U.P. forest products industry riding out weak economy

Michigan State Roundup

Published January 1, 1992  | January 1992 issue

With some regional slowdowns in new homebuilding, environmental issues facing the timber industry and other economic uncertainties, the U.P.'s bread and butter forest products industry is having its ups and downs.

Most pulp and paper companies in the U.P. are operating at capacity, says Peter Grieves, executive director of the Michigan Association of Timbermen. The majority of the timber cut in the region feeds paper mills at Escanaba, Manistique and Quinnesec.

But the October closing of the Connor Forest Industries sawmill in Newberry was a significant event, Grieves says, even though the company only had 20 employees. More significant is that the company sold 25,000 acres of timberland because of declining profitability, he adds.

"In the U.P. profit margins are not what we'd like them to be," says Grieves. But people in the industry say production is up to normal.

And while the case of the endangered spotted owl is debated on the West Coast, the U.P. is getting a little more business. Grieves pointed to a plywood plant near Ironwood and a building board plant in Newberry that are at least temporarily benefiting from the constraints on wood supply in the West.

Although uncertainties exist about some areas of the timber industry, secondary wood products manufacturers in the U.P. have fared better. Over the last 12 years lumber and wood products, paper and allied products, and furniture and fixtures have outperformed the nation, according to studies by the Northern Economic Initiatives Center (now NEICorp.), Northern Michigan University, Marquette.

NEICorp. is building on this success by working with U.P. firms to modernize their front office operations, to foster networking relationships and to offer counseling and assistance to area firms through the Michigan Association of Timbermen.

NEICorp. has already helped the Timbermen prepare a series of videotapes promoting the U.P.'s forest products industry. The videotape, produced in Japanese, German and English, with plans under way to add an Italian version, features forest resources and the kinds of wood products available from U.P. companies. As a result of the video airing at a trade show, a German manufacturer has expressed interest in purchasing lumber for pallet production, Grieves says.

"It could be much worse," Grieves says. "We're in a typical cycle; our folks are used to ups and downs."

Kathy Cobb