
Exhibit B Forest2Market Analysis
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chair. Thank you very much, Mr. Schienebeck, and,
certainly, working frequently with the Virginia Loggers
Association, as I do, some of the comments you made, I thought,
were particularly impactful.
Certainly, what we have heard on the ground relates back to
the fact that with the rise in price in timber products, so
many of our timber haulers and foresters did not see the
benefit there.
So thank you for making sure that that was a central part
of your opening statement.
Mrs. Dauzat, you are now recognized for 5 minutes.
STATEMENT OF CAROLINE DAUZAT, CO-OWNER, REX LUMBER, GRACEVILLE,
FL
Mrs. Dauzat. Chair Spanberger, Ranking Member LaMalfa, and
Members of the Committee, thank you for holding this hearing
and for your continued work to support the forest products
industry.
I am Caroline Dauzat, a fourth-generation owner of Rex
Lumber, which operates four southern yellow pine sawmills. I am
also a member of the Southeastern Lumber Manufacturers
Association, which represents mills, lumber treaters, and their
suppliers throughout the southeast.
Additionally, I chair the Softwood Lumber Board. My family
has been in the lumber industry since the early 1900s. Rex
Lumber Company was founded by my great grandfather, D.W. McRae,
in 1926 in Graceville, Florida.
Through years of hard work and dedication, our sawmills now
employ more than 650 hard-working men and women while on track
to produce over 800 million board feet of lumber per year in
2022.
In addition to lumber, we own a pole and piling
manufacturer, land management company, and trucking operation.
In total, we employ 715 individuals.
We also own timber land in Florida, Georgia, and Alabama.
Like the rest of the world, the pandemic and market volatility
took us by surprise. Our mills were at maximum production
before COVID. When the pandemic hit, we implemented strict
safety protocols and COVID infections within our company were
not widespread.
We were able to utilize the tax credits made available in
the COVID relief package to offset the cost of providing for
our employees and their families that were impacted by the
virus.
Our smaller trucking company, procurement and pole
companies were also able to participate in the PPP Loan
Program. The lumber industry received essential status and the
market rebounded quickly.
Rex Lumber was able to produce 689 million board feet from
June of 2020 to May of 2021, compared to 575 million board feet
over the same period in the prior year. That is an increase in
production of 20 percent.
As a whole, the North American lumber industry increased
production by 1.4 billion board feet last year. Most of this
growth was in the South, where production increased 1.1 billion
board feet, marking a five percent increase over 2019.
With housing starts being depressed over the past decade,
the pandemic ushered in skyrocketing demand for new homes,
renovations, and DIY projects, outpacing production.
Sawmills have continued to manufacture lumber as quickly as
possible to meet demand. However, we are constrained by
manufacturing infrastructure as 36 southern sawmills
disappeared during the Great Recession. In fact, production of
southern pine did not return to the previous peak of 19 billion
board feet in 2005 until 2019.
Construction of new mills is impeded by the availability of
sawmill machinery, and while we understand the importance of
protecting air and water quality, the permitting process can be
lengthy.
For example, the Rex Lumber Mill in Troy, Alabama, which
employs 175 people, broke ground in 2018 and will not meet our
full production target of 300 million board feet annually until
next year.
Throughout the South, projects currently underway are
expected to increase production more than 2 billion board feet
over the next 2 to 3 years. This will increase the supply of
lumber in the long-term, while creating more markets for timber
land owners.
Short-term, our primary constraints are workforce and
transportation shortages. While residential construction has
been and will continue to be a major portion of our customer
base, the industry is looking for ways to diversify our markets
to lessen the impact on sawmill infrastructure when the next
recession hits.
Specifically, we are working to increase the use of mass
timber for nonresidential and larger multifamily housing
construction projects. In addition to diversifying the domestic
lumber market, utilizing more wood through mass timber also
locks up carbon in the built environment.
This expands markets for landowners that produce trees for
the benefit of society and the environment, but most
importantly, creates and sustains good-paying jobs in our rural
communities.
The government can encourage increased utilization of wood
products by supporting the U.S. Forest Products Lab to continue
valuable research for current and new wood products.
Additionally, increased utilization in government projects
such as those managed by the General Services Administration
and the Department of Defense not only expands mass timber
markets directly, but also enhances awareness and acceptance of
these innovative pro-environment products in the commercial
market.
In conclusion, volatility within the markets continues to
be difficult for lumber producers and consumers. Sawmills
remain drivers in rural economies while providing opportunities
to meet society's demand for reduced carbon emissions.
Thank you for your time and I look forward to taking your
questions.
[The prepared statement of Mrs. Dauzat follows:]
Prepared Statement of Caroline Dauzat, Co-Owner, Rex Lumber,
Graceville, FL
I would like to thank the Committee for holding this hearing on the
impact that the COVID-19 pandemic has had on lumber supply-and-demand.
I would also like to thank the Committee for your ongoing work in
support of the forest products sector to provide benefits for the
American people, including essential forest products such as lumber and
packaging, habitat for wildlife, carbon sequestration, recreational
opportunities, and economic growth.
Company Background
I am Caroline Dauzat, a fourth-generation owner of Rex Lumber,
along with my brother and two sisters. Rex Lumber operates four
Southern Yellow Pine lumber mills in Graceville and Bristol, Florida;
Brookhaven, Mississippi; and Troy, Alabama. I am also a member and past
director of the Southeastern Lumber Manufacturers Association (SLMA).
SLMA is a trade association that represents sawmills, lumber treaters,
and their suppliers throughout the Southeast. SLMA's members produce
more than 4.5 billion board feet of solid sawn lumber annually, employ
over 12,000 people, and responsibly manage over 2 million acres of
forestland. These sawmills are often the largest job creators in their
rural communities, having an economic impact that reaches well beyond
people that are in their direct employment. Additionally, I serve as
the current chair of the Softwood Lumber Board.
My family has been involved in the lumber industry since the early
1900s. Rex Lumber Company was founded by my great grandfather, W.D.
McRae in 1926 in Graceville, Florida as a cypress sawmill, which later
became an oak flooring manufacturer. In 1971, my grandfather, Robert
McRae and his children, including my father Finley McRae, acquired full
control of the company and proceeded to add a Southern Yellow Pine mill
in Graceville. In 1980, the Graceville mill was sold and the family
constructed a new sawmill in Bristol, Florida under the name North
Florida Lumber. In 2001, my family bought the original Rex Lumber mill
in Graceville out of bankruptcy and proceeded to completely rebuild the
mill, restarting production in 2003, marking the return of the Rex
Lumber name. In 2009, in the depths of the Great Recession, our family
decided to purchase another sawmill in Brookhaven, Mississippi and
upgraded the facility for improved high quality, high volume lumber
manufacturing that is now leading the industry in safety, quality and
production. In 2017, we made the decision to invest in a greenfield
mill in Troy, Alabama, which is now a state-of-the-art mill that
continues to increase production as additional equipment comes online
and our workforce continues to grow.
In total, our sawmills employ more than 650 hardworking men and
women while on track to start producing over 800 million board feet of
lumber per year in 2022. The lumber we produce is used primarily in
residential and commercial construction applications. In addition to
lumber mills, our family owns Apalachee Pole Company, Inc. which
manufactures utility poles and pilings, North Florida Woodlands, Inc.,
a timber procurement company, and Rex Transportation, which is a
flatbed and boom trucking company that transports our lumber and poles
to customers. We also own timberland in Florida, Georgia and Alabama.
The forestry and forest products sectors directly support over one
million American jobs. That number increases to 2.9 million jobs if you
include the indirect jobs supported by the industry.\1\
---------------------------------------------------------------------------
\1\ https://www.forest2market.com/blog/new-report-details-the-
economic-impact-of-us-forest-products-industry.
---------------------------------------------------------------------------
COVID-19 Impact and Unexpected Demand Increase
Like the rest of the world, the pandemic and proceeding market
volatility took us by surprise. Our mills were operating at maximum
production before the pandemic hit. When governments ordered the
economy to shut down, we scrambled to keep our employees safe while
simultaneously preparing for a recession. Fortunately, COVID infections
within our company were not widespread. However, when employees were
unable to work due to COVID infection or exposure, we found the tax
credits provided for in the Families First Coronavirus Response Act
helpful in offsetting the cost of providing income and benefits, on a
temporary basis. Additionally, while Rex Lumber is too large by Small
Business Administration standards to have participated in the Paycheck
Protection Program, it was a very useful Program for our trucking and
pole companies and other smaller lumber producers to maintain payroll
at the initial uncertainty of the pandemic, before lumber prices
bounced back and began the drastic increase we witnessed over the last
year. While there were some issues around implementation of the
Program, it was helpful overall.
Our industry received ``essential industry'' status and we
implemented strict COVID protocols within our operations, so we faced
minimal disruptions in lumber production. With the continued ramp up of
our new Troy mill and upgrades to our existing mills, we were able to
produce 689 million board feet from June of 2020 to May of 2021
compared to 575 million board feet over the same time period in the
prior year, an increase in production of 20%. As a whole, the North
American lumber industry increased production by 1.4 billion board feet
last year. Most of this growth was in the U.S. South, where production
increased 1.1 billion board feet, marking a 5% increase over 2019.\2\
---------------------------------------------------------------------------
\2\ https://forisk.com/wordpress//wp-content/assets/Press-
Release_Mill-DB_20210518.pdf.
---------------------------------------------------------------------------
In spite of this increase, new home construction was up nearly 12%
in 2020 vs. 2019.\3\ According to the U.S. Census, the demand for new
housing continued into 2021, as seasonally adjusted housing starts were
up 37% in March 2021 compared to March 2020.\4\ In addition to new
housing starts, the DIY and home renovation markets also unexpectedly
increased more than 20%, when people began quarantining due to COVID-
19.\5\ This unforeseen market demand reduced lumber inventories while
mills were adjusting production levels in response to the economic
slowdown and government mandated restrictions at the on-set of the
pandemic.
---------------------------------------------------------------------------
\3\ https://www.marketwatch.com/story/new-home-construction-
activity-soars-to-highest-level-in-over-a-decade-as-builders-rush-to-
produce-single-family-homes-2021-01-21.
\4\ https://www.census.gov/construction/nrc/pdf/newresconst.pdf.
\5\ https://www.cnbc.com/2020/08/18/home-depot-hd-q2-2020-
earnings.html.
---------------------------------------------------------------------------
Recently, we have seen lumber demand and supply begin to balance,
and prices drop accordingly. In fact, prices are now down more than 60%
since the May highs.\6\ While we have no way of knowing whether this
down trend will continue, we do know that lumber production capacity
continues to increase with new greenfield mills and expansions across
the Southeast while new single family home permits are 37% higher in
May 2021 compared to May 2020.\7\
---------------------------------------------------------------------------
\6\ https://markets.businessinsider.com/commodities/news/lumber-
price-today-outlook-august-analyst-commodities-prices-2021-7.
\7\ https://eyeonhousing.org/2021/07/may-single-family-permit-
gains/.
---------------------------------------------------------------------------
Sawmill Infrastructure Constraints
As the country and the economy slowly return to normal, sawmills
have continued to manufacture lumber as quickly as possible to meet on-
going high demand. However, we have been constrained by manufacturing
limits, and increasing production is more complicated than simply
deciding to make more lumber. Sawmill infrastructure declined
significantly when the Great Recession began in 2007. In the South, for
example, the total number of pine mills operating in 2007 was 276. In
2017, the total was only 240.\8\ Production of Southern Yellow Pine's
previous peak was 19 billion board feet in 2005. The industry did not
return to this level until 2019.\9\ Meanwhile, housing starts grew
almost 200% between the fourth quarter of 2010 and first quarter of
2021.\10\
---------------------------------------------------------------------------
\8\ https://www.forest2market.com/blog/making-more-lumber-is-not-
so-simple.
\9\ Southern Forest Products Association. May 6, 2021.
\10\ https://www.forest2market.com/blog/making-more-lumber-is-not-
so-simple.
---------------------------------------------------------------------------
Adding additional capacity through expansion of existing mills or
building new mills takes eighteen months to 3 years to complete.
Equipment manufacturers are also experiencing high levels of demand,
leading to higher prices for concrete and steel to build the new
equipment and structures. Another ongoing factor is the regulatory
burdens, such as long permitting processes for air and water. For
example, the Rex Lumber mill in Troy, AL, which employs 175 people,
broke ground in 2018, started limited operations in 2019, produced over
100 million board feet in 2020, and is on target to produce 175 million
in 2021. Upcoming 2022 projects at our Troy mill will increase
production to 300 million board feet annually. In total, projects that
are currently underway across the South are expected to increase
Southern Yellow Pine production by more than 2 billion board feet over
the next 2 to 3 years.\11\ Lumber manufacturing expansion projects will
increase the supply of lumber in the long term while creating more
markets for timberland owners.
---------------------------------------------------------------------------
\11\ Ibid.
---------------------------------------------------------------------------
Workforce shortages, rail car availability and trucking capacity
constraints are also hindering our ability to increase lumber supply.
Our industry requires a variety of skill sets ranging from hourly mill
production and maintenance positions to salaried supervisors, managers,
and administrative personnel. Hiring qualified people to fill these
various roles is always difficult but has become more challenging
during the economic recovery. As enhanced unemployment benefits have
subsided in the states where we operate, we are seeing capable
individuals begin to apply for work again. Rex Lumber, in addition to
other members of SLMA, are taking various approaches to find qualified
candidates. For example, we have coordinated with local community
colleges to manage paid internship programs in hopes of finding
qualified people that are able to quickly move up the company ladder.
Additionally, SLMA has worked with sawmill members to design outreach
materials for high school students that want to go directly into the
workforce.\12\
---------------------------------------------------------------------------
\12\ https://www.lumber.works/.
---------------------------------------------------------------------------
Rail car availability along with trucking capacity was problematic
before the pandemic and has become increasingly difficult to manage. At
Rex Lumber, we are planning to increase our truck fleet over the next
few years as we are unable to find outside companies to move our
products in a timely fashion. This is another issue that is widespread
in our industry. For example, another SLMA member in South Carolina had
7 million board feet of sold lumber sit at his mill for a week last
month because he could not secure trucks to transport finished products
to customers.
Economic and Environmental Sustainability for Forest Products
The impact of the Great Recession has been long felt in the lumber
industry, while the impact from the pandemic appears to be a shorter
term phenomenon as it relates to forest products supply-and-demand. To
make the industry more resilient to future market volatility,
diversification will be critical. Housing, both single family and
multi-family is a large majority of our markets, and we expect that to
continue to be the case for the foreseeable future. However, we do
believe that looking at other opportunities for our products throughout
the built environment would help offset the drastic impact that another
housing recession might have on sawmill infrastructure capacity.
Additionally, using more wood products for construction purposes has
the benefit of being a more environmentally friendly building product
than competing building materials.\13\
---------------------------------------------------------------------------
\13\ https://www.thinkwood.com/blog/4-things-to-know-about-mass-
timber.
---------------------------------------------------------------------------
Innovative building materials, such as mass timber, have the
potential to open new markets in the commercial, defense, and other
infrastructure sectors. Thanks to updated 2021 International Building
Code changes that allow 18 story mass timber buildings,\14\ on-going
efforts by the forest products industry, support for research and
innovation grants from this Committee as well as the Forest Service,
along with increased societal demand for greener building products, we
are seeing growth in the utilization of mass timber. Recent examples
include Wal-Mart's new 2.4\2\ million headquarters in Arkansas that
will be constructed of cross laminated timber and glulam mass timber
composed of southern yellow pine and the five cross laminated timber
hotels built through the Privatized Army Lodging (PAL) program on bases
in different regions of the country. We are also excited about the
potential for mass timber bridges, sound barriers, and other
infrastructure research that is being supported through the U.S. Forest
Products Lab and academia.
