A FUNCTIQNAL GEOGRAPHIC APPROACH TO THE UTELIZATEON OF THE NORTHERN MICHIGAN FOREST RESQURCE Wests {20:- We Degree of pit. D. MICHIGAN STATE UNIVERSITY David E. Kromm 1966 p. i':_iC L or, . ‘ LIBRARY . Michigan State University This is to certify that the, '. .1 I ‘ _" . .,,.. thesis entitled A FUNCTIONAL GEOGRAPHIC APPROACH TO THE UTILIZATION OF THE NORTHERN MICHIGAN FOREST RESOURCE presented by David E. Kromm has been accepted towards fulfillment of the requirements for Ph.D. Geography degree in Jam/ks. Major professor Date :DerC-ewtbei ‘74; 0-169 ‘ ABSTRACT A FUNCTIONAL GEOGRAPHIC APPROACH TO THE UTILIZATION OF THE NORTHERN MICHIGAN FOREST RESOURCE by David E. Kromm The forest, one of the most important resources in our Western society, has contributed to the progress of man since the beginning of civilization. It is the purpose of this thesis to investigate the role of forest exploitation as an agent in formulating the spatial structure of a forest- ed area. The character of the relationship between the uti- lization of a forest resource and the organization of human activity in space is viewed as a function of the method by which the resource is appropriated for use. Within a con- ceptualized framework of forest exploitation sequences of depletion and management for continuous production, the be— havior of the Northern Michigan lumber industry between 1850 and 1910 and of the pulp and paper industry following World war II is observed. These industries, which dominated ex— ploitation of the resource during their respective time periods, connect the concepts of forest utilization and the human organization of activity in space. Observing the pro- cesses of forest resource utilization in Northern Michigan David E. Kromm provides the basis for establishing generalizations regard- ing the consequential relationship between resource utili- 'zation and spatial Organization. The patterns 0f forest utilization found in Northern Michigan are common to forested regions throughout the nation. In a depletion or mining model, the inputs influencing man's activities in space which result from forest utili- zation are terminated when the timber is removed from the landscape. In a sequence whereby the resource is managed for continuous production, the inputs influencing the human organization of space which are generated by forest exploi- tation persist through time. During Northern Michigan's lumbering era, the activity-inducing inputs generated by the conversion of the resource to useful products stimulated economic growth and development. But as a result of the mining, the forest resource was depleted. The economic activity of the region was greatly altered as the inputs re— sulting from forest exploitation were terminated and new means of support were sought. Because of the germination of a second-growth forest that is effectively managed for sustained yield, Northern Michigan presently is able to support an expanding and eco- nomically important pulp and paper industry. In approaching the persisting influence of a managed forest resource, David E. Kromm consideration is given the notion that the potential of the resource to influence the human arrangement of activity with- in a region is in large measure determined by the comparative advantage of the area for forest product industries. NOrthern Michigan's competitive position with respect to the pulp and paper industry varies with the locational control considered, but the region's strongest advantage is proximity to a major market area for paper and board products. In general, the region's relative advantage for the pulp and paper industry lies within the manufacture of products which can be produced from locally available species and for which there exists a large nearby market. The utilization of the Northern Michigan forest re- source to support an expanding pulp and paper and particle board industry contributes substantially to the economic activity of the region. But it is observed that the basic extensive structure persisted as the utilization of the forest progressed from exploitation without regard for future production to management of the resource for sustained yield. It is suggested that, as regions dependent on forest product industries are usually heavily forested and sparsely pOpu- lated, few have an organization of social and economic activity mature enough to supply needed technology, non—wood materials and mechanical inputs, or to purchase the products David E. Kromm of the industry. As a result of this space-using character of forestry, forested regions do not benefit proportionately from the multiplier effect of expansion in resource-based industry and are restricted in the extent of participation in economic growth and development. A FUNCTIONAL GEOGRAPHIC APPROACH TO THE UTILIZATION OF THE NORTHERN MICHIGAN FOREST RESOURCE BY R David EV Kromm A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Geography 1966 ACKNOWLEDGMENTS This study was made possible through the assistance of many people, a number of whom I wish to specifically acknowledge. The managers of the pulp and paper mills oper- ating in Lower Michigan willingly offered their time and pro- vided information which greatly facilitated the collecting of needed data. Mr. Ray Pfeifer of the Michigan Department of Conservation was particularly helpful in making available research files, answering my numerous questions, and offer- ing suggestions which contributed immeasurably to my under- standing of the problems of forest resource utilization in NOrthern Michigan. For their guidance and advice I would like to thank Dr. Harm deBlij and Dr. Clarence Vinge of the Geography De- partment. I am especially indebted to Dr. Milton Steinmueller of the Resource Development Department, whose abiding interest inspired me to probe more deeply into the meaning of re- sources. I also wish to express my sincere appreciation to Dr. Ian Matley for his continued encouragement and his generosity in giving time and council while patiently di- recting this thesis. For her love, help and understanding, I thank my wife, Roberta. ii TABLE OF CONTENTS Page ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . ii LIST OF TABLES . . . . . . . . . . . . . . . . . . . . vi LIST OF ILLUSTRATIONS . . . . . . . . . . . . . . . . ix LIST OF APPENDICES . . . . . . . . . . . . . . . . . . x Chapter I. INTRODUCTION . . . . . . . . . . . . . . . . . 1 Part 1. The Concept of Resources . . . . 1 Man and Resources Considerations in Resource Utilization Scarcity of Resources The Contribution of Resources to Man's Economic Well—Being Utilization of the Forest Resource Review of Geographic Literature Re- lated to the Forest-Resource Part 2. A Geographic Approach to Re- source Problems . . . . . . . . 32 Some Useful Generalizations Statement of the Problem Scope of the Investigation Sources of Data Area of Study: NOrthern Michigan II. MINING OF THE NORTHERN MICHIGAN FOREST RESOURCE . . . . . . . . . . . . . . . . . 45 Introduction Early Non-Commercial Utilization of the Forest Mining of the Forest Resource Growth of Other Forest Product Industries iii Chapter Page Relationship of Mining to Structur— al Arrangement Structural Changes Resulting from Forest Depletion III. THE SECOND-GROWTH FOREST: INTRODUCTION OF FOREST MANAGEMENT AND NEW INDUSTRY . . . . . 77 Introduction Forest Management Structure of the Forest-Based Industry Growth of the Pulp and Paper Industry Present Structure of the Pulp and Paper Industry Paper and Board Products Manufactured Current WOod Utilization IV. NATIONAL GROWTH AND STRUCTURE OF THE PULP AND PAPER INDUSTRY . . . . . . . . . . . 93 Introduction Role of Technology in the Pulp and Paper Industry DistribUtion of Pulp and Paper Mills Economic Structure of the Pulp and Paper Industry Demand and Capacity in the Pulp and Paper Industry Future Growth of the Pulp and Paper Industry V. COMPETITIVE POSITION OF NORTHERN MICHIGAN . . 112 Introduction Wood Chemicals water PoWer Transportation Labor Markets Competitive Position iv Chapter VI. CAPABILITY OF THE NORTHERN MICHIGAN FOREST RESOURCE TO SUPPORT AN EXPANDING PULP AND PAPER INDUSTRY . . Introduction The Existing Forest Resource The Future Forest Resource Competitive Position Price of Wood Utilization of the Forest Resource VII. RELATIONSHIPS BETWEEN FOREST UTILIZATION AND ECONOMIC GROWTH AND DEVELOPMENT Introduction Models of Forest Resource Utilization Contribution of the Pulp and Paper Mills Forest Utilization and Structural Change Opportunities for Further Research VIII. SUMMARY AND CONCLUSIONS APPENDICES BIBLIOGRAPHY The Nature of Resources Mining of the Forest Resource The Managed Resource as a Basis for the Pulp and Paper Industry Forest Utilization and Spatial Structure Page 134 162 187 200 210 Table 10. 11. 12. LIST OF TABLES Growth in number and employment of shingle mills, 1874-1894 . . . . . Number of plants, employment and capital in- vested for selected industries, 1884 Selected characteristics of the NOrthern Michigan economy, 1854-1894 Population changes in Northern Michigan, 1890—1940 Population change of Au Sable and Oscoda, 1890—1910 . . . . . . . . . Change in tax rate per $1000 valuation for selected counties, 1892-1921 Daily capacity of NOrthern Michigan pulp mills by pulping process for selected years (in tons) . Daily capacity by pulping process of the mills using Northern Michigan roundwood (in tons) Paper and board products manufactured in Northern Michigan or in other mills using the region's forest resource Roundwood utilization by species, 1965 (in standard cords) . . . . Apparent consumption of paper and board, 1899—1960 (in million tons) Rates of cost substitution among inputs in the wood pulp industry . vi Page 59 61 62 .71 72 75 86 88 9O 92 107 115 Table 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Value of materials consumed in pulp, paper and board mills in the United States, 1963 . . . . . . . . . . . . Selected characteristics of the Northern Michigan forest resource by county, 1956 Commercial forest area, volume and annual growth of principle pulping species in Northern Michigan, 1955 . . . Allowable cut by species, Huron National Forest, 1952 and 1965 (in standard cords) Growth, allowable cut, actual cut and . surplus of selected pulping species in Northern Michigan, 1955 (in 1000 cords) Annual drain of selected pulping species in Northern Michigan, 1959-1965 (in 1000 cords) . . . . . . . . . . . . . Amount of commercial forest land in Northern Michigan and pulpwood production by ownership Net volume in forest plantation in Northern Michigan by ownership, 1957 (in 1000 cords) . . . . . . . . . . . . . Percentage of woodland owners and forest acreage in Northern Michigan by occupation Quantity, delivered cost and cost per cord of major pulping species in the United States, 1963 . . Quantity, delivered cost and cost per cord of wood by major region of utilization, 1963 . . . Average delivered pulpwood prices in Lake States by species, 1957-1958 Estimated contribution of primary forest activity of the pulp and paper industry to the Northern Michigan economy . . . vii Page 118 136 137 140 140 142 147 149 151 156 157 159 169 Table Page 26. Projected domestic consumption of paper and board products (in million tons) . . . . . . 208 27. Projections for domestic pulpwood consumption (in million cords) . . . . . . . . . . . . . 209 viii Figure 10. 11. 12. 13. 14. 15. 16. 17. LIST OF ILLUSTRATIONS Model for sequence of forest removal Model for sequence of managed resource Area of study: counties and county seats Original forest cover Sawmilling employment, 1874 Sawmilling employment, 1884 Changes in sawmilling employment, 1884-1894 Political organization of counties . Establishments using NOrthern Michigan pulpwood National distribution of secondary converters Wood pulp capacity by state, 1965 National distribution of paper and paper- board mills . . . . . . . . . . Vertical integration in the pulp and paper industry . . . . . . . . . . . . . . . . Highways and rail lines serving Northern Michigan Pulpwood production, 1965 . . . . . Stumpage value, 1965 Estimated contribution of primary forest activities, 1965 ix Page 37 37 42 48 52 55 57 64 88 99 101 102 105 128 143 167 170 LIST OF APPENDICES Appendix Page I. . . . . . . . . . . . . . . . . . . . . . . . 200 II. . . . . . . . . . . . . . . . . . . . . . . . 204 CHAPTER I INTRODUCTION Part 1. The Concept of Resources Man and Resources Geographers are vitally concerned with the variable landscape of the surface of the earth as it is modified through the interchange between man and his environment. To support his desire for economic and social well-being, man interacts in a diverse manner with his environment, result- ing in an infinite number of landscape patterns. Employing intellect and manipulative ability, man utilizes selected elements of his environment to achieve his goals. Illus- trating this process, Mesolithic man pursued a livelihood of hunting and gathering, searching for water, animals, fruits and nuts. Those elements that he appropriated for sustenance comprised the useful part of his environment. In modern terminology, they constituted the Mesolithic man's natural resources. ’To the contemporary American, resources embody many more elements of the environment, including water, forests, 1Hereafter interchanged freely with the word "resources." mineral fuels and a wide spectrum of metals. With the ex- ception of water, and perhaps the forest, these phenomena were either unknown or of no use to the Mesolithic hunter and gatherer. For the ancients, coal and oil did not exist; for tens of centuries man throughout the world walked on gold, silver and other precious metals without seeing any value in them. Resources are a relative phenomenon that varies in time. But resources also vary in space. As there exists an enormous range in abundance among the elements of the earth's surface, the fixed location of resources is often of great significance in their use. The uneven distribution of uranium ore illustrates the problems associated with Spatial variation. When American scientists began a systematic search for the resource in the early 1940's, the most useful deposits were found in the Belgian Congo. Because this lo- cation was deemed strategically unacceptable, an immediate attempt was made to find uranium nearer our country. Soon additional deposits were found in Canada, and through in- creased effort, valuable trace occurrences have been identi- 1 In the case of fied in large areas of the United States. uranium, technology was employed to overcome the unsatis- factory spatial variation that existed following initial exploration. 1Thomas B. NOlan, "The Inexhaustible Resource of Tech- nology," in Perspectives on Conservation, ed. Henry Jarrett, published for Resources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1958), p. 58. Resources cannot be defined merely by the existence of certain elements in the environment. Man's perception of these elements denotes what is and what is not a resource; without man, there are no resources. Resources comprise that part of the environment which man finds useful. Zimmermann asserts that "usefulness to man, capacity to satisfy human wants, stamps environmental aspects as re- sources."1 In this paper, the term "resource" refers to those elements of the natural environment which man uses to assist his attainment of social and economic goals.2 Resources are relative because they are not only natural phenomena but are also cultural phenomena. In the words of Broek, "Each culture has its own appraisal of the utility of the earth's elements--in other words its own re- source pattern."3 Through the application of certain features of culture, notably technology and scientific knowledge, resources assume their meaning and significance in a society. Technological advancement alters both man's lErich W. Zimmermann, WOrld Resources and Industries: A Functional Appraisal of the Availability of Agricultural and Industrial Resources (New York: Harper & Brothers, 1933). p. 3. 2This would exclude man and his works except for those segments of the natural (biotic) environment which were not physically created by man but were in some form changed by his actions. In this broad definition, a forest plantation or fertilized soil would be a resource, but a highway or a dam would not. 3Jan 0. M. Broek, "Discourse on Economic Geography," Geographical Review, XXXI (October, 1941), p. 664. awareness of resources and his ability to use them.1 Few of the combinations of elements that the contemporary American identifies as resources are of any use to the indigenous population of Micronesia or to the Australian Aboriginal, or even to the more sophisticated inhabitant of the Bolivian Altiplano. At present, uranium is not a resource to the people of Finland or Argentina or Thailand. Conversely, the reindeer hides sought after and prized by the Lapp are of little meaning to the resident of Baltimore or Kansas City. Culture also governs the number and kinds of elements that the society chooses to use. Often, this takes the form of a religious belief which restricts the use of specified animals, minerals or other elements of the environment. There exists an essential correlation between the culture pattern and the environmental substances which are considered useful.2 Because of the profound connection between resources and culture, examination of the elements of the environment employed by various societies serves as an important key in the understanding of man's organization of his institutional 1Joseph L. Fisher, "Natural Resources and Technologi— cal Change," Land Economics, XXIX (February, 1953), p. 61. 2Within each culture differences exist as to how those elements selected as resources are viewed. For ex- ample, in looking at the soil resource of a Georgia plan- tation, a conservation officer, a tenant farmer and the property owner may possess conflicting ideas with regard to the utilization of this element of the environment, with all of them agreeing on its value as a resource. and sustenance patterns.1 The patterns and organization of human occupance may be seen as the outgrowth of human choice achieved within the framework of the technology, values, re- strictions and other components of the cultural setting. Through cultural interaction with the environment, each so- ciety appropriates a unique combination of elements and con- tinuously alters the contents of this amalgamation through time. As a result of this dynamic process, resources are relative in the time, space and culture dimensions. Considerations in Resource Utilization In viewing the concept of resource utilization, many scholars have probed the behavior of resources from the per- spective of contrasting cultural settings.2 For through the mechanism of varying motives, differing cultures produce unique patterns of resource utilization. In order to limit the influences of this diversity in this thesis, resource utilization will be viewed through the cultural-economic structure characteristic of Anglo-America. Many of the lVincent Ostrom, "The Social Scientist and the Con- trol and Development of Natural Resources," Land Economics, XXIX (May, 1953), p. 105. 