A lot has changed in the 25 years I have worked in the forest industry.
- The breaking up of vertically integrated forest product companies that owned land, building product plants, and pulp mills; and the formation of REITs and TIMOs.
- The worldwide development of high-production plantations in favorable climates, the conversion facilities that followed, and the reality of global competition in forest products.
- Mergers and acquisitions of forest product companies at a pace that has made me wonder if the only ones really profiting were the guys that printed business cards.
- All of these changes have worked profound effects on how we manage our forests. But a development that marks this decade—the emergence of new bio-energy industries and the strong interest in new policies to grow them further—promises to change how we use our forests more than any of these trends.
Will the necessary technology breakthroughs occur, and will the appropriate government policies materialize, to make this new competitor real and sustainable? Or will bio-energy possibly drift away, as the Y2K scare did ten years ago?
If technology avails itself, wonderful things should happen. Our dependency on Middle Eastern oil and our need to station troops in the region will drop. Our trade deficit will improve dramatically, as hundreds of millions of dollars we now send off-shore each day are instead invested in rural America.
But if new technologies are not successful, then most of these new uses of wood for bioenergy will require some form of government subsidies or incentives. Most of us believe business does best without government intervention, but looking at the record of bio-energy incentives so far, we can all see cases in which businesses, of all sizes, have reacted and changed their practices and profit pictures in response to them.
A journey traveled with different groups pulling in different directions does not follow the straightest path. But it is such a path that we must travel. Our collective entrepreneurial spirit will identify and develop the good ideas as we go. I hope at least one of these ideas will lead to a new use of wood that can move into tomorrow’s market without subsidy.
Give us one success story, and we as an industry will surprise those outside forestry with how quickly we can adjust the way we grow, harvest, and process the product. The supply chain management piece will be a big part of the challenge, and FRA will play a critical role in testing supply chain systems, helping us share information about systems and innovations that work, and ensuring that we needn’t repeat failed approaches.
A wise man once said, "Life is not about arriving at a destination, but the journey." Enjoy the trip!
Dick Carmical
FRA Chairman