---------------------------------------------------------------------------
\14\ https://www.awc.org/pdf/education/des/AWC-DES607A-
TallWood2021IBC-190619-color.pdf.
---------------------------------------------------------------------------
To encourage continued growth for these innovative new markets,
Congress and the Administration should support utilization of these
products through the government procurement process. The General
Services Administration (GSA) owns and leases over 376\2\ million of
space.\15\ GSA's Green Building Advisory Committee has recommended ``a
whole building life cycle assessment approach for larger projects (over
$3 million), requiring that buildings be designed in such a way that
life-cycle carbon assessment shows that the selected design results in
a 20 percent carbon reduction.'' \16\ Utilizing forest products in
place of traditional more carbon intensive building materials can help
GSA meet this ambitious goal.\17\ Additionally, the Department of
Defense spends billions of dollars per year on military construction.
Mass timber was accepted into the Unified Facilities Code in 2016, but
we have seen very little utilization of mass timber in military
construction beyond the PAL hotels. Given the positive data surrounding
these hotel projects, we would like to see the Department of Defense
look for additional opportunities for mass timber construction.\18\
Given the impact of Hurricane Michael on the Florida Panhandle, the
rebuilding of Tyndall Air Force Base is one example where mass timber
could be deployed.
---------------------------------------------------------------------------
\15\ https://www.gsa.gov/real-estate/gsa-properties.
\16\ https://rmi.org/press-release/the-us-federal-government-takes-
the-lead-on-low-embodied-carbon-buildings/.
\17\ https://www.researchgate.net/publication/
344694854_Wood_buildings_as_a_climate_solu
tion.
\18\ https://www.woodworks.org/wp-content/uploads/4-Story-CLT-
Hotel-WoodWorks-Case-Study-Redstone-Arsenal-01-05-16.pdf.
---------------------------------------------------------------------------
In addition to encouraging the GSA and DOD to prioritize forestry
products as an environmentally friendly domestic building material, we
request strong support for the Forest Service's Forest Products Lab and
Wood Innovation Grants to continue needed research and experimental
projects to continue finding new and innovative markets for wood
products.
Conclusion
In conclusion, lumber mills continue to produce lumber as quickly
as possible to meet on-going demand and as the industry invests in
greenfield mills, new supply will rise to meet future demand. To dampen
the impact of the next housing recession on sawmill infrastructure
capacity, we hope to diversify markets beyond the traditional housing
sector, which we believe fits with on-going societal demands to
decrease the carbon footprint of the built environment. Continued
efforts by the industry with continued support of the Committee will
play a critical role in meeting these economic and environmental goals.
Thank you for the opportunity to participate in this important hearing.
[Attachment]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chair. Thank you so very much, Mrs. Dauzat, for your
opening testimony.
And, Mr. Imbergamo, please begin whenever you are ready,
and welcome back to the Agriculture Committee.
STATEMENT OF WILLIAM IMBERGAMO, EXECUTIVE
DIRECTOR, FEDERAL FOREST RESOURCE COALITION,
WASHINGTON, D.C.
Mr. Imbergamo. Thank you, Chair Spanberger. Happy to be
here.
And Ranking Member LaMalfa and Chair Spanberger, thanks for
the opportunity to speak to you today about the public lands
timber industry and our experience in the pandemic and as the
economy has continued to recover.
Our industry weathered the pandemic with remarkable
resilience. At the outset, lumber prices fell further in a few
weeks than they did during the entirety of the Great Recession
in 2007 to 2009. Mills reacted by reducing production, dropping
shifts, and in some cases, closing entirely.
As Members of the Committee know, however, demand for wood
products rapidly rebounded as the DIY market and housing starts
picked up steam.
Prices climbed to record highs in early May of this year,
but since then, lumber prices are down more than 65 percent,
proving that the laws of supply-and-demand remained very much
in effect.
I want to be clear. The Forest Service is to be commended
for their efforts to continue delivering timber sales during
2020. They took steps to quickly provide contract extensions
and other flexibility when the market collapsed, and then
delivered a 3.2 billion board feet Timber Sale Program during
the pandemic and a historically bad fire year.
While this was amongst the highest level sold in over 2
decades, it still represents less than \1/2\ the allowable sale
quantity identified in current forest plans.
As the market for solid wood products has remained strong,
however, the Forest Service Timber Sale Program has not kept
pace. At the end of the second quarter of this fiscal year,
timber sales from the National Forests were down 19 percent
compared to the same quarter last year.
Modest efforts to salvage burn wood from last year's fires
has been limited by the threat of litigation and this includes
even just modest roadside hazard tree removal.
Many forests that burned in 2020 will convert to brush
fields if they are not harvested and replanted. Brush fields
are more susceptible to future fires and do not sequester
carbon in the way healthy growing forests do.
Salvaging burned timber would store carbon in long-lasting
wood products while generating revenues to pay reforestation
costs.
Since the 1990s, the Forest Service has presumed that
sensitive species--grizzly bears, spotted owls, and others--
need closed canopy high-density forests in order to survive. We
reduced harvests by more than 80 percent across the National
Forest System as a result. We have had more than 20 years to
see the results and they are not pretty.
As harvests have dropped, wildfires have increased.
Overstocked National Forests have succumbed to fires driven by
drought, climate change, and insects. Communities have been
decimated as mills, which serve as economic engines, were
forced to shutter.
The benefits we were told to expect, from tourism,
healthier watersheds, and improved wildlife habitat, have not
materialized either. Over 360,000 acres of northern spotted owl
habitat were destroyed by catastrophic fire in Oregon last year
alone, and there was more in California and Washington as well.
We have seen similar destruction in grizzly bear habitat in
Montana. Sometimes National Forests simply fail to offer
sufficient timber for sale regardless of whether there is a
species of concern in the forest. This threatens nearby mills
and the blue-collar jobs they provide.
Just this year, one of my member companies, Neiman
Enterprises, was forced to shutter their mill in Hill City,
South Dakota, after the Black Hills National Forest failed to
meet its timber target for 3 consecutive years.
Over 120 people in the small town of just over a thousand
are now out of work and the ability to manage the Black Hills
has been permanently reduced.
Given the widespread forest health and wildfire crisis we
are seeing on our National Forests, we hope that at the very
least, the agency would not reduce their current timber sale
levels. Loss of mill capacity permanently reduces the ability
of the Forest Service to manage forests and drives up land
management costs.
Congress has enacted numerous streamlined authorities to
get management done and has more than doubled the hazardous
fuel budget since 2005. Many of the authorities originated in
this Committee, including key provisions adopted in the 2014
and 2018 Farm Bills.
We urge Congress to treat our National Forests as critical
green infrastructure and invest further in increases in
management, focusing on mechanical thinning and harvest as well
as collaborative approaches like Good Neighbor Authority.
The funding in the bipartisan Outdoor Restoration
Partnership Act (H.R. 2682) would be a good start on this
investment. The threat of litigation remains a significant
burden on the Forest Service.
Congress must address the extremely disruptive Cottonwood
precedent, which the Obama Administration fought all the way to
the Supreme Court. That one precedent has led to over 400
million board feet being tied up in litigation in one region
alone. That is enough to build 24,000 houses.
The Forest Service should also plan in advance how it is
going to help National Forests recover from increasingly
frequent and, therefore, increasingly predictable disturbances
like wildfires and hurricanes.
While a few forests have taken steps to prepare in advance
for salvage and recovery efforts, Congress can provide clear
support and direction that will help these steps stand up in
court.
I have other specific recommendations in my testimony, and
I appreciate the opportunity to share these thoughts with you
today. I look forward to your questions.
[The prepared statement of Mr. Imbergamo follows:]
Prepared Statement of William Imbergamo, Executive Director, Federal
Forest Resource Coalition, Washington, D.C.
Thank you for the opportunity to speak to you today about the
impact of the pandemic on the public lands timber industry, and our
experiences as the broader economy has continued to recover. Congress
has an opportunity to use the upcoming infrastructure legislation to
make badly needed investments in the management of our National
Forests. However, Congress must understand both the urgency of the need
for management, and the difficulties Forest Service managers face as
they grapple with an expanding forest health crisis on our public
lands.
The Pandemic and the Public Lands Timber Industry: When the
pandemic began, widespread economic disruption caused lumber prices to
plummet by more than 43 percent in the space of less that 6 weeks. This
is a bigger drop in lumber prices than the one that took place over 3
years during the 2008-2011 ``Great Recession.'' While toilet paper and
other household paper demand initially skyrocketed due to hoarding, my
industry, like most others, anticipated a prolonged recession and began
taking steps to prepare. This meant curtailing production, and in some
cases closing mills. The industry, smaller in 2020 than it was in 2009,
scaled back production, anticipating depressed demand.
The Forest Service moved quickly to allow timber contract holders
flexibility to extend current timber contracts. Over 700 timber
contracts were granted extensions within a few months of the beginning
of the pandemic. Individual National Forest units took steps to adjust
field operations and managed to maintain a timber sale program in 2020
that matched the roughly 3.2 Billion Board Feet sold in 2019. While
among the highest level sold in over 2 decades, this still represents a
little more than half the Allowable Sale Quantity identified in current
Forest Plans.
Operating during [COVID] was a challenge for my member companies,
just as it was for many other industries. Although we were designated
as an essential sector by the Department of Homeland Security, our
mills had to adjust operations to allow for social distancing and other
[COVID]-related precautions. Occasional outbreaks required mills to
take downtime or reduce production.
The Forest Service deserves credit for keeping the timber sale
program going in 2020, during both the disruptions caused by the
pandemic and the onset of the record-breaking fire season. Many of the
larger fires took place in the last month of the fiscal year, a time
during which many sales are awarded each year.
The Lumber Recovery: As you know, the disruption caused by the
pandemic led to a sudden--and very much unexpected--rebound in lumber
markets. After tanking dramatically in March 2020, by the first week in
July, prices began to recover. By May of this year, the DIY market,
combined with the strongest year in new single-family home construction
in more than a decade, sent lumber prices to record highs. Since May,
however, lumber markets have proven that the law of supply-and-demand
remains very much in effect: The CME lumber index has fallen 62 percent
in the last 2 months as production and market demand have equalized.
The capacity of mills to meet demand has not been the sole issue in
lumber markets. Efforts to recruit professional loggers and truck
drivers has been lagging for some time. Several of my members have told
me that the lack of trucking capacity--due to a shortage of drivers--is
a major bottleneck in their efforts to meet market demand.
The forest products industry is capital intensive, and it is
difficult to raise the capital needed to build and modernize mills
without a reliable supply of timber. The lumber and panel industry
shrank significantly in the wake of the Great Recession. The sudden
demand for lumber and other building materials in the last 18 months
caught our industry by surprise, much as is it did other observers.
For the mills I work with, the 2020-2021 Fiscal Year was an
opportunity to make up for decades of generally low prices for our
products. It's important to note that not every segment of the wood and
paper industry has enjoyed strong pricing as we've been through the
pandemic. The closure of in-person schools and offices has severely
depressed demand for printing and writing paper, for instance.
However, as market demand for solid wood has remained strong, the
Forest Service timber sale program has not kept pace. At the end of the
second quarter, timber sales from the National Forests were down by
over 19 percent compared to the same quarter last year. More
alarmingly, modest effort to conduct removal of fire-killed timber near
roads and campgrounds has been limited by threats of lawsuits from
environmental groups. Salvage of burned timber from National Forests in
Oregon and California has been limited, in keeping with patterns in
recent years. Failure to remove burned wood from unreserved lands
condemns these forests to convert to brush fields, which are more
susceptible to future fires and do not sequester carbon the way
healthy, growing forests do.
Salvage of this burned timber would store carbon in long-lasting
wood products while generating revenues to defray reforestation costs.
Outside groups, such as The Nature Conservancy and American Forests,
estimate that there are over 7 million acres of National Forest
requiring reforestation, figures that were arrived at before the
disastrous 2020 fire season.
Going Forward: Strong Lumber Markets Can Help Save Our Forests,
Store Carbon, and Create Jobs: Outgoing Chief [Vicki] Christiansen told
Congress last year that up to 40 percent of the National Forest System
is at moderate to high risk of catastrophic fires.
Throughout the 1990's, the management of our western National
Forests was changed to ``protect'' several species, including Spotted
Owls, several salmon species, and the Grizzly bears. In each case, the
Forest Service has presumed that closed-canopy, high-density forests
were the preferred habitat for each of these species. We've had more
than 20 years to see the results, and they are not pretty.
As harvests have dropped, wildfires have increased. Overstocked
National Forests succumb to fires driven by drought, climate change,
and insects. Communities have been decimated as mills, which served as
the economic anchor for those small towns, were forced to shutter.
The benefits we were told to expect--from tourism, healthier
watersheds, and improved wildlife habitat, have not materialized
either. 360,000 acres of Northern Spotted Owl habitat were destroyed in
catastrophic fire last year in Oregon alone.
Where species listings aren't enough to force mills out of
business, simple failure to deliver on the timber sale program can
often stand in. Just this year, one of my member companies, Neiman
Enterprises, was forced to shutter their mill in Hill City, SD after
the nearby Black Hills National Forest failed to meet its timber target
for 3 consecutive years. Over 120 people in the small town of just over
1,000 people are now out of work, and the ability to manage the 1.2
million acre Black Hills National Forest is permanently reduced.
Unfortunately, this is not the only example. In January of last
year, R-Y lumber, another member of mine, was forced to shutter their
mill in Townsend, Montana. The economic damage in the small town of
1,800 will be significant.
Given the widespread forest health and wildfire crisis we're seeing
on our National Forests, we'd hope that at the very least the agency
would not reduce their current timber sale level. Congress has enacted
numerous streamlined authorities to get management done, and has more
than doubled the Hazardous fuels reduction budget since 2005. Many of
those authorities originated in this Committee, including key
provisions adopted in the 2014 and 2018 Farm Bills.
We would urge Congress to treat our National Forests as critical
green infrastructure and invest in further increases in management,
focusing on mechanical thinning and harvest, as well as cooperative
approaches like Good Neighbor Authority.
Congress should:
Support infrastructure spending that invests in Forest
Management on our Federal lands--The Forest Service has a 10
year, $20 Billion strategy to begin to reverse the overstocking
and fire dangers we see threatening so many communities. The
bipartisan, bicameral Outdoor Restoration Partnership Act is a
good starting point for this effort.
Clarify that outside of ``reserved'' acres, such as Roadless
Areas and Wilderness Areas (which make up about half of the
National Forest System), the top priority should be reducing
fuel loads and managing for a healthier, more diverse National
Forest System.
Direct the Forest Service to plan in advance how it will
help National Forests recover from increasingly frequent--and
therefore increasingly predictable--disturbances like fires,
hurricanes, and other wind events.
Finally and fully address the disastrous Cottonwood case,
which has led to litigation that has tied up over 400 Million
Board Feet of timber in one Forest Service Region alone (that's
enough lumber to build over 25,000 houses).
Invest in essential workforce development to ensure a
vibrant and capable forest workforce to conduct needed forest
management and restoration work on the National Forests and
other Federal lands.
