Arkansas Inc. Podcast - Forestry in Arkansas, with Max Braswell, EVP - Arkansas Forestry Association

TRANSCRIPT

MIKE
If you’ve ever visited Arkansas or lived here, it’s a safe bet you’ve seen our beautiful forests. More than half our state is covered in trees and forests are a major part of Arkansas’ history, culture, tourism and our overall economy. 

Today I am going to be visiting with Max Braswell, Executive Vice President of the Arkansas Forestry Association. We’ll be talking about the challenges that are facing the timber industry today, the changing landscape of forestry, the timber industry as a whole and why Arkansas’ forests are uniquely situated to handle today’s increased demand for wood and wood products. 

So first, let me introduce Max. Max is the Executive Vice President of the Arkansas Forestry Association and has served in this capacity since 2008. Prior to that, he was the Manager of Communications and Government Relations for Domtar Industries from 2001 to 2008 and communications manager for Georgia Pacific’s Ashdown mill from 1992 to 2001.  He started his career in the forest products industry with Georgia Pacific in 1990 and currently serves on the Board of Directors for the Arkansas Society of Association Executives and is a member of the Arkansas Society of Professional Lobbyists. He served as president of the Arkansas Forest and Paper Council and is a past member of the AFA Board and past Chairman of the Communications Committee. Max is a proud graduate of the Arkansas State University in Jonesboro, Arkansas. 

Welcome, Max.

MAX
It’s great to be here, Mike. Thanks for having me. 

MIKE
Well, we have a lot of momentum right now in our state. We have a good couple of years. In fact, in the last two years since January of 2015, there have been 29 projects and 17 locations that are resulted in a proposed of over $2 billion in investment in the timber industry. A few of the highlights include Conifex, who is investing $80 million in El Dorado. They are going to start up the old Georgia Pacific mill there, creating 120 new jobs. Last November, Highland Pellets officially opened its doors on a new 600,000 metric ton per year wood pellet facility in Pine Bluff. This is 68 direct jobs at that facility. The list goes on and on, including Sun Paper, which announced a state of the art biorefinery in Clark County with a $1 billion investment and 250 jobs.

So I want to start off with the demand for timber. It is obviously very strong. What makes Arkansas forests well suited to handle the expansion we’re seeing in our state?

MAX
The best place to start is one of the things you mentioned. The fact that the state of Arkansas has over 19 million acres of forest land. That is over half of the state. The abundance of the available fiber that we have is a great advantage and a great selling point for Arkansas. You know trees are only renewable resource. We use that terminology lot but it is really true. We’ve got a lot of trees out there and we have a lot of trees that continue to grow. Our forests in Arkansas are healthy. We want to keep them that way and one of the things that need to happen is that we need to see an expanded presence in the growth of the timber and forest products industry in the state.  So I think we are uniquely ready. It’s time. We’re excited about it and we think there’s no better time to be in the timber and forest products industry in Arkansas than right now and moving forward.

MIKE
So as a state and an economic development organization, we’ve identified the timber and forest products as one of our key targets that we are proactively recruiting. Is that a good target for our state?

MAX
I think it’s a great target for our state. We talked about the fact that we have healthy forests in Arkansas. We’ve got great diversity in the forests of our state. If you go to North Arkansas, you’re going to see primarily hardwoods. You go to South Arkansas, you’re going to see the great pine forests of our state. A lot of folks traveling in one direction or the other will think that’s the only kind of trees that we’re growing in Arkansas but in fact, our forests are very diverse. We have the opportunity for any number of different types of manufacturing facilities, related industries to the timber and forestry products community, and then we have a great sense of collaboration in Arkansas. Whether it be private industry, folks at the Arkansas Forestry Commission at the state level, our U.S. Forest Service partners who manage our national forests, or agencies who have an agriculture, environmental, or timber & natural resources-based focus in the state, we just really work well together. That’s something that is recognized not only by us but by folks around the country. 

MIKE
That’s great and a good factor in all of that. You mention timber is a renewable resource so we talk a lot about sustainability. Sustainability it a big topic in this industry and you’ve mentioned it before. Can you explain why the growth in the timber industry is actually a good thing for Arkansas forests?

