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Maine Wood Manufacturers are still an Important Part of the Economy

They produce gun stocks, flooring, cedar shingles, log homes, wooden playsets. They make cigar tips, wooden pack baskets, doors and staircases. Cutting boards and chairs, cabinets and baseball bats, grilling planks canoe paddles.

Colorful wooden eggs made by Wells Wood Turning in Buckfield have been featured at the White House Easter Egg roll since 2006, Photo from MFPCThey are Maine’s so-called secondary wood manufacturers and the list of things they produce is a list of stuff Americans buy and use every day. Reading it can prompt a lot of “huh, I didn’t know THAT.”

Secondary wood manufacturing is the technical term for mills and factories that take rough-cut material and turn it into finished products. As opposed to sawmills, say, primary manufacturers that turn logs into lumber.

Maine’s secondary wood manufacturing sector has had a rough few decades. At one time the state had hundreds of mills producing things of wood, from toothpick and match mills that employed hundreds to small operations that specialized in one, or a handful, of items with employment in the single digits. But beginning in the 1970s China rose to become the world’s low-cost manufacturer and the sector shrank steadily. It was a hard time to be a maker of wooden things.

It may have seemed to be on life support, but that part of Maine’s forest products industry never entirely disappeared. Now it seems to be thriving again, with competitive mills optimizing their strengths and seeking out new niches in a retail sector revolutionized by online marketing, according to a report published last year by the Maine Forest Products Council.

As part of that report, the Council commissioned Mindy S. Crandall, an assistant professor and forest economist with the University of Maine’s School of Forest Resources, to analyze the economic impact of secondary processors in the state. She compared Maine’s situation to Michigan, which had done a similar analysis.

JD Irving's Value Added Shop in Dixfield, photo courtesy of Lloyd IrlandCrandall’s work showed that in 2014 Maine’s forest products industry directly contributed $1.25 billion, or about 2.2 percent, of the state’s gross state product, creating 14,484 jobs. Of that, the secondary manufacturing sector accounted for about 20 percent, or a quarter of a billion dollars, and 3,715 jobs and $200 million in labor income. And that’s only the direct contributions. Indirect contributions boost the total jobs numbers to nearly 9,000, with a total economic benefit of more than $1.8 billion.

It’s almost impossible to make an apples to apples comparison of the state’s secondary wood processors through the decades, said Lloyd Irland, a forest economist and the president of The Irland Group who has written extensively about the history of Maine’s forest products industry. “Basically there is now almost no way to pull out secondary wood products in any thorough way from the available data.”

But suffice it to say that the sector is much diminished.

Products changed through the years as society changed. When the sector started to implode thanks to cheaper labor costs in China and elsewhere in Asia, manufacturers of all types of wood products were affected. Because the mills were scattered across the state, and were often in rural areas with more limited job opportunities, the impact on those communities was profound.

Mark Kemp, a Farmington-based distributor of wood products, was quoted in the Council’s report as saying that the combination of China and the NAFTA, which went into effect in 1994, “just really destroyed our manufacturing companies” in Maine.

But these days it’s a different story. “Maine has the strongest secondary manufacturing of all the Northern New England states by far,” said Dave Redmond, the director of Wood Products Initiatives at the Northern Forest Center, who was also quoted in the Council’s report.

Redmond said the 2008 recession claimed some victims among wood products industries that had managed to hang on through the economic turbulence of the 1980s and 1990s, but “the remaining businesses were stronger and were able to pick up the pieces and move forward.”

It’s highly unlikely that commodity wood products like toothpicks and clothespins will ever come back to Maine, said Irland, who also authored a section of the Council’s report on bolt wood. Not just because the margins on them are so small, but because they’re among those products left for dead on the roadway of capitalism, replaced by, in those two cases, plastic dental floss picks and clothes dryers.

“Coffee stirrers come from China now (ask your barista to see the box),” Irland told me. “And houses noNeat row of trees with bush in background is a multi-culture plantation in India (Haryana), where poplar is grown for core stock for plywood, photo courtesy of Lloyd Irland longer use wood clapboard siding, which was a big value-added product for pine mills.”

By and large the secondary manufacturers surviving and thriving in Maine have concentrated on high-end, value-added products, whether it’s laminated gun stocks produced at Cousineau Wood Products in North Anson or custom dovetail drawers at Maine Dovetail, Inc. in Westbrook; pepper and salt mills turned at Maine Wood Concepts in New Vineyard or hand tools for woodworkers at Lie-Nielsen Toolworks in Warren.