Conclusion: In the late 1990s, we made a public policy mistake. We
assumed that large land set asides would protect wildlife habitat,
ensure clean water, and stimulate the economy. We're now paying the
price for that mistake. The species that were supposed to benefit
haven't. The watersheds we were told were protected are now burnt. In
some cases, entire towns--and lives--were lost. And mills continue to
struggle when the National Forests they rely on fail to meet current,
modest timber targets.
As the economy continues to recover following the pandemic, we hope
Congress supports a concerted effort to restore, reforest, and manage
the 193 million acre National Forest System. We have to move to a new
paradigm where the National Forests are treated as renewable resources
to be managed for climate, social, and economic benefits. We've tried
producing those things through a strategy that focused on large set
asides and reduced management. We know now that that approach is a
failure. We look forward to working with this Committee to move forward
into a better future for our National Forests.
The Chair. Thank you very much.
Mr. Macdonald, could you please begin your testimony when
you are ready?
STATEMENT OF IAIN MACDONALD, DIRECTOR, TallWood
DESIGN INSTITUTE, OREGON STATE UNIVERSITY,
CORVALLIS, OR
Mr. Macdonald. Chair Spanberger, Ranking Member LaMalfa,
and Members of the Subcommittee, thank you for the opportunity
to testify today.
My name is Iain Macdonald. I serve as the Director of the
TallWood Design Institute collaboration between the Colleges of
Forestry and Engineering at Oregon State University and the
College of Design at the University of Oregon.
We carry out applied research education, product
development and testing for designers, builders, and
manufacturers. Much of our work focuses on a new breed of
engineered wood products known as mass timber.
In my testimony today, I will focus my comments on the role
of wood as a tool to sustainably rebuild our infrastructure and
economy.
The capacity to process wood into mass timber with reliable
and predictable performance is facilitating a sea change in
sustainable construction around the world. Mass timber is
precision engineered and robotically fabricated.
This enables wood, which has typically been restricted to
single-family homes and low-rise multifamily structures, to be
used in buildings that are larger and taller than ever before.
In 2015, with support from researchers at OSU, Oregon was
the first state to produce cross-laminated timber panels
certified for use in buildings.
As a result, Oregon became home to many of the nation's
earliest mass timber buildings and a vibrant cohort of
pioneering architects, engineers, and construction firms with
expertise that is now in demand across the country.
Nationwide, the rate of adoption of mass timber has been
dramatic. In 2013, there were less than five construction
projects started. As of June 2021, 1,169 mass timber buildings
have been constructed or are in design with projects in all 50
states.
Manufacturing capacity has expanded in lockstep from just
one U.S. production facility in 2015 to nine today. All these
are bringing back high-value jobs to rural communities, from
Washington to Alabama.
But these buildings still represent only 5 million of the
93\2\ billion of U.S. commercial building space. In addition
to the economic impacts, there are carbon reduction benefits
from expanding wood construction, as we have heard.
Currently, 40 percent of U.S. greenhouse gas emissions are
derived from buildings. We can improve their thermal efficiency
to reduce the energy needed for heating and cooling. But this
alone will be insufficient to achieve the steep reductions we
need in carbon.
Manufacturing processes for timber products have a much
lower carbon footprint than those for concrete and steel.
Timber products sequester carbon for the building's lifetime
and can be recycled and given a second life afterwards, and
lighter wood structures mean that less concrete is needed in
the foundations.
It all adds up to a ready-made formula for reducing our
carbon emissions by doing what we already planned to do,
modernize and improve our physical infrastructure.
Mass timber can help our nation rebuild in other ways too.
Two innovative Oregon projects are embracing the use of
underutilized species and restoration timber to tackle the
housing crisis.
They aim to design kit-of-parts housing systems using
domestic timber that can be prefabricated at high volumes and
low unit cost for communities in need, whether these are urban
centers addressing homelessness, rural communities ravaged by
fire or other natural disasters, or working families caught in
the missing middle who cannot afford to own homes.
Research has played a key role in driving innovation,
showing us that mass timber buildings can deliver fire and
seismic safety on par with any concrete or steel structure.
Further work is critical, however, to help our industry
drive down costs, optimize fiber use and allow mass timber to
be implemented on a broader scale. The USDA Agricultural
Research Service, the Forest Products Lab, and the U.S. Forest
Service have been invaluable partners for our research.
The leadership and financial contributions of these
agencies have been matched 200 percent by state and private-
sector support, and industry has worked hand-in-hand with us.
To fully realize the enormous potential of timber
construction, I offer these recommendations.
First, continue and expand the support to USDA-ARS, the
Forest Products Laboratory, and the Wood Innovations Program
for this important applied work.
Second, facilitate support for workforce training and
development. This is critical for the successful growth of the
manufacturing base.
Last, I would encourage this Subcommittee to consider
opportunities for incentivizing the use of domestically-
produced low-carbon building materials at Federal, state, and
municipal levels.
In closing, thank you for the opportunity to testify today
and I would welcome the opportunity to answer any questions.
[The prepared statement of Mr. Macdonald follows:]
Prepared Statement of Iain Macdonald, Director, TallWood Design
Institute, Oregon State University, Corvallis, OR
Introduction
Chair Spanberger, Ranking Member LaMalfa, and Members of the
Committee, thank you for the opportunity to testify today. My name is
Iain Macdonald and I serve as the Director of the TallWood Design
Institute (TDI), a unique collaboration between the Colleges of
Forestry and Engineering at Oregon State University and the College of
Design at University of Oregon.
TDI carries out applied research, works in partnership with
industry on product development and testing, and offers education and
outreach to current and future designers, builders and manufacturers.
Our mission is to conduct the science that can open up viable new
applications for the use of wood in the built environment and to
disseminate the results of that work efficiently to stakeholders in the
public- and private-sectors. The data we generate is used to validate
designs for innovative new buildings, evolve building codes, increase
the knowledge of design and construction practitioners, and help U.S.
manufacturers develop and launch new products and compete effectively
in domestic and export markets. Our work focuses heavily on a new breed
of engineered wood products collectively known as mass timber, which
can make use of small-diameter logs that can be sourced from
sustainably managed forests and forest restoration projects, and
contribute to the reduction of greenhouse gases and wildfire risk.
The U.S. Wood Products Sector and COVID Impacts
The forestry and wood products sector is a major contributor of
employment and GDP to the national economy. Overall, forest products
comprised about 1.5% of the total U.S. economy in 2018, supported
almost three million jobs, and represented about 5% of the entire
manufacturing output of the country. The sector is particularly
important to the hundreds of rural communities in which processing
facilities are located, from the Pacific Northwest to the Southeast.
Importantly, the forest sector in the U.S. is one of the only
significant economic sectors with net negative carbon emissions, making
wood products the most climate-sensitive structural building material
available today.
During the COVID-19 pandemic, most forestry and wood product
manufacturing businesses stayed open as essential services, but there
were still significant impacts to this sector. The need to implement
safety and social distancing protocols in plants resulted in temporary
shutdowns and lower concentrations of staff in certain spaces, both of
which decreased productivity. Delivery logjams further constrained
supply. Lumber producers anticipated reduced housing demand in the
early days of the pandemic and decreased production levels accordingly.
Broadly, the industry has faced these lumber supply constraints while
also experiencing high demand for lumber for remodeling and renovation
work, which has caused a record spike in prices.
Outside of the supply of lumber for single-family homes, the mass
timber product industry experienced reduced demand when some commercial
office and hotel projects that would have used mass timber were put on
hold or canceled altogether. Additionally, uncertainty around the
extent to which remote employees will return to offices continues to
impact the commercial construction sector. In the pulp and paper sector
there were some mill closures due to a lack of demand for high-quality
paper for events, programs, etc. And, critically, the logging industry
lost approximately $1B of revenue.
Wood as a Tool to Sustainably Rebuild our Infrastructure and Economy
Wood is the only major building material that can be renewed and
regrown. The capacity to process this basic material into engineered
products with reliable and predictable strength and performance
attributes has undergone a renaissance of late. A family of relatively
new engineered products, known as mass timber, is facilitating a sea
change in sustainable construction around the world. The
characteristics of these products allow wood, which has typically been
restricted to single-family homes and low- and mid-rise multifamily
dwellings, to be used in buildings that are larger and taller than ever
before.
Wood fell out of favor as a building material in office,
institutional and commercial buildings around 100 years ago, as
concrete and steel became dominant. At the time there were justifiable
concerns about wood use in these types of structures, relating to fire,
structural strength and seismic resilience. Today this landscape is
radically different. Mass timber products are precision-engineered and
robotically-fabricated to offer specific strength and stiffness
characteristics, depending on where they are needed in a building and
what loads they must bear. Modern fire suppression and alarm systems
have greatly improved fire safety, and mass timber beams, columns and
panels are supplied in large cross-sections, meaning that the face of
the wood element will char at a slow, predictable rate, while
insulating the core structure and preserving its load-carrying
capacity. All of this has been empirically validated through applied
research at our major universities and institutes, due in large part to
investments made to and through the USDA Forest Service, Forest
Products Lab, and Agricultural Research Service.
As a result of this work, we are continually pushing the boundaries
of what is possible with wood. In 2015, with support from researchers
at OSU, Oregon was the first state to start producing cross-laminated-
timber panels certified for use in buildings. This product can be
fabricated in large dimensions up to 12 by 60 for wall and floor
applications, and is a game-changer in terms of construction speed and
efficiency. As a result, Oregon became home to many of the nation's
earliest mass timber buildings. A vibrant cohort of pioneering
architects, engineers and construction firms have emerged in the state,
with expertise that is now in demand across the country. In Milwaukee,
Wisconsin, a 25 story mass timber apartment building named Ascent will
shortly become the tallest wood building in the world, at 284, with
the timber engineering, fabrication and installation performed by a
company in Portland, Oregon.
In the last 5 years, the rate of adoption of mass timber in the
United States has been dramatic. In 2013, there were less than five
construction projects started. In 2020 more than 100 projects
commenced, and as of June 2021, 1,169 mass timber buildings had been
constructed or were in design, with projects in all 50 states.
Manufacturing capacity has expanded in lockstep, from just one U.S.
production facility in 2015 to nine today.\1\ These are now bringing
high-value jobs back to rural communities, from Colville, Washington to
Dothan, Alabama.
---------------------------------------------------------------------------
\1\ 2021 International Mass Timber Report, Forest Business Network.
---------------------------------------------------------------------------
This progress is impressive for a new-to-the-U.S. construction
technology, but mass timber buildings still represent a tiny fraction
of U.S. real estate that is built each year. There are currently just
over 5\2\ million of mass timber buildings in the nation, but in 2019
there was 93\2\ billion of commercial building space.\2\ The U.S. has
the capacity and know-how to significantly ramp up the number of mass
timber structures, and there are compelling reasons for doing so.
---------------------------------------------------------------------------
\2\ US Energy Information Administration: Annual Energy Outlook
2020.
---------------------------------------------------------------------------
The manufacturing processes for timber products have a
significantly lower carbon footprint than those for concrete and steel.
Furthermore, the carbon naturally sequestered in wood is stored within
the building for its lifetime, and the wood components have the
potential to be recycled and given a second life afterward. The lighter
strength-to-weight ratio also means that less concrete is needed in the
foundations. All these things are important, given that the general
scientific consensus is that the warming effects of CO2
emissions will be irreversible unless we can achieve significant
reductions by 2030.
Currently 40% of U.S. greenhouse gas emissions are derived from the
construction and operation of buildings. Efforts to improve the thermal
insulation of windows, doors and walls to reduce the energy consumed
for heating and cooling are laudable, but these alone will be
insufficient to achieve reduction targets. Mass timber building can
further advance efforts to achieve measurable new gains in the sector
and nation's carbon reduction efforts. As soon as we construct a mass
timber building we immediately avoid emissions. For example, District
Office, a six story office building in Portland, avoided 750 tons of
carbon emissions by using timber instead of concrete, the equivalent of
taking 570 cars off the road for a year. The amount of timber used to
build it took Oregon's forests just 21 minutes to grow.
Research is Driving the Expanded Use of Sustainable Wood Products
Research and development are driving innovation and adoption of
mass timber products and modern wood construction. The work that is
ongoing at TDI and other institutions aims eliminate a number of key
barriers to wood use, as well as learning more about how we can enhance
technical, sustainability and cost performance. We already know that
mass timber buildings, when designed correctly, can deliver fire and
seismic safety on par with any concrete or steel structure. However,
further research is critical to help our industry drive down the cost
of doing that, while at the same time optimizing fiber use and allowing
mass timber to be implemented on a broad scale.
At TDI, we are putting data into the public domain on fire,
seismic, structural and acoustic performance of tall wood buildings, so
that more architects and engineers have the tools and confidence they
need to effectively design them and contractors have the know-how to
build them. And the research goes beyond the wood itself. We are
testing different kinds of connectors and assemblies to find out which
ones offer the best combinations of cost-efficiency, strength, fire
resistance, moisture protection and acoustic separation. We are working
on termite-resistant CLT for Hawaii and the southern states, and
energy-efficient structural panelized systems for use in Alaska. Along
the way we are even learning important things about the psychological
and physiological benefits of wood in our indoor environments, which
have important ramifications for wellness and disease control.
All of this work involves a high degree of collaboration, both
across university research institutions and between the public- and
private-sector. Early next year, ten universities, twenty companies and
the USDA Forest Products Lab will be working together to test a ten
story mass timber building on the shake table at UC San Diego. The test
will yield a treasure trove of new information about the behavior of
these buildings in earthquakes, enabling us to further optimize their
performance.
The USDA Agricultural Research Service, the Forest Products Lab and
the U.S. Forest Service have been invaluable partners for our own
research at TDI. Since 2015 their support has enabled our affiliated
researchers to launch more than 50 research projects and acquire state-
of-the-art technical equipment that is helping us train our
manufacturers in critical new skills like computer-aided design and
fabrication. The leadership and financial contributions of these
agencies have been matched 200% by state and private-sector support,
and industry has worked hand-in-hand with our researchers to identify
the applied research projects that can generate tangible market impacts
in a 3 to 5 year timeframe. This year we launched the REACTS Consortium
for Research on Engineering, Architecture and Construction of Timber
Structures. The organization consists of pioneering firms in those
industry sectors who are partnering with us and pooling cash
contributions and technical expertise to jointly drive the innovation
agenda. Notably, work at OSU funded by the Economic Development
Administration directly resulted in the launch of a first-in-the-world
mass timber product--the Mass Plywood Panel--by Oregon's Freres Lumber
Company, and their investment in a $40M greenfield manufacturing
facility.
Mass timber innovations can play a positive role in our nation's
rebuilding in other ways too. TDI is working hard to evaluate the
viability of using under-utilized species in these products, and
research is underway already to test the strength properties of
ponderosa pine, white fir and Alaskan spruce for use in CLT. Each year
sees our forestlands and the communities in proximity to them
increasingly threatened by wildfire. By selectively thinning these
overstocked forests and using the restoration fiber in our buildings we
can simultaneously reduce fire risk, improve the safety of humans and
property, and support high-value jobs in rural communities as well as
design and construction jobs in urban centers.
