The forest
products industry is the fifth largest manufacturing industry
in the state. It is first in western Maryland and second, after
agriculture, on the Eastern Shore. While most harvesting and
primary processing occur in rural areas, secondary
manufacturing of finished products occurs in the central and
southern regions. The economic benefits of the forest products
industry include income from the sale of goods and services,
wages paid to individuals, and taxes collected. Including
direct, indirect and induced output , the industry provides
nearly $4.5 billion in total output through the sale
of goods. Including direct, indirect and induced employment,
the industry provides more than 42,000 jobs. On average,
then, for every job created in a subsector of the forestry and
wood manufacturing industry another two jobs will be created
elsewhere in the economy. These benefits are felt across
the entire state.
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EMPLOYMENT
Maryland
Forestry and Wood Products Industry Employment (in
FTEs)
|
|
Category
|
1996
Data
Direct Employment
|
Multiplier
|
Total
Employment
Direct, Indirect and Induced
|
|
Timber
Management and Harvesting
|
1,375
|
2.95
|
4,056
|
|
Primary Wood
Manufacturing
|
3,449
|
3.83
|
13,210
|
|
Secondary
Wood Manufacturing
|
9,074
|
2.80
|
25,407
|
|
TOTAL
|
13,898
|
|
42,673
|
|
ECONOMIC
IMPACT - Sale of Goods
Maryland
Forestry and Wood Products Industry Output (in
millions of dollars)
|
|
Category
|
1996
Data
Direct Output
|
Multiplier
|
Total
Industry Output
Direct, Indirect and Induced
|
|
Timber
Management and Harvesting
|
$230.27
|
1.93
|
$444.42
|
|
Primary Wood
Manufacturing
|
$719.93
|
2.15
|
$1,547.85
|
|
Secondary
Wood Manufacturing
|
$1,233.92
|
2.04
|
$2,517.20
|
|
TOTAL
|
$2,184.12
|
|
$4,509.47
|
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Economic
Analysis
An analysis of the economic
impact of the forest products industry shows both the direct
impact in employment and value of output through sale of goods,
and their indirect and induced effects throughout the state's
economy. Economists use input-output models to estimate these
effects, calculating specific "multipliers" for each industry
segment which are then applied to direct data to determine
total impact. Indirect impacts focus on the additional
inter-industry purchases that are stimulated by the initial
purchases (i.e., as the industry initially impacted increases
orders from its suppliers, who in turn do the same and so on).
Indirect impacts do not account for associated local respending
of increased returns to factors of production (e.g., workers'
spending of increased wages). Induced impacts, in contrast, are
estimates of the additional economic activity stimulated by
local respending of, for example, increased incomes. The
results for each segment of the forest products industry are
displayed on the charts above.
Similar methods are used to
estimate "Value-Added" income for other businesses, additional
property income, and indirect business taxes. The forest
products industry contributes another three-quarters of a
billion dollars in value-added economic activity in
Maryland
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The
Forest Products Industry
Timber Management
and Harvesting:
•Operation of timber
tracts, Tree Farms, reforestation services, and forest
nurseries;
•harvesting and
transporting logs;
•producing wood chips and
rough round, hewn, or split wood raw materials;
•other forest
products.
Primary Wood
Manufacturing:
•Processing logs and
related raw materials into lumber, veneer, plywood, pulp,
paper, and other products.
Secondary Wood
Manufacturing:
•Remanufacture of primary
manufacturing products into finished products, such as
furniture, toys, cardboard containers, cabinets, and finished
building components
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Future
of the Industry
While secondary manufacturing
provides the most direct employment, the primary manufacturing
segment has higher employment multipliers. In fact the primary
segment multipliers are, on average, higher than all other
industries in the state (3.83 vs 3.24). These multipliers
suggest that growth in primary wood manufacturing has a greater
tendency to create employment than other sectors of the
regional and statewide economy. Primary wood manufacturers,
such as saw mills, hardwood dimension and flooring mills, and
paper mills are important as a market since they purchase local
raw wood products and in turn they prepare basic wood products
for the secondary manufacturers who produce finished goods.
Additional analysis suggests that a 10 percent shift in the
value of just primary wood manufacturing would result in a $156
million shift in the value of all goods and services in the
state. While the impact would be greatest in Western Maryland,
it would affect the economic health and quality of life of the
entire state, including the majority who life in urban and
suburban communities.
Opportunity for expansion in
the forest products industry exists in every phase. Annual
forest growth on Maryland's 2.7 million acres of forest land
generally exceeds annual harvest by 69 percent. This means
that, with proper management and maintenance, our forest land
base can sustain additional harvesting activity. Indeed, the
biggest threats to the viability of the forest products
industry and our forest land base are forest fragmentation and
the loss of land to development. The Maryland Office of
Planning currently estimates the losses from development at
10,000 acres of forestland per year.
To maintain
Maryland's forests and the quality of life that we all want and
enjoy,
we must do all we
can to assure the continued health of the forest products
industry.
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Data
Source: Excerpted from the preliminary report prepared by
Agricultural and Community Development
Services for the Committee to Study the
Economic Importance of the Maryland Forestry and Wood Products
Industry (December, 1999; used with permission). The
Committee includes representatives of the Department of Natural
Resources, Forest Service; Department of Business and Economic
Development; Eastern Shore Resource Conservation and
Development Council; University of Maryland, Cooperative
Extension Service; USDA, Forest Service; Association of Forest
Industries; and the Maryland Forests
Association.