2Among these works are Walter Firey, Man, Mind and Land: A Theory of Resource Use (Glencoe, Illinois: The Free Press, 1960), pp. 19-38; Allen K. Philbrick, This Human World (New York: John Wiley and Sons, 1963), pp. 20—34: Carl 0. Sauer, "Theme of Plant and Animal Destruction in Economic History," Journal of Farm Economics, XX (1938), pp. 765-75; and Erich W. Zimmermann, pp. 138—54. concepts would probably apply in most other societies be- cause of certain qualities inherent in an individual re- source, while others are likely to be much less universal, applying only in the "Western" form of social and economic organization. It is also recognized that the behavior of individual resources in the same cultural-economic setting differs and that no one principle of resource utilization or conser- vation would apply to all. Though certain categories may in time be fully exploited, resources as a whole cannot be ex- hausted.l The problem of conceptually approaching the varied character and availability of resources has resulted in the establishment of several classifications. Two such categorizations will be examined, one based on the relative availability of resources for economic extraction and another on the relative renewability of resources. Based on the cri- terion of relative renewability (or exhaustibility), three principal classes of resources have been distinguished: (1) Fund or stock resources--Resources for which the total supply is relatively fixed and non—renewable. Fund resources include metals, mineral fuels, coal, stone, gravel, sand and peat soils. (2) Flow resources-—Resources issued in a continuous stream which persists regardless of whether they are used or lConrad H. Hammar, "Society and Conservation," Journal of Farm Economics, XXIV (February, 1942), p. 112. not. Flow resources include precipitation, water in streams and lakes, sunlight and wind. (3) Biological resources—-Resources which are replace- able over time, providing care is taken to insure their con- tinued production. Biological resources include crops, pasture, wildlife, fish and forests.1 In their examination of energy resources, Schurr and Netschert introduced new terminology regarding relative availability that is applicable to other resources as well. Three concepts of resource availability were developed:2 (1) Reserves-—The stocks of a resource as viewed by the operator producing it. Reserves are defined in terms of im- mediate- or short—term economic feasibility. (2) Resource base--The sum total of a resource present within a given geographical area. The resource base es- tablishes the outer physical limit of a resource. (3) Resources--The part of the resource base which seems likely to become available given certain technologic and lRaleigh Barlowe, Land Resource Economics: The Po- litical Economy of Rural and Urban Land Resource Use (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1958), p. 285. 2In a similar discussion, Lovejoy and Homan likened the relative availability to a set of concentric circles which widen as economic feasibility for extraction declines. Wallace F. Lovejoy and Paul T. Homan, Methods of Estimating e O' t r 1 Gas and Natura as Li uids, pUbliShed.for Resources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1965), p. 147. economic conditions. Resources may be defined according to any relevant technical and economic criteria selected.1 In Western society, problems of utilization, conser- vation and management of resources are usually approached through the consideration of the relative renewability and availability of resources. Although fund resources have a fixed supply, depletion has been partially offset through in- creased efficiency in their recovery and processing and by the substitution of flow and biological resources or more plentiful stock resources for those in diminishing supply. Also, in considering the depletion of fund resources, at— tention is given to the possibility of new discovery or of tapping even larger deposits of the resource base as in- creased demand lowers the acceptable grade.2 In this fashion, the iron ore reserves of the United States have been significantly increased through the utilization of taco- nite. The resource base concept emphasizes the wide possi- bilities awaiting realization through technology. Although the supply situation with respect to the flow and biological (renewable) resources varies with the lSam H. Schurr and Bruce C. Netschert, with Vera F. Eliasberg, Joseph Lerner and Hans H. Landsberg,.§nergy in the American Economy, 1850-1975: An Economic Study of its History and Prospects, published for Resources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1960), pp. 296-97. 2Donald Carlisle, ”Nonfuel Mineral Resources," Chapter 14 of Natural Resources, ed. Martin R. Huberty and Warren L. Flock (New York: McGraWBHill Book Company, Inc., 1959), pp. 353 and 355. particular element considered, in general it is assumed that they serve society best when carefully exploited and managed for continuous production. If they are not used, they are lost—-water in a stream is wasted unless harnessed to pro- vide power, irrigate crops or supply municipal and industrial water needs. But when used, the renewable resources must be managed to maintain continuous supply. Without proper care, water resources are lost through pollution, soil resources through erosion and exhaustion, wildlife resources through starvation or slaughter. Because of the waste of renewable resources through inadequate management practices, there is a concern for their future supply. The primary objective of investigating the nature of resources and resource utili- zation is to learn more about their behavior so that they can be more effectively exploited to serve man through time. It is hoped that greater knowledge of resource behavior will facilitate producing additional products and services for society while depleting available reserves as little as possible in the process. Scarcity of Resources A foremost concern in resource studies that has stimu- lated research on the nature of resources is the question of 1Joseph L. Fisher, "Natural—Resources Research Problems," Chapter 20 of Natural Resources, ed. Huberty and Flock, p. 528. 10 whether man is "overusing" resources to the eventual detri- ment of society as a whole. The classic Malthusian state- ment of the problem contends that resource growth is not as dynamic as population growth, and therefore there exists a fixed population ceiling which can be supported by the re— source base.1 But the shortage of resources that was seen as imminent by Malthus in 1798 never occurred. Instead, living conditions for the world as a whole improved as technological advances introduced new resources and tech- niques of obtaining increased benefit from previously ex- ploited resources. For many years, there existed what is sometimes termed a cornucopian concept of resources, which asserted that technology and inventiveness would provide a never—ending storehouse of resources. However, at the present time, some scholars question whether the technologi— cal advances which seem to disprove the postulations of Malthus and other classical economists are sufficient to in— sure an adequate resource base for the world's burgeoning population. For example, Fuller declares that "the likeli- hood of critical situations in the world's stock of re— sources is hardly debatable; the only real uncertainty is the timetable.”2 But other investigators maintain that 1Richard T. Ely and George S. wehrwein, Land Eco- nomics (Madison: The University of Wisconsin Press, 1964), p. 2. 2Varden Fuller, "Natural and Human Resources," Chapter 1 of Natural Resources, ed. Huberty and Flock, p. 3. 11 there are no real shortages of resources today and that no scarcity will occur in the forseeable future. These re- searchers advance the contemporary view that unit cost of production is the best measure of scarcity and that short— ages will merely be reflected in increased prices.l Since the publication of the report of the President's Materials Policy Commission in 1952, the concept that re- source scarcity is largely a matter of cost has gained wide acceptance.2 The Paley Report stated that "the quantity of materials we can have in the future will be determined in great measure by what we can afford to pay for them, not simply in money but even more importantly in human effort, capital outlay, and other productive energies."3 In his study on mineral economics, Herfindahl proposed that, as many of the physical alternatives in resource development are not economically feasible at a given point in time or space, the most useful way to approach the question of short- ages is in terms of cost.4 Also supporting this view of lAs demand is assumed to be the determinant of the ef- fort which will be expended to appropriate a given resource and therefore its price, the terms "cost" and "price" are used interchangeably in this discussion. 2As the commission was chaired by William S. Paley, its publication is commonly referred to as the Paley Report. 3Resources for Freedom, a Report to the President by the President's Materials Policy Commission (washington: U.S. Government Printing Office, 1952), Vol. I: Foundations jpr Growth and Security, p. 13. 4Orris C. Herfindahl, Three Studies in Minerals Eco- nomics (washington: Resources for the Future, Inc., 1961), p. 13. 12 resource scarcity, McDivitt asserts that "past shortages have been due to inability to keep up with sudden surges in demand rather than to any basic lack of natural resources-— due, that is, to inadequacy in plant, not of raw material."1 As pointed out by Herfindahl, in the cost of pro- duction doctrine of natural resource scarcity it is not the physical but the economic limit of a material that de- termines the existence of scarcity. For the development of a resource to take place in western society, it must be of sufficient quality to be produced at a profit. It is not a question of physical depletion of reserves but a gradual de- crease in grade or accessibility resulting in higher costs. As demand increases, reserves are depleted and lower quality and less accessible deposits are brought into use; the eco- nomic limit of utilization is then defined by the additional capital and labor inputs society is willing to employ to put the resource in use. Contemporary concepts regarding the relationships be— tween resource scarcity and economic growth are rooted in the works of the classical economists, Malthus, Ricardo and Mill. In their penetrating work on resource scarcity and 1James F. McDivitt, Minerals and Men: An Exploration of the WOrld of Minerals and its Effect on the WOrld we Live 'In, published for Resources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1965), p. 10. 2Ibid., p. 25. 13 growth, Barnett and Morse show that the classical economists professed that resource scarcity would lead to diminishing social returns to economic effort and a retardation and cessation of economic growth.1 Scholars today reject the economic pessimism and determinism of classical thought and view the social effects of scarcity as a dynamic force which reduces labor productivity and increases the real costs of all products. As rising costs of resource extraction divert manpower and capital from other productive efforts, the total output of goods and services is reduced.2 But McGann asserts that, even if through scarcity the real price of re- sources does increase relative to other goods and services, the actual effect on overall income would be negligible as the processing of resources accounts for a very small part of world income.3 Using increasing unit cost as the measure of scarcity, several investigations have been made into the allegations of certain conservation-minded scholars and laymen that the world resource base has been severely depleted in the past 1Harold J. Barnett and Chandler Morse, Scarcity and Growth: The Economics of Natural Resource Availability, pub- lished for Resources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1963), p. 2. 2Resources for Freedom, Vol. I, p. 13. 3Paul W. McGann, "Economics of Mineral Exploration," in Science_gnd Resources: Prospects and Implications of Technological Advance, ed. Henry Jarrett, published for Re- sources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1959), p. 109. 14 fifty or one hundred years. Based on five indicators of scarcity,1 Fisher and Potter found that the relative scarcity .wmma “meflnoflz mo wumum on» mo mammmo mam “mmfluouommscmz 6cm ousuasofluam "HH .Ho> .emma "cmwflnoflz mo mpmum may no msmcmo lemma "cmmHBUHz mo mumum may mo msmcmo lemma ”cmmflnoflz mo mpmum may we moflumfiumum new msmcwo lemma .mmz ”amchUHS mo wumum may mo moflumflumum paw msmcmu ca cw>flm mump Eoum Umumasoamom oa¢.mmm.nm III «Hm.aom.mm mmm.mmmw III amassa mo msam> mmm.smo.mw namm.som.mw ooa.mmv.ow oom.v¢mw III maaflesmm cu omumo>ce Hmuflmmo III III oom.mmm.ann oom.mom.om ooo.aam.mm 663mm amnesa mo umwm pumom mom beam mmm mm Hm maaaszmm mo HmQESZ mmm.n beam.o wom.m HmH.H 66m mHHHszmm ca ucoE>oHQEm mam.mm mmo.sm omo.n oom.H mam mauusuomuscme CH ucwENOHQEm xm.¢H xh.ma xm.s am.m xa.H aoflumasmom wumum mo mmmucwoumm www.mmm mmm.mmm son.mm mon.ma nom.o coflumH5dom «mma vmma vnma woma wmma M.V®®H|¢m®.n «\wEOCOUQ CMDHEUHE CHGflUHOZ mflu. MO WUHHmHHQHUMHMSU UGUOQHQWII.M @HQMB 63 1854 to 7,288 in 1894; it is probable that the number ap- proached 7,500 in the peak lumbering year, 1890. The lumber industry nourished a growing pOpulation that demanded barbers, doctors, teachers and storekeepers. Between 1854 and 1864, the population increased by 288% and by 484% between 1864 and 1874, with the rate of increase de- clining to 265% between 1874 and 1884. Even though nearly all of the usable softwoods were removed by 1890, the popu— lation continued to grow as the hardwood lumbering and other manufacturing and service industries expanded. Between 1884 and 1894, the population increased by only 28%. The pro— portion of the state population residing in the region in- creased with each enumeration and peaked at nearly 15% in 1894. Counties, cities and villages were organized as the lumber industry diffused throughout the region. Prior to 1851, Northern Michigan remained politically unorganized and there existed only a handful of small fishing villages, saw- mill communities and Indian settlements. The organization of the region into minor civil divisions closely followed the movement of the lumber industry.' By 1859, ten coastal and southern tier counties were formed as sawmilling centers arose in their territory (see Figure 8). As the industry spread along the coast and then inland, political organi— zation ensued. By 1869, all but thirteen inland counties and one coastal county of the present thirty-one were 64 83‘ POLITICAL ORGANIZATION OF COUNTIES r 84‘ 46% ~46” O 5 4 > 45" r 44° 01 4 4 ~43° 43°- 42'4 I0 20 30MILES IOO -_--_I I I— ! --_--I_ ~42° | --.— YEAR OF COUNTY ORGANIZATION E59 l850 4359 I360- I869 I870 - I879 AFTER I880 E3 T3 OF THE STATE OF MICHIGAN, $034927. 84’ L AL SOURCE: IN X TO THE LOCAL AND S APSI 8“ 85° 1 Re.” Figure 8 65 organized. Except for three counties which never supported any sizable sawmilling centers, political organization was complete by 1879. Communications also developed with the expansion of the lumber industry. Railroads were first built to connect interior sawmilling centers with ports and with more souther- ly trunk lines. With the advent of the logging line, rails connected the resource with the sawmills. In 1882, forest products accounted for nearly three-fourths of all rail tonnage on a typical railroad.l Under a federal law to aid states in establishing rail communications, railroad companies were granted about 2,100,000 acres of forest land in Northern Michigan. During the mining of the forest, these companies constructed over 3,200 miles of railroad in the region.2 Agriculture developed rapidly on the thin soils as prices for produce were inflated by the increasing demands for the lumber camps and milling centers. Crops cultivated included hay and oats used as feed for the work animals in the logging camps and potatoes and wheat for human con— sumption. Because of the complementary work periods of lEdmund A. Calkins, "Railroads of Michigan since 1850," Michigan History Magazine, XIII (Winter, 1929), p. 18. 2Russell Watson, "Forest Devestation in Michigan: A Study of its Deleterious Economic Effects," Journal of Forestry, XXI (May, 1923), pp. 431 and 446. 66 lumbering and farming, many of the farmers worked their land May through October and then hired on at the logging camps for the cutting and driving .seasons. Even at the greatest extent of agricultural development during the lumbering period, more than half the food supply was produced outside the region. Most industries established before 1900 were wood processing plants or firms serving the timber-using factories. As stated earlier,most of the logs were sawed into timber and exported with little value being added by manufacture during the White Pine Era. However, the hardwood period saw the rise of many woodworking industries in NOrthern Michigan. In Cadillac were manufactured hardwood flooring and furniture, in Reed City and Alpena maple flooring and in Onaway bicycle and automobile steering wheel rims.1 Throughout the lumber- ing centers, small plants turned out numerous wooden products such as baskets, wooden barrels, shingles, handles, crates, poles and lathes. .Structural Changes Resulting from Forest Depletion Structural changes resulting from economic decline following the depletion of forest resources have been re— peated throughout the United States where the resource was mined. Merriam lists the general conditions which prevail: lPowers, pp. 222 and 485. 