Two innovative projects in Oregon seek to embrace opportunities for
developing wood products made with under-utilized species while at the
same time tackling the housing affordability crisis that plagues many
of our major cities. Their aim is to design kit-of-parts housing
systems using domestic mass timber that can be prefabricated in a
factory and deployed in high volume and at low unit cost to communities
in need--whether these are urban centers addressing homelessness, rural
communities ravaged by fire or other natural disasters, or working
families caught in the `missing middle' who cannot afford to move from
rental housing into their own homes. The projects exploit the rapid
assembly advantages of mass timber and utilize design principles that
enable disassembly and reuse at end of life, helping to further extend
the sustainability of these structures. What has been particularly
invigorating about these projects is the momentum and determination of
all involved to make a lasting impact on these challenges--from Federal
agencies like FEMA and EDA to Oregon state agencies and private firms.
Key Roles that Government can Play
The research funding and scientific leadership provided through the
USDA Agricultural Research Service and the Wood Innovations Program has
been pivotal in advancing the science around mass timber buildings, and
TDI is grateful to the Subcommittee for its work in supporting these
key agencies and their research programs. Continuing and expanding the
support available for this critical applied research work will enable
the innovative collaborations between research institutions, Federal
and state agencies and the private-sector to make even greater impacts.
Support for workforce training and development will also be
critical for the growth of the mass timber supply chain in the U.S.
When firms move up the value chain from commodity products such as
lumber to custom products such as mass timber, they pivot from a focus
on producing products of low complexity and low variation in high
volumes to a business model in which each component is designed for a
specific place in a specific building. This typically means that those
firms must train or hire for new digital skills such as 3D computer-
aided-design and computer-controlled fabrication. The good news is that
these digitally-oriented jobs are more likely to be appealing to young
people than traditional physical work, provided that training is
available. TDI is rolling out a certificate program on these topics for
industry learners. However, it will be important to implement
strategies to introduce these new careers to young people and encourage
them to take them up, in particular among demographics that have not
traditionally been associated with the forest industry.
And, regarding the Subcommittee's current efforts to consider
priority needs for modern infrastructure investment, the INVEST in
America Act includes some key investments in rail infrastructure that
would help to address critical lumber supply chain constraints. For
example, in Oregon, TDI completed a supply chain analysis last year
that revealed existing rail infrastructure is serving as an impediment
to growth, due to loading constraints on some bridges.
Last, I would like to encourage the Subcommittee to consider
opportunities for incentivizing Federal, state and municipal levels of
government to accelerate adoption of green construction with the use of
domestically-produced low carbon building materials. By stimulating
domestic demand for products like mass timber, we can divert logs from
offshore export to domestic processing, grow our manufacturing base and
maximize the socioeconomic benefits provided by each tree harvested.
This is the best way to ensure that forests remain as forests.
In closing, thank you for the opportunity to testify today. I
welcome the opportunity to answer any questions.
The Chair. At this time, Members will be recognized for
questions in order of seniority, alternating between Majority
and Minority Members.
The Ranking Member and I would like to recognize the
Ranking Member of the full Committee, Mr. Thompson, if he would
like to begin with asking his questions.
Mr. Thompson. Madam Chair, Ranking Member, thank you very
much. I very much appreciate it.
To all of the witnesses, thank you so much for your
testimony today. Thanks for your advocacy and your work in
terms of our forest products, our forest industry, your
perspectives that can help us have both a healthy environment
and a healthy economy.
And so, Mr. Imbergamo--Bill, in your testimony, you
discussed the impact that lower timber targets have on sawmills
and the supply chain, and the Administration has proposed
reducing the Forest Service's timber targets in the Fiscal Year
2022 budget request from 4 billion board feet to 3.4 billion
board feet.
What can we do to encourage the Forest Service to harvest
more timber system-wide and closer to each forest's allowable
sustainable growth or Sales Quantity Act?
Mr. Imbergamo. Yes. So, the Administration's budget
actually proposed 3.4 billion board feet, and that would
represent an increase over the current year's expected output
and it would be an increase over last fiscal year. But it is
down from the 4 billion board foot target that was in the prior
year's budget request.
The reality is on the National Forest System the timber
outputs have been climbing steadily since bottoming out in
2000. But, we are not even close to capturing either growth or
mortality.
And, I think one of the things I mentioned is preparing in
advance to be ready when you have a disturbance event. There
are portions of the National Forest System that aren't going to
get managed--wilderness areas, roadless areas, for the most
part.
But the general forest--each unit of the National Forest
System should be prepared to capture value and capture the
carbon from damaged trees. The response in different parts of
the country of the Forest Service to these events is markedly
different.
The National Forests in Mississippi salvaged 85 percent of
the acres that were damaged by Hurricane Katrina, whereas in
the West, it is rare for a forest, say, in California, where
the Ranking Member of the Subcommittee is from, to harvest, to
salvage more than five to 15 percent. So 85 percent of what is
burned is just, basically, converting to brush fields.
So that is a big area where the Forest Service can do
better. It would help sustain local industry and we would have
substantial carbon benefits as well.
Mr. Thompson. Thank you for that.
Markets, obviously, are extremely important. We have to
have markets for our timber, for our board feet, in order to be
able to have that demand to be able to do that healthy
management of the forests, let alone support our economies and
rural America.
What can Congress do to incentivize new markets for wood
waste and low-grade wood, and would growing new markets for
these materials benefit both forest health and hazardous fuels
reduction?
Mr. Imbergamo. That is for me? Yes, absolutely. I think one
of, whenever you have had the Forest Service in front of this
Committee or other committees, they always talk about the
difficulties they have in selling low-value trees. And, I think
the markets for residuals and lower-value materials are
critical to making the entire industry work.
When we saw schools and offices go virtual last year,
demand for printing and writing paper evaporated, and that was
already a sector that was under a lot of stress, and Henry can
perhaps talk a little bit more about that.
But, right now what we would like to see is for the Forest
Service to sustain the mills that they have, like Rex Lumber's
mill in Bristol, Florida, and the remaining mills in the Black
Hills.
If you don't have those primary wood processors, the entire
wood value chain is going to break down. It is difficult to
make it go strictly on residuals and low-value biomass.
Mr. Thompson. And my final question for you, Bill, or
anyone that would have insight on this, tell us more about the
Cottonwood precedent and why it is so damaging and what can
Congress do on that front.
Mr. Imbergamo. So the Cottonwood precedent was a decision
of the Ninth Circuit Court of Appeals that the Obama
Administration challenged and, basically, it has allowed
environmental groups to win injunctions against timber and
forest management projects while forcing the Forest Service to
go back and consult with the Fish and Wildlife Service on the
underlying forest plan.
It is important to understand there is no conservation
benefit here because the Fish and Wildlife Service would have
already signed off on the project. So there is no project level
of concern, and in some cases, these forest plans are over 30
years old.
So Congress fixed part of that with the critical habitat
designations. I believe that was in the 2018 Farm Bill. But
there are three other prongs in the Cottonwood test. And as I
mentioned in my testimony, 400 million feet are tied up just in
Region 1 and that is putting a substantial strain on the
industry in that part of the world.
Mr. Thompson. Well, once again, thank you. Thank you to all
of our witnesses.
Madam Chair, thank you so much.
The Chair. Thank you very much.
And the chair now recognizes Ms. Pingree of Maine for 5
minutes.
Ms. Pingree. Thank you very much, Madam Chair. I really
appreciate you holding this hearing. Thank you to all the
witnesses. All of you really have provided excellent insights
into some of the challenges that we are facing from the Forest
Service to our private industry.
Representing the State of Maine, we are the most forested
state in the nation. We don't have a lot of Forest Service land
but we face some of the same challenges that I heard from
Minnesota and some of the Midwestern states: closure of our
paper mills, all the things you talk about, trucking, labor.
They are all issues for us as well.
I want to ask my first question to Mrs. Dauzat. Thanks for
telling us a little bit more about the ups and downs of your
lumber mill. I am sure this has been a really challenging
couple of years with the loss of demand and then huge interest
in it, and I really appreciate the expansion that you are
making in the jobs you provide in your area.
You talked a little bit about the Forest Service Wood
Innovations Grant Program in helping the industry to diversify
and look to the future. I am really interested in the
innovation side, and I also chair the Interior Appropriations
Subcommittee.
So we are trying to increase the funding there. But I am
working on a new bill to expand and make some improvements to
that program and other Forest Service programs.
Could you talk a little bit more about how in your industry
they have helped or how they could be changed to benefit you?
Mrs. Dauzat. I think any supportive research--research is
wonderful, but those end-markets being viable are very
important.
There is a lot out there and we would love some of it to
get to fruition. We personally have looked into biochar as
something, especially as we have been impacted by Hurricane
Michael.
But we are not finding the markets there to support the
investment, and so--and the research is critical. It is very
important. But getting to that end-user to where there is an
industry that can be supported has to be available.
Ms. Pingree. That is great. Yes, thank you for saying that,
and I think you are right. It is one thing to have the
research, but we also have to figure out how to make sure there
is a market there so it is economically viable, and that is
really important.
And we are hoping to add a biochar facility in Maine, so we
are huge fans of that as well. But you are right, there are
some challenges.
Mr. Macdonald, thank you for the work that you are doing
and your really interesting testimony. We are sorry you are on
the West Coast instead of the East Coast, but we have some
great research going on in Maine as well.
And you talked a little bit about the climate benefits of
materials like mass timber, which is something we are really
interested in exploring more in terms of the infrastructure
investments that Congress is making.
In May, we were working on some of those things as well,
and including wood fiber insulation product, which we think
also expands those markets and we hope you include in some of
your prototype products.
But can you talk more about any thinking that you have done
about how we could get the GSA or the Department of Defense or
other sections of the Federal Government to kind of use our
purchasing power to increase and better utilize these products?
Mr. Macdonald. Thank you for the question, Congresswoman.
I am a Canadian citizen, and there are some precedents in
Canada that worked quite well. In 2009 in British Columbia,
there was something enacted called the Wood First Act (SBC
2009), which was a piece of legislation that specifically
incentivized the use of wood in buildings paid for with
provincial funding.
That catalyzed a lot of the early interest in mass timber.
In fact, British Columbia was the first place in North America
that really got going with this. And, there was no particular
teeth to the legislation in terms of there being a penalty for
not using wood.
But the general principle was that if it could be done
within the bounds of building codes and so on, then it should
be done, and it really got a lot of that early work going in.
And as a result, in the same province of British Columbia
52 municipalities enacted their own Wood First resolutions to
say, when we do build a municipal building that we use wood.
Ontario did a similar thing in 2012. I know that in Oregon
there was thought about doing that a couple of years--maybe 5
years ago, but there was a little bit of resistance from other
industries.
A low-carbon building materials incentive would be
something that would be palatable to a wide range of
industries. There are really good innovations going on in other
materials, too, like concrete, as the Committee has previously
heard. And so that would be something that could really drive
adoption.
Ms. Pingree. Great. That is a wonderful suggestion and I
will look more into that, because I think that, as I think you
might have suggested in your testimony, it is something we
should use Federal, state, and local governments to really
encourage this.
And it is kind of a crying shame if in states like Maine or
Oregon we don't have a wood first ordinance in our communities,
because that is a great way to support it.
I am out of time. Thank you, Madam Chair. I yield back the
time I don't have.
The Chair. The chair now recognizes Ranking Member LaMalfa
for 5 minutes.
Mr. LaMalfa. Thank you again.
Let me turn to Mr. Schienebeck for a moment here. We, of
course, are seeing the issues for the last year of trying to
get the product from the woods to the shelf.
What can we think about in terms of a pandemic situation
like we currently are trying to come out of or one that may
happen in the future?
And just as a practical matter, I got frustration out there
on the front line with people saying, we are outside. We are
out in the woods.
We are not in large groups of people--if there was really
hesitancy to be able to do that work in a spread out situation
of whether it was Federal forestlands or even somewhat in the
private-sector, too.
What do you think we could do to improve protocols to allow
people to do more outside work and not have such tight
constrictions such as COVID, and basically, people having to
stay home?
Mr. Schienebeck. It was really good to see that Homeland
Security did recognize the timber haulers and harvesters as
being essential workers. That was good to know, because most of
our folks do work in machines by themselves.
They don't, and a lot of the larger logging companies they
did do different protocol. They didn't put a whole group of
four people in one vehicle and send them off to the woods. Some
of them did different things. They might have paid gas stipends
and stuff for them to take their own vehicles and separate
them.
From that regard, probably one of the bigger issues that we
ran into was really having access to agency folks when the
stay-at-home orders took place.
So, a timber sale goes on and you want to close the timber
sale out, it was difficult from time to time to get a hold of
somebody to actually close the timber sale out.
There are certain requirements that are needed. You have to
have your roads cleaned up. You have to have different things
done to get that approval to close out. I think that is really
an improvement that could be made is having better access.
We have all gotten more used to Zoom and those types of
things and we are trying to create apps for loggers and
truckers. Everybody carries a computer in their pocket and over
the phone and being able to give them access to those people.
Mr. LaMalfa. And that is--that is what we were running into
a lot of is ability to get the permitting done, getting the
work done for the agencies to allow those folks to get out
there and do that, and we do need to find improvement there.
Mr. Imbergamo, talk a little bit about increasing the
salvage situation. I mean, we have so much potential in the
West, millions of acres, and I will say it again, that when you
fly over after, say, a few years after a fire in a particular
area and you can see there is the checkerboard pattern of
private land versus Federal land, and you can tell which one is
which just by flying over and seeing which one has been
recovered, which ones have been starting to replant and
restoration, et cetera.
How the heck are we going to increase the salvage on
Federal lands? What do we need to do to help the Federal
agencies to get on track from lawsuits or get motivated to get
this out, maybe fight the lawsuits?
Because we are not helping our Federal lands with this lack
of recovery and that window of time where you have--you can
salvage trees and actually get value out of them within a year
after a fire and we lose that because of lawsuits dragging on
for years and years.
What do you see as one of the linchpins of being able to
speed that process up and get the value and actually get them
restored again for markets that still seems to want it?
Mr. Imbergamo. Yes. I think you have it exactly right. The
problem is right now we do fight the lawsuits and frequently
the agency prevails. So, ultimately, the projects go forward.
The problem is that they go forward sometimes too late. If
it is a proactive project, and we actually had a great example
of this in your district back in 2012 where the Forest Service
had tried for over 6 years to do a thinning in some land that
was a Spotted Owl habitat.
And they finally prevailed in the lawsuit and before the
project could be implemented the project area burned. That was
not good for the owls. I think that that fire burned 20 or so
Spotted Owl nesting areas.
And then on the salvage side, you said it. If we don't move
fast enough, you lose value fairly quickly, much more quickly
in the eastern U.S. than in the West.
As I said, if Congress would bless the idea of preplanning
the salvage so that resalvage outside of wilderness and
roadless can go forward in an expedited fashion, that would
enable us to get the fiber on a timely basis and help pay for
the reforestation that we know is going to be needed.
Mr. LaMalfa. Yes, exactly. It seems we just keep running
into, one particular case in east Butte County in northern
California there is grant money sitting there waiting to be
used for Fire Safe Council work, but they couldn't get out of
their own tracks due to some combination of NEPA or CEQA
(California Environmental Quality Act). And so that grant money
sat for 2 years. Finally, the area burned and it is just a
horrific story. So we need to expedite.
So I yield back. Thank you, Madam Chair.
The Chair. Thank you, Mr. LaMalfa.
The chair now recognizes Ms. Kuster of New Hampshire for 5
minutes.
Ms. Kuster. Thank you, Madam Chair, and thanks so much for
holding this important discussion.
New Hampshire is the second most densely forested state in
the entire country, and nearly 60 percent of all our
agricultural lands are working for us.
