- Lorenzo, Mark
National Wildlife Federation, Northeast Natural Resource Center
What would be the impact of Vermont losing entirely its value-added wood products industry? Alternatively, what would the impact be of $1 million in new spending on Vermont-made certified wood products? Greatly increased imports of wood products have subjected local producers to severe price competition, eroding their market share, with mill closures and employee layoffs resulting. Although overall employment in the Vermont economy increased by some 2.3% from 2000 to 2005, the state lost the equivalent of 9,550 manufacturing jobs in the same period. Around 1,200 of these job losses were in furniture and related manufacturers with an estimated direct economic cost of $60 million.
Business strategists suggest that product differentiation is an effective strategy to counter price-based competition in a global economy. International trade trends show that wood products from unknown or generic sources increasingly contain material resulting from illegal logging activities. Some 10% of all wood products in circulation globally may now be from illegal sources. Fully one-quarter of all plywood imported into the US is estimated to be of suspicious origin. These products are traded primarily on the basis of their low cost appeal, often with no questions asked regarding the practices or places behind the products. High volumes of imports also bring high threats of costly forest pest invasions.
Over the same period, independent forest certification has emerged as a strong tool to differentiate legitimate products produced with high forestry standards and consideration of local social and economic conditions. Such products carry a chain-of-custody number that can be traced back to the forests where the wood originated. Wood products certified by the international Forest Stewardship Council (FSC) have since 1993, attained a global value estimated at $5 billion.
Wood product differentiation by both origin, i.e. state branding programs and high production standards i.e. FSC-certification, can provide additional consumer choices that support sustainable rural community development. Whereas the US exported $1.42 billion in forest products in 1991, it imported some $17.7 billion worth in 2005. An import-substitution strategy, based on greater in-state purchases of differentiated wood products can add twenty in-state jobs per $1 million in purchases, while supporting sustainable forestry practices. State tax revenues would be also enhanced by 5% of the total value of these purchases.