Demand for lumber will revive as downstream markets recover
Los Angeles, CA (PRWEB) March 13, 2012
The Forest Support Services industry, which provides services such as estimating timber, forest fire fighting, forest pest control and consulting on wood attributes and reforestation, has performed poorly over the five years to 2012. The demand for forestry support is directly tied to demand for lumber. Because of the downturn in the housing market, demand for the forestry sector as a whole contracted. IBISWorld estimates that industry revenue will fall at an average annual rate of 5.0% to $1.7 billion during this period. However, there have been two distinct revenue periods: first, revenue dropped during the two years to 2009, while it is estimated to experience growth during the following three years. According to IBISWorld industry analyst Caitlin Moldvay, “declining domestic construction activity has led to lower demand for wood products since 2006, negatively affecting firms throughout the forestry sector.” However, the slow recovery in the housing market and the US economy as a whole has helped the industry in the three years to 2012. Residential construction has led this trend, as the number of housing starts has trended slowly upward with strong gains expected during 2012. As a result, industry revenue is expected to increase 5.8% in 2012.
While the services provided by the Forest Support Services industry continue to be important for forestry operators, the industry has been heavily affected by declining activity within the forestry sector. Industry firms are generally nonemployers or small companies that employ fewer than four workers. Moldvay says, “since downturns in business generally have a strong effect on smaller firms, industry participation has been greatly affected by the decline in the forestry sector.” Over the five years to 2012, the number of industry operators has decreased at an average of 1.0% annually to 13,409. The heavy reliance on vehicles for plantation transportation has challenged the industry, as high oil prices have made it difficult for firms to control their operating costs.
The momentum experienced in the economic recovery will continue through the five years to 2017. During this time, increased residential and non-residential construction will drive industry revenue growth. Housing starts are projected to rise at an average annual rate of 14.0% over the five years to 2017, aiding industry growth. The US forestry sector will also benefit from technological developments that allow the provision of new, higher value added services, such as in the areas of electronic asset mapping, timber quality scanning and harvest management.
For more information visit IBISWorld’s Forest Support Services in the US industry page
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This industry includes establishments that perform support activities related to timber production, wood technology, forestry economics and marketing, and forest protection. These establishments may provide support activities for forestry, such as estimating timber, forest fire fighting, forest pest control, and consulting on wood attributes and reforestation.
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