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The Financial Health and Response of Arkansas's Loggers to Depressed Timber Markets and Severe Operating Conditions of 2009

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Abstract:

In 2009, Arkansas's loggers faced a severely depressed timber market and historic weather conditions that placed these firms in severe financial distress. A mail survey was sent to 216 Arkansas logging firms to elicit their responses to these exceptional conditions. The response rate was 59%, with respondents accounting for 55% of the state's wood production in 2009. Typical responses to financial difficulty included deferred maintenance, temporary employment reductions, and use of company and personal savings to make up income shortfalls. However, 39% of logging firms permanently reduced employees, 26% sold equipment as part of reducing capacity permanently, and 30% were making late payments on existing debt. Nearly 40% of logging firms indicated that they would quit the business within 12 months without substantial market improvement; this loss of logging firms represents 75% of the reported production among the survey respondents. Loss of this capacity could severely curtail any recovery in wood and paper manufacturing in the state. Solutions sought by the logging industry focused on reducing operating costs through lower fuel and sales taxes, and increased gross vehicle weight limits. Short-term loans were seen as marginally helpful, as were a fair logging practices board and business and financial training for loggers. Long-term loans were seen as least helpful to loggers. Only 1 in 4 logging firms reported that their equipment was well-suited for “energy wood” production; development of bioenergy markets in Arkansas will require substantial capital investment.

Keywords: bioenergy; logging; timber recession

Document Type: Research Article

DOI: http://dx.doi.org/10.5849/sjaf.10-033

Publication date: May 1, 2012

More about this publication?
  • Each regional journal of applied forestry focuses on research, practice, and techniques targeted to foresters and allied professionals in specific regions of the United States and Canada. The Southern Journal of Applied Forestry covers an area from Virginia and Kentucky south to as far west as Oklahoma and east Texas.
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