67 "decline of industrial centers, injury to transportation systems, depopulation and impoverishment of extensive re— gions, and destruction of, or injury to, scenic features and wildlife habitats."1 As the economic structure of Northern Michigan was initially developed and then dominated by the exploitation of the forest, the magnitude of the change following the depletion of the forest resource was par- ticularly striking. The most significant feature of the structural change was the loss of nearly all economic support for the popu- lation when the timber was removed. There was no transition from a forest-based economy to a diversified industrial and agricultural economy as characterized many areas previously depleted of trees. When the lumber mills left, the farmers were dealt two blows—-they were unable to find winter work as loggers, and they lost their local market for grain and hay. Between 1910 and 1930, the number of farms declined by 27% as the farmers moved to the towns or left the region alto— gether.2 Much has been written about this failure of the "plow to follow the axe" in Northern Michigan and the other 3 cutover lands of the Lake States. Many of the sawmill 1Willis B. Merriam, "Forest Situation in the Pacific Northwest," Economic Geography, XIV (January, 1938), p. 104. 2Whitaker and Ackerman, pp. 230-31. 3Michigan, Minnesota and Wisconsin. 68 owners, railroad men and community commercial leaders as— sumed that, as soon as the timber was removed, the farmer could move in and cultivate the land. They expected that, as happened in other forested areas, the land would ”ripen" into a higher use. These men were concerned about the economy, “but they were sure that farmers would appear in all the upper counties once the timber was cut."1 In 1912, Powers wrote that the white pine of Northern Michigan is gone, "but the fruit raiser is close upon the retreating lumberman of the pineries, and even in certain sections of the hardwood country the farmer follows that class of lumber- man so closely that what was this year a solid forest will next year be cleared and planted to potatoes or rye or wheat."2 Writing about Montmorency County, Powers states the then popular belief that "any section that will grow large timber can be depended upon for agriculture and horticulture."3 The myth that most of the cutover land was suitable for agriculture was given credence by the activities of the logging and railroad companies that wanted to dispose of their land and the local trade and development associations 1L. R. A. Schoenmann, uPublic Lands in Michigan," President's Address, Michigan Academy of Science, Arts, and Letters, Report for 1951, p. 25. 2Powers, p. 211. 31bid., p. 486. 69 that wanted to find a substitute for timber to sustain the economy. Large tracts of land were sold by the companies in vast real estate schemes, and community and regional organi— zations1 such as the western Michigan Development Bureau pro- moted the region through exhibits, lectures and publi— cations.2 Barlowe lists several factors that these land promoters were counting on: (1) The success achieved by those farmers who were lucky enough to settle on islands of good agri- cultural land; (2) the good local markets, both for labor and for farm products, provided by the thriving lumber industry; (3) the steadily rising values of farmland through- out the country; and (4) the promised disappearance of the virgin prairie lands to the West. Many of the railroads crossed the land most suitable for agriculture, which led Davis to observe that "the rail- roads may have laid out their right-of-ways through the area with an eye to both the immediate possibilities of lumber hauling and the future location of agriculture."4 But the 1An early example of a community effort is the publi- cation of the booklet entitled The Advantages of the City of Ludington: A Brief Glance at the Opportunities Afforded for the Investment of Capital by Ludington Businessmen in 1891. 2Leo Alilunas, "Michigan's Cut-over 'Canaan'," Michigan History Magazine, XXVI (Spring, 1942), p. 194. 3Raleigh Barlowe, Administration of Tax—Reverted Lands in the Lake States, Michigan State College Agricultural Experiment Station Technical Bulletin No. 225 (East Lansing, December, 1951), p..7. 4Davis, p. 101. 7O anticipated agricultural boom never materialized. Those farmers who did stay on after the lumbermen left and those who heeded the speculator and purchased cutover land were soon disappointed. A few areas, especially in the hardwood zones, were effectively crOpped, but most of the land re- buffed the attempts to cultivate corn, barley and potatoes. Without a large local market, the poor soils and short grow— ing season render Northern Michigan unprofitable for agri- culture. The value of all farm crOps was less than $10.00 per acre of land for twenty-one counties in Northern Michigan in 1919; Roscommon and Crawford Counties had a value per acre of less than $1.00.1 The employment in logging and milling declined rapidly following the mining of the white pine and the de- pletion of the best hardwood stands. It is estimated that in 1890, NOrthern Michigan (excluding Oceana, Newaygo, Mecosta and Midland Counties) had 700 logging camps and 25,000 loggers. By 1923, there were only ten logging camps with 500 loggers.2 With the loss in forest products employment and then in other sectors of the economy, the rapid popu- lation growth experienced prior to 1900 became a slow decline after 1910. Between 1910 and 1920, 80% of the townships lSparhawk and Brush, p. 75. 2Watson, p. 446. —-—_.‘ ,_ _.- 71 lost population.1 The movement of people out of the urban centers of Southern Michigan during the depression years and the large—scale development of recreational facilities halted the decline after 1930. Table 4.--Population changes in Northern Michigan, 1890- 1940.a Year Population Year Population 1890 293,732 1920 360,074 1900 366,112 1930 316,468 1910 399,923 1940 361,437 aCalculated from data given in U.S. Bureau of the Census, Census of Population, 1890, 1900, 1910, 1920, 1930 and 1940. When the mills closed down and the farmers left, the trade centers lost their market and declined in size and function. Even though the remaining woods workers and farmers were moving out of the open country and into the towns, many of the communities were losing population, and a number disappeared from the map. Between 1910 and 1920, the incorporated places gained a slight 4.1% with six of the seven cities over 5,000 population registering a decline.2 lSparhawk and Brush, p. 13. ZLbi ., p. 17. 72 The population decrease in the lumber centers of Au Sable and Oscoda at the mouth of the Au Sable River represents an extreme example of decline. Table 5.—-P0pulation change of Au Sable and Oscoda, 1890— 1910.a City 1890 1900 1910 Au Sable 4,328 1,116 648 Oscoda 3,593 1,109 864 Total 7,921 2,225 1,512 aPowers, pp. 506-507. In July of 1911, a large fire swept through the two cities, and no effort was made to build them again. Au Sable and Oscoda are extreme cases, but as nearly all the towns of NOrthern Michigan received their initial impetus and sustaining force from the sawmills, they lost their raison d'etre when the lumber boom ended. A number of cities developed lasting woodworking industries and others, due to a fortunate location, functioned as central places for large, thinly populated areas. Those communities which were not supported by a railroad or were near a larger com— mercial center died out. Davis generalized the population pattern of the towns of the High Plains as "one of rapid - I. . .— o—w“‘q'..-fi.~" 73 increase in population to a peak which corresponds to the peak of lumbering operations; followed by a less rapid de- cline which in some cases, has been arrested in the last de- cade [1925-1935] by increased activity resulting from recre- ational development."1 The railroads lost their major source of revenue when the lumbering era ended. But the main lines continued in operation as through carriers serving the remaining towns which had developed around the mills. The railroad gave birth to most of the interior communities and served as the lifeblood for these settlements in the post-lumber period. Few of the logging lines lasted, but on their rights-of-way were built many of the roads that account for the uneven circulation pattern of Northern Michigan today. With the decline in industry and population, there was not enough traffic to produce revenues to cover expenses, and through- out the region many rail lines were dismantled. Between 1880 and 1921, about 1,240 miles, nearly one-third of the total mileage, was abandoned.2 As previously mentioned, large development schemes were established by the railroads after 1900 in order to dispose of their land grants and to encourage settlement to provide revenue for their remaining lines. 1Davis, p. 173. 2Watson, p. 445. 74 A revealing index of the decline of the economy following the mining of the forest resource is the fluctu— ation in land values and tax returns. Idle forest land re— sults in a reduction of property available for taxation and an increased burden of taxation on other property. As roads, bridges and schools had to be maintained, the prOperty taxes were increased on the remaining population. The fewer the people in the community, the higher the per capita tax burden. In many areas, the basis of assessment was in- creased to the full value of the property even though these values were often highly inflated (see Table 6). As a conse- quence of the high taxes resulting from inflated land prices and over-expanded governmental services and institutions, severe financial hardships were experienced by many land owners in the region.1 During the depression years of 1929- 1933, thousands of landowners forfeited their cutover lands for taxes. In order to keep the cutover lands in private ownership, Michigan placed a tax moratorium on the land lDavis attributes much of this problem to the in- adequacy of the system of political organization which was designed for agricultural land use. Organized into town- ships and counties under the Ordinance of 1785, the frag- mented system was ill—suited to the sparsely populated and widely dispersed settlement following the depletion of the timber. Charles M. Davis, "Functional Areas in Political Readjustment," Economic Geography, XIV (January, 1938), pp. 85-88. 75 (1933-1938), but within a year after it was removed, 2,200,000 Hi acres reverted to the state.1 Table 6.--Change in tax rate per $1000 valuation for se— lected counties, 1892-1921.a ========l County 1892 1921 Antrim $22.01 $38.43 Charlevoix 25.87 51.08 Kalkaska 22.54 41.06 Lake 30.03 52.52 Missaukee 23.11 49.63 aSparhawk and Brush, p. 49. In Northern Michigan, the mining of the forest re- source removed the region's basic economic support. Forest exploitation had initiated and then dominated the organi- zation of human activities in the region, and when the forest was mined and no substitute was introduced, the economy col- lapsed. The result was decay, depopulation and a severe contraction of industrial and commercial function. Whitaker and Ackerman describe the character of the region in these terms, "desolate cutover areas of barren sands or scrubby lCon H. Schallau, Forest Owners and Timber Managp— ment in Michigan, Lake States Forest Experiment Station Re- search Paper LS—9, Forest Service, U.S. Department of Agriculture (St. Paul, March, 1964), p. 21. 76 growth, deserted or run-down farms, and trade centers that have seen their better days."1 The legacy of the mined re— source is even more pointedly revealed by Strassmann's as- sertion that Northern Michigan became a land of "empty stores, vacant houses and deserted farms."2 1Whitaker and Ackerman, p. 31. 2 . . W. Paul Strassmann, Economic Growth in Northern Michigan, Institute for Community Development and Services General Bulletin No. 2, Continuing Education Service, Michigan State University (East Lansing, 1958), p. 1. CHAPTER III THE SECOND-GROWTH FOREST: INTRODUCTION OF FOREST MANAGEMENT AND NEW INDUSTRY Introduction Northern Michigan again supports a forest resource of economic significance. The renewed importance of the forest resource is due to an increased volume of timber re— sulting from natural growth and management of the resource and technological advances which permit the use of most lspecies. But the character of the second—growth forest ‘differs substantially from the original forest resource. No longer are there large pure stands of white pine and other g conifers; the second-growth forest is essentially a hardwood forest dominated by aspen, oak and birch. The Forest Survey completed in 1956 showed Northern Michigan as having 3,428,000,000 board feet of hardwoods of sawtimber size and 1,141,000,000 board feet of conifers. In growing stock,l there were reported 32,442,000 cords of hardwoods and only lTrees from stump to a minimum of four inches tOp diameter of the central stem inside bark. 77 78 7,547,000 cords of softwood conifers.l Northern Michigan accounts for 32% of the hardwood growing stock in the state, but only 4.5% of the softwood growing stock, most of this in plantations. With the regrowth of the timber, various forest product industries were attracted to the region. Of the numerous industries which are supported by the forest, pulp and paper has grown the most rapidly. In this chapter, the management of the Northern Michigan forest resource for con- tinuous production is discussed and an examination made of the structure of industry based on the resource. Particular attention is given to the growth of the pulp and paper industry. Forest Management The overall objective of managing the forest resource is to establish conditions that will assure a sustained flow of forest products at the highest and most efficient level of production? Depending on local forest conditions, ownership patterns and desired forestry goals, the measures utilized lVirgil E. Findell and Ray E. Pfeifer, Net Timber Volume in Michigan by Species Group and County, Lake States Forest Experiment Station Technical Note No. 548, Forest Service, U.S. Department of Agriculture (St. Paul, January, 1959). p. 2. 2Virgil E. Findell et a1., Michigan's Forest Re— sources, Lake States Forest Experiment Station Paper No. 82, Forest Service, U.S. Department of Agriculture (St. Paul, September, 1960), p. 27. 79 in management vary considerably. This section considers techniques of forest management with a brief inquiry into the development of forest management in NOrthern Michigan. Specific management practices and problems will be discussed in greater detail in Chapter VI. Important techniques utilized in managing the forest resource include fire protection, control of disease and in- sects, reforestation and selective cutting. The problems of disease and insects are especially acute on smaller, privately-owned stands, Where they account for a greater drain on the timber supply than cutting. Through reforest- ation, the forest is artificially reproduced. This practice is often a necessity for forest growth in areas which have been mined, leaving few trees for natural seeding. Selective cutting involves a number of cutting practices designed to achieve specified management goals. This may mean the re- moval of old or diseased trees to make room for new growth or the cutting of certain species to accelerate the repro- duction of more desired species. Management of the Northern Michigan forest resource grew out of the increasing public ownership of forest land.1 As mentioned in Chapter II, much of the forest land reverted to public ownership through the non—payment of taxes in the 1930's. In 1960, state and national forests accounted for 1Barlowe, Administration of Tax-Reverted Lands in the Lake States, p. 74. 80 35%.of the region's forest land.1 These public lands have been managed by professional foresters with the goal of "building up," or increasing the volume of the forest. One of the most significant accomplishments has been the planting of over 660,000 acres of conifers, chiefly red pine and jack pine.2 Beginning in 1904 near Higgins Lake, reforest- ation initially centered only on public land, but in the last two decades, large tracts of private land have also been planted. Today, the total acreage in plantations is nearly evenly divided between national, state and private ownerships.3 Through management, Northern Michigan again supports a forest resource of economic significance. Forest volume has increased through natural growth, reforestation, fire and disease control and selective cutting. Forest Survey reports indicate that between 1935 and 1955, sawtimber4 volumes increased by 146% and the volume for all trees by 96%. lFindell et al., p. 9. 2Robert N. Stone and Clarence D. Chase, Forest Plantations gprpgthe n Lower Michigan, Lake States Forest Experiment Station Paper No. 102, Ferest Service, U.S. De- partment of Agriculture (St. Paul, 1962), p. 7. 3Ibid., p. 8. 4Trees that contain at least one merchantable sawlog with a minimum top diameter inside bark of eight inches. 81 .Structure of the.Forest-Based Industry With the change in the composition of the forest re- source has developed a corresponding change in the forest product industries. The lumber industry which dominated the regional economy for half a century is still the most per- vasive regional wood-processing activity because of the large number of small mills. In 1964, there were only 122 sawmills which produced 200 or more cords; of these, 25 were portable mills.l In 1963, the Michigan Conservation Depart- ment reported that Northern Michigan produced 8,038,400 board feet of lumber (about one—third of the output for 1854), of which 6,547,300 board feet was hardwood. Newaygo and Oceana Counties in the southwestern part of the region accounted for nearly one-fifth of the total production. The moderate resurgence of the lumber industry is due to the in- creasing volume of sawtimber in the region and the growing demands of the pallet industry2 for low-grade sawtimber. 1Forestry Section, Michigan Department of Conser- vation, 1964 Directory of Northern Lower Peninsula, Michigan (Lansing, 1964). 2A pallet is a raised platform, usually made of wood, used in handling heavy or bulky materials by a forklift truck with a minimum of hand labor. Companion to automation of industry, there has been increased use of pallets for handling during production and for shipping. In the auto industry, packaged or individual parts are placed on a pallet and moved by forklift or other conveyance from a truck or railroad car to storage or to the production line in assembly plants. 