A strong conservation ethic is deeply embedded in our
state's history as is a heritage of maintaining forests that
are responsibly managed.
However, the forestry sector in our region, like the rest
of the country, is facing serious challenges that have only
been exacerbated by the uncertainties of the COVID pandemic.
I was pleased to hear from foresters and loggers who were
able to access Paycheck Protection Plan funds to get some
relief at the height of COVID, and I was also proud to help
champion $200 million in direct relief for those businesses
that was signed into law in December and rolled out by the USDA
just this week.
I have heard from timber stakeholders in my district that
this assistance is vital and cannot come soon enough. And while
I am glad we were able to work in a bipartisan way to help this
industry, we must not lose sight of the long-term issues that
still need to be addressed.
For New Hampshire, the future of forest products has a
direct correlation to the future of our rural economies and our
iconic wild places. With land prices climbing rapidly and
residential development increasing, the survival of our small
family-owned forests depends upon having strong markets for
their wood products.
As New England's paper mills had, largely, closed over the
past couple of decades, it is imperative to help connect
foresters with new market opportunities.
So I am excited about the tremendous progress being made to
incorporate mass timber and wood products into tall building
construction and other infrastructure, including, I might add,
in a new building addition to a building in the Navy Yard in
our neighborhood here in D.C.
I have also been proud to champion legislation that
provides incentives to help transition families and businesses
away from fossil fuels and toward modern wood boilers and
heating systems.
The forest products industry desperately needs new markets
like this for low-grade wood that could otherwise accumulate on
the forest floor and accelerate fires.
And these are just a few of the avenues that should be
pursued in order to maintain and grow a healthy market for wood
products. Congress can play a role in fostering this progress.
Now, Mr. Schienebeck, your testimony highlighted just how
severe an impact the pandemic has had on the financial health
of many businesses in the timber industry. Could you elaborate
on why high demand and prices for products like lumber did not
trickle down the supply chain to small business harvesters and
haulers?
Mr. Imbergamo. Sure, I would be happy to answer that
question.
So it really becomes a supply-and-demand thing. So when you
look at, I would say, especially in Wisconsin, Minnesota, and
Michigan, we had three pulp and paper mills close, and they
bought a substantial amount of wood. They bought, roughly, 25
percent of the pulpwood that was harvested in this region.
And when that closes, we have a lot of loggers that are out
there that are--they have a lot of equipment and stuff and they
produce a lot of wood. So when you lose that market, you have a
supply-and-demand issue.
I mean, it only makes sense. If I am going to purchase for
development just way overproduction out there, I am not going
to pay as much for that.
And then on the other hand, when we saw a lot of the
markets kind of curtail a little bit from purchasing because
they had no idea what the pandemic was going to bring with
stay-at-home orders, they basically stopped production and
these mills actually closed their production and those markets
no longer existed.
But then for building material all of a sudden it just took
off, I am not sure--I am not sure we knew we had that many do-
it-yourselfers at home.
Ms. Kuster. Yes. It certainly--my husband has done a lot of
projects and the price goes up every week when we go back to
the lumberyard.
Mr. Macdonald, the work that you and your colleagues are
doing at the TallWood Design Institute is very exciting and I
am interested in the workforce development components necessary
to support mass timber in tall and intricate building
construction.
How long will it take to complete the Certificate Program
you are rolling out in Oregon, and do you think this could be a
model that could inspire similar programs in community colleges
and schools across the country?
Mr. Macdonald. Thank you, Congresswoman, for the question.
Yes, the work will be completed, largely, over the next 12
months. We are rolling out a combination of e-learning and
blended learning to kind of maximize the access to
manufacturers in remote communities.
A lot of the work that we are doing is focusing on the
digital skills that are missing. If you are a lumber
manufacturing company and you start to manufacture with
something like mass timber, you are designing for customized
products.
Instead of selling in high volume and low complexity, you
are selling customized building components for a specific place
in a specific building.
So a lot of the skills gaps are in things like computer-
aided design, computer numerical control, fabrication, and that
kind of thing. So we do feel it is important to partner with
community colleges to really, say, maximize the access to those
programs in all the communities where they are needed.
Ms. Kuster. Great. Thank you so much. My time is well over.
I yield back.
The Chair. The chair now recognizes Mr. DesJarlais from
Tennessee for 5 minutes.
Mr. DesJarlais. Thank you, Madam Chair. I would like to
pick up where we left off a little bit on lumber prices. What I
am hearing back home from people is, they were going to build a
house, they started building a house, and now the costs have
gone up exponentially. And, Mr. Schienebeck, you touched on
this in your opening testimony.
I guess the question is, these prices are high. The
producers are not getting paid more. The haulers are not
getting paid more. They did get some relief from PPP and that
is good. The big box lumber stores are charging these high
prices.
The question would have answered is who is getting rich off
these high lumber prices.
Mrs. Dauzat. Being a lumber producer, we are a commodity
and the prices of lumber go up and down. I will tell you our
highest average price, weekly average price, was $1,200. We are
now, I am seeing, $350 to $450 average price.
So it has corrected, and I believe we submitted a chart
showing kind of lumber prices over the last 5 or so years and
you can see the anomaly that happened in 2020 and 2021 due to
the demand created by the pandemic. So demand just outpaced
supply and the prices went up----
[The chart referred to is located on p. 26.]
Mr. DesJarlais. Okay. But somebody was making some money
somewhere, whether it is Georgia Pacific, Sierra Pacific. These
companies, their stock has gone up.
We saw a similar phenomenon in the beef industry. The
producers couldn't sell their cattle. The packers were shut
down due to COVID. But the prices we are paying in the grocery
store are high. People are asking who is making money, is it
the grocery stores, is it the big producer.
Somewhere in both these industries it seems like down the
chain people were getting paid by the taxpayer COVID relief,
but somebody is making money somewhere.
And I don't believe it is the producers. I don't believe it
is the haulers. But I do think there are big companies in there
that almost seem to be like price gouging we see sometimes with
gasoline.
Do any of you feel that that is the case?
Mrs. Dauzat. It is a commodity market. It goes up and it
goes down. So, we have lived with this. I have been in this
industry for 23 years.
In 2009, I was selling lumber for under $200 per 1,000 and
losing money every day. It is a supply-and-demand industry. Our
country is not real used to commodity markets and the
volatility they can create.
But what happened was just an extreme demand. Also, due to
depressed housing, we lost so many mills through the Great
Recession and then housing starts have been depressed for
over--it has been over 10 years. So we just had an under supply
of housing on top of this.
Mr. DesJarlais. They are projecting, though, it is going to
take 2 or 3 years to normalize. You say they have already come
down tremendously, but a lot of prognosticators are disagreeing
with that.
But let me move on. And this one, I guess, is for anyone
who wants to answer it. We have heard some talk recently of
potential changes to the inheritance tax, including a recent
proposal from the Administration discussing the possibility of
eliminating the step-up in basis that allows families to leave
certain assets to their heirs and reduces their capital gains
liability. Would anyone here be able to discuss what this would
look like for the timber industry?
Mrs. Dauzat. I can tell you what it would look like for a
family business. We are fourth generation and I am actively
trying to get this business into the fifth generation.
But it takes planning on day one. The minute you have a
child, you have to start planning and start gifting. Because we
are not cash rich. We are not a cash rich industry. We are an
equipment rich industry. We have to invest a lot of money into
our businesses.
And so when someone passes away, you have to have a lot of
life insurance or you have to have gotten it out of your estate
to maintain the business.
Mr. DesJarlais. Okay. Let us just touch briefly on labor
issues as well. Most industries, restaurants, service
industries, cannot get people back to work. There are nine
million available jobs out there. How is this impacting this
industry in terms of being able to get people who were laid off
due to COVID back on the job?
Mrs. Dauzat. Well, in the states we operate in the
unemployment assistance has ended. I think both the last--
Florida ended it at the end of June and Alabama and Mississippi
were a little bit earlier.
We are starting to see people come back into the market
looking for jobs. It was very tough through the last few months
getting employees into the workforce. So with the reduction of
that, we are seeing more people come into the workforce.
Mr. DesJarlais. Though the take on there is that if we end
these additional benefits that we have been seeing around the
country, then we are going to see people go back into the
workforce. But as long as we continue to provide the extra $300
per week, we are going to continue to have the problem.
And, Madam Chair, I went over, too. I am sorry. I yield
back.
The Chair. Thank you, Mr. DesJarlais.
And the chair now recognizes Mr. O'Halleran for 5 minutes.
Mr. O'Halleran. Thank you, Madam Chair and Ranking Member,
for putting on today's hearing.
The COVID-19 pandemic raised unique challenges. I remember
in a number of fires talking to Forest Service people also and
when they were fighting fires, and the challenge that was
presented to them.
And as we have heard today, it will help us better
understand the lasting effects and identity opportunities for
future economic growth. My district includes part of six
National Forests in addition to the Grand Canyon. We are loaded
with pinyon pine. That is the largest pinyon pine forest in the
world, and the wood products industry in my district plays a
key role in forest health and wildfire risk.
In cooperation with the Four Forest Restoration Initiative,
4FRI, the role of low-value small-diameter ponderosa pine
remains a major issue in the success of 4FRI in the
establishment of a sustainable restoration economy. At one time
this year in my district we had 14 fires going at one time,
none of them over 10,000 acres.
So I remain hopeful that we can develop an efficient and
sustainable use of these products to reduce the fire risk in
Arizona's forests. Careful forest management is critical to
ensuring the safety and stability of the region and the wood
products industry in Arizona.
Mr. Macdonald, you mentioned ways in which mass timber
innovations play a role in helping with other key challenges,
such as wildfires and the need for new products to reduce costs
for thinning, a critical element, and reducing fuel loads in
western states like Arizona.
Can you describe the challenges and the opportunities for
creating mass timber products and using underutilized species
like ponderosa pine?
Mr. Macdonald. Thank you, Congressman, for the question.
We are doing a lot of work on ponderosa pine specifically
and what we have found is that the technical characteristics of
the material are such that there is no significant barrier to
their use in mass timber products.
In some cases, for example, they might use them in the
middle layers of a cross-laminated timber panel with stronger
material on the outside.
But, really, the strength characteristics are not as good
as something like Douglas fir. But there are applications in
buildings that have lower loading requirements, for example,
that kind of thing.
So more of a challenge right now looking forward, is
working out the logistical, the business case, the economics of
the supply chain and the logistics.
How do you get that restoration fiber to a sawmill that can
process it, set up to work with sometimes small-diameter
timber, and then to a mass timber processing facility in a way
that is commercially viable?
For sure, any markets we can create for this product will
help to offset the cost of restoration work, which is really
critical to reducing fire risk.
But I think the business case, looking at logistics and
transportation, is the problem that we have to work on next.
Mr. O'Halleran. Thank you, and is there more targeted
support we can provide, we in the government or others, in the
area to make a better impact?
Mr. Macdonald. Yes. The Wood Innovations Program and
programs like that have been very, very useful to a large range
of projects--not just research, but pilot projects.
There is a great example in John Day, Oregon, of the
community working hand-in-hand with a sawmill that was--that
was experiencing a--basically, they ran out of fiber,
traditional fiber, and the community worked with them,
environmentalists worked with them, and came to an
understanding that it is better to use this wood to thin the
forest to save the forest, basically, and protect it than to
try to oppose the use of it.
And so it resulted in the sawmill being able to remain open
and continue to employ people in the community and for this
restoration work to happen in a commercially viable way.
So, the continuation and the continued funding for the Wood
Innovations Program would be very, very useful for that kind of
thing. And if there is ways to provide tax incentives to those
kinds of projects where you are retooling, for example, a
dormant sawmill, trying to bring it back online to----
[The information referred to is located on p. 63.]
Mr. O'Halleran. We will have to talk about it later. We are
over our time.
Madam Chair, I do want to say that I would hope the Forest
Service starts to use the 20 year contracts that we have
allowed them to use now for a couple of years.
They seem to be going slow at getting that up to speed, and
it is critical that this be part of the process.
And I yield back.
The Chair. Thank you, Mr. O'Halleran.
The chair now recognizes Mr. Allen for 5 minutes.
Mr. Allen. Thank you, Chair Spanberger, for having this
hearing today. Although I would tell you, we have been getting
an earful from my timber industry and our home builders for
quite some time, and I wish we could have gotten together
earlier. But we are here and thank you for doing this.
For the last half year, we have been dealing with these
challenges facing our timber industry, and, of course, COVID-19
gets blamed most of the time for it.
The most critical issues the timber industry tells me they
are facing right now are lack of labor, shipping costs,
combined with lack of truck drivers, low prices for uncut
timber and insufficient domestic milling capacity, and the
inflation that is caused by this insufficient milling capacity.
We do know and I had noted, in previous hearings as much as
2 to 3 years ago, that we were seeing a lot of consolidation in
our building industry, particularly from non-U.S. companies and
that was a concern.
And so, Mr. Schienebeck, in your testimony, you highlighted
the slim profit margin that timber harvesters and haulers
receive.
Obviously, you all feed the milling facilities, and why
haven't we investigated why the stump prices are depressed and
then when you get to the mill you get these inflated prices?
Do you not have safeguards in your industry to deal with
something like that or does the government have to get
involved?
Mr. Schienebeck. Well, typically, I guess, I would say a
lot of that gets into antitrust violations. We would be looking
at that as a collective industry.
Typically, it depends on supply-and-demand, and being a
logger myself for 32 years, I went through a lot of those
challenges where I would buy a timber sale.
I knew exactly what my costs were. It is a little bit
different in our industry. It is not like going to Wal-Mart and
you pay whatever price is on the product, right.
You don't go up to the cash register and say, ``Well, I
don't think this is really worth that much money so I am only
going to pay you $10 for this pair of shoes instead of the $15
that you are asking.''
So we know what our costs are. We know exactly what they
are. Most of our folks are very good businessmen. Yet, when we
go into the mill, it is, like, well, we are only going to pay
you what we think we can pay you based on what we are selling
our end-product for, and that is kind of the way it works in
our industry.
So it is very difficult for a group of loggers to get
together and even discuss anything like that. We just don't do
it because antitrust is a very serious violation and we treat
it that way.
Mr. Allen. But you could not, like, demand an investigation
into this, whatever the--again, I don't know who benefited from
the price of lumber when it--but, obviously, it came from--it
wasn't the timber owners.
It was not the loggers and, of course, like I said, with
the mills, we just had this consolidation, which is creating
big, in my opinion, a lack of competitiveness and, certainly,
the Federal Trade Commission needs to look into that issue.
Moving on to the next big disturbing piece of this whole
thing to me is the forest fires, and it is amazing to me that a
developed nation like the United States allows people who know
nothing about our greatest resource, our timber lands, to
control the management of those timber lands and allow these
fires to take place.
And so, Mr. Schienebeck, as a logger, can you give us your
take on what it is going to--I mean, and of course, we
understand this has been going on for 20, 30 years, and we are
way behind in managing.
Do you see a way out on this? How do we fix this and how
can we fix this problem quickly?
Mr. Schienebeck. Well, one thing I think we need to do is
support the industry that we have and also make sure that
everybody has got affordable raw material.
I mean, I--personally, I don't see any good reason why we
should be importing a lot of the lumber products and stuff that
we are when we are growing it right here in this country.
We just don't have access to it a lot of times, and it
needs to be affordable because we do compete globally anymore
if we don't, and we have other industries that we could be
supporting--biofuel industry.
