Impact of the Great Recession and Housing Collapse on the Forest Products Industry in the Western United States
2011
Keegan, C. E. | Sorenson, C. B. | Morgan, T. A. | Hayes, S. W. | Daniels, J. Michael
The first decade of the Twenty-first Century proved tumultuous for the West's A strong economy, low interest rates, easy access to credit, and real estate speculation fostered more than two million U.S. housing starts in 2005 and record lumber consumption from 2003 to 2005. With the decline in U.S. housing beginning in 2006, the 2008 global financial crisis, an over 50-year record low 554,000 housing starts in 2009, wood product prices and production fell dramatically. In 2009 and 2010, virtually every major western mill suffered curtailments and 30 large mills closed permanently. Sales value of wood and paper products in the West dropped from $49 billion in 2005 to $34 billion in 2009. Employment declined by 71,000 workers and lumber production fell by almost 50 percent from 2005 to 2009. Capacity utilization at sawmills and other timber-using facilities in the West fell from over 80 percent in 2005 to just over 50 percent in 2009 and 2010. With the exception of exports and some paper markets, U.S. wood products markets have improved little since the recession officially ended in 2009. Modest improvements are expected in domestic markets in the short term but substantial improvements are unlikely until 2014 or later, as U.S. home building recovers and global demand increases. Much of the West retains the bulk of its pre-recession (2006) capacity and mills could respond quickly to increased demand spurred by economic recovery.
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