82 These transportation platforms are used extensively in the automotive and other manufacturing industries in Southern Michigan. The Ford Motor Company used 4,810,000 board feet of hardwoods and 450,000 board feet of pine in the form of pallets in 1956; this was equivalent to 2.7 board feet of wood for each vehicle Ford produced.1 Possessing the forest resource and access to the major market area, Northern Michigan has participated in this growth industry on a large and increasing scale. The Michigan Conservation Department reports forty-five pallet—producing plants in the region in 1964, with a concentration of establishments in the southern two tiers of counties. The federally financed Center for Economic Expansion and Technical Assistance at Central Michi- gan University has encouraged the development of the pallet industry because it requires moderate capital investment to begin operations, acts as a concentration yard for lowegrade timber and employs semi—skilled local men who are otherwise underemployed.2 Another growth industry has been the manufacture of charcoal and charcoal briquettes for outdoor cooking use. 1Charles F. Sutherland, Jr., The Market for WOod Pallets in the Auto Industry: A Case Study of the Ford Motor Comppny, Lake States Forest Experiment Station Paper No. 104, Forest Service, U.S. Department of Agriculture (St. Paul, September, 1962), p. l. ' 2Interviews with Dr. Howard R. Sommer, Director, and William C. Strohschein, Forest Products Specialist, Center for Economic Expansion and Technical Assistance, Central Michigan University, Mt. Pleasant, Michigan, April 26, 1966. 83 This industry is important as it uses crooked or poor- quality trees which, as a part of forest management, should be removed from the forest but are of no use to other indus— tries. Of declining importance is the production of veneer logs, which was established as early as 1912, using the re- maining hardwoods of Northern Michigan. With increased competition from other products and producing areas and the failure to develop innovations to allow extensive use of the second-growth forest, the veneer industry is no longer of major significance. Only three veneer plants were listed for the entire region in 1964. Other forest product industries of modest importance to the post-lumbering era economy of Northern Michigan are furniture, poles, excelsior, plywood, flooring, log cabin building and rustic novelties. A new industry to the region, the production of particle board, began in 1964 at the Novoply Plant of U.S. Plywood Corpor- ation at Gaylord in Otsego County. Growth of the Pulp and Paper Industry At present, the most important manufacturing industry in Northern Michigan is the pulp and paper industry.1 The industry first entered the region about 1890, using the then abundant spruce and fir. As it did in the NOrtheast, the lPulping is the process of separating the usable cellulose fibres from the raw material. Paper-making is the matting of these fibres together into a sheet. 84 pulp industry followed the lumber industry and soon grew to large prOportions. Early mills include the Fletcher Paper Company, which started making sulphite, express and manila paper in Alpena in 1899, and the Cheboygan Paper Company, which was organized to manufacture newsprint in 1902. It is reported that by 1912, the Cheboygan Paper Company employed nearly 200 men and was adding $150,000 annually to the com- munity through wages, prices paid for wood and taxes.1 In 1909, there were pulp mills in operation at Alpena, Cheboygan and Petosky. Together, these mills had a daily capacity of fifty tons of groundwood pulp and seventy-five tons of sul- phite2 fibre.3 As the industry expanded throughout the Lake States, another Northern Michigan mill was opened at Filer City near Manistee. However, with the mining of the timber, the state did not have the necessary resource base to sustain the industry. Because heavy plant investment makes pulp mills less mobile than lumber mills, the industry was reluctant to leave when the primary pulping species, spruce and fir, were exhausted. By 1920, the pulp and paper industry had to im- port 1,590,300 board feet of timber. According to a study lpowers, pp. 455-56 and 473. 2The characteristics of each of the pulping pro— cesses are described later. 3Lockwood's Directory of the Ppper, Stationeryy and Allied Trades, 34th edition (New York: Lockwood Trade Journal Company, Inc., 1909). 85 by the National Resources Committee, 65% of the forest re- source in the cutover lands in the Lake States consisted of "weed" species such as aspen, oak and jack pine.1 Although jack pine was utilized by the pulp mills during the decade of the 1930's, the industry waned because of the inadequate supply of the preferred species. A part of this decline, however, may be attributed to the duty—free import of com- peting pulp and paper products from Canada and Western Europe. Though not important nationally, the local industry remained significant within the regional economy. Table 7 presents the changes in capacity of the pulp and paper indus- try between 1900 and 1939. Present Structure of the Pulp and Paper Industry Since aspen and other hardwoods abundant in Northern Michigan have been adapted to various pulping processes, the industry has expanded rapidly. There are two pulp and paper corporations operating three pulp mills in Northern Michigan and three other companies operating mills in Southern Michi— gan which obtain pulpwood in the north. In addition, the particle board plant in Gaylord utilizes roundwood suitable for pulping (see Figure 9). Together, the five pulp and lNorthern Lake States, Part VIII of Regional Planning, report of the NOrthern Lake States Regional Committee to the National Resources Committee (Washington: U.S. Government Printing Office, 1939), p. 3. 86 paper companies utilizing Northern Michigan's forest re- source have a daily pulping capacity of 1,575 tons (see Table 8). Prior to the installation of an additional 280 tons capacity in early 1966, these mills accounted for 66% of the capacity in Michigan and 15% of that for the Lake States. The combined capacity of the sulphate and semi- chemical mills of the Packaging Corporation of America plant at Filer City is the largest in Michigan and in the Lake States is second only to the Minnesota and Ontario Paper Company mill at International Falls. Table 7.--Dai1y capacity of Northern Michigan pulp mills by pulping process for selected years (in tons).3 _— i <— Year oguggiIs Groundwood Sulphite Sulphate Total 1900 2 30 25 0 55 1909 4 50 85 0 135 1918 5 35 75b 30 140b 1928 3 0 80 50 130 1939 2 0 40 65 105 aLockwood's Directory of the Paper and Allied Trades, 25th, 34th, 43rd, 53rd and 64th eds. (New York: Lockwood Trade Journal Company, 1900, 1909, 1918, 1928, and 1939). bDoes not include one mill. 87 Table 8.--Daily capacity by pulping process of the mills using Northern Michigan roundwood (in tons).a —— Number Semi- Year mif1s Gigggd- pggt; pgzie cggTi— Otherb Total 1950 5 0 130 220 10 0 360 1956 7 70 150 140 515 0 875 1960 8 60 165 165 560 240 1,190 1965 6 0 170 290 530 300 1,290 1966 6 0 170 405 700 300 1,575 aData for 1950, 1956 and 1960 are as of January 1 of each year and were obtained from Lockwood's Directory of the Paper and Allied Trades, Blst, 85th and 90th eds. Data for 1965 and 1966 are as of July 1 of each year and were ob- tained from interviews and correspondence with managers of the pulp and paper mills between May 21 and June 29, 1966. bCapacity of the special-process hardboard plant at Alpena. Two phenomena Operating in Northern Michigan that are characteristic of the nation as a whole are revealed in the above table. First, the rapid increase in the capacity of the pulping processes using hardwoods and, secondly, the de- crease in the number of mills, with a corresponding increase in the size of the remaining mills. In Michigan, the semi-chemical and sulphate mills and special process mill are the largest users of hardwoods. Using only aspen and other hardwoods, the development of the 88 T 00‘ .4 . T 0" w ESTABLISHMENTS USING NORTHERN MICHIGAN PULPWOOD .. [3 I \‘ | I o \ I i 9 \ | I .J-__| I .w Q. | ''''' FJ‘ I ““5“ 0 / i GAYLORDI m I r——'+—-'—-—-l——————— —‘—.‘ ' I I ' I i i I I i — T T T'T’I—‘-‘—'f—'—'—"' '''''''''' — I I ' FILER | I I .CITY I I I I I I i -_r ______ I I I i d _ _1_-_-_L_-_- ___ I I ......... — I I _. I Tm ! _ —I :EG " “ 1 I 1__ J 'T II I I _uim___I_' i L»—~— r-C) ! i ! i l i I 0,-1 ! - I i I -_I-_-_-—'—-—- _ _ 1-_-_!__ I __I_.._.I_.j I I I I I I I OTSEpo I I I I ___I.__ ‘— — —I-— —‘|— — “‘T‘_ _"I' ''''' DETROIT _ . ‘ . I i ! J! ! I i '-_ ___ _________ .I _____ .1... ----- J— \ I-c- I ‘1' i I T ar-I I I I I I --_--_I___-__I ..... . ..... i I L ___-_______,__.- I905 W WREMENT FRW WHEN" IICHGAN . Ml :oopoooonos . mace-macaw In.“ C moon-00.000 0 ”NW I when mow T. f‘ 01" '1‘. an Figure 9 89 semi-chemical process has revolutionized the Lake States pulp and paper industry. Expanding from a daily capacity of 10 tons in 1950 to 700 tons presently, the semi-chemical pro- cess is the most important in Lower Michigan.1 Also of in- creasing importance is the sulphate process, which utilizes hardwoods and local pine. A special process mill producing hardboard began operation in 1958 with aspen as its chief raw material. One medium-sized sulphite mill remains which uses imported softwood and local hardwoods. Following a national trend, Lower Michigan mills are decreasing in number and increasing in size. In 1960, eight mills had a total daily capacity of 1,190 tons for an average of 149 tons per mill; in 1966, six mills register a capacity of 1,570 tons, or 260 tons per mill. Between 1960 and 1966, two small mills, one groundwood and one semi-chemical, terminated Operations, while three of the medium-sized mills increased their combined daily capacity from 485 tons to 840 tons. One mill manager pointed out that because of the economies of scale realized in high-volume wood procurement and mill mechanization, he no longer considered it economical to operate a pulp mill below 250 tons daily capacity.2 1The lower peninsula- 2Interview with Roman Suess, General Manager, Otsego Falls Mill, Menasha Corporation, Otsego, Michigan, June 9, 1966. 90 Paper and Board Products Manufactured All of the pulp mills utilizing the forest resource of Northern Michigan are vertically integrated in that they Operate in conjunction with a paper or board mill. Two paper mills located in Northern Michigan, Fletcher Paper Company at Alpena and Charmin Paper Products Company at Cheboygan, purchase woodpulp. As shown in Table 9, the products of the paper and board mills include a wide range of grades. Table 9.——Paper and board products manufactured in Northern Michigan or in other mills using the region's forest resource.a f f Corporation Products Abitibi (Alpena) Hardboard, hardboard specialties and rigid insulation board products Charmin (Cheboygan) Sanitary tissue Fletcher (Alpena) Various bonds and printing paper Menasha (Otsego) Corrugating medium Packaging (Filer City) Corrugating medium and bleached Kraft paperboard S.D. warren (Muskegon) Book paper, plain and coated print- ing papers Scott Paper (Detroit) Sanitary tissue, wax paper and print- ing papers U.S. Plywood (Gaylord) Particle board aInformation was obtained from interviews and corre— spondence with managers Of the pulp and paper mills. 91 The corrugating medium manufactured by both Packaging Corporation and Menasha forms the fluted core of corrugated containers, serving as a shock absorber. Fletcher and Scott produce medium-quality printing papers and bonds, while S. D. Warren makes high—grade paper for use in custom products such as college yearbooks. Scott and Charmin both produce tissue paper stock, and Scott converts it for consumer use. Packag- ing Corporation also manufactures bleached Kraft paperboard for use in small cartons such as cereal boxes and pharmacy boxes. Although somewhat similar in their uses, the particle board manufactured by U.S. Plywood and the hardboard pro— duced by Abitibi are constructed differently. Hardboard is manufactured from wood pulp which is bonded together by natural lignen, pressed and hardened. Particle board con— sists of distinct particles Of wood bonded together with a synthetic resin or binder and pressed into a board. Hard- board is denser and is used in the manufacture Of furniture and Office equipment and in building and construction. Particle board is used as a core for veneered furniture and in construction. Current WOOd Utilization The total roundwood consumption of the five pulp mills1 and the particle board plant was approximately 750,000 1As Packaging Corporation operates two pulp mills in Filer City, there are actually six pulp mills at five sites. 92 cords in 1965, of which nearly 620,000 cords were produced in Northern Michigan. Excluding consumption data for one mill which relies heavily on Canadian imports Of spruce and balsam fir, Northern Michigan supplied over 92% of the total roundwood consumed. Table 10.-—Roundwood utilization by species, 1965 (in standard cords).a Mixed Pine S ruce Fir Total Hardwood! p Aspen Birch 443,760 28,993 12,436 129,274 55,871 78,435 748,769 aInterviews and personal correspondence with managers Of the pulp and paper mills. Reflecting the rapid growth of the pulpwood-using industries during the five-year period 1961-1965, roundwood production in Northern Michigan increased from 450,000 cords to nearly 620,000 cords. Another source of pulpwood, saw- mill residue in the form Of chips, was first used in 1964 and provided an equivalent of 30,000 cords of wood in 1965. Roundwood production is expected to exceed 700,000 cords in 1966 and the use of mill residue to more than double. The roundwood production for 1966 may be held to 1965 levels, however, if the shortage Of loggers experienced in the winter and spring continues throughout the year. CHAPTER IV NATIONAL GROWTH AND STRUCTURE OF THE PULP AND PAPER INDUSTRY Introduction The second model of forest utilization conceptual- ized considered the persisting influence on the organization of human activity Of a forest resource managed for continuous production. In order to investigate the persisting character Of the man—resource relationship established in this model, the expansion Of the pulp and paper industry in Northern Michigan is Observed. As the regional growth of the pulp and paper industry is a function of national conditions, the national structure of the industry is also examined. This chapter will investigate the role of technology in the growth of the pulp and paper industry, the national distribution and economic structure of the industry and the conditions for demand and future growth. For added information, tables presenting projections for the future growth Of the pulp and paper industry and the assumptions underlying these pro- jections are discussed in Appendix II. In subsequent chapters, the competitive position of Northern Michigan for the pulp and paper industry will be examined. 93 94 Role of Technology in the Pulp and Paper Industpy To permit an understanding of the changing national pattern of the pulp and paper industry, the role of techno— logical innovation in the industry must be examined. The pulp and paper industry presents a dynamic history character- ized by the frequent introduction of new methods and ideas which change the types of raw materials used and the products manufactured. Stevenson described this attribute of the industry in 1940: "New locations, new processes, new ma- terials, are developed so frequently, that there is no indi- cation of a static condition in sight."1 Using rags as the raw material, the first paper mill in the United States was founded in Pennsylvania in 1690. Through the introduction of chemicals into papermaking, a number of raw material sources--straw, hemp, jute, cotton-hull fibre and wood--came into use in the nineteenth century. Although some straw and rags are still used, wood had become the standard raw maw terial for pulp and paper by 1900. Two notable methods Of Obtaining cellulose from wood were developed in the nineteenth century: the soda pulp pro- cess was introduced into the United States in 1854 and the 1Louis Tillotson Stevenson, The Backgpound and Eco- nomics of American Papermaking (New York: Harper & Brothers Publishers, 1940), p. 34. 95 groundwood process in 1867.1 The utilization Of wood for cellulose revolutionized the pulp and paper industry: here was an abundant and varied raw material that was compact and easily handled, yet provided a high pulp yield. Prior to the introduction of wood into the pulp and paper making process, finding enough of a suitable raw material had been the major limiting factor Of the industry. As stated by Kellogg, "There never was paper enough in the world until it was made of wood."2 When wood pulp papers appeared, the price of paper was lowered, demand for paper products was stimulated and the industry grew rapidly. Changing technology in the pulp and paper industry has spatial expression. When a variety Of accessible raw materials was utilized, the industry consisted of a large number of small, market—oriented, independently-Operated mills.3 Regional shifts have occurred in response to the location of new areas of inexpensive raw materials found to be useful through the development Of new techniques in paper making. Large urban centers in the NOrtheast supported the largest concentration of mills when rags were the chief raw lIbid., p. 22. 2Royal S. Kellogg, Pulpwood and WOOd Pulp in North America (New York: McGraw—Hill Book Company, Inc., 1923), p. 15. 3Helen Hunter, "Innovation, Competition, and Lo- cational Changes in the Pulp and Paper Industry: 1880—1950," Land Economics, XXXI (NOvember, 1955), p. 315. 