MAX
That’s a great question, Mike and I think the answer is something that kind of escapes people from time to time. You would equate bringing more industry into your state using more trees. Historically, that’s a bad thing because we think, "we don’t want to cut down any trees." But when we talk about sustainability, we have to remember that everything we do in this industry goes back to creating good forest health. Whether you are a landowner, logger, or manufacturer, everything that you are doing is trying to create a healthy, sustainable forest out there. You only have to look at the western part of the United States to see what happens when the forest products infrastructure gets closed down. I was in Colorado a couple of years ago and I looked out and saw thousands of acres of dead and dying trees. We don’t want that to happen in Arkansas. Bringing in forest industry into the state creates markets for landowners. The folks that own that 19 million acres of forestland in Arkansas, the vast majority of those are private, non-industrial types of landowners. They are people like you and me. They need markets and an incentive to continue to keep their forests growing. Forest industry provides that market that provides a return on investment that they’ve placed in growing those trees. That’s one reason that we feel like that having the opportunity to bring more forest industry in the state would be a great thing. Our forests need to be thinned from time to time and right now we have 19 million acres of healthy forest but over time, a lack of infrastructure means you don’t have the markets, people don’t harvest their timber, and the denser our forests get, the more opportunities we provide for the bad things to happen like disease, insects, wildfire. Thinning those forests out and having a reason to utilize some of those trees is a good thing and relates directly back to keeping our forests healthy. 

MIKE
That number, 19 million acres, when you try to put that to scale that’s incredible to think about when you want to quantify that and what it really means. It hit home for me and I’ll see if you agree with this. The governor and I obviously, as I’ve said before, tried to make this a targeted industry and one thing we do around that talks to CEOs and try to convince them who have timber companies that they should come to Arkansas. I don’t want to give away any information. It’s a confidential project we’re working on but one CEO in particular that we were on the phone with and we were making the pitch and the sales case for Arkansas. We were talking about that number 19 million, and that CEO told us “Yeah, we refer to Arkansas as the Saudi Arabia of Timber.”  
My question would be, do you agree with that CEOs assessment?

MAX
Wow. If the CEO, and I believe he probably did, made that statement in a positive way, I could agree with that. I think what he’s saying is much like Saudi Arabia in their rich oil resources, Arkansas is rich in its timber resources. I would agree with that. In fact, that 19 million acres is a term that we utilize a lot to describe today’s forests but I think something to keep in mind is that back in the late 1970s, that number was about 17.8 million acres. Since the late seventies, we’ve added over 1 million acres of forest land to Arkansas. 

MIKE
You’ve mentioned Colorado and what is happening there. When you look at Canada and the western United States and how they’ve been devastated by Mountain Pine Beetle and wildfires, are there concerns? Are there problems here that we need to worry about? Are any of those going to be impactful here? Are we doing a good job of staying away from those?

MAX
Well specifically, we would have a Southern Pine Beetle in Arkansas and across the South. There is no immediate danger for Southern Pine Beetle in the state but it is certainly something that is monitored on a regular basis. Folks like the Arkansas Forestry Commission and the U.S. Forest Service are at the forefront of monitoring for Southern Pine Beetle and any number of invasive species. So there is not an immediate threat but let’s go back to that forest health equation that we’ll talk so much about. We don’t want to create an environment for the Southern Pine Beetle. The Southern Pine Beetle would like to have a very dense, even-aged forest that's compacted so it can move very easily for the forest. So again, having a market and a reason to thin and keep our forests healthy helps with a species like that. You see those kinds of things happen out west and happen in Canada in places where they probably do have an older, dense, even-aged forest. Perhaps everything was planted around the same time. When you take that infrastructure away and you take the reasons you have to manage your forest actively, when you don’t have a place for your fiber to go to be processed into products you use every day, you’re creating an atmosphere thats conducive to things like the Southern Pine Beetle and forest fires like the massive ones we have seen in the west. You look at the characteristics of those forests, and right now we are not there in the south. We don’t want to get there. So that’s why you see really so much focus on sustainable forestry and keeping our working forests working

MIKE
Going back to the seventies, you’ve mentioned we’ve actually grown our forests in the state. Healthy forests at that. With you having a long-storied career in the industry, what are some of the biggest changes that you’ve seen in the last 10-15 years?

