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The Future of Forests &
Forest Industry in Maine
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207-233-991...
Innovative Natural Resource Solutions LLC
• Founded in 1994
• Offices in New Hampshire and Maine
• Focus at the intersecti...
Our Continuing Advantage
The Wood
The Markets
http://www.colby.edu/environ/courses/ES493/stateofmaine20
07/papers/SOME07_ResourceAccess.html
Markets for Forest Products
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sawlogs Pulpwood Biomass
Volume (Tons)
Value ($)
Volume and Value to Landowner...
Solid Wood
Source: Census (http://www.census.gov/const/www/newresconstindex.html )
Single family starts, Thousand units, SAAR
0
200
4...
Source: Census ( https://www.census.gov/construction/chars/sold.html )
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,6...
Cross Laminated Timber
• Pre-fabricated structural
wall, floor and roof
panels
• Key benefits include
• Ability to build m...
Markets for Low-Grade (not sawlogs)
Pulp and Paper
Emails you never expected…
Hardwood Pulpwood Price ($/ton) by Region
All figures in 2013 dollars, using the US Bureau of Labor Statistics CPI
Inflation Calculator, http://www.bls.gov/data/inf...
Pulp and Paper
• Pulp and paper mills remain Maine’s largest consumer of wood
products, and represent significant fixed in...
Challenges to the Pulp & Paper Industry
• You will hear
• High taxes
• High energy costs
• High wood costs
• And so on
• T...
Wood for Heating
Percent of Homes Using Oil as a Primary Heat Source
Wood Pellets for Thermal Use
• Wood pellets used in thermal (heating) applications for homes and
small businesses
• Can be...
New England
Pellet Mills
Capacity:
60,000 – 110,000 tons
<30,000 tons
Wood Pellets Now Seeing Large-Scale Users
Jackson Laboratory, Bar Harbor, Maine
Maine’s Forest Industry
• Incredibly diverse
• Well positioned for access to consumers
• Facing challenges and opportuniti...
Income from Maine Forestland
• Are TIMOs and REITs getting the return they need on their
investment?
• Currently working o...
My Crystal Ball (which can be very cloudy)
•A forest industry that is:
•A little smaller
•Working hard to hold on
•New opp...
My Crystal Ball (which can be very cloudy)
•Land ownership that:
•Has more families – individuals in the ownership
group
•...
My Crystal Ball (which can be very cloudy)
•A public that:
•Believes that the industry is dying
•Wants to support the indu...
My Crystal Ball (which can be very cloudy)
•A government that
•Is reactive
•Has a better rear view mirror than windshield
...
About My Woods
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207-233-9910
Email kingsley@inrsllc.com
www.AboutMyWoods.org
The Future of Forests & Forest Industry in Maine
The Future of Forests & Forest Industry in Maine
The Future of Forests & Forest Industry in Maine
The Future of Forests & Forest Industry in Maine
The Future of Forests & Forest Industry in Maine
The Future of Forests & Forest Industry in Maine
The Future of Forests & Forest Industry in Maine
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The Future of Forests & Forest Industry in Maine

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Presentation by Eric Kingsley of Innovative Natural Resource Solutions LLC on Maine's forest industry. This presentation was made to the Forest Society of Maine in December 2015

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The Future of Forests & Forest Industry in Maine