96 material. But with the advent of wood pulp, paper mills were located in the forested areas of New England and New York. Here were found large supplies of desired forest species and low—cost water power.1 It was when the forest resources of the Northeast proved inadequate for the rapidly expanding industry that the Lake States, including Northern Michigan, began to participate in the growing industry. How- ever, the existing pulping processes2 were oriented toward species that were becoming increasingly short in supply in Northern Michigan. By the time of the Depression, imported wood was sustaining the industry. Relative to the national growth of the pulp and paper industry, especially in the South and the Pacific Northwest where supplies of preferred species were abundant, Northern Michigan experienced a de- cline. Thus, the focal point Of pulp and paper production progressed from the East to the Lake States and is now 1National Resources Planning Board, Industrial Lo- cation and National Resources (Washington: U.S. Government Printing Office, 1943), p. 162. 2The methods by which the wood fibres are separated and rearranged in order to produce pulp are referred to as the pulping processes. Three broad headings may be used to describe these processes: mechanical, chemical, and semi- chemical and chemi—mechanical. In mechanical pulping (ground- wood), the wood is reduced to pulp fibre by pressing on a revolving grindstone. In the chemical processes (sulphite, soda and sulphate, Often called Kraft), the wood fibres are separated by cooking in a chemical solution. The semi- chemical and chemi—groundwood processes soften the wood with chemicals and then mechanically reduce the fibres. Each of the processes produces a different quality of wood pulp, and the method chosen depends upon the type of wood used and the requirements Of the end product. 97 concentrated in the Far West and South. In 1964, the East North Central States produced nearly 19% of the nation's paper and paperboard, with Michigan accounting for 5%.1 Distribution of Pulp and Paper Mills The process of manufacturing paper and board products occurs in three distinct stages: the reduction of pulpwood and other raw material into pulp, the conversion of pulp in- to various grades of paper and board, and the manufacture of specific products using paper and board as a raw material. Each of these stages has a distinct spatial expression. Be- ing ubiquitous in its secondary stage, in some form the pulp and paper industry is located in forty-six states and the District Of Columbia. The primary pulp manufacturing stage is found in areas where raw material is present, while the plants converting paper and board to finished products are located wherever a large enough market exists for the com- modities. For the industry as a whole, four regions of pro- duction emerge: the South, the Far West, the Northeast and the Lake States. The most pervasive of all sectors of the pulp and paper industry are the establishments converting paper and paperboard into numerous final products. As many Of these plants are small and have little connection with the paper 1U.S., Bureau of the Census, Current Industrial Re- ,ports_§pries: Pulp,L Paper,L and Board: 1964 (Washington, 1965), p. 9. 98 industry other than as a source of raw material, they are difficult to identify. According to Lockwood's Directory, there are over 3,300 such paper conversion Operations in the United States. As seen on Figure 10 the greatest concen- tration is in the populous states of New York, Illinois, Pennsylvania, California, Massachusetts, New Jersey and 1 These states account for 60% of the total paper- Ohio. converting plants in the nation. Michigan ranks ninth, with 113 converting plants.2 The most concentrated sector of the pulp and paper industry is the pulp mill engaged in the manufacture of pulp from wood or from other raw materials; these resource— oriented operations are found in only twenty states. Be- tween the extremes Of market-oriented converters and the resource-oriented pulp mills are the establishments which process pulp into paper or integrate two or more stages of the manufacturing process. Paper mills which process their own pulp are more closely tied to the forest resource and are located near the forest resource or at a point inter- mediate to the resource and the market. Paper mills which lPerloff et a1. account for this concentration in populous areas, stating "Converted paper products industries generally add bulk and value to processed inputs for which significant weight loss has been achieved in earlier stages. This, plus the market service aspect, tends to make these sectors strongly market-oriented." Perloff et a1., p. 432. 2Lockwood's Directory of the Paper and Allied Trades, 90th ed.(1965). 99 OH urawua g I new \ to... l _ . .00. com com x a to >§ ¢_ . .uOCDOm .254: D zoo >mm >._._o-+ Mill Figure 13. Vertical integration in the pulp and paper industry. .Logging -+ Wholesaler In the production of finer papers, such as writing paper and high-grade tissue, vertical integration is un- common because Of the many different grades and types uti— lized, the higher cost of transporting high-value paper rather than pulp and the desirability of having these paper mills located close to large markets to insure prompt de- livery. The factors favoring or Opposing integration ex- press themselves in a spatial pattern of integration. Massachusetts, the center of the writing paper industry, has sixty—nine paper mills but only one pulp mill. The paper and board mills Of Georgia are highly integrated, with thirteen of the nineteen paper mills operating in conjunction with a pulp mill. Reflecting the importance of the market factor, only nine of Michigan's paper or board mills Operate pulp mills.l lLockwood's Directory of the Paper and Allied Trades, 90th ed. (1965). 106 Demand and Capacity in the Pulp and Paper Industpy Because Of the extensive variety of uses, paper has become the most widely employed man-made product. A per- sistent low cost and the continuing developments Of new uses for paper products have resulted in a vigorous and con- sistent growth in demand (see Table 11). Exceeded only by aluminum and natural gas, the pulp and paper industry is presently the third fastest growing major industry in the United States. As the pulp and paper industry has continued to grow at a rate more rapid than that Of the national economy, it is considered a growth industry. During the period 1930-1959, paper and paperboard consumption increased at a compound rate Of 3.9%, while the Gross National Product was increasing at 3.3% and the national population at 1.2%.1 A part of this growth is attributable to the ex- pansion in the export market for pulp and paper products. In 1954, 2.2% of production was exported, and it is expected that 4% of total production will be exported in 1966.2 As standards of living throughout the world improve, the demand for paper products increases. The Business and Defense lHarold E. Christen, "A Survey of the Capabilities of the Lake States Forests to Support an Expanding Pulp and Paper Industry" (unpublished Ph.D. dissertation, Michigan State University, 1961), p. 22. 2Business and Defense Services Administration, U.S. Industrial Outlook, 1966: Industry by Industry, p. 35. 107 Services Administration of the U.S. Department of Commerce estimates that world demand for paper products will double by 1980.1 Table ll.—-Apparent consumption of paper and board, 1899- 1960 (in million tons).a Year Paper Paperboard Total 1899 1.8 .4 2.2 1909 3.2 .9 4.1 1920 5.5 2.3 7.8 1930 8.4 3.9 12.3 1940 10.6 6.2 16.8 1950 16.8 12.3 29.1 1960 22.0 17.2 39.2 aData for 1899 and 1909 are taken from U.S. Depart- ment of Agriculture, Forest Service, Timber Resources for ‘America's Future, Forest Resource Report NO. 14 (Washington: Government Printing Office, 1958), p. 431. Data for 1920— 1960 are taken from U.S. Department of Agriculture, Forest Service, Timber Trends in the United States, Forest Resource Report NO. 17 (Washington: U.S. Government Printing Office, 1965), P. 48. The demand for products Of the pulp and paper industry is essentially derived--it is dependent upon the direct de— mand for the goods which use pulp and paper in their manu- facture. Although some paper products such as stationery lIbid. 108 are directly used by the individual, most products are used as raw materials in the manufacture of other products or for the protection Of goods in transit or storage. As the de- mand for pulp and paper products depends upon the demand for other goods or services, it is inelastic. The amount Of product consumed is relatively unresponsive to price changes. If there is a limited demand for the primary good or service, a small drop in the price of the pulp or paper product used as a raw material will not greatly increase the amount de- manded. However, in the long run, if substitutes for pulp and paper products could be Obtained at a lower cost, the demand for the pulp and paper products would decrease. Because of high fixed investment cost in the pulp and paper industry, it has striven to attain continuous Oper- ation at a maximum percentage of rated capacity. But there always exists a difference between the operating capacity of the industry and the consumption Of paper products. Guthrie states, NOrmally, excess capacity exists in most branches Of the industry, and under these circumstances supply is very elastic. However, when requirements increase to the point where excess capacity no longer exists, the supply becomes sharply inelastic, primarily be— cause of the time required to add to the productive facilities.1 Except for a period during the Second WOrld War, the increase in the wood pulp capacity has been ahead of the lGuthrie, p. 110. 109 increase in consumption. This has often meant a significant difference between population and capacity, which leaves a part Of the capacity idle. During the Depression, mills Operated as low as 58% of capacity1 and averaged 86% between 1958 and 1964.2 Because of the rapid rise in demand in the past five years, it is expected that mills will Operate at 93% of capacity in 1966.3 Future Growth Of the Pulp and Paper Industpy In the United States, the pulp, paper and board industry is a growth industry. Since the employment Of wood as a raw material, there has been a virtually uninterrupted rise in the use of pulp and paper products. This increase has occurred not only in the absolute volume being conSumed, but also in the per capita use. Although population increase may account for an absolute rise in the volume of consumption, other factors explain the per capita increase. In his analysis of the future consumption Of forest products, Streyffert discusses the role of the rise in the standard of living in the world-wide increase in per capita lSlatin, p. 6. 2 . BuSlness and Defense Services Administration, U.S. Industrial Outlook, 1966: Industryaby Industpy, p. 33. 31bid. 110 paper and paperboard consumption.l He refers to a study by the FAO2 which established a relationship between paper and paperboard consumption and per capita income, a measure of the standard of living. Pulp and paper products, according to Streyffert, "serve a number Of needs associated with an increase in the standard Of living . . . [and are] difficult to replace with other materials."3 As the standard of living in the United States and the rest of the world con— tinues to improve, the future use of products of the pulp and paper industry will largely be determined by the price at which these products can be sold relative to the price of competing materials. The three major influences on the growth of the pulp and paper industry appear to be popu- lation growth, improvement in standard of living and the relative price of paper products in comparison with other materials. Several detailed studies projecting the future growth of the pulp and paper industry in the United States have been conducted. In these analyses, various measures of the eco- nomic condition of the nation have been used as indicators Of the demand for pulp and paper products. The Forest Service lThorsten Streyffert, WOrldfiTimber, Trends and Prospects (Stockholm: Almqvist & Wiksell, 1958), p. 94. 2Food and Agriculture Organization of the United Nations, Rome. 3Streyffert, p. 101. 111 of the U.S. Department Of Agriculture used population and gross national product,1 while the Stanford Research Insti- tute related paper demand to population growth and real dis- posable income, a component Of the gross national product.2 In other investigations, a close correlation between the In— dex of Industrial Production in non-durable goods and the consumption of pulp and paper products has been identified. Although these projections are subject to invali- dation by many unforeseen circumstances, the studies of the future of the pulp and paper industry in the United States all agree that the industry will adapt to changes in con- sumption that might occur and will remain competitive. Indi- cations are that, in addition to satisfying domestic demand, the industry will increasingly participate in supplying the rapidly expanding foreign market. To meet the challenge of the growing domestic and foreign demand, the industry must continue to make major capital investments to increase pro- duction capacity and to improve the efficiency and flexi- bility of operations. 1Forest Service, Timber Resources for America's Future and Timber Trends in the United States. 2Stanford Research Institute, America's Demand for WOOd, report to the weyerhaeuser Timber Company (Sunnyvale, California: Professional Reports, 1954), pp. 2 and 28. CHAPTER V COMPETITIVE POSITION OF NORTHERN MICHIGAN Introduction In examining the national structure Of the pulp and paper industry, it was established that the industry must rapidly expand production capacity and production in order to satisfy the expected demand for its products. As a re- sult Of economic conditions, the growth of the industry will not be uniformly distributed throughout the country. The persisting influence Of the forest resource on the economic structure of NOrthern Michigan is a function of the region's competitive position in the industry.1 In order to ascer- tain the potential contribution Of the forest-based pulp and paper industry to the Northern Michigan economy, the factors which influence the region's participation in the national expansion will be examined. Throughout its history, the pulp and paper industry has expanded its production most rapidly in those regions lCompetitive position refers to the ability of a re- gion to sell a product in a market area at a price equal to or lower than that at which another region can sell this product in the same area. 112 113 with the best sources of raw material consistent with the technology of the day as shown in Chapter IV. But the industry does not move to the least costly raw material supply unless other needed inputs are also available. Areas in Canada where pulpwood costs are measured in cents per cord rather than in dollars remain unexploited because they are far from transportation and other input factors. Several of the cost items in the pulp and paper industry do not vary spatially and are usually unimportant in locational de- cisions. Variations in the cost Of overhead, repairs and executive salaries are based on the corporate capital structure, age Of plant and equipment and position in the industry. Federal taxes may also be an important cost input but do not vary areally. In geographic investigations, observationIOf coinci— dent phenomena provides a basis for generalizations regard— ing the location of economic activity.1 In studies of the pulp and paper industry, investigators have selected several variables which are associated in space with the industry and of importance in explaining the national pattern of the industry. According to Stevenson, the dominant locational requirements of the pulp and paper industry are the availa- bility of water, power, raw materials and labor, and 1H. H. McCarty, "An Approach to a Theory Of Economic Geography," Abstracts, Annals Of the Association of American Geographers, XLIII (June, 1953), p. 184. 114 proximity to market.1 Included in raw materials are both wood and chemicals. Also to be considered in the study of the location of any industry is the price for overcoming distance, the transportation cost.2 Varyininn degree of importance, these consider— ations are significant in location decisions relating to all pulp and paper mills, regardless of the type of raw material used, the process employed to produce pulp, or the product manufactured. In his analysis of the locational controls of pulp mills, Hagenstein writes that although each mill is some— what unique in its needs; all mills require "wood, water, labor, fuel and a number of other common inputs."3 A useful tool in evaluating the location pattern Of an industry is the substitution framework. Using this method, costs of inputs are compared to one another to determine which costs are most important in location decisions. For each of the inputs associated with the pulp and paper indus- try, a rate of cost substitution was developed by Hagenstein.4 The rate was expressed as the percentage of lLouis Tillotson Stevenson, p. 8. 2Edgar M. Hoover, The Location of:§gonomic Activity (New York: McGraWHHill Book Company, Inc., 1948), p. 8. Perry R. Hagenstein, "Factors in Locating Pulp Mills," paper presented at the annual meeting of the American Pulpwood Association, May 10, 1965, in 1965 Pulpwood Annual, prepared by the American Pulpwood Association (New York: Pulp and Papar, 1965), p. 49. 41bid. 115 change in the cost of an input that is equivalent to a 10% but Opposite change in the cost of a pulpwood input. Be- cause Of measurement difficulties, the relative importance of water supply and waste disposal were not examined. Using a hypothetical 200-ton-per—day semi-chemical pulp mill lo- cated in the Northern Appalachians as a basis for estimating quantities required, Hagenstein established his rates of cost.substitution. Table 12.--Rates of cost substitution among inputs in the wood pulp industry.a Input Per Cent Changeb WOOd 10 Transportation 20 Labor 36 Electricity 44 State and local taxes 64 Forest land 647 Local financial assistance 1050 Industrial site 2400 aHagenstein, 1965 Pulpwood Annual, p. 51. bPer cent change in the cost of inputs equivalent to a 10% change in the cost of the wood input; 116 In this chapter, each of the factors which have a significant influence on the spatial variation of the pulp and paper industry will be discussed and an evaluation made of NOrthern Michigan's competitive position with respect to these considerations. WOOd The pulp industry is closely associated in space with standing timber. As the industry directly processes pulpwood, a substantial weight loss in the raw material re- sults. On the average, for every two tons of pulpwood con- sumed, less than a ton of pulp is produced. Under present technology, the availability Of suitable wood at a competi— tive price is considered by investigators as the most im- portant locational control of the pulp and paper industry. The continuing search for pulpwood has been responsible for the regional shifts that have occurred in the industry since the introduction of wood as a raw material. Using data from the 1963 Census of Manufactures,, it was calculated that 49% of the total cost Of a11;materials and supplies used in pulp mills was for pulpwood. For pulp, paper and board mills taken together, pulpwood accounts for 25% of the total cost of materials and supplies.1 Therefore, 1The proportion Of total cost-accounted for by an in- put is not a sufficient index of the fundamental importance of the factor in locational decisions as its availability may be Of greater importance. 