MAX
Suddenly a guy who started in this industry in 1990 has been around a while. I don’t feel like that. I’ll go back to when I started in the industry. I started in Crossett, Arkansas with Georgia Pacific. Probably the premier pine forest in the south. At that time, most of the big players in the industry like Georgia Pacific, International Paper, Weyerhaeuser, Green Bay Packaging were all fully integrated companies. They owned their own timberland and they had their own manufacturing facilities. One of the big changes I’ve seen is the move away from fully integrated companies. The selling off of timberland assets and now many of those assets are owned by timber investment management organizations or real estate investment trusts. We have those in Arkansas. They are great AFA members. That’s a big change. Those types of organizations manage a little differently than traditional forest product companies. They have financial investors and it’s different objectives. While they may be very close to what we would have seen when everyone was fully integrated, it’s a little bit of a change. We’ve seen more ownership fragmentation in the last 10-20 years or so. You have more folks owning that land out there, which means maybe it’s a little bit more difficult to manage. You might perhaps have more absentee owners. We work with folks in California that own land here I the state of Arkansas. So we’ve seen things like that. On a positive front, we’ve seen things like the growth of forest certification, which at AFA we think is a good thing. Whether it be through the Sustainable Forestry Initiative or the Forest Stewardship Council or an entity we work closely with the American Tree Farm System that provides a framework for forest landowners to become certified to undergo the third party audits so that you really have a way of showing the general public that you are doing the right things on the landscape. You can prove you are doing the things that you say that you’re doing. These standards are rigorous so it has really been positive from a forest management perspective. Finally, the impact of technology on our industry is something that may have been the biggest thing that has happened over the past 20 years. For a lot of years, we questioned whether the technology would really have an impact. Change happens incrementally. It doesn’t happen all at once so you have to look back to see where you might have been ten years ago to understand where you are today. Technology has had a major impact on the paper industry I particular. We don’t make as many copies these days. We do more online transactions. We were talking about one of our premier paper facilities down in southwest Arkansas, which used to be the largest producer of check paper in North America. We don’t write very many checks anymore. 

The use of technology is a good thing in our own community. We love efficiencies but it has had an impact, not the industry. It’s caused some high-cost producers to have to step away from the business. It’s forced low-cost production and a real focus on efficiencies, which is a good thing but from a job perspective, it’s difficult to replace a job in the paper industry with a lot of others out there. Particularly when those jobs could pay $30 or more an hour and you have folks making outstanding livings for their families and being able to contribute to their communities. To me, that’s been a big change and big impact, not the industry. 

MIKE
So you talk about the opportunities and jobs and the changing technology has brought about. What types of skills will be in demand in the coming years? What are the jobs of the future in this industry?

MAX
Certainly, our industry has changed just like all the others out there. We’re always going to look for the traditional skills. We need folks that know how to operate heavy equipment, to go out into the forest and be able to handle logging jobs and things of that nature. We need truck drivers. Keeping in mind though, that all of that equipment is high-tech. It’s computer controlled. The same for our manufacturing jobs. These facilities are as high tech of facilities you would ever want to see. At the same time, we need problem solvers, team builders, people who can be critical innovative thinkers and communicators. We need all those kind of skills as well. I think the jobs of the future in our industry will continue to evolve into high-tech jobs. When I watch people operate the equipment in our industry, I think back to seeing young people playing video games and the skills they have in manipulating. You see a lot of that when you’re operating logging equipment or operating equipment inside a wood yard in a paper facility and sore going to need soft and hard skills. People that can help us to continue to be innovative. 

MIKE
Working in a mill 40 years ago to working in a mill today is completely different skills sets. 

MAX
It is a different skill set. You always look for a little different of an employee today than you would. And certainly one as we talked about that has a variety of skills, can adapt to a changing working climate and then in our larger facilities, in particular, we have opportunities for all kinds of employees. You need engineers, people with information technology skills, accountant, HR professions. I used to tours for young people. Did hundreds of them when they came to a paper mill. I urged all of them to listen to what their teachers had to say. Get a good education and understand that there was a place for them in wood products or paper facility out there. We have all kinds of jobs that need good employees and they pay very well. 

MIKE
This has covered great information. Let’s sum it up on this. If there is a CEO of a timber company or a site selection consultant listening to this today, what would you tell them is the top reason they need to be locating a facility in Arkansas.

MAX
Number one, Arkansas is a great place to work. It is a state filled with great people to work with. It’s a state that is ready to work and we have a long history of supporting and having a relationship with forestry. We’ll go back to those 19 million acres of healthy forest. We need to utilize that fiber wisely so we can have sustainable forests for years and years to come. There’s no better time for a forest company to be a part of so many solutions that we’re looking for in Arkansas. The Arkansas Forestry Association has had the opportunity to represent this industry since 1947. We’re excited about the prospects of continued growth for our forest products industry.

MIKE
We thank you for doing us today. Thank you for your time and the incredible insight into this industry and what you are doing for our state in making sure those 19 million acres continue to be healthy.

You can learn more about the forestry industry in Arkansas by visiting arkforests.org or Arkansasedc.com/timber.