Maines View of the Softwood Lumber Trade Dispute

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Maines View of the SoftwoodLumber Trade Dispute

• Lloyd C. Irland
• The Irland Group and
• Yale University

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Contents

• Geography
• Cross border flows of workers
• Production trends
• Resource situation
• Border mills cross border flows of logs
• Investment flows of Capital
• Summary Whats unusual about Maine

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Cant find Internat. Border on this map! (Domtar)
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An industry and a society divided by an arbitrary
line
Source Irland, 2000.
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Maines Empty Quarter
Cross border flow of workers slows to a Trickle,
50s to late 90s
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Production Trends

• ME SWL production
• Revived after the 60s
• Slipped after 2000
• Rank in SWL 13 in 2002
• Integration w. paper industry
• Region one of culture hearths of paper industry
• Once time an advantage, Now not so clear
• Canadian capital sustains significant part of
  Paper industry

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Resource Situation

• Major plunge in spruce fir inventory
• Budworm, rising harvest pressure maturity
• By early 90s most of the large wood gone
• Now ME in competition with Canadian small wood
  regions huge spaghetti mills
• Species Mix -- chart.
• Sawmills sustained by
• Smaller wood
• Bidding wood away from pulp mills

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Source MFS, Wood Processor Report, 1993.
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Who owns the land

• Industry major owner till turn of century
• 8 of US total!
• Total Owned by US Pub. Held Industrial Corps
  0.
• PCT 950,000 /-
• 3-4 MMA held by Canadian entities
• Public ownership below 10
• Easements mixed ownership
• 10 of state by end 2003

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Quebec Border Mills

• Small forest resource So. of St. Lawrence
• Little Crown or freehold industrial land
• Often built by logging contractors
• Long hauls to Ti too costly by 60s
• Rebuilt spruce market in the East
• Accomodated push to salvage budworm wood
• Small log technology chip markets
• Longterm relationships
• Some have bought land in ME

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Export Percent 70s 40 2003 36 Higher in N.
Counties
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Border mills

• Hedged against exchange rate fluctuations
• More dependent on US market than 15 yrs ago
• Since they run on ME wood, not affected very much
  by Crown policies/prices
• Most exempt from duties/quotas, wholesale or mill
  by mill.

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Effects of border log trade

• On sawmills
• Higher log costs
• Extreme competition for wood
• Competition for residuals
• Effect on market side actually small
• On landowners
• Better prices for stumpage
• More competition
• Shorter hauls to mill
• Better utilization t/l, small tops

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Crossborder Investment

• Maine is importing Canadian Capital
• Canadian owned sawmills in ME
• Even as US Giants selling their land, closing
  mills
• Canadian capital sustains major paper mills (and
  chip markets for sawmills)
• Canadian landownership substantial
• Largest private owner JDI Ltd of New Brunswick

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List of Grievances

• Trucking regulations weights
• Log exports
• (mis) characterized as Exporting jobs
• Sending product to our customers
• Misuse of SPF N label on Me wood
• Woods Labor coming into state
• health care all those goodies
• Generalized resentment of ownership from away

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Emerging competition late 90s

• White pine
• Radiata end products
• Blocks
• Lumber
• Have annexed major share in end use markets
• Framing
• European suppliers

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Offshore imports 2002 2 X compared to Maine
production
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Import Unit Values

• per cubic meter, 2003
• Canada 100
• Germany 166
• Brazil 192
• NZ 308
• Finland 210
• Source FAS website.

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Summary Whats different about Maine

• Crossborder ownership of land/mills
• Communities sustained by Canadian capital
• Land almost entirely private
• Workers cross border ... In both directions
• High level of sawlog exports complex web of
  wood/chip flows

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Summary

• Extreme fiber supply tightness
• Single economy and society divided by an
  arbitrary line
• So Maines political view of this trade
  conflict flows from an incredibly complex
• Web of interconnections.