I was recently passing through the central United States
and saw, I don't know, hundreds of windmill towers. I would
rather see a growing forest there that is being harvested
sustainably and having that go into energy production in
biofuels or wood pellets or whatever they are.
But the biomass industry just hasn't taken off because
there are a lot of subsidies for other types of energy that are
out there, and that industry is not included in that.
Mr. Allen. Okay.
Mr. Schienebeck. But, if we really support a good
manufacturing base that we will be able to--I mean, we got to
have a place to go with the wood. We are growing it.
Mr. Allen. Right.
Mr. Schienebeck. We harvest it----
Mr. Allen. I am sorry, but I am out of time and the Chair
is looking at me so I better yield back here.
But thank you. I think you are right on and thank you for
your input, and thank you, Madam Chair, for this hearing.
The Chair. Thank you very much, Mr. Allen, and I am far
more comfortable tapping the gavel at my colleagues who should
be looking at that timer than I am at our guests. But, I was
giving Mr. Allen an eye.
Thank you very much for that very good answer to the
question, Mr. Schienebeck.
The chair now recognizes Mr. Panetta for 5 minutes.
Mr. Panetta. Great. Thank you, Madam Chair. I appreciate
this opportunity and, obviously, my friend, Ranking Member
LaMalfa, as well.
Mr. Schienebeck, let me follow up on that question real
quick that my friend from Georgia asked in regards to not
necessarily suppression of wildfires, which we are doing,
unfortunately, plenty of, not just this year but a few years
back we have been doing that, especially out on the West Coast
where I come from there in California.
I have to say, what about forest management but, obviously,
level-headed reasonable forest management in which we can
reduce the potential for wildfires, things like including
removing dead and dying trees, using controlled burns to reduce
fuel in larger fires and removing invasive and nonnative
species to create habitat that is better suited for wildlife
and native species.
What about if we did something where if we had
reforestation projects that would be for at least 100,000
acres? What if we did something like my Wildfire Emergency Act
(H.R. 3534) that authorizes $250 million to do something like
this?
Mr. Schienebeck, do you think projects of this nature and
scope that big are needed to restore our forests that face the
threats of climate change and the effects of climate change
that we are seeing right now, even out here in Washington D.C.
with the haze that we are seeing from the smoke of the
wildfires that are out West?
Mr. Schienebeck. Yes, I think that would be very helpful. I
think it is a helpful tool, number one, for the agencies to be
going and doing their EISs and their NEPA documents based on
those larger acreages and kind of being a bit more inclusive on
that, and then breaking those down into smaller affordable
timber sales that loggers and companies can afford to buy.
When you look at it kind of across the landscape it is more
efficient. Economically, it just makes more sense to do it that
way on those larger projects like that. I think that goes a
long ways with climate change. You are looking at smoke there.
Well, we are getting smoke here in Rhinelander, Wisconsin,
from Canada right now. There is a haze on the road and that is
what the newscasters tell us that it is coming from. So, it is
out there and that is not healthy either. So I think that would
go a long ways in helping that.
Mr. Panetta. Thank you. And another bill I have called the
REPLANT Act (H.R. 2049), which addresses the important issue,
the reforestation and, basically, dealing with the
Reforestation Trust Fund, which I am sure you are familiar
with.
Right now, as you know, Mr. Schienebeck, that there is a
cap at $30 million and, basically, it is finance. That trust
fund to reforest is financed through tariffs collected on wood
products but it is capped at $30 million, and what my bill
would do, excuse me, would, basically, take that cap off.
Would you think something like that would help, obviously,
one, reforestation projects, but also lead to more resilient
and healthier forests?
Mr. Schienebeck. Yes, it would. I mean, in today's world,
$30 million is not a lot of money. Probably look pretty good in
our retirement accounts but, in reality, it is not a lot of
money.
And I think that if you would allow, because a lot of our
forests regenerate naturally but there is a lot of it that
needs to be replanted from storms, that type of thing.
And for us, we have seen some of those in industry shut
down and that really stifles their ability to research better
trees that can perhaps resist emerald ash borer, oak wilt, some
of those types of things.
So I think that funding would go a long ways to help those
nurseries develop trees that are more resilient to those types
of things, which in turn, would be planted and really help to
sequester carbon.
Mr. Panetta. And part of that is nursery capacity as well.
Can you speak to the importance of shoring up the nursery
capacity for these types of products?
Mr. Schienebeck. Yes, it has been, so we have had a few
that have shut down in Wisconsin that the agency had, that the
Department of Natural Resources had and it is, so far they have
been--and it switched a little bit.
A lot of folks have been going to containerized trees,
which has taken more time and they feel like they are better
stock to plant.
But having accessible and, again, affordable stock to
replant is very important. So just like everything else, if you
reduce the amount that is available and you reduce the places
that you can get it from, transportation costs go up if you
have to bring them farther, yes, it would definitely help if
there was a better, more available nursery capacity.
Mr. Panetta. Great. Great. Thank you, Mr. Schienebeck. My
time is up. Thank you, and I thank all the witnesses.
And, Madam Chair, thank you. I yield back. Excellent job,
Abby. Thank you.
The Chair. Thank you very much. The chair now recognizes
Mr. Johnson from South Dakota.
Mr. Johnson. Thank you, Madam Chair. My questions will be
for Mr. Imbergamo and, obviously, there are lots of regional
differences. But, we want to be concerned anytime you have a
forest inventory that is higher than the mill capacity. We see
that in a lot of places and, frankly, in the Black Hills of
South Dakota we are concerned about getting there.
We want to do what we can to protect that mill capacity
because we know that that processing capacity is incredibly
important from a healthy forest perspective, from a safe forest
perspective, and also just making sure we are in a position to
develop innovative wood products. We have to have that capacity
out there.
So this really builds, sir, on some of the questions my
colleagues have asked. But what should we be doing in places
like the Black Hills of South Dakota to make sure that we are
providing the predictability and the certainty that that
industry needs to make the long-term investments that are going
to keep them around because we want that capacity 10 and 20 and
30 years from now because we want healthy forests 10 and 20 and
30 years from now?
Mr. Imbergamo. Yes. Thanks for the question.
I guess the first step is not to have a sudden and drastic
decline in a Timber Sale Program that has really done a good
job of keeping the Black Hills from being entirely damaged or
destroyed by the mountain pine beetle.
They had a significant mountain pine beetle outbreak. The
presence of those three mills on that forest helped the Forest
Service limit its spread and they helped capture that value and
they put that carbon into long-lasting wood products while
providing jobs in small communities. I don't need to tell you.
You know these communities.
The northern half of the Black Hills is overstocked and
really needs both pre-commercial and commercial thinning, and
in many cases, it is like a lot of forests in the West. Before
you can say if we prescribe burn, you have to reduce the stand
density.
And, right now that forest seems to have backed itself into
a very bad position where it is unclear how much timber they
are going to be able to get out in the next 2 years.
And if that further compromises the wood value chain there,
the danger of South Dakota becoming somewhat like Mr.
O'Halleran's district where you have a substantial ponderosa
pine forest and just no ability to get the management done is
very, very real and very immediate.
Certainly, financial support to the agency to conduct NEPA.
But, some clear direction to use some of the authorities,
again, that this Committee was the author of to get projects
through the pipeline and out as timber sales as quickly as
possible is what is going to enable you to manage that northern
half of the Hills and avoid a repeat of the pine beetle
outbreak that happened on the southern side of the Hills.
Mr. Johnson. And so we want to make sure that they get the
proper staffing needed to conduct these sales, right?
Mr. Imbergamo. Right.
Mr. Johnson. I mean, is there a role for expanded CE
authority? I mean, the last farm bill did a lot on that front,
but is there room for improvement?
Mr. Imbergamo. Sure. I mean, the 3,000 acre CEs that the
farm bill created in 2014 and then expanded their use to some
other uses in 2018 is a proven method of getting things done.
The question is, is it equal to the challenge that we are
seeing--is 3,000 acres enough.
And, I think that we are seeing, again, in a lot of cases
that it is not enough. It is not enough to get substantial
projects that will keep the logging infrastructure working and
feed the mills.
And, again, these things do not apply in the 50 percent of
the National Forest System that is in either wilderness or
roadless areas. This is not about opening acres that are not
available for management in current forest plans.
This is about managing the portion of the landscape that we
are supposed to be managing.
Mr. Johnson. Do we--I mean, in the Black Hills--and I
understand. I mean, the scientists, they want to have a good
data-driven process and we want them to have a good data-driven
process.
I have, at times, had concerns that when they look at the
inventory they are only looking at areas that have been
historically logged, and I wonder if we could be more
innovative in putting roads to some places that could be logged
that are overstocked. Am I on the right track there?
Mr. Imbergamo. I think you are. As I understand it, the
general technical report you are referring to only looked at a
subset of about 700,000 acres on a 1.2 million acre National
Forest.
And, again, they are--that I believe that is just the
suited base, which is--in every National Forest they are
supposed to identify acres that are suited for timber
production. It doesn't mean that harvest is not allowed on
other acres and there are other acres where--that are or should
be open to management.
My understanding is the Hills is one of the best roaded
forest. Has a very extensive road network. So, getting to those
other acres and making sure that the assumptions behind the GTR
are correct is critically important, and that the existence of
that report can't lead to a rapid changing direction on the
forest without causing a lot of havoc locally.
Mr. Johnson. Thank you very much, sir.
And thank you for your indulgence, Madam Chair.
The Chair. Thank you very much, Mr. Johnson.
I now recognize myself for 5 minutes.
And to our witnesses, thank you for a wonderful discussion.
I was interested in listening to my colleagues ask their
questions first because I really wanted to see where this
conversation would go.
It has been informative, instructive, and I think so very
interesting, and as follow-up to some of what has already been
asked, I would like to begin with a question for Mr. Macdonald.
So as we look forward to the opportunities that exist for
wood products to play a significant role in the future of
America's infrastructure, you mentioned briefly in response to
Ms. Pingree some of what has happened in your native Canada in
terms of incentives or legislation that has helped pave the way
for innovative wood products.
But I was wondering if you could sort of take us back a
step. You mentioned concrete. You mentioned cross-laminated
timber. Could you speak, just very briefly, to the structural
and climate benefits of using these products and why they are
of such great value?
Mr. Macdonald. Yes. Thank you, Madam Chair, for the
question.
The Committee is very well informed on mass timber in
general and some of the benefits of being able to sequester
carbon for--in one with products like buildings, the ability to
manufacture buildings with less embodied energy than other more
energy-intensive materials like concrete and steel.
And rapid construction, there are, of course, economic
benefits, too. But, and I think we are, there are direct links
between creating markets for these kinds of wood products and
keeping forests as forests.
The Chair. Yes.
Mr. Macdonald. If you have robust demand for good products
it is the best way to ensure that forests stay as forests.
The Chair. And, Mr. Macdonald, and certainly, the concept
of nanocellulose and innovations in concrete are something that
is of great interest to me and something that I, frankly, talk
about with my constituents when we look at where are some
climate-friendly solutions that we can bring to the
infrastructure investments that we are making in our country.
So that is why I asked the question because it is an
important one for anyone at home watching the Conservation and
Forestry Subcommittee hearing to have a bit more information
and background on that.
And I would stop there and say from the perspectives of a
sawmill operator or from the logging perspective, Mr.
Schienebeck or Mrs. Dauzat, is there anything you would add
about where you see or where you are hopeful about the
innovative wood products and new technologies that continue to
be studied by people like Mr. Macdonald at his university?
Mrs. Dauzat. In the South, we have a very healthy
byproducts market in Florida. Everybody is always surprised we
do that.
But we have paper mills and other things and--but in
Mississippi it is a struggle with byproducts and I know we have
heard that repeated over and over. Alabama is okay. But
anything that can come out and build that byproducts market so
that the system can be whole----
The Chair. And, Mrs. Dauzat, can I--let me ask you a
question. Are the byproducts market difficulties that you have
had is that just not generating enough interest?
Is that the actual supply chain for the production of those
byproducts? Where are the challenges that you are seeing there?
Mrs. Dauzat. Well, it is the markets for the byproducts. So
in Florida, we have paper mills. You have WestRock in Panama
City.
You have GD in several locations in Georgia and in Florida,
and also International Paper. So we have a good market for our
pulpwood, our chips. We also have a pellet mill down the road
that also purchases byproducts.
In Mississippi the markets are just very limited, and what
we are doing at our Brookhaven mill we are actually putting in
a containerized dry shavings pellet plant where the pellets
will be exported, and we will be buying our own dry shavings
but we are also going to have a market for other people to sell
their dry shavings to us.
So we are actively looking for ways to support the
byproducts market in the locations where it is struggling.
The Chair. And, ultimately, is that an additional revenue
stream for you?
Mrs. Dauzat. It is.
The Chair. Excellent. Excellent.
Well, I want to thank our witnesses. I want to abide my
time, and I am going to yield back to myself and recognize Mrs.
Miller of Illinois.
[No response.]
The Chair. And I am not seeing Mrs. Miller on the screen so
I am going to go to Mr. Moore of Alabama.
Mr. Moore. Thank you, Madam Chair, and I appreciate you
holding this hearing today.
First, let me say thanks to all our witnesses for
testifying at the Subcommittee today. In Alabama, we have about
23 million acres of timberland, and that is large in a lot of
states, if you know about the size of some of these states.
But, well, basically, Mrs. Dauzat, I want to ask you a
question. I appreciate, by the way, Rex Lumber investing in the
Second Congressional District. I have heard great things about
the mill. I have been to a couple of them. I want to get up and
see yours.
But I want to ask a specific question, if you don't mind.
You outlined some obstacles to expanding your mills and
facilities to heavy and prolonged regulatory burdens.
Would you go into a little more detail on regulatory
obstacles that stand in your way? And what can Congress do to
remove the excessive red tape to help streamline practices at
the Federal level to assist your industry?
Mrs. Dauzat. Well, the permitting process always takes at
minimum 4 to 6 months. In the South, we are lucky. I think we,
generally, keep it into that 4 to 6 month range. But anything
that would streamline that process, and we want to protect our
water and air quality where we are, it is so precious to all of
us.
But the process is onerous. It is expensive. It requires a
lot of people gathering a lot of information, and just anything
we could do to streamline that process would help mills get
started up more quickly. Did that answer your--and thank you,
and you are welcome anytime at the mill as well.
[Laughter.]
Mr. Moore. Thank you so much. So do you think there is some
probably--are there mills on the drawing board right now in the
area maybe that are coming in--they will be coming into
production anytime soon provided we can help you get the
regulatory restrictions out of the way?
Mrs. Dauzat. Yes. Mississippi has three Greenville mills
announced. There is another one announced in Louisiana. These
are all in the last, I would say, year, year and a half. There
are additional mills that are under construction right now. So
we do have a lot of supply coming online.
Mr. Moore. Well, that is fantastic. Hopefully, we can find
labor. I have been critical of sending mail, checks to
everybody's mailboxes. I hate it when government dollars
compete against the private-sector dollars for the labor force.
So anyway, hopefully some of that, like you said earlier,
our states are starting to clear that up. So with any luck, we
will get people back to work.
But thank you, and we will set something up. I look forward
to coming to the mill and seeing it sometime. Thank you.
And, Madam Chair, with that I will yield back.
Mrs. Dauzat. Thank you.
The Chair. I appreciate that efficiency, Mr. Moore.
Next, I recognize Mr. Kelly of Mississippi.
[No response.]
The Chair. No. Mr. Kelly of Mississippi is not present at
this time. And I now see Ms. Schrier has returned.
