July 01, 2016

The Future of Logging and Loggers

The timber industry is changing rapidly, and loggers need to take a progressive business approach to survive. When it comes to the Forestry business in North America, there is good news and bad news for loggers.

First the good news. There has never been a more exciting time to be a logger than right now. There are some important economic trends that point to an increasing demand for North American wood. Here at home, the housing market, although still slow, is showing signs of strength. Commercial development and road building – leading indicators of housing starts – are on the rise.

A recovering housing market is reason enough to be optimistic, but there is more. North American wood is seeing an increased demand abroad. Areas like China and Europe are looking to the United States and Canada for timber for construction as well as wood pellets for biofuel.

A notoriously cyclical industry, the timber business is clearly emerging from a long down period, spelling tremendous opportunity.

The bad news is that loggers are facing a huge challenge, not to take advantage of the coming increase, but to survive. Loggers are being squeezed on one side by mills, and on the other by land owners. Rising fuel and other operation costs and a declining and aging workforce are adding to the problem.

The result will be a consolidation very similar to what farmers faced 30 years ago. Just as the family farm all but disappeared from the landscape, so too will small-scale, family logging operations. Sadly, many logging companies currently in operation will not be in business five years from now.

But the news is not all doom and gloom. With every challenge there is opportunity, and loggers who choose to embrace the challenge stand an excellent chance of not just surviving the coming industry shift, but building highly successful, thriving businesses.

In order for that to happen, loggers need to do the following:

Embrace Technology
Technology is changing the way business gets done. Every year, technology solutions become more affordable and more powerful, streamlining business, adding efficiencies, and reducing costs. Some technologies are built into forestry machines, making them smarter and more productive, while others help with the business side. At John Deere, we have seen farmers and construction contractors embrace technology. Loggers will need to follow suit to be successful.

Practice Better Human Resources
People are the lifeblood of almost every industry, and logging faces a human resources crisis. Today’s loggers are getting older, and they are not being replaced in sufficient numbers by a younger generation. Loggers need to work harder at attracting good people, developing them, and retaining them.

Become Savvy Businesspeople
As in many trades, loggers get into forestry because they enjoy working in the woods. They may struggle with the financial side of the business and may not have a firm grasp of things like cashflow and profitability, but these things are extremely important. Loggers need to have a good working knowledge of financial management to stay in business.

Find New Markets
For too long, loggers have been at the mercy of landowners and mills, and the prices they receive for timber has been squeezed. They don't realize that it doesn't have to be this way. They don't have to sell their products exclusively to mills, who don't care about their survival. There are other ways to deliver wood to other customers in other markets. Loggers need to take the time to learn how to reach those markets and market their services.

Despite the significant challenges that lie ahead, the opportunity is there for the taking for loggers who take a progressive approach. That will mean thinking differently and seeing the big picture. Loggers who build a strong business acumen and apply it to their work in the woods will be poised for long-term growth and success.