117 even a small difference in the unit cost Of wood can have an influence on the profitability of producing pulp and paper products in different regions. Of the factors considered by Hagenstein, no input could be substituted for wood at a rate less than 20% (transportation), with such important considerr ations as labor and power substituting at rates of 36% and 44% respectively. These comparisons indicate that wood and wood costs are of significantly greater importance than any other input measured. As with all inputs to be considered, the consumption of wood varies between pulping processes. The manufacture of some chemical pulps requires double the wood needed in making a ton Of pulp as is used in a ton of groundwood pulp. But with all processes, pulpwood remains the governing lo- cational factor,1 which restricts the choice Of location to those accessible to adequate supplies of wood at a competi— tive price. Chemicals The pulp and paper industry is a major user of chemi- cals. According to the American Pulp and Paper Association, the entire industry, including establishments converting finished paper and board into various consumer goods, uses lMelvin L. Greenhut, Plant Location in Theory and .gpactice: The Economics of Space (Chapel Hill: The Uni- versity of North Carolina Press, 1956), p. 103. 118 at least one billion dollars worth of chemicals each year.1 In the manufacture of pulp and paper, chemicals are the second most important raw material (see Table 13). Chemicals accounted for 16% Of the cost Of materials and supplies in pulp mills in 1963 and 9% Of the cost for pulp, paper and board mills taken together.2 Table 13.—-Value Of materials consumed in pulp, paper and board mills in the United States, 1963 _:-1 —_ — Material Value (in dollars) Pulpwood 774,373,000 Chemicals , 279,718,000 WOOd pulp 629,340,000 waste paper 283,646,000 Other materials 184,901,000 All other materials and components 935,587,000 Purchased fuels 265,554,000 Electricity 114,788,000 aU. S Bureau of the Census, Census of Manufactures: 1963. Industry Statistics: Pulp, Paper, and Board Mills. lAmerican Paper and Pulp Association, Monthly Sta— ,tistical Summary, XLII (October, 1964), p. 41. 2U.S., Bureau of the Census, Census Of Manafactures: 1963. Industry Statistics: Pulp, Paper, and Board Mills (Washington: U.S. Government Printing Office, 1966). 119 The pattern and magnitude of the use of chemicals have changed significantly in the past decade. With the de- velopment Of new methods of pulping and manufacturing paper and board which make extensive use of chemicals, their re- ported value in pulp and paper mills increased from approxi— mately 85 million dollars in 1954 to nearly 280 million dollars in 1963.1 The actual cost of chemicals varies wide— ly by pulping process and may approach wood costs in some cases. For example, in a cost summary for semi-bleached cold soda pulp, chemicals may account for nearly 30% Of the total production cost. Water In volume use of water, the pulp and paper industry ranks third behind the iron and steel and chemical indus- tries. As water is used in the process Of pulp and paper— making, an adequate supply of water of sufficient quantity and quality is a necessity.2 Water suspends the cellulose fibre (chiefly wood pulp) from its initial manufacture through to the paper machine rollers. In addition, water is used to wash the logs, generate steam, wash out impurities from the pulp and make chemical solutions. For every ton Of lIbid. 2National Resources Planning Board, Industrial Lo- cation and National Resources, p. 183. 120 pulp, 60,000 to 80,000 gallons of water are required.1 In its Operation at Filer City, the Packaging Corporation of America uses over 36,000,000 gallons Of water daily.2 A major problem confronting the pulp and paper indus- try with respect to water utilization is pollution. In some of the pulping processes, much spent liquor remains in the process water, creating problems of suspended solids and color removal and bio-chemical oxygen demand (BOD).3 For mills using the sulphite process, water treatment may be a significant cost item, as recovery and treatment of liquors are expensive and difficult.4 In the sulphate process, re- covery is nearly complete, and parts of the chemicals are reusable. 1Richard M. Highsmith, Jr., and J. Granville Jensen, Geography of Commodity Production (Chicago: J. B. Lippincott Company, 1958), p. 222. 2Interview with George G. Dlesk, Vice-President and Mill Manager, Filer City Mill, Packaging Corporation of America, May 21, 1966. 3James E. Blyth,.water Resources for Expanding WOog— Usingalndustries in NortheasternaMinnesota, Lake States Forest Experiment Station, Forest Service, U.S. Department of Agriculture (St. Paul, 1964), pp. 3-4. 4E. R. Schafer, Pollution of Streams from Pulp apg Paper Mills, FOrest Products Laboratory Report NO. 1207, Forest Service, U.S. Department of Agriculture (rev.; Madison, 1956), p. 5. 121 Power The cost of power amounts to approximately 10% Of the direct cost Of pulp and paper manufacture. Of the eight inputs considered by Hagenstein, power was ranked as fourth in importance. Electricity is usually generated by steam, with hydroelectric power used extensively in the Far West. In 1963, the pulp and paper industry was the third largest user of electric energy, consuming 14,044 million kilowatt hours of electricity.1 With 14,425,000 tons being purchased for $117,665,000, coal accounted for nearly one-third Of the total fuel cost. The total cost to the industry for pur- chased fuels was $265,554,000.2 Power is consumed in the Operation of conveyers, chippers, grinders, cooking vats for the pulp, heaters, driers and paper—machines. Even in regions using hydro— electric power, fuel is needed to provide steam for drying the paper. Fuel requirements average from one to one and a half tons Of coal for every ton Of paper. In addition to using expended liquor from its Kraft mill, the Packaging Corporation mill at Filer City requires 400 tons of coal and 16,000 gallons of fuel Oil daily.3 1Bureau of the Census, Census of Manufactures: 1963. Industry Statistics: Pulp, Paper,_apd Board Millp. 2Ibid. 3Interview with George G. Dlesk, Packaging Corpor— ation of America, May 21, 1966. 122 Transportation Transportation facilities connect the disparate in- puts of the pulp and paper industry with each other and with markets. The total freight bill of the industry is the com- bined expenditure for assembly Of raw materials and distri- bution of finished products. Of the inputs measured by Hagenstein, transportation cost ranked second only to wood. As the cost Of conveying pulpwood and other materials is in— cluded in the price of these materials, transportation costs here refer only to the costs involved in shipping products to the market. Marketing Of pulp and paper requires an ex- tensive transportation movement from a limited number of mills to widespread and numerous consuming points.l Although exact data are not recorded, generally rails carry the largest volume of pulp and paper products. In 1960, the United States paper industry produced 6.4 million tons Of printing and fine paper, of which 4.1 million tons were shipped by Class I railroads. Total paperboard production was 16.7 million tons, with rail shipments total- ing 8.6 million tons.2 As much of the output was converted 1Edward Margolin and William P. McLendon, Transpar- tation Factors in the Marketing of Newsprint, U.S. Depart- ment of Commerce Transportation Series NO. 2 (washington: U.S. Government Printing Office, 1952), p. 2. 2Benjamin Slatin, "Regional Competitive Position of the Pulp, Paper, and Board Industry in the United States," Proceedings of the Society of American Foresters, Atlanta, Georgia, 1962, p. 94. 123 at the site of production and never shipped, the magnitude of the production conveyed by railroad is not accurately re— flected. In Northern Michigan, mills ship between 47% and 80% of their production by railroad, with the remainder con- veyed by truck. Following the value theory of rate making, freight rates generally progress with the value of the commodity be- ing shipped. However, Guthrie points out that shipping charges on a ton of pulp constitute a larger fraction of the total value Of the product than of a ton of paper. He found that the cost of transporting a ton of pulp varied between 15% and 20% of the destination price, while the transpor- tation costs for paper varied between 4% for high—grade writing paper and 12% for newsprint.1 Labor As labor costs in.the capital—intensive pulp and paper industry are less than half that Of raw materials, the industry is not particularly responsive to differences in labor costs. The per cent Of value added by manufacture ac— counted for by wages is less in the pulp and paper industry than for industry as a whole. Nevertheless, wages are an im— portant segment in the cost structure of the industry. In Hagenstein's study, labor had a cost substitution rate of 36%, placing it third in importance among the inputs 1Guthrie, p. 93. 124 considered. The pulp, paper and board mills of the United States employed 220,243 people in 1963 and paid out wages exceeding three billion dollars.1 In addition, approximately 50,000 men are employed full-time, and another 250,000 part- time, to produce the nationls pulpwood harvest.2 Within any sector of the industry, wage rates vary little areally, except for generally higher labor costs in the Far West. Regional differences in labor costs exist be- cause Of variations in plant efficiency and types Of product manufactured. Using 100 as the index of average labor cost per ton of product for the paper and board industry, rag con- tent paper has the high value Of 410 while container board has the low index Of only 36.3 Wage rates are more a re- flection of the existing situation than an influence on the future pattern of the industry. Markets The locational pattern of any industry to some extent reflects the influence of the flow of commodities through its marketing system. Markets consist both of the ultimate 1Bureau of the Census, Census Of Manufactures: 1963. Industry Statistics: PpippaPaper, and Board Mills. 2American Forest Products Industries, Inc., Pulpwood Industry Fapts, written in cooperation with the American Pulpwood Association (1962), p. 2. 3Slatin, Proceedings of the Sopiety of American Foresters, 1962, p. 93. 125 consumers and the intermediary establishments which handle the products for further production and distribution.1 In the pulp and paper industry, the role of access to markets in plant location varies with the stage Of production and the product manufactured. As wood pulp loses little weight in paper making and can be shipped easily by ship or rail, pulp mills are Often located in forest areas hundreds Of miles distant from a paper mill. At the other extreme, plants converting paper and board to finished products are closely associated with their markets. Stafford has shown that the magnitude of the paperboard container industry varies directly with the magnitude of its market.2 Much of the intermediate market for paper and paperboard lies in the manufacturing centers Of the nation, and these mills are located at points where the greatest profit can be obtained considering both market and resources. There exist spatial variations in the markets for various paper and paperboard products. As communities throughout the nation support daily or weekly newspapers, the market for newsprint is extensive. But the market for book paper is limited essentially to the Northeast and Lake States. Mills manufacturing standardized products are 1National Resources Planning Board, Industrial LO- cation and National Resources, p. 203. 2Howard A. Stafford, Jr., "Factors in the Location Of the Paperboard Container Industry," Economic Geography, 126 usually less dependent on markets than are plants producing I l l "speClal order" merchandise. Competitive Position According to Perloff et a1., "A realistic appraisal of a region's relative advantages and disadvantages with re- gard to input-output access is an essential starting point for an understanding Of its growth potential."2 In order to establish the growth potential of the pulp and paper industry in Northern Michigan, the region's status with respect to each of the industry's significant inputs is examined. As previously develOped, these factors are wood, chemicals, transport, labor, power, water and market. All but wood are discussed in this section. The capability of the forest re- source to support an expanding pulp and paper industry will be discussed in Chapter VI. Chemicals.-—As the chemical companies commonly equal— ize delivered prices by absorbing freight rates, regional cost variations are slight. Some chemicals are available at lower costs to southernxnills, but differences are minimal. Michigan is an important producer of chemicals, and the pulp and paper industry has adequate access to those not locally available. In general, NOrthern Michigan compares favorably lLouis Tillotson Stevenson, p. 45. ZPerloff et a1., p. 105. 127 to other regions with respect to cost and availability of chemicals. Transport.--Northern Michigan is served by all major means of surface and air communications. Between the mile— ages of five rail lines,1 all important commercial centers and twenty—eight of the region's thirty-one counties are served by railroad (see Figure 14). But there is limited duplication Of service or competition between rail companies. Also, the circuitous routes followed by several of the lines add time and costs onto rail shipments. Of the six es— tablishments using Northern Michigan pulpwood, four use rails to bring in wood, and all ship a part of their pro- duction by rail. A network of state and federal highways serves Northern Michigan. In addition to a long—established hard— surfaced road system, six of the central counties are traversed by a limited-access freeway which extends to Detroit and other important markets. But the local roads which afford access to the forest resource are inadequate in many parts of the region. Inaccessibility Of the forest is a serious problem confronting the pulpwood producers. One of the mill managers interviewed also indicated that the east-west roads in the primary system were inadequate for lThe Ann Arbor, Detroit and Mackinac, Chesapeake and Ohio, New York Central and Pennsylvania Railroads. 128 > 00' I I I ---.-_I — Farm FKEHV m w m m m w. m _ Pll a. a N . .. .II m” A _ . . m mm . -IFIII. . n ? 1w. m .IIIIIIII_I_ .—I|I||I. fl M _ . .. . u m . . . .1-.. _. ..... I. . .. m \H I_I .. I--. I. ..... . _. ..... I. . R I. IHIIIHIII; .. _ I. . _ . m - I . _ _ .III. 1 . _ .. i _ _ . .I. ..... _ _ _ ..... 1.- ..... _ w m I_ . .. II. ..... I. _ _.. ..... ._ m .- I. ........... _ . l. _ . _ . E H ..... II_ _ _I ..... _ _ .. I.“ N .9 . _ ._ r... . _ . _ _ .2 I r III II IIL _ IIIII _ . L _ .. _ . _ _ _ _ . H. ...... _ |-I.I ...... _l ......... _ DA“ / _ . . _ m _ _ _ m . D .\ - _ ............ I _ ..... I“ _ u m N . I . IIMIL. _ ..... III . A Q _ ._ I I . _ . . n 1 cu nw _ r L _ _ m r W . m H Figure 14 129 transporting pulpwood from the inland counties to his coastal mill.l Each county in the region is served by at least one interstate and intrastate common carrier. All the mills using Northern Michigan pulpwood obtain some pulpwood and ship a portion of their production by truck. Although trucks generally are used for shorter pulpwood hauls and rails for greater distances, two of the mills bring in all their wood by truck. In addition to land transport, fifteen counties possess deep-water access to national and world re- sources and markets through the Great Lakes. At present, one pulp mill obtains part of its wood supply through the St. Lawrence waterway system. Commercial air service is avail- able at Alpena, Cadillac, Manistee, Pellston, Petoskey, Reed City and Traverse City. Although there are limitations, the overall transpor— tation net for Northern Michigan is good. Hagenstein indi- cated that the East North Central region, which includes Northern Michigan, has competitive transportation rates to markets within the region and in the Middle Atlantic and West North Central regions. 1Interview with George G. Dlesk, Packaging Corpor- ation of America, May 21, 1966. 2Hagenstein, 1965 Pulpwood Annual, p. 51. 130 .Lgb2£.-—Northern Michigan presently experiences a problem with respect to labor procurement. The situation is unique in that in the past there has been available a labor pool with a relatively low level of technological skill which provided woodsworkers.l But because of the increasing demand for labor in the large urban centers of the Lake States, there has developed a shortage of men to harvest the pulpwood. In Michigan, as in the other Lake States, pulpwood production is in the domain of the off-season farmer and others seeking part-time work. The producer is an inde- pendent operator who contracts with a pulpwood dealer or some other middleman to provide a stipulated amount of wood for a given price. The wood is delivered to a predetermined point, often a railhead or concentration yard.2 Unless long hours are devoted to the work, the remuneration is below that of alternative employment in the large urban centers outside the region. Many of the woodsworkers have left the region for more lucrative work, and several of the region's 1In a 1955 publication of the Michigan Economic De- velopment Department, the high unemployment rate in Northern Michigan was cited as an advantage to pulp and paper companies considering the region. "What You Should Know About Michigan as a Location for Pulp and Paper Mills," pre- pared by the Michigan Economic Development Department (Lansing, l955), p. 3. 