Minnesota's Logging Businesses: A 2016 Update

softwood timber pile

By Charlie Blinn, Professor Forest Resources Department at the University of Minnesota.

Minnesota logging businesses are harvesting more timber during the winter months, and 37 percent of Minnesota loggers say they've seen their profitability improve over the previous three years. Those were among the preliminary findings in a survey of Minnesota logging businesses owners conducted last year.

The survey was sponsored by the University of Minnesota, the Minnesota Logger Education Program, and Minnesota Forest Industries with in-kind support from the USDA Forest Service. Logging business owners have been surveyed several times since the late 1970s to assess the health of this industry. The most recent survey assessed the status of businesses in 2016.

Here are some of the highlights of the 2016 survey, including basic characteristics of respondents, their perspectives on their production and profitability in 2016, and their thoughts about the future of their business.

A total of 140 businesses responded to the survey, an overall response rate of 39 percent.

Average cords harvested increased.
Respondents reported harvesting 1.476 million cords in 2016, across all public and private ownerships, an average of 11,250 cords (median 4,000 cords) per respondent or 51 percent of the statewide harvest reported by the Minnesota DNR for 2016. (In 2011, the average respondent produced 9,500 cords.) Respondents had been in business an average of 30.5 years, continuing a trend of aging businesses.

Minnesota has more smaller-volume logging businesses.
Another trend we're noticing is that Minnesota has more smaller-volume producing businesses and relatively few larger businesses. Fifty-six percent of the businesses produced as many as 5,000 cords, accounting for nine percent of the total volume reported. The 18 percent of respondents who produced more than 15,000 cords accounted for 68 percent of the reported volume. The remaining 26 percent of respondents produced between 5,001 and 15,000 cords.

Annual harvet category bar chartAnnual volume harvested (cords) in 2016 by number of responding businesses (bars) and percent of total reported volume harvested (line).

Most Minnesota loggers use feller-bunchers and harvest in the winter.

Loggers felled 74 percent of the volume using a feller-buncher, 24 percent using a cut-to-length harvester, and 2 percent using a chainsaw. Fifty-three percent of the volume was harvested during the winter, continuing a trend of increasing winter harvesting. The average respondent used 1.55 gallons of fuel per cord while working in the woods.

Around half of the harvested volume comes from public lands.
Just over half—51 percent—of the harvested volume came from lands managed by the Minnesota DNR and county land departments. Family forest landowners provided 20 percent of the reported volume. Family forests are important to businesses that harvest up to 1,000 cords but less so for larger businesses. The remaining 29 percent of the timber came from lands owned and/or managed by private industry, the USDA Forest Service, Indian tribes, municipal, and other sources.

Equipment is getting younger—slightly.
Businesses replace equipment for a variety of reasons to maintain productivity within their operation. While business that produced up to 1,000 cords annually continued to maintain the oldest equipment, the average age of their newest piece of felling equipment fell from 26 to 21 years. In contrast, for businesses that produce 20,000 cords or more, the average age of the newest piece of felling equipment remained unchanged at 5 years. Approximately three-quarters of planned equipment replacements will replace existing equipment, generally with pre-owned equipment.

Two-thirds of businesses are not operating at full capacity.
A business operates at full capacity when its current equipment, workers, capital, and other resources are producing at their full potential. Thirty-five percent of the businesses reported that they operated at full capacity in 2016. The highest percentage of respondents who operated at full capacity harvested "between 5,001–10,000 cords" and "more than 15,000 cords" in 2016. Of the businesses that reported having excess (or unused) capacity, they could have produced nearly 5,400 more cords on average (median 3,000 cords). Businesses that produced at least 5,000 cords in 2016 were most likely to report that they broke even in 2016.

Businesses that harvest more cord volume can access capital more easily.
Successful businesses have ready access to capital that can grow business and create jobs. While there was general agreement across all volume categories that access to capital in 2016 was neither easy nor hard or even more accessible, businesses that harvested "between 5,001–10,000 cords" or "more than 15,000 cords" in 2016 reported the easiest access to capital.

Profitability is improving.
Most, or 39 percent, reported good or excellent profits in 2011. About one-quarter (26 percent) reported poor or very poor profits. Thirty-seven percent reported that profits have improved between 2013 and 2016.

comparison profitability over time bar chartComparison of profitability in 2016 and 2011 to the previous three years.

Independence and the outdoors are the best reasons to be a logger, yet most loggers would not encourage others to enter the business.
Only 20 percent of respondents indicated they would encourage a member of their family or a close friend to become a logger. Why? However, out of nine factors provided as reasons for going into the logging business, respondents rated that working independently and outdoors as being very to extremely important. Respondents rated pay or wages as least important.

Even though business is up, 27 percent don't expect to be in business in five years.
Twenty-seven percent of respondents don't expect to be in business in five years. While up slightly from 2011 (25 percent), the average volume (10,850 cords) produced by those businesses in 2016 is higher than was reported in 2011 (5,750 cords).

For additional information about the survey, contact Charlie Blinn, Department of Forest Resources, University of Minnesota (612-624-3788, [email protected]).