So, Ms. Schrier, we are going to recognize you for 5
minutes. Thank you.
Ms. Schrier. Thank you, Madam Chair, and I want to thank
you for holding this hearing. This is such a vital issue from
my district, and I have a ton to talk and ask about.
So I will be submitting more questions to the record about
uses of wood products, the jobs the timber industry creates,
and small-diameter mills.
Last year, a report from the Washington Department of
Natural Resources identified 3 million acres of forestlands in
my home State of Washington in need of restoration. A
significant percentage of those acres are in central
Washington, including about 700,000 acres in the Okanogan-
Wenatchee National Forest in my district.
A major challenge for removing fuels from overcrowded
National Forest lands is that central Washington has lost the
sawmill and contractor infrastructure needed to make forest
health treatments feasible, both economically and ecologically.
And as a result, public and private land owners must truck
saw logs over 150 miles away from central Washington to the
nearest mills at high costs that dramatically reduce revenue.
It just doesn't pencil out.
Developing a small-diameter sawmill in Chelan County
presents a unique opportunity to create family-wage jobs, make
our forests more resilient to catastrophic wildfire, support
the wood products industry, and reduce housing prices.
Since approximately 85 percent of Chelan County is National
Forest lands, a mill would generate revenue for landowners as
well as for the Okanogan-Wenatchee Forest to pay for critical
forest restoration needs including the reduction of fire risk.
There is substantial momentum and desire locally and
regionally to invest in this work. The effort to bring a
sawmill to central Washington has the support of the community,
local, state, and Federal Government officials as well as
environmental groups.
And not only will this effort make forest restoration more
cost effective but it will also become profitable, benefiting
state, Tribal, and private lands that are currently too far
from markets to be economically viable.
Through active restoration and thinning we can make our
forests more resilient to drought, climate change, and
pestilence, in addition to mechanical thinning, makes
prescribed burns more effective and renders forests less
vulnerable.
So I have a question for Mrs. Dauzat. In your experience,
what are the impediments to the development of new lumber mills
on or near Federal lands and how can Congress and this
Committee help overcome those obstacles?
Mrs. Dauzat. Well, we have a very personal story with the
National Forest.
In the South, we have a large majority of private
landowners, but when my dad and grandfather sold the mill in
Graceville and moved to Crystal, Florida, which is right by the
Apalachicola National Forest, we were guaranteed that we would
have a supply of timber for the life of the mill.
So we are in 2021. That was in 1981. They did not honor
that promise, and so we have been struggling with timber out of
the Apalachicola National Forest since the late 1990s, early
2000.
With Hurricane Michael in 2018, our timber base was
decimated around the mill. If you look at the path of where
Bristol is, it, basically, wrapped around the mill.
It was necessary--it is required that the National Forests
step up and sell more timber out of the Apalachicola, which
they have and I am very grateful for that.
But it is the long-term solution for us to bridge the gap
in that very rural community so land owners can get their land
cleaned up, replanted, and that is starting to happen as the
funds have started flowing out over the last year for cleanup
and replanting.
So the impediment is you can't--you just can't depend on
the supply, I guess, to put it simply.
Ms. Schrier. It sounds like increasing the requirement to
harvest could guarantee that supply and make a mill financially
viable. Make it a sure thing.
Mrs. Dauzat. Correct.
Ms. Schrier. Okay. Thank you. I also wanted to highlight an
example from my district of what can be done with wood
byproducts. There is a company called Forest Concepts. It is a
wood product company based in Auburn, Washington.
I had the opportunity to go visit them and learn about some
of the innovative ways they use wood products. One example is
wood straw, which they can provide in bales, like bales of hay,
but this is wood.
It is their signature product, and after a fire this
innovative product can be used to prevent landslides and to
promote the growth of new vegetation, and support for the wood
products industry would be tremendous, both with small-diameter
mills and also with looking at these kind of unique products
that can really help us get over forest fires afterwards. It
helps everyone.
So I look forward to working with the Administration,
Forest Service, and my colleagues on this Committee to support
the wood products industry.
And I yield back. Thank you.
The Chair. Thank you very much.
I would like to thank our witnesses for being with us
today. Ranking Member LaMalfa and I would each like to ask an
additional question as we have at this point recognized all of
the other Members of the Committee.
So I am going to yield to Mr. LaMalfa for his 5 minutes of
questions.
Mr. LaMalfa. Thank you again. I appreciate, again, the line
of questions. Ms. Schrier's questions are just right up the
alley I was looking at, too.
For Mrs. Dauzat, now, could we elaborate a little bit more,
we have opportunities to use this forest biomass in not just
maybe the typical way of timber, lumber products, and paper
products but you were talking about the needs for the
facilities to processes this and we were talking about logging
and long trucking distances, as Ms. Schrier was saying. The
transportation becomes a real impediment as well.
So can you elaborate a little bit more on the possibilities
of having more smaller mills, or in my area where so much is on
fire right now we are going to have so much material either
left behind from a logging operation, the slash and such, or
this salvaged material?
We need to be converting this into electrical power. We
need to make power plants. How practical would it be to have
more smaller power plants spread around so that we are having
the zone from which you would truck from be a little more
closer, a little more reasonable?
I have at least one plant in my district that runs into
issues with the proximity towards the material, the forest
material that would be used in the plant for making
electricity.
Could you elaborate a little bit on that, what we need to
be focusing on and can we have more plants maybe a little
smaller in size to meet a better regional need?
Mrs. Dauzat. Well, in the sawmill smaller is not better,
usually. Usually, higher volume drives down your manufacturing
costs and allows you to be profitable--hopefully, profitable in
most scenarios.
2008, 2009, 2010, and 2011 were not a time period where--it
was difficult time period. As far as you know, I will relate it
to my experience after Hurricane Michael because it is a lot of
timber left on the ground.
And so what our mills did is went into salvage mode, and
WestRock and Georgia Pacific, all the paper mills, Enviva
pellet mill, we all switched to just trying to salvage the
timber on the ground.
Now, in the South, we have a life for--a log about 9 months
in our weather, unless you can get them underwater, which is
what we were trying frantically to do.
We did not have that infrastructure in place, and it is
called a wet log yard and, basically, you stack the logs under
water and you can store them from anywhere 18 months to 2
years, depending on size of the log.
So we were not able to do that. We do have that
infrastructure in place now should another hurricane come in
and destroy more timber, which that would be a catastrophic
event for us at this point.
But I do think we all need to do more planning on what can
be rapid response to these devastating events. I don't know if
western logs can go under a wet log yard and be stored for a
longer period.
Your climate is much different from ours, where we are hot
and humid most of the summer and our lumber starts to--our logs
start decaying pretty quickly if they are not preserved
properly.
But that is where we are--our solution has fallen is with
these wet log yards where we can store a decent amount of
timber underwater to salvage them.
Mr. LaMalfa. You expressed frustration with the permitting
process for any of these milling type facilities, and so do you
think we would have a little better luck with a right size one?
You have to have your economies-of-scale. That makes
perfect sense on a size of a mill.
But, is there a possibility the permitting, licensing, all
those things could go easier if we are--we are spreading them
out a little bit more and then sizing them a little more
regionally?
Mrs. Dauzat. Yes, and just the time. If you are going to
build something new, it is just the time-frame of building
something new as well that hinders when you are trying to
respond to a serious event.
Mr. LaMalfa. What should Congress be doing to help this?
Because we need the facilities. We need somebody--it isn't lack
of material.
It is not lack of wood product and it is not lack of
willing people to fall it and haul it. But what do you--what do
we--could really put our finger on here to help----
Mrs. Dauzat. If we could focus on the General Services
Administration and DOD utilizing mass timber. Just anything
that utilizes wood in every form, and then some of these other
side industries follow.
But I think that is what Congress can do is support that
idea of really getting mass timber out there in the market.
Mr. LaMalfa. Thank you.
Madam Chair, I yield back.
The Chair. Thank you very much, Mr. LaMalfa. I now
recognize myself for 5 minutes for additional questions.
This conversation, again, has just been fascinating and I
really thank our witnesses for your time here. I think we have
heard you all loud and clear, and Mr. Macdonald, and, I
believe, our other witnesses spoke to the need to have end-
users for these technologies.
Mrs. Dauzat, I believe you said it is important to invest
in the research, but we do need the end-users. So I hear you
loud and clear on the references to DOD and GSA in places where
we can incentivize or prioritize investments in our own
domestic product within the wood product industry. And I
believe, Mr. Macdonald, you spoke of that and included it in
your written testimony as well.
I would like to ask a question related to forest management
and additional wood products that, Mr. Macdonald, some of it is
in your written testimony and you spoke to some of it in your
opening statement, mentioning the innovative products and
projects, excuse me, in Oregon where you are using
underutilized species in tackling housing affordability crisis
as one piece. But you also talk about how forest lands and the
restoration fiber can reduce fire risks.
And so could you speak to that a bit more as we see fires
raging on the West Coast, we talk about forest management?
What opportunity exists in our forests that could
simultaneously help us mitigate and address or at least reduce
to some degree the risk of large-scale forest fires but also
create new revenue streams, new industries, and, frankly, good
products from a sustainability, resiliency, and climate change
perspective?
Mr. Macdonald. Thank you for the question. I think putting
together a lot of what we have talked about already today.
There are enormous opportunities to use restoration timber. We
still need to work on, as I say, the logistics, the economics
of getting that to a processing facility.
But there is a large project being put together in Oregon
right now, and there is a lot of moving pieces but,
essentially, it is to take restoration fiber and to process
that in high volumes and that low unit cost to create kit-of-
parts housing that I kind of alluded to earlier where we are
really driving up the cost of each unit of housing by
automation, using automation in the factory that would assemble
these modules or these prefabricated systems.
So that by doing that, we kind of close the loop of
reducing fire risk, using this fiber for profitable use, and
creating jobs in rural communities in the mass timber
facilities and the sawmills, and also creating urban jobs in
prefabrication factory, and designers and architects as well.
The Chair. Thank you very much.
Mr. Imbergamo, you had mentioned in your statement the
differences, I believe it was, between the utilization of post-
disaster materials as a result of hurricanes and natural
disasters in the South versus what we are seeing in areas
ravaged by forest fires.
Could you speak to that a bit more and where there is areas
of opportunity that we could potentially be seizing on, and
what some of the hindrances might be for that real difference
that we see between the two regions?
Mr. Imbergamo. Sure. Yes.
I mean, as Caroline said, in the humid and warm South logs
don't last very long. We saw some of my member companies in the
central Rockies were conducting salvage operations 3 or 4 or
even 5 years after we had seen mortality from pine beetles. In
arid climates, the wood doesn't decay quite as fast.
Fire salvage, it kind of depends on where you are. The
ability to capture value can extend for up to 2, maybe 3 years.
The thing about salvage is that it is, again, I believe we need
to do more of it. Again, this is not opening areas that are not
currently available to harvest. But we do need to do more of it
on the general forest landscape.
But again, if--the trick to attracting investment for--as a
forest land base is to be a reliable supplier of wood fiber.
And, as Caroline said, we need the end-use market. We also need
some relative certainty of supply.
And what we have seen with the Forest Service over the
years in quite a number of places is they have tried to attract
new investment to take advantage of the--to get the thinning
down to prevent the need to do salvage and then they failed to
deliver the logs that were needed to keep those investments in
place.
Some of my California companies, for instance, invested in
small log lines when the Forest Service said they were going to
move away from larger-diameter material, and then those forests
tried to get sales up and they weren't able to get them up, and
those investments, which are substantial, wound up being just
stranded assets and had to be closed and broken up.
So reliably providing a fiber supply from the general
forest landscape is what is going to enable you to do the
thinning to reduce the fire danger and have to mill capacity
there to get the salvage done while the wood is still viable.
The Chair. Thank you very much.
Before we adjourn today, I would like to invite the Ranking
Member to share any closing comments that he may have.
Mr. LaMalfa. Thank you again, Madam Chair, for the hearing
and for this opportunity to talk about something that has been
a bit of a mystery for people on lumber, wood supply, and how
that ties into forest management and the fire season that we
can't ignore either.
As far as solutions here, there are a lot of people on this
panel that could be very helpful for us long-term, and in the
industry to help us point in the right direction.
We really just have to focus on getting out of our own
tracks and having an atmosphere where the type of harvest we
need and the type of processing, a streamlined process to get
these products to be produced domestically, whatever it takes,
and I am so focused, in our western states and California,
where I am from, that the overload of wood inventory we have we
have to accelerate rapidly if we don't want to have the fire
situation we have year after year.
And so everything has to be on the table. We have to have a
permit process that gets a lot more salvage wood out a lot
sooner so we can recover the value of that, and the green
harvest.
And we are not talking about--we are not talking about
clear cutting every tree, and that is the fear that is often
struck in media or in the environmental world there. That is
not what we are after.
It is not about big timber and big profit and all that.
There is a responsible way to manage these lands that does take
timber, but it leaves it behind, too. It leaves good habitat
behind.
We have to have everything on the table as far as the
private-sector helping with our Federal lands and even things
on the table like being able to export more. Whether it is a
finished product or saw logs, we have a lot of catching up to
do.
So if we are ever going to catch up, we have to have open
mind on how all these things can be part of the solution.
And so I look forward to this conversation, going forward,
and, again, appreciate Madam Chair's partnership on this, and I
yield back.
The Chair. Thank you very much, Mr. LaMalfa.
I would like to thank our witnesses for their testimony
today. It has been incredibly helpful to hear firsthand how you
all have managed the challenges of the past year, how you view
the challenges of the past year and a half, and how you view
the future and potential areas for us to increase our
resiliency, assist the industry, and ensure that it can thrive
long term.
I think the conversation has moved to various different
topics throughout the questions. Certainly, the challenges that
we see with, perhaps, insufficient number of sawmills, some of
the challenges that sawmill operators have faced.
Mrs. Dauzat, when you mentioned the 36 closures of sawmills
across the South that is, certainly, something that I have
heard about from members of the Virginia's Loggers Association,
the challenges that that creates for the larger supply chain.
And Mr. Macdonald's comments and in his written testimony
there is discussion of rail infrastructure investments that we
could be making to help mitigate some of the supply chain
constraints that we see in the lumber industry.
And I think that is an important element of the
conversation and, certainly, something that I think we are all
taking back as we think through additional legislation in the
future.
We have heard you all loud and clear in the ways that we
can play a role in helping to inspire, create, and normalize
the industry of innovative wood products and byproducts related
to the timber industry and, certainly, the job opportunities
that exist but the need for workforce training there.
We are at a critical juncture. We have the ability to apply
some of the lessons that we have learned from the pandemic the
past year and a half, but also ensure that the steps we are
taking forward as a nation as we consider investments in
infrastructure and other Federal investments and decisions are
informed by the research, the development, and the future of
the timber industry.
We have the opportunity to strengthen the wood products
industry as Congress considers our funding choices and our
decisions related to infrastructure, how we can be climate-
smart on these areas as well, and I do look forward to working
with all of you as well as Ranking Member LaMalfa and my
colleagues from the Subcommittee into the future.
Again, I thank you for your time, for all that you have
provided to this important conversation and all of the work
that you do in this industry.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
witnesses to any question posed by a Member.
This hearing of the Subcommittee on Conservation and
Forestry is now adjourned.
