Last summer, the bubble burst in the home-building industry. Ainsworth closed three mills that made oriented strand board - that's a manufactured wood product that's become one of the two big players in northern Minnesota forestry.
Mike Kilgore, who teaches forest policy at the University of Minnesota, says several factors are contributing to the tough time in the industry; not just the drop in home construction, but also higher energy costs, and increased competition from overseas producers.
"A lot of the markets have simply dried up, and for a number of the employees of these mills, they're laid off," he says. "We've got loggers out there who have a lot of high-priced equipment that they're making payments on, and their ability to sell the timber to these mills is now a lot more restricted than it was a year ago."
Gov. Pawlenty commissioned a task force to come up with recommendations about how to make Minnesota's forest industries more competitive. They issued their recommendations two weeks ago. Minnesota's mills badly need modernizing, but the permitting process is too bureaucratic and time-consuming, according to Wayne Brandt. He's head of Minnesota Forest Industries, a trade group that represents primarily paper and manufactured wood producers.
"Minnesota has a slow and cumbersome process," he says. "You can go to other states and achieve permits much more quickly, meeting the same standards, than you can in Minnesota."
The Minnesota Pollution Control Agency is studying the process to see how it could be streamlined. Loggers and industry representatives have complained for years that the state and federal governments aren't making enough timber available.
That makes Matt Norton nervous. He studies forest issues for the Minnesota Center for Environmental Advocacy. Norton says a few years ago the timber industry and environmentalists and the DNR agreed on a big plan. The goal was to create a healthy forest through diversity.
"We have to follow through and actually manage our forests in way that not only continues a responsible amount of timber production but helps to restore and readjust our forest so that we can repair a lot of the imbalances right now," Norton says.
He worries that goal will be forgotten in the current concern about the industry and jobs.
There's a lot the legislature could do to improve the climate for forestry. The task force report recommends trucks should be allowed to carry heavier loads, and roads should be improved. But those measures might amount to fiddling with details, when the big picture is far gloomier.
According to industry observers, some companies are investing in new mills in the southern U.S. and in other parts of the world, where trees grow quicker, labor is cheaper, and environmental rules may be less stringent.
Eric Kingsley, a forestry consultant in Maine says industries in both Minnesota and Maine should concentrate on their strengths, one of which is their location close to U.S. population centers. Even with the home-building downturn, Americans still have a big appetite for furniture and other value-added wood products.
"How do we take our proximity, and our advantage in the supply chain, and translate that into value-added products that we can sell," he asks, "as opposed to trying to compete in very, very difficult commodity markets, where manufacturing is quickly moving offshore?"
Kingsley says those commodites, such as paper and processed building products, may never be competitive in Minnesota again.
Should the state encourage the forest industry to produce unique or higher-priced items? The Governor's task force may take up that question. The group plans to come up with longterm recommendations later this year.