They have also learned to look at every cost factor in order to shave prices and be competitive. And to always be on the lookout for other niches worth leaping into, according to the Council’s report,

Just before the turn of the century, Pride Manufacturing in Burnham was making cigar tips and using the waste wood from that produces to make golf tees, which grew into a big market. Then, in 2001, China started producing golf tees.

“It really challenged us. We had to really get some costs out, do things a little bit different to remain competitive,” Pride senior director of manufacturing cooperation's Randy Dicker was quoted as saying in the MFPC report. “We worked on our efficiency and machines — how we could do more in an hour — and we were able to take $2 or $3 million out of the process.”

These days Maine’s makers of wood products need to maintain their vigilance, because things are changing yet again. Some changes may help, others may not.

In China, labor costs are rising, reducing the cost advantage of manufacturing in the Middle Kingdom versus Maine, particularly with the raw materials available right here. The cost of transportation and the time and effort to get products from Asia also factor in.

The current administration in Washington has adopted an anti-globalist stance, pulling the U.S. out of the TransPacific Partnership and threatening to scuttle NAFTA unless it gets a better deal for the U.S. President Donald Trump has already levied stiff tariffs on solar panels and washing machines from China and softwood lumber from Canada. He’s expressed his disdain for multi-party trade deals and international trade organizations like the World Trade Organization.

Then there’s the recent cut in the corporate tax rate, which could boost profit margins for businesses and, backers of the cuts hope, business investment. But Crandall told me in an interview that “it’s hard to know how the new tax law” and any future tariffs will play out. There’s a lot at play.

But even if there are opportunities to expand production or get into new lines, Maine secondary wood products manufacturers face some other real challenges.

Molding samples at A.E. Sampson. The company can make literally thousands of custom profiles, photo courtesy of Joe RankinAmong them:  finding good employees in a time of virtually full employment. Dicker, of Pride Manufacturing, told the MFPC “it’s hard to find employees today who, when they come in, want to stay with you, who have what it takes to be successful . . .”

Also, a tightening labor market will engender rising wages, which could affect local mills’ competitiveness.

The U.S. dollar’s rise or fall against other currencies can affect the attractiveness of U.S. goods, boosting or depressing exports in inverse proportion to the currency’s value. Rising interest rates — the Federal Reserve is likely to raise short-term borrowing rates three times this year to counter nascent inflation — are likely to increase borrowing costs.

Also, expansion costs money. The high-tech equipment needed to run a modern wood mill is not cheap. “One of the biggest hurdles to the companies here being able to branch out is spending a fairly large amount of cash to bring on a different piece of equipment,” Tom Wallace, the former owner of Wells Wood Turning in Buckfield was quoted as saying in the Council’s report. He suggested matching grants could help.

“It takes a lot of money to start any kind of wood manufacturing mill,” said Kemp, the Farmington wooden products wholesale distributor.

Paul Sampson, who owns A.E. Sampson & Son Ltd. with his wife Jula runs lumber through a molding machine at his company's Warren plant, photo courtesy of Joe RankinPaul Sampson, whose A.E. Sampson & Son Ltd. mill in Warren produces custom flooring and moldings, said he works hard to promote Maine woods to his customers.

But he faces challenges, he said, because the state has not emphasized the growing of hardwoods over the decades. Sometimes, for instance, he can’t get Maine white oak in the lengths he needs and has to supplement his locally harvested stock with lumber from Connecticut. But then has to tell the client that mixing the two batches may mean the color doesn’t match.

Sampson said there are practical ways the state could help secondary wood manufacturers:  for instance, by promoting the construction of drying kilns, even mobile ones. Too much of the rough-cut lumber available on the market is air-dried, he said.

Crandall said at one time Maine mills used to enjoy an advantage by being located so close to their source of raw materials. But these days, she said, with transportation costs cheaper, the advantage tends to lie with being close to the consumer instead.

Crandall believes that one way the state could encourage the growth, or regrowth, of secondary wood manufacturing, is simply by working with the mill owners and their industry groups to create “a vision for the forest industry” of the future. It’s hard to get somewhere if you don’t know where you want to go.

Ultimately, Crandall said, “Maine’s advantages are going to continue to be our vast natural resource. And our labor force, if we can hold on to our working age people. We have a good well-educated labor force with a reputation for being hardworking. And for being a state where there is a social acceptability of forestry. If we can hold on to those things, it gives us options.”



Joe Rankin writes on forestry, nature and sustainability for magazines and websites.