[Whereupon, at 12:02 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Hon. Abigail Davis Spanberger, a Representative
in Congress from Virginia; on Behalf of National Lumber and Building
Material Dealers Association
The National Lumber and Building Material Dealers Association
(NLBMDA) would like to thank the House Committee on Agriculture's
Subcommittee on Conservation and Forestry for the opportunity to
provide written comments regarding the hearing titled, ``The U.S. Wood
Products Industry: Facilitating the Post COVID-19 Recovery'' on July
21, 2021.
NLBMDA with its state and regional association partners represent
over 6,000 building material retail locations nationwide who operate
single and multiple lumber yards and component plants serving
homebuilders, subcontractors, general contractors, and consumers in the
new construction, repair and remodeling of residential and light
commercial structures. The majority of NLBMDA members are small,
family-owned lumber and building material (LBM) operations, in many
instances providing lumber products and building material in the same
communities for generations.
Like many small businesses, lumber and building material dealers
were deeply impacted by the economic downturn caused by the COVID-19
pandemic in 2020 and subsequent supply chain disruptions that are still
affecting our industry today. We write today to highlight solutions
that the House Committee on Agriculture and Congress should consider as
you examine concerns involving the wood product supply chain and forest
product industry. NLBMDA believes these solutions will strengthen the
wood product supply chain moving forward and provide necessary relief
to businesses in our industry as they continue to recover from the
COVID-19 pandemic.
H.R. 4302--Active Forest Management, Wildfire Prevention and Community
Protection Act
Sustaining an efficient wood supply chain process is crucial for
the viability of the forest products industry and the overall health of
public and private forestlands in the United States. NLBMDA supports
legislation recently introduced in the House of Representatives and
referred to the House Committee on Agriculture which would take
proactive and meaningful actions to improve the health of our nation's
forests. NLBMDA calls on Congress to pass H.R. 4302, the Active Forest
Management, Wildfire Prevention and Community Protection Act, which
would authorize active management decisions for targeted forestry
management actions, remove bark beetle-killed trees, protect property,
stop frivolous litigation, provide a local source of revenue for
counties, and prevent catastrophic wildfires.
As of the end of last month, over 40 large wildfires were burning
more than 660,000 acres throughout the country, preventing travel,
hindering business, causing property damage, and creating poor air
quality for citizens. In addition, the Western U.S. is still afflicted
by a bark beetle epidemic that attacks healthy trees and creates more
fuel for these wildfires. The bark beetle epidemic currently affects
all eight National Forests in the Rocky Mountain Region. Bark beetles
have destroyed more than 45 million acres of forest including 15
million acres of Forest Service land.\1\
---------------------------------------------------------------------------
\1\ https://boebert.house.gov/media/press-releases/rep-boebert-
introduces-comprehensive-bill-prevent-catastrophic-wildfires.
Editor's note: the referenced press release is retained in
Committee file.
---------------------------------------------------------------------------
The Active Forest Management, Wildfire Prevention and Community
Protection Act would tackle these challenges head on and implement
bipartisan reforms to support the health of our forests and strengthen
the wood product supply chain. Importantly, the bill is fully paid for
and will bring in billions to the U.S. Treasury.
Softwood Lumber Agreement
NLBMDA supports the renewal of a Softwood Lumber Agreement (SLA)
with Canada and believes a resolution to the softwood lumber dispute
will contribute much needed certainty in the lumber market moving
forward. The most recent SLA expired on October 12, 2015 and has not
been renewed. Under the previous agreement, Canadian softwood lumber
shipped to the United States was subject to export charges and quota
limitations when the price of U.S. softwood products fell below a
certain level. From 2006-2015, this agreement helped foster a period of
stability in the U.S. lumber market and strengthened our relationship
with a critical North American trade partner.
Since the agreement's expiration in 2015, the U.S. and Canada have
been involved in a contentious trade dispute that has resulted in the
U.S. placing both countervailing duties and antidumping duties on
Canadian softwood lumber imports. These duties, while not the sole
cause, have contributed to price volatility for U.S. small businesses
and consumers that rely on a supplemental steady supply of softwood
lumber from Canada when domestic production cannot meet demand.
The impact of these duties is particularly urgent as our economy
experiences lumber price volatility and supply shortages which
threatens the availability of affordable housing for millions of
Americans. This volatility, when coupled with other factors, has caused
the price of an average new single-family home to increase by more than
$30,000.\2\
---------------------------------------------------------------------------
\2\ https://www.nahb.org/news-and-economics/housing-economics/
national-statistics/framing-lumber-prices.
---------------------------------------------------------------------------
While the SLA is not the ultimate solution to price volatility and
supply chain disruptions, reenactment of the agreement with beneficial
terms for both domestic producers and consumers down the supply chain
will contribute to needed stability in the marketplace. Due to these
pressing concerns, NLBMDA believes that Members of the House Committee
on Agriculture should urge the Biden Administration to re-enter SLA
negotiations with Canada and continue to follow-up with the
Administration as necessary in the coming months.
Labor Shortages and Workforce Development
Labor shortages continue to pose a very real risk to the long-term
health of the lumber and building material dealer industry and wood
product supply chain. The impacts of this shortage are affecting
stakeholders ranging from small, family-owned businesses to large
corporations. The lack of labor throughout the industry could have dire
implications for the entire supply chain and have a negative impact on
meeting the nation's demand for wood and paper products.
NLBMDA calls on Congress to support the following measures to help
improve labor and workforce development challenges within wood product
supply chain:
Oppose the extension of COVID-19 supplemental unemployment
benefits. While LBM dealers support reasonable policies to aid
workers in times of economic need, NLBMDA opposes any further
extension of the COVID-19 supplemental unemployment insurance
(UI) program which has been in place since the start of the
pandemic. According to the Bureau of Labor Statistics, the U.S.
economy continues to see a record number of job openings \3\
and NLBMDA members have personally experienced the impact that
these supplemental benefits have had on employers' ability to
find and hire qualified workers. Due to the record number of
job vacancies combined with increased vaccination rates, NLBMDA
believes it is appropriate for Congress to wind down the
supplemental UI program and reject any further extensions.
---------------------------------------------------------------------------
\3\ https://www.bls.gov/news.release/jolts.nr0.htm.
Editor's note: the referenced news release is retained in Committee
file.
Pass the Future Logging Careers Act (H.R. 2727/S. 1262) to
help facilitate adequate successional planning for many multi-
generational family-owned businesses common in the forest
---------------------------------------------------------------------------
products supply chain.
Pass the DRIVE Safe Act (H.R. 1745/S. 659) which would
establish an apprenticeship program that would allow for the
legal operation of a commercial motor vehicle in interstate
commerce by CDL holders under the age of 21.
Pass the Safe Routes Act (H.R. 2213) which would allow
logging trucks that meet state-determined legal requirements to
travel up to 150 air miles on the Federal Interstate Highway
System.
Pass the Promoting Women in Trucking Workforce Act (H.R.
1341) which would require the Department of Transportation to
establish an advisory board charged with identifying barriers
to entry for women in the trucking industry and help identify
and establish training and mentorship programs for women.
Support technical and vocational schools and apprenticeship
efforts in order to address the workforce skills gap.
Thank you for the opportunity to submit comments on these critical
issues impacting the lumber and building material dealer industry and
wood product supply chain. As the national voice of lumber and building
material dealers across the U.S., NLBMDA looks forward to working with
your Committee to address these challenges in a manner that strengthens
the LBM industry and U.S. economy in the future.
For any questions, please contact NLBMDA's Director of Government
Affairs Kevin McKenney at [Redacted] or [Redacted].
______
Supplementary Material Submitted by Iain Macdonald, Director, TallWood
Design Institute, Oregon State University
Insert
Mr. O'Halleran. Thank you, and is there more targeted support
we can provide, we in the government or others, in the area to
make a better impact?
Mr. Macdonald. Yes. The Wood Innovations Program and programs
like that have been very, very useful to a large range of
projects--not just research, but pilot projects.
There is a great example in John Day, Oregon, of the
community working hand-in-hand with a sawmill that was--that
was experiencing a--basically, they ran out of fiber,
traditional fiber, and the community worked with them,
environmentalists worked with them, and came to an
understanding that it is better to use this wood to thin the
forest to save the forest, basically, and protect it than to
try to oppose the use of it.
And so it resulted in the sawmill being able to remain open
and continue to employ people in the community and for this
restoration work to happen in a commercially viable way.
So, the continuation and the continued funding for the Wood
Innovations Program would be very, very useful for that kind of
thing. And if there is ways to provide tax incentives to those
kinds of projects where you are retooling, for example, a
dormant sawmill, trying to bring it back online to----
As I mentioned in my oral testimony the continuing support of the
Subcommittee for research on timber construction through the USDA Wood
Innovations Program and the Agricultural Research Service is extremely
valuable, as researchers and the private-sector work to develop even
more sustainable and cost-effective low-carbon buildings. Creating
incentives for the use of low carbon materials in buildings funded by
Federal, state, or local governments would also help to accelerate
adoption of green construction. By stimulating domestic demand for
products like mass timber, we can divert logs that might otherwise be
exported offshore to domestic processing, thereby growing our
manufacturing base and maximize the socio-economic benefits provided by
each tree harvested.
______
Submitted Questions
Response from Caroline Dauzat, Co-Owner, Rex Lumber
Questions Submitted by Hon. Kim Schrier, a Representative in Congress
from Washington
Question 1. Mrs. Dauzat, in your experience what are the
impediments to the development of new lumber mills on or near Federal
lands? How can Congress and the Agriculture Committee overcome those
obstacles? What benefits can small mills bring to forests, local
communities, and rural economies?
Answer. The Rex Lumber mill located in Bristol, Florida exists
because my father was assured a steady supply of timber from the
Apalachicola National Forest in the early 1980s. Instead, it has been
an ongoing struggle to access that timber due to a strenuous regulatory
process. Primarily, the National Forest staff must go through extensive
environmental reviews to meet NEPA requirements that can take months or
years to complete before actually bringing a timber sale to market. As
a company, and an industry, we support sustainable forest management
and strong best management practices to reduce negative environmental
impacts. However, the U.S. Forest Service should put forth greater
efforts to streamline and expedite the process. Recently, we have had a
better experience getting timber from the Apalachicola National Forest
to supply the mill in Bristol, which has been critical to keeping the
mill, and the jobs it supports, running since Hurricane Michael
devastated much of the timber basket in the Bristol area. If this trend
reverts to a more limited timber supply from the Federal forest, the
mill will likely not be able to survive. To increase the presence of
mills near Federal lands, Congress and the Forest Service must work to
streamline the process for buying trees. Sawmills are capital
intensive, with new mills costing $100-$200 million depending on the
size. If a strong timber supply is not readily available, businesses
are unlikely to make the necessary investment.
The economic benefits of sawmills in their local communities are
quite large, with some reports citing four indirect jobs supported for
every direct job in the mill. A typical sawmill in the Southeast
employs 100-200 people, so the multiplier effect is substantial. When a
mill is built near a Federal Forest and buys Federal timber, the
revenue from the Forest Service Sales goes back to the local counties
to support community government and schools. Additionally, sawmills
present an environmental opportunity for trees that need to be removed
from the forest to be utilized while making way for new trees to be
grown in their place. Young trees absorb carbon from atmosphere quicker
than older trees, and forest products used in long term applications
such as construction lock that carbon up for the life of the building
or other wood products.
Question 2. Mrs. Dauzat, your testimony mentions that we can reduce
the likelihood of mill infrastructure collapse by encouraging increased
market diversity for the forest products industry. Can you talk about
some of the ways we can encourage increased market diversity?
Answer. Market diversification is critical to maintaining domestic
lumber production capacity. We would like to see the Federal Government
take the following actions to encourage diversification:
1. Fully fund the U.S. Forest Products Lab to continue their crucial
research and technology transfer efforts for new wood
products while improving existing wood products.
2. Support the Wood Innovation Grant program, which provides
matching funds for selected proposals to utilize new or
improved wood products technology.
3. Increase utilization of domestically produced innovative wood
products by the General Services Administration and
Department of Defense.
a. As the GSA's Green Building Advisory Committee looks to
decrease the
carbon footprint of the government's built environment,
wood products,
such as mass timber, should be taken into
consideration. The GSA should
look at the life cycle analysis of various building
materials to meet carbon
reduction goals.
b. DOD continues to face a construction backlog while also
looking to reduce
their carbon footprint and be more resilient to extreme
weather events.
Mass timber products, such as cross laminated timber
(CLT), have been
approved in the military's Unified Building Code since
2016, passed anti-
terrorism blast testing, and has been approved for up
to 18 stories of con-
struction in the 2021 International Building Code. To
date, five CLT ho-
tels have been completed on military bases around the
country through
the Privatized Army Lodging program. Due to the
prefabricated charac-
teristics of CLT, these projects have gone up 30%
faster than similarly
buildings made of other building materials while
requiring much fewer
on-site construction workers. The DOD should put forth
a greater effort
to use innovative building technologies, including mass
timber, to meet
environmental, budgetary, and building needs.
Response from Iain Macdonald, Director, TallWood Design Institute,
Oregon State University
Question Submitted by Hon. Kim Schrier, a Representative in Congress
from Washington
Question. Mr. Macdonald, in your testimony you mentioned that
workforce training and development will be critical for the mass timber
supply chain. I have also heard from stakeholders like the Cross
Laminated Timber industry in my state about the need to bring more
people into the wood products workforce. And I was excited to learn
that Forest Concepts is partnering with Washington State University,
Green River College, and the Auburn school district to create
internships and apprenticeships to bring more workers into the wood
products industry. In your experience, what are the wood products
industry's workforce development needs? How can Congress support these
efforts?
Answer. There are a broad range of needs that span the spectrum
from woodlands to manufacturing. The forestry sector is experiencing a
shortage of workers in occupations like harvesting, as older workers
retire and young people choose other careers. We believe that
implementing new harvesting technologies can partly address this, as
`upskilling' these occupations will be likely to make them more
attractive. On the manufacturing side, the relatively new field of mass
timber differs from the traditional lumber sector in that workers need
to be conversant with a variety of digital tools, such as computer-
aided-design software and CNC fabrication (CNC stands for computer-
numerical control and refers to programmable manufacturing machines).
Mass timber construction projects also commonly use Building
Information Modeling (BIM) software, in which digital models of
buildings are shared between architects, engineers, contractors and
sub-trades. Our Institute, in collaboration with community colleges and
school districts, is developing continuing education programs for
workplace learners to provide opportunities to gain these skills.
Support to promote these career opportunities and extend this kind of
training to new audiences such as BIPOC communities would be extremely
valuable.
The U.S. construction sector is also facing an aging workforce and
severe labor shortages in some regions. Building with mass timber is
somewhat helpful in alleviating these problems, as more of the
fabrication work is done in the factory and less on the construction
site. A shift to a greater use of modular or panelized construction
methods, in which components of buildings are pre-assembled in a
factory and then joined together quickly onsite, is being seen as a
further potential solution. The factory jobs offer a more comfortable
work environment and more predictable schedules and commutes. In many
cases, labor unions have also embraced this shift.
Oregon has assembled a coalition of public agencies and
universities that will shortly be submitting a proposal to the Economic
Development Administration's Build Back Better Challenge. The focus
will be to develop modular affordable housing solutions using mass
timber that utilizes fiber from forest restoration. It is our hope that
the `virtuous cycle' created by the project--reducing wildfire risk,
creating urban and rural manufacturing jobs and tackling the housing
affordability crisis faced by many cities--will serve as a model that
can be replicated in many other parts of the U.S.
[all]