  1. 1. The Future of Forests & Forest Industry in Maine Eric Kingsley Innovative Natural Resource Solutions LLC Phone 207-233-9910, kingsley@inrsllc.com
  2. 2. Innovative Natural Resource Solutions LLC • Founded in 1994 • Offices in New Hampshire and Maine • Focus at the intersection of forest industry, energy and economic development • Author of Maine Future Forest Economy Project (2005) • Services include: - consulting in renewable energy - advocacy - forest management and protection - forest certification and sustainability • Clients from the private, non-profit and government sectors • Conducted work in all regions of North America • www.inrsllc.com
  3. 3. Our Continuing Advantage
  4. 4. The Wood
  5. 5. The Markets
  6. 6. http://www.colby.edu/environ/courses/ES493/stateofmaine20 07/papers/SOME07_ResourceAccess.html
  7. 7. Markets for Forest Products
  8. 8. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sawlogs Pulpwood Biomass Volume (Tons) Value ($) Volume and Value to Landowner of Products from a Timber Harvest North East State Foresters 2013 All NH, 2010
  9. 9. Solid Wood
  10. 10. Source: Census (http://www.census.gov/const/www/newresconstindex.html ) Single family starts, Thousand units, SAAR 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
  11. 11. Source: Census ( https://www.census.gov/construction/chars/sold.html ) 1,800 1,900 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Median Square feet floor area
  12. 12. Cross Laminated Timber • Pre-fabricated structural wall, floor and roof panels • Key benefits include • Ability to build mid-rise (up to ~10 stories) • Short construction timeline (at jobsite) • Cost competitive • Good seismic performance
  13. 13. Markets for Low-Grade (not sawlogs)
  14. 14. Pulp and Paper
  15. 15. Emails you never expected…
  16. 16. Hardwood Pulpwood Price ($/ton) by Region
  17. 17. All figures in 2013 dollars, using the US Bureau of Labor Statistics CPI Inflation Calculator, http://www.bls.gov/data/inflation_calculator.htm Stumpage Price for Selected Pulpwood Species, 2004 - 2014 Statewide Average from Maine Forest Service - Stumpage Price Reports $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Mixed Hardwood Spruce / Fir White Pine
  18. 18. Pulp and Paper • Pulp and paper mills remain Maine’s largest consumer of wood products, and represent significant fixed infrastructure. • Mills produce a variety of products, including market pulp, dissolving pulp, communication papers (coated and uncoated), and tissue. Each of these markets is unique. • The Northern American paper industry has been shrinking, both in output and capacity. Individual mills often do well, but new investment in production is extremely limited in the U.S. • More turmoil to come, but Maine will remain a paper producing state for well into the future • I expect reduced pulpwood consumption, and reduced prices for pulpwood (a bunch of factors in this one, not just demand).
  19. 19. Challenges to the Pulp & Paper Industry • You will hear • High taxes • High energy costs • High wood costs • And so on • There are all very real, and present real challenges to the industry • Mills and regions now fighting over a shrinking pie • They aren’t the fundamental issue, which is change in the marketplace, and a capital intensive industry that is hard to change with any reasonable speed
  20. 20. Wood for Heating
  21. 21. Percent of Homes Using Oil as a Primary Heat Source
  22. 22. Wood Pellets for Thermal Use • Wood pellets used in thermal (heating) applications for homes and small businesses • Can be as primary (boiler) or supplemental (stove) heat source in a home • Cost competitive with oil (on a BTU basis) • Maine and Northeast highly dependent upon oil • At this moment, not true – pellets and oil about the same on a $ per MMBTU basis • A primary issue in industry is developing downstream market (boilers, stoves) and encouraging customer adoption
  23. 23. New England Pellet Mills Capacity: 60,000 – 110,000 tons <30,000 tons
  24. 24. Wood Pellets Now Seeing Large-Scale Users Jackson Laboratory, Bar Harbor, Maine
  25. 25. Maine’s Forest Industry • Incredibly diverse • Well positioned for access to consumers • Facing challenges and opportunities • Enjoys broad support as an economic engine • Will see mill closures, will see new industries • Massive opportunity for energy products, if we can figure out how to capture and properly value • My crystal ball – more small / mid-sized facilities, reduction in large facilities • Big, capital-intensive projects are hard everywhere, very hard in Maine
  26. 26. Income from Maine Forestland • Are TIMOs and REITs getting the return they need on their investment? • Currently working on this, I’m not sure what the answer is • If NO, who are the new buyers…and what are their objectives? • Family offices, high-net worth individuals, conservation buyers… • Forest products income is important, but can’t be all there is… • $ from recreational use • Carbon sequestration • Ecosystem services (maybe a pipe dream) • Energy leases (e.g., wind) • Some of this will challenge and disrupt tradition – for land users, for rural towns, for the industry, for the landowner
  27. 27. My Crystal Ball (which can be very cloudy) •A forest industry that is: •A little smaller •Working hard to hold on •New opportunities for small and mid-scale businesses •Innovating at the edges, and experiencing failures as part of the process
  28. 28. My Crystal Ball (which can be very cloudy) •Land ownership that: •Has more families – individuals in the ownership group •Gets very creative about capturing economic value from non-timber activities •Continues to see conservation buyers – who the industry often views as “undisciplined” •Views the proximate population as an asset – and monetizes it
  29. 29. My Crystal Ball (which can be very cloudy) •A public that: •Believes that the industry is dying •Wants to support the industry that remains •Views private land as something they have a right to access •Thinks that landowners should be incredibly generous and provide lots of services for free
  30. 30. My Crystal Ball (which can be very cloudy) •A government that •Is reactive •Has a better rear view mirror than windshield •Would invent a time machine if it could •Is focused on protecting a mill or a sector, instead of industry health •There is nothing unique to Maine about this – this is how the world works (“the future” is a very nebulous constituency)
  31. 31. About My Woods
  32. 32. Eric Kingsley Innovative Natural Resource Solutions LLC Phone 207-233-9910 Email kingsley@inrsllc.com www.AboutMyWoods.org

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