Research Brief #19

Characteristics of U.S. Hardwood Dimension Manufacturers
Louisiana Forest Products Development Center
Louisiana State University
Baton Rouge, LA

Research Objectives

A number of U.S. states and regions are actively pursuing rural economic development initiatives to add value to their hardwood resources. One common challenge inherent in these efforts is the ability to attract new industry or to expand an existing hardwood manufacturing industry base. After hardwood lumber, a logical next step in the value added chain is the production of hardwood dimension products. This research, based on a comprehensive analysis ofthe U.S. dimension industry, identified critical success factors and impediments to development of this industry sector.

Conclusions

• Respondent companies on average purchased 27 percent of species raw materials (by volume) from out-of-state suppliers representing a potential opportunity for adding value to the hardwood resource.
• The most cited reasons for out-of-state raw material purchases were product availability, better prices and better quality.
• The study also examines factors that foster or hinder dimension industry development. Highest rated factors that contribute to dimension company success were supplying quality products to customers, development of long-term oriented customer relationships, offering a high level of customer service and company reputation.
• The foremost impediments to company success were acquiring quality raw material, developing a consistent raw material supply and volatile pricing.
• With regard to location decision factors that influence corporate expansion or location, dimension manufacturers identified productivity of labor, labor costs, taxes and a skilled labor supply as the most important factors.

Researchers

Richard P. Vlosky, Assistant Professor, Forest Products Marketing
Louisiana Forest Products Laboratory
Louisiana State University Agricultural Center
Baton Rouge, Louisiana

Target Group

• Hardwood primary wood products producers examining opportunities to vertically integrate production processes.
• Forest industry economic development program and policy planners.

Methodology

The sample frame for the study consisted of U.S. wood products manufacturing firms in SIC (Standard Industrial Classifications) 2426, hardwood dimension and flooring mills. A database listing of 1,872 companies was purchased from Harris Publishing Company. This list was augmented by 31 National Hardwood Lumber Association member companies, not on the Harris listing, that indicated that they were dimension producers, for a total of 1,903 companies.

Of the 1,903 surveys mailed, 82 were undeliverable or out of business, reducing the sample to 1,821. The total study response rate was 36 percent (650/1,821). Ofthe 650 returned surveys, 400 were from companies that indicated they were not in the dimension business. The balance of returned surveys were all useable resulting in an adjusted usable response rate of 13 percent (250/1,903).