2Robert S. Manthy and Lee M. James, Marketing Pulp— wood in Selected Areas of the North Central Region, North Central Regional Research Publication 156, Michigan Agri- cultural Experiment Station Research Bulletin 6 (East Lansing, 1964), Pp. 34-35. l3l pulp mills are experiencing serious wood procurement problems because of the shortage of pulpwood harvesters. If the pulp companies are able to make the occu- pation more attractive through increased payment for wood and by offering credit to producers for purchasing needed equipment, the problem could be alleviated.. But these measures, together with needed mechanization of the logging operation, require capital. Mill managers do not want to allocate additional funds to pulpwood procurement for fear that the higher price of wood would make their operations noncompetitive nationally. Power.--Purchased electricity costs are higher than in the Far West (because of better access to hydroelectric power in the latter region) and the South but similar to those in the Northeast. Costs vary less between regions for fuels purchased for the generation of electricity. Overall fuel costs are less in the Lake States than in the Far West or Northeast. As fuel oil is not widely used by the pulp and paper industry, those areas nearest the Appalachian coal fields experience the greatest advantage for fuel costs. Hagenstein found that the East North Central states have a comparative advantage over the Northeastern and Far Western producing regions with respect to fuel and power costs.l lHagenstein, 1965 Pulpwood Annual, p. 51. 132 EE£§£.--One of NOrthern Michigan's greatest ad- vantages for the pulp and paper industry is the abundant supply of high-quality water. In addition to a lengthy shoreline on Lakes Michigan and Huron, the region contains 503 square miles of water in numerous inland lakes. Most of this water resource is of high quality and requires little or no treatment for use. With an annual precipitation ex- ceeding thirty inches, NOrthern Michigan is endowed with a sustained supply of water for use by the pulp and paper industry. A major obstacle to the use of the water resource by the pulp and paper industry is the pollution control program of the state. Increased public pressure to clean the state's waterways has resulted in high treatment costs of effluent. In one instance, the cost has affected the ability of a mill to remain competitive. Several of the mills are presently increasing their capability to treat spent liquor in order to meet more stringent enforcement of treatment requirements. Market.--Proximity to the large and expanding market area of the Midwest is NOrthern Michigan's most important ad- vantage for the pulp and paper industry. In 1960, over 40 million people, nearly one-fourth of the national population, resided within overnight shipping distance of Clare.l And 1City in Clare County, near the defined boundary with Southern Michigan. 133 between 1950 and 1960, the population growth of this region exceeded the national average. The industrialized and popu— lous market area is a major consumer of printing paper, tissue paper, boxboard and various grades of container paper. Pulp and paper mills in Northern Michigan are able to absorb higher production costs and still compete with southern mills in the Midwest because of the shorter distance. Northern Michigan's competitive position with re- spect to the rapidly growing pulp and paper industry varies with the locational requirement considered. The relative cost and availability of water and transportation are favor- able, while the situation with respect to fuel and labor is less favorable. Proximity to a major market area is the region's strongest advantage. Mills accept higher overall production costs in order to seek profits of large pro- duction and low mill—to-market transfer costs. legeneral, the economic position of NOrthern Michigan is favorable for a continued expansion of the pulp and paper industry. Based on the capabilities of the forest resource, the magnitude and direction of expansion will be discussed in the following chapter. CHAPTER VI CAPABILITY OF THE NORTHERN MICHIGAN FOREST RESOURCE TO SUPPORT AN EX- PANDING PULP AND PAPER INDUSTRY Introduction The most significant consideration in evaluating the persisting contribution of the forest resource to the spatial structure of Northern Michigan is the capability of the forest resource to sustain an expanding pulp and paper indus- try. The influence of the forest resource is a function of its volume and the demand for its products. In this chapter, the existing and expected character of the forest is investi- gated in order to ascertain the availability of wood for present and projected demand. Problems confronting foresters in their programs to increase production are discussed, and the competitive position of the region with respect to wood supply is examined. Also, considering the available species and pulping processes and markets, the products which could be produced in Northern Michigan are studied. The Existinngorest Resource In Chapters II and III, the demise of the white pine and its replacement by a predominantly hardwood forest were 134 135 discussed. The character of this change has been documented by Forest Surveys conducted in the mid-1930's and the mid- 1950's. Current data regarding the forest resource are un— available, but through an examination of the 1955 Forest Survey and data concerning the annual harvest and growth, an idea of the character of the existing forest can be developed. Table 14 presents the volume of timber by type of wood for each county and indicates the percentage of land area classified as forest land. It is apparent that hard- woods dominate both growing stock and sawtimber. As hard— woods are of greater dominance in the growing stock, it is likely they will become even more important in the future. A more complete summary of the volume, area and growth of the forest resource is provided in Table 15. From this table, it is evident that both hardwoods and softwoods are growing rapidly and that total volume is increasing ap— preciably. Considering existing volume and annual growth, the major species available for pulping are jack pine, aspen, Northern hardwoods and other hardwoods. As 64% of the com- mercial land in Northern Michigan in 1955 was either medium- to well-stocked seedlings and saplings or poletimber, the current growth probably exceeds that shown on the table. Both of these size classes have experienced rapid growth in the past decade. 136 Table 14.--Se1ected characteristics of the NOrthern Michigan forest resource by county, 1956.a Growing Stock Sawtimber (in Per cent County (in thousand cords) million board-feet) ofaizgd Hardwoods Softwoods Hardwoods Softwoods forested Alcona 1,250 433 65 65 87.8 Alpena 1,098 409 80 53 71.5 Antrim 1,118 145 140 21 66.7 Arenac 366 52 34 6 41.7 Benzie 740 91 110 _ 15 71.2 Charlevoix 1,027 163 105 25 69.9 Cheboygan 1,476 426 140 68 81.6 Clare 1,072 137 115 19 65.9 Crawford 713 538 51 65 92.8 Emmet 1,131 167 125 25 74.9 Gladwin 718 102 66 14 57.2 Grand Traverse 756 187 103 33 59.3 Iosco 814 385 61 51 71.1 Kalkaska 784 218 96 40 82.9 Lake 1,637 259 203 39 86.9 Leelanau 1,099 112 161 26 58.4 Manistee 1,443 155 216 20 70.7 Mason 1,019 142 129 20 57.9 Mecosta 866 75 112 18 45.9 Midland 876 118 86 14 57.6 Missaukee 894 134 88 19 65.5 Montmorency 1,165 441 80 62 86.7 Newaygo 733 223 254 53 65.8 Oceana 1,144 114 96 27 51.4 Ogemaw 1,213 351 78 45 74.6 Osceola 1,171 87 132 16 52.7 Oscoda 976 697 63 108 92.6 Otsego 1,113 230 109 35 83.9 Presque Isle 1,016 462 66 59 77.2 Roscommon 1,021 331 66 54 91.4 Wexford 993 146 104 18 71.2 Total 32,442 7,547 3,428 1,139 71.5 aGrowing stock and sawtimber data from Findell and Pfeifer, Net Timber Volume in Michigan by Species, Group and County. Per cent of area forested data from V. E. Findell and R. E. Pfeifer, Forest Area in Michigan Counties, Lake States Forest Experiment Station Technical Note No. 545, Forest Service, U.S. Department of Agriculture (St. Paul, October, 1958). Table 15.-—Commercia1 forest area, 137 volume and annual growth of principle pulping species in Northern Michigan, 1955.3 2:3 Baéiim Other Northern Other Soft- Hard— Aspen Hard- Jack and c P' woods woods woods 1ne Spruce Forest Area (1000 913 160 376 1,099 2,218 1,294 acres) Volume (1000 -- 1,120 -- -- 10,700 -- cords) Annual Net Growth 315 83 170 296 535 518 (1000 cords) aFindell et a1., pp. 38, 41 and 42. bCedar, white pine and tamarack. CSugar maple, yellow birch, beech and basswood. dOak, hickory, ash, elm and cottonwood. The character of the Northern Michigan forest re- source is in a state of constant change. In an analysis of the Lake States forest resource, Dickerman discussed several factors which continually act to improve or lessen the quali- ty of the forest: (1) the "thickening up" of the forest in recent years, (2) the presence of a sizable area of de— forested land, (3) the expanding reforestation program, (4) the stabilized ownership pattern, (5) the favorable outlook 138 for aspen, (6) the concern about maintaining conifers and (7) the expanding supply of oak.1 In the long run, factors two and three, regarding deforested land and an active reforestation program, will largely eliminate each other. Along with improved manage— ment practices, the plantation program will alleviate the concern for maintaining conifers expressed in point six. The ownership pattern will be discussed later in this chapter, but attention will now be given to the factors deal— ing with the "thickening up" of the forest and the expanding supply of oak and aspen. Both oak and aspen, along with other hardwoods, have been underutilized in Northern Michigan. Only in the past twenty years have these woods been used extensively by the pulp and paper industry. As these species dominate, and will continue to dominate, the forest resource, any additional ex- pansion of the pulp and paper industry is predicated on de- veloping new techniques to more fully utilize them. As re- cently as 1946, aspen was called a "weed," but it is now the primary pulping species. Pulping processes which use oak and the other hardwoods must be developed as they were for aspen. 1M. B. Dickerman, The Changing Forests of the Lake and Central States Region, Lake States Forest Experiment Station Miscellaneous Report No. 31, Forest Service, U.S. Department of Agriculture (St. Paul, October, 1954), p. 10. 139 In order for a forest resource to be productive, a part of the annual growth should be harvested annually to reduce loss through over-age, death and disease. Depending on whether the desired growing stock is too large or too small, more or less than the annual growth may be harvested. In determining the "allowable cut," the amount of wood that is to be cut, the size of the growing stock needed to meet specified goals is considered. Where growing stocks have been severely reduced by past logging activity, as in Northern Michigan, the allowable cut is kept below annual growth to permit growing stock to accumulate. In establish— ing an allowable cut for various species in a region, forest type, species composition, stand-size class and feasibility of logging Operations are all considered. In 1954, for Michigan as a whole, the allowable cut was set at about 33% of annual growth for jack pine, 45% for balsam fir, 67% for aspen and 63% for northern hardwoods.l Consistent with more recent data showing increasing annual growth; allowable cuts have been revised upward by the Forest Service for National Forest lands (see Table 16) and the Michigan Department of Conservation for State Forest lands. Suggested cuts for private lands issued by the Forest Service Research Station at St. Paul have also been increased. lFindell et a1., p. 45. 140 Table l6.--Allowable cut by species, Huron National Forest, 1952 and 1965 (in standard cords).a Species 1952 1965 Jack pine 32,600 21,450 Aspen 10,300 33,930 Oak 5,800 21,680 Red pine 500 3,090 aPersonal communication from John Von Bargen, Forest Supervisor, Huron-Manistee National Forests, June 29, 1966. Although the allowable cut is a desired forest management goal, it is seldom attained in Northern Michigan. Table 17 shows that in 1955 the allowable cut was not reached for any of the major pulping species. Only in aspen and pine did the actual cut account for more than 50% of the allowable cut. Table 17.—-Growth, allowable cut, actual cut and surplus of selected pulping species in Northern Michigan, 1955 (in 1000 cords).a Aspen 32233 Spruce Baéiim Regazid 252:: woods Pine woods Growth 535 753 21 62 35 190 Allowable cut 451 206 13 23 98 83 Actual cut 231 35 3 3 56 29 Surplus 220 171 10 20 42 54 aFindell et al., pp. 42, 45 and 46. 141 The pulp and paper industry has rapidly expanded since 1955, and a greater proportion of the allowable cut is taken each year. Table 18 presents the drain of selected pulping species from 1959 to 1965 as compared with the al- 1owable cut established in 1954. From the data, it is ap- parent that actual cut remains below the allowable cut for most species; only in pine has the timber harvest reached the desirable cut. For all species, the actual cut was 62% of the allowable cut, which means that 38% of the desired cut was not taken, with much of it being lost from use through old age and disease. Each year, timber growth in NOrthern Michigan considerably exceeds the amount removed through harvest or lost to natural causes. A survey of the pulpwood production by county re— veals an unequal distribution of harvest. Although counties vary significantly in their ability to produce because of forest composition, site characteristics and amount of forest land, all but six had a growing stock exceeding one million cords in 1955. Figure 15 shows the pulpwood pro- duction by county in 1965. From the map, it appears that two areas, one extending from Benzie to Emmet Counties in the northwest and another smaller one in the southeast, pro- duce very little pulpwood. It would seem that these areas have the greatest surplus for expansion. The data does not include the consumption of the particle plant at Gaylord, 142 which means the drain from Otsego and adjoining counties is higher than shown. Table 18.--Annual drain of selected pulping species in NOrthern Michigan, 1959—1965 (in 1000 cords).a Tatié Aspen 3:23: Pine Baiiim Spruce woods Allowable Cut, 1954 874 451 206 98 23 13 1959 409 263 28 104 7 7 1960 503 355 20 114 7 7 1961 450 280 51 103 9 7 1962 486 305 80 93 4 4 1963 489 314 78 84 8 5 1964 539 332 94 106 4 3 1965 539 326 100 111 2 1 aData for all years preceding 1965 were obtained from Arthur G. Horn, Pulpwood Production in Lake States Counties, Lake States Forest Experiment Station Paper No. 85, September, 1960; Station Paper No. 94, January, 1962; Sta- tion Paper No. 106, December, 1962; Research Paper LS—S, December, 1963; Resource Bulletin LS—l, December, 1964; and Resource Bulletin LS-2, September, 1965. Data for 1965 were provided by the Forestry Division, Michigan Department of Conservation. bDoes not include consumption of the particle board plant at Gaylord. 143 I 84’ 83‘ I 85' PULPWOOD PRODUCTION I 86' 46% I... D. --1 Mgr-Mo-N‘ioc. ‘3 w «Enema... 1..“ _. 0 t - Iv v‘- on |965 .46” .49 a 9 4 ninth-o... I .‘.............I {$0.61 0-"- n‘ . .-4- I'Io' ' O 4 4 P 44“ 4&4 ._. _ .... “Herd ~43° _-l_. 42‘- —'_I—""”T Iloll-filll'o I I‘ ! >- 42° 30 MILES IO L-_-- --_J-_.--_ u__-J_ CORDS PRODUCED 40.000 - 55.000 25.000 40.000 - 25.000 l0. D UNDER |0.000 m m m... «a m m m... 81’ Figure 15 144 The Future Forest Resource Although the Northern Michigan forest resource is able to support the existing pulp and paper industry, the future capability of the forest must be evaluated in order to consider the persisting contribution of the forest re- source to the economy of the region. It is assumed that inter—industry competition for wood will not be a serious problem, as pulp and paper is the only important forest products industry expanding in the region. An idea of the future forest situation in NOrthern Michigan was obtained through an examination of a study by Christen of the capabilities of the forest of the Lake States to support an expanding pulp and paper industry with local wood. Northern Michigan's forest resource is com— parable with the other forested regions of the Lake States and presently has the greatest surpluses of hardwoods. In his study, Christen estimates the pulpwood consumption of the Lake States mills for 1975 and 2000 if they were to grow to an annual rate of 3%. This assumed rate of growth falls well within the national growth projections for the industry discussed in Chapter IV and Appendix II. Supplying the expansion of pulping capacity would require 500 million cubic feet of roundwood by 1975 and l 1This excludes the particle board plant, which is classified as a Miscellaneous WOOd Industry, and the pallet industry, which uses lower—grade wood and is more market- oriented. 145 billion cubic feet by the year 2000. Adding consumption for lumber and other forest products industries equal to the 1959 level, a grand total of 825 million cubic feet of round- wood would be needed by 1975 and 1.35 billion cubic feet in the year 2000.1 Using the annual growth for 1953, Christen showed that there would be a surplus of growth over pro- jected use for all wood industries of 355 million cubic feet in 1975 and a deficit of 170 million cubic feet for the year 2000.2 From this study and considering the growth rates and harvests in NOrthern Michigan, it is assumed that the forest resource has the capability of supporting a pulp and paper industry expanding at the expected national rate through 1975 and probably through the year 2000. In Northern Michigan, there remains a virtually un- tapped source of wood for the present and future pulp and paper industry. Mill residue, the leftovers from the manu— facture of lumber and veneer, is an important source of pulp- wood throughout the United States. Bark-free slabs, edgings, trimmings and veneer cores are processed into chips and sold to the pulp mills. In 1960, the pulp mills of the Pacific Northwest obtained more than 40% of their wood supply in the lChristen,.p. 127. 2Ibid., p. 128. 146 form of mill residue, with many mills using 90% chips. In the South, 11% of the pulpwood was in the form of chips.1 In the lower peninsula of Michigan, mill wastes were first introduced in 1964, and in 1965 four mills used resi- due equivalent to nearly 30,000 cords of roundwood. Dis- cussions with mill managers indicate that the utilization of chips will show a sharp increase, probably doubling, in 1966. However, several conditions serve to limit the potential of chips in Michigan: (1) the small-size sawmills produce a low volume of mill wastes, (2) each sawmill uses several different species, which results in mill wastes that are not usable in most pulping processes, and (3) the pulp mills are equipped to handle roundwood, and expensive remodeling would be needed to allow the extensive use of chips. Competitive Position Although the presence of an adequate wood supply will not limit the expansion of the pulp and paper industry in NOrthern Michigan, several considerations regarding the forest resource may influence the competitive position of the region. The price and accessibility of the timber and the pattern of forest land ownership limit the economic supply of wood. Species limitations restrict the types of pulping operations and will be discussed in a later section. 1American Forest Products Industries, Inc., Pulpwood Industry Facts, p. 3. 147 Although ownership of forest land is presently stable, this was not true prior to 1940. During the Depression, forest land owners were selling large acreages to the federal government at low valuations or forfeiting control of the land to the state through non-payment of taxes. Within a short time, the national and state governments found them— selves owners of large but scattered forest tracts. Subse- quent land exchanges have consolidated the holdings of the National and State Forests into manageable units. An examin- ation of the present ownership pattern of the commercial forest land reveals several factors which will be of sig- nificance to the future of the pulp and paper industry in Northern Michigan. Table l9.——Amount of commercial forest land in Northern Michigan and pulpwood production by ownership.a Per Cent of Per Cent of Ownership Acres Commercial Pulpwood Forest Land Production Federal . government 805,000 10.7 23 State government 1,780,000 23.7 29 Local government 20,000 .3 0 Private 4,903,000 65.3 48 aSchallau, pp. 2 and 5; Michigan Department of Conser- vation, "Volumes and Sources of Major Forest Products," un— published table, 1965. I?! I! l 148 Although pulp and paper mills prefer to own their forest resource in order to insure continuous supply, it is apparent that a substantial share of the wood in Northern Michigan is harvested on public lands. Both the state— and federally-owned lands are significant out of proportion to their land area. The discrepancy between land area and pro- duction by various classes of ownership is largely a result of the better management of the forest on the public lands. Present National and State Forest policies are designed to increase the annual cut to the maximum level possible con- sistent with sustained yield management. In total acreage, the State Forests of Michigan are the largest in the nation, and through able management and increasing annual growth, they are becoming highly important as a source of wood. As most of these lands were obtained through tax reversion, they are generally of low quality for tree growth. But through an active program of timber improvement and disease and fire control, the forest is be- coming increasingly productive. On State Forest land, timber production is given equal emphasis with game manage— ment and recreation in developing management policy.1 Because of the plantation program initiated by the state at the turn of the century, the annual growth of several important pulpwood species is rapidly increasing. lSchallau, pp. 25-26. 149 Including replanted areas, over 340,000 acres of trees were planted by the state between 1904 and 1960. Through an in— tensive management program and the increased annual growth of softwood plantations, the State Forests will be able to account for a larger production of pulpwood in the future. Table 20.—-Net volume in forest plantation in Northern Michigan by ownership, 1957 (in 1000 cords).a Species Total State National Private Forest Forest Land White pine 42.0 13.3 3.1 25.6 Red pine 242.7 62.9 96.7 83.1 Jack pine 294.7 178.8 85.6 30.3 Spruce '5.9 3.0 0 2.9 aStone and Chase, p. 19. National Forests account for less than 11% of the commercial forest land in Northern Michigan but produce nearly one-fourth of the pulpwood (113,400 cords sold to pulp mills in 1965).1 This results from the better con- dition of the forest itself and the intensive management of the resource. As in the State Forest, pulpwood is the chief timber product, accounting for over 90% of the timber volume 1Personal communication from John Von Bargen, June 29, 1966. 150 in 1964. The forest fire, disease and insect detection and control measures are similar to those in the State Forests, and the programs of the two agencies are coordinated for ef- ficiency. Outdoor recreation, range land, timber, watershed and wildlife are all part of the National Forest management program, according to the provisions of the Multiple Use Sustained Yield Act of 1960.1 With the increased demand for recreational space, there will be increased competition be- tween land uses on the National Forest acreage. Table 19 indicated that private ownership accounted for nearly two- thirds of the commercial forest land in NOrthern Michigan but produced less than half the pulpwood. Table 21 shows the percentage distribution of private forest acreage among various occupation groups and the number of woodland owners. The considerable land held by the business- professional and wage-earner groups is characterized by absentee ownership and poor management with little or no timber harvest.3 This is also true of the recreation group, which consists largely of camps owned by religious and social groups. In a recent survey, only 4% of the woodland owners listed timber sales as an objective, while 39% indicated lSchallau, p. 30. 2WOOdland owner refers to an individual possessing less than 5,000 acres of forest land. 3Conklin refers to woodlands owned by urban dwellers as "suburban forests." H. E. Conklin, "The New Forest of New York," Land Economics, XLII (May, 1966), p. 203. 151 recreation or residence.1 Timber production for these owner- ship categories has been low in the past, but with the in- creased use of land owner agreements and cooperative manage— ment plans, the productivity is increasing. Through the Tree Farm program, the pulp mills are providing professional fores- try assistance.2 This program has enabled the mills to intro— duce management plans on a greater portion of the lands in their procurement area and to insure long-term availability of wood. Table 21.—-Percentage of woodland owners and forest acreage in Northern Michigan by occupation.a Occupation Per Centbof Per Cent of Owners WOodland Farmer 39 21 Part—time farmer 12 Forest industry 0 Non—forest industry Business—professional 5 15 Wage-earner 32 ll Housewife (widow) 6 Recreation group 1 13 Undivided estate 0 Retired 3 4 Other 2 10 aSchallau, p. 7. b0 means less than .5% reported. lSchallau, p. 13. 2Forest land bearing the Tree Farm symbol is certi— fied by a regional industry association after the owner has introduced a plan of forest management for timber production. 152 Because of the acreage involved and the generally higher quality of the land, the woodland owned by farmers probably has the greatest potential for increased production. In the past decade, the acreage in grazed woodlots and cropped land has declined, with much of the land reverting to forest. However, the farm and other woodland holdings are small in size and highly fragmented and not readily susceptible to mechanized logging operations. For this reason, their share of the pulpwood harvest will probably remain stable in the future, although absolute production will substantially increase. About 10% of the private ownerships are in land holdings exceeding 5,000 acres. Much of this acreage is owned by large hunt clubs and camp groups.1 As these lands are large enough for effective management and logging, they offer the pulp and paper industry the best opportunity for securing long-term wood supplies. Consumers Power Company owns 115,000 acres of commercial forest land that is managed for wood production. The company uses the allowable cut suggested by the Forest Service, annually selling between 8,000 and 10,000 cords of pulpwood.2 lPackaging Corporation of America owns nearly 30,000 acres of commercial forest land. 2Personal communication from Mr. Edward Totten, Forester, Consumers Power Company, August 1, 1966. 153 With respect to the land ownership pattern, three problems which adversely affect the competitive position of Northern Michigan are recognized: (1) None of the existing pulp and paper mills owns or has the opportunity of acquiring forest land. This means the mills do not have an assured source of wood at a competi- tive price. (2) The quality of forest management varies widely, with much of the land not professionally managed. (3) Many of the holdings are too small to permit the use of the more mechanized logging techniques. Price of WOod Regional variations in the price of pulpwood are difficult to establish because of the differences that exist within each region. Also, real costs may be hidden, as different species of wood vary in density, affecting the wood cost per ton of pulp and paper manufactured. Delivered pulpwood prices essentially reflect the local scarcity of wood, labor wage rates and the volume of wood in the forest. Limited wood supplies increase the price of stumpagel and as the procurement area expands, transportation costs. Higher 1The value of timber as it stands in the forest. 154 wage rates and poor stocking contribute to higher logging costs.1 In his analysis of regional pulpwood price differ- ences, Guthrie noted that between 1928 and 1943, the South had the lowest wood costs, followed by the West, with higher prices in the Lake States and highest prices in the North- east.2 Hagenstein found wood costs highest in the Middle Atlantic and East North Central states and lowest in the South and West.3 This apparent higher cost of wood in Northern Michigan as a part of the Lake States or East North Central States is often attributed to the higher logging costs and more recently, to the limited use of sawmill residue. Stumpage prices are competitive in the Lake States region and have been stable over time. In 1959, producers in Michigan paid an average of $1.34 a cord for aspen and $3.46 a cord for pine.4 Department of Conservation records indicate that stumpage prices for Northern Michigan in 1965 averaged $1.31 a cord for aspen and $3.33 a cord for pine. lLogging costs are those involved in preparing the standing tree for transport. Logging operations include felling, limbing and bucking, bark peeling and skidding to the roadside. Logging costs together with the margin for profit and risk comprise the cost of production. 2Guthrie, p. 145. 3Hagenstein, 1965 Pulpwood Annual, p. 51. 4Manthy and James, p. 87. 155 But the cost of harvesting the stumpage is higher than in the West or South. Lower per-acre yields, poor accessibility to many stands and a low level of mechanization account for the differences in logging costs. Also, because of the paucity and small size of sawmills, large quantities of mill residue are not available. A general notion of the existing cost differences of wood between major producing regions can be calculated from census data. Using data from the 1963 Census of Manu— factures, Table 22 was constructed to show the quantity, total delivered costs and average price per cord of the major pulping species. In Table 23, roundwood data from Table 22 are allocated by species to the major producing region in which the species is most intensively used. From this data, several important regional vari- ations are discerned. Woods used in the Lake States average out to $23.14 per cord, while those used in the South and West amount to $19.90 and $18.61 respectively. The national average for all species was $19.36 per cord. At first glance, this would indicate that the mills in the Lake States are at a competitive disadvantage with respect to wood, paying $3.24 a cord more than the southern mills and $4.53 a cord more than the western mills. Moreover, the western and southern mills use most of the relatively inexpensive wood chips and mill wastes. But these broad generalizations ob- scure price variances for particular mills resulting from 156 Table 22.--Quantity, delivered cost and cost per cord of major pulping species in the United States, 1963.a . Quantity Delivered Cost Cost SpeC1es (in cords) (in $1000) per Cord Softwoods Spruce 3,038,115 $ 84,551 $27.25 Hemlock 1,712,626 32,983 19.25 Jack pine 783,261 17,558 22.41 Southern pine 17,798,934 360,939 20.75 Other softwoods 1,728,870 31,069 17.97 Chips 8,196,962 130,505 ' 15.92 Mill wastes 687,887 9,251 13.44 33,946,655 $666,856 $19.65 Hardwoods Northern mixed hardwoods 1,580,603 $ 31,520 $19.94 Poplar 1,650,926 29,633 17.94 Southern mixed hardwoods 677,321 11,055 16.32 Other hardwoods 1,172,038 19,185 16.36 Chips and mill wastes 796,113 13,124 16.48 5,877,001 $104,517 $17.78 Total 39,823,656 $771,373 $19.36 aCalculated from data given in U.S. Bureau of the Census, Census of Manufactures: 1963. Industry Statistics: Pulp, Paper, and Board Mills. 157 Table 23.--Quantity, delivered cost and cost per cord of wood by major region of utilization, 1963.a S ecies Quantity Delivered Cost Cost p (in cords) (in $1000) per Cord West Hemlock 1,712,626 $ 32,983 $22.41 Other softwoods 1,728,870 31,069 17.97 Total 3,441,496 $ 64,052 $18.61 South Southern pine 17,798,934 $360,939 $20.75 Southern mixed hardwoods 677,321 11,055 16.32 Other hardwoods 1,172,038 19,185 16.36 Total 19,648,293 $391,179 $19.90 Lake States Spruce 3,038,115 $ 84,551 $27.83 Jack pine 783,261 17,558 20.75 Northern mixed hardwoods 1,580,603 31,520 19.94 Poplar 1,650,926 29.633 17.94 Total 7,052,905 $163,262 $23.14 aCalculated from data presented in Table 22. 158 the raw material mix consumed and the local differences in price. Illustrating the influence of species mix, a mill in Northern Michigan using equal amounts of pine and poplar (aspen) would, at national average prices, have an average wood cost of $19.35 per cord. This is competitive with the average price for wood in the South and less than one dollar per cord more than wood costs in the West. Within the Lake States producing region, the cost of pulpwood is generally lower in Northern Michigan than for the region as a whole (see Table 24). This is probably the re— sult of fewer mills with less competition for wood and smaller procurement areas, reducing transportation costs. In their study of pulpwood marketing in the Lake States, Manthy and James found the stumpage prices for the favored pulping species were lowest in Michigan and highest in Wisconsin.1 Although relative wood costs appear to be higher in the Lake States than in the west or South, NOrthern Michigan holds a competitive advantage within the Lake States pro- ducing region. Mills using the local pulping species such as aspen and pine have wood costs comparable with mills using roundwood in the West or South. Through greater utili- zation of available dense hardwoods and mill residue and in- creased mechanization of the logging operation, wood costs in Northern Michigan could remain competitive. lManthy and James, p. 87. 159 Table 24.——Average delivered pulpwood prices in Lake States by species, 1957-1958.a Location Aspen Other Hardwoods Spruce Pine Wisconsin $12.50 $13.00 $27.00 $17.00 Minnesota 11.00 -— 24.00 15.50 Upper Peninsula 14.50 13.50 27.00 17.50 Lower Michigan 10.50 11.00 22.00 13.00 aU.S. Department of Agriculture, Forest Service, Feasibilitygof Using Lake States Hardwoods for Newsprint and Other Pulp and Paper Products (Washington, April, 1959), p. 48. Utilization of the Forest Resource Although Northern Michigan possesses certain ad- vantages that will result in the region participating in the national expansion of the pulp and paper industry, the di— rection and magnitude of future expansion depends on the ability of the industry to utilize the available forest re- source. In any producing region, the species available im— pose limitations on the ultimate products. Through research, the species constituting the Northern Michigan forest re- source are being adapted to a greater number of pulping pro- cesses for use in a variety of grades of paper and paper— board. The Forest Products Laboratory of the Forest Service at Madison, Wisconsin, continuously experiments with the 160 utilization of Lake States woods in various pulping pro- cesses for various grades of paper and board.1 Most suitable for hardwoods under present technology are the semi-chemical and chemi—mechanical processes and the soda chemical process. The semi—chemical process has found wide acceptance in Michigan. In 1964, Michigan produced 570,129 tons of wood pulp, of which 231,252 tons, or 41%, were semi—chemical.2 From the pulping processes most suited to the forest resource of Northern Michigan a great variety of grades of paper and board can be manufactured. Con- sidering the market area served, several combinations of pulping processes using jack pine, aspen and other hardwoods are particularly applicable. Neutral sulfite semi-chemical pulp together with soda chemical pulp produces fine paper, book paper, and various other grades of printing paper. Other combinations of available wood and processes produce quality corrugating board, insulating board and various 1The results of this research are published in the form of reports. Illustrative of these are: G. H. Chidester, Use of Hardwoods in the Manufacture of Newsprint, Forest Products Laboratory Report No. 2027, August, 1961: E. M. Davis, Paper Birch Utilization in the Lake States, Forest Products Laboratory Report No. 1953, 1959: and D. J. Fahey et a1., Milk Carton_Boards from Certain Lake StateppSoft— woods and Hardwoods, Forest Products Laboratory Report No. 2187, April, 1960. 2Bureau of the Census, Current Industrial Reports Series: Pulp, Paper, and Board: 1964, p. 6. 161 types of high-grade paper.l Northern Michigan's competitive advantage for the pulp and paper industry lies within the production of these products, which can be manufactured from local resources and for which there is