On the one hand, logging companies are facing a crisis: There are about 40% fewer logging businesses today than there were 30 years ago, with many more owners slated to retire in the next decade.
But on the other hand, the industry is primed for new growth, stemming from a new generation of loggers capitalizing on efficiencies and opportunities in the market.
How these factors play out—and how new companies can launch in the coming decades—is the subject of a new study by faculty at the University of Georgia Warnell School of Forestry and Natural Resources. Funded by the USDA’s National Institute of Food and Agriculture, this four-year, $500,000 grant aims to understand the barriers facing the next generation of logging professionals, as well as what can be done to encourage new logging businesses in the future.
“We’ve been losing logging businesses for as long as we’ve been keeping records on them—people have retired, and the businesses themselves have gotten more efficient. So, that’s not necessarily a bad thing, that’s just progress,” said Joe Conrad, an assistant professor of forest operations at Warnell. “Unfortunately, the problem we face today is that about one-third of all logging company owners are over age 60, and because we’ve been in this consolidation phase, we haven’t seen the new businesses forming that we typically had. Eventually, we’re going to need somebody to come in behind those folks who are over 60.”
Conrad and his research team will begin by interviewing loggers who already fall into areas they are looking to grow: business owners who are 35 and younger, businesses led by women, African Americans or individuals of Hispanic descent, or new businesses started by people with experience in other areas of forestry. Then, researchers will talk with loggers who are nearing retirement age to understand what they plan to do with their business.
The project will examine trends across six Southern states: Georgia, Alabama, Florida, Mississippi, North Carolina and South Carolina. These states account for 40% of all timber harvesting in the country and are home to about 2,000 logging businesses. “So, this is really getting to the heart of the matter,” said Conrad. “If you look at the paper that’s produced and the boards produced for building houses, these are the states where a lot of that happens.”
Logging companies are an important piece in a complicated timber supply chain that often starts with small, individual landowners and moves on up to large, multinational companies manufacturing wood products.
Managing a logging company requires balancing financial calculations, connections with landowners and manufacturers, equipment maintenance and long days out in the woods. Logging machinery is a significant investment, often into the millions of dollars to set up just one crew. But the rewards come from the productivity: Even a small logging company with two crews and 10 employees can harvest upwards of 100,000 tons of wood a year.
In previous decades, added Conrad, small, family-owned logging companies would pass from one generation to the next. But that’s not the case more recently, as children leave the nest and opt for a different line of work.
“There’s some evidence that a significant number of these businesses are just going to cease to exist,” said Conrad. “In the past, you’d pass the business off to the next generation, but that seems to be less common than it was in the past. A lot of those kids are doing something other than logging—they’re not continuing on with the family business.”
Add to that a complicated wood supply chain that involves multiple independent businesses as a piece of timber gets from the stump to the mill. Sometimes, a logger works directly with landowners, while other times a logger is simply performing a service for others along the supply chain. Each scenario requires a different business plan, and can differ depending on where across the South they’re located.
“And that’s another thing we want to look at—are they tending toward a different business model, or do they perform harvesting on a contract basis for other people?” said Conrad. “A lot of people think of the logger being the lumberjack out there with a chainsaw, but in reality these are folks who are operating multimillion-dollar businesses. The good businesses do well, and unfortunately they go out of business every once in a while.”
Down the road, Conrad said he and his team have plans to produce an updated online cost estimator that won’t require a spreadsheet—perfect for using out in the forest—and also provide outreach and training to new businesses.
It’s all in the name of equipping the next generation of logging businesses to supply the timber needed by society.
“We have a society that’s more diverse, and more than likely we will need more diverse logging company owners in the future,” said Conrad. “So, we want to determine what, if any, barriers exist to these particular businesses coming online and what can be done to encourage the formation of these businesses.”