Table of contents

Changing Economics of the Appalachian Forest Products Industry

Some Global Trends Facing U.S. Forest Products Industry

Questions

Wood Products* Industry

Paper* Manufacturing

Furniture & Related Industries*

Slide 7

I. Competition – U.S. losing Market Share in Most Forest Product Markets

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Slide 10

Wood HH Furniture Imports (Billion US$)

U.S. Hardwood Flooring Trade

U.S. Hardwood Lumber Consumption Trends

Slide 14

Global Trade in Forest Products Value of Imports, in Billion US dollars

U.S. Trade Balance in Forest Products*

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II. Fiber Issues

U.S. Industrial Hardwood Roundwood* Usage

OSB

Structural Panel Production U.S. & Canada

… Engineered wood plants doubled in past 15 years .. They can use smaller trees and some hardwoods

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Another Fiber Issue - U.S. Timberland Ownership

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Softwood Logs World Share (volume) of Top Importers and Exporters

Hardwood Logs World Share (volume) of top Importers and Exporters

III. Center of Economic Activity Shifting to Asia

Globalization – How will Changing Global Economy Impact Wood Products Industry?

Per Capita Wood Consumption

China and US Consumption of Wood Products in 2003 – What will China’s Share be in the Future and where will it come from?

China’s Hunger for Raw Materials

Slide 37

China’s Hardwood Log Imports - 2006

China’s Hardwood Lumber Imports

IV. Opportunity - Find New Markets – Residential Construction Markets Critical for the Softwood Industry (structural applications) and becoming increasingly important for the Hardwood industry ( non structural or appearance applications)

Housing Demand

Slide 42

Market size - New Construction vs Remodeling Remodeling becoming increasingly important & is the key market for hardwood components

Softwood Markets

Hardwood Lumber Consumption Trends

Changing Hardwood Component Markets

Components in building materials interior trim, moldings, stair parts, flooring blanks

Components in cabinetry cabinet doors, and parts

Components in in furniture parts

V . Opportunity – adding value, customization, market focus

Service sector provides bulk of employment in high wage countries – can’t make money selling only product – selling service means installation & more!!

U.S. Employment Trends – Growth in Value Added Services

U.S. Demographic Trends Our aging labor force

Labour shortages in homebuilding

Slide 55

Using more factory built to reduce waste, labor cost, & cycle time… less lumber per SF for each house

Modular Construction to Reduce Waste, Labor Content, Cycle Time

Implications of demographics

From standard to customized From product to Value-Added service

Opportunities for hardwood lumber Industry?? – help component manufacturers and other secondary industry to remain competitive – how – proprietary grades; cut to size; sorting; ….????

Concluding thoughts – globalization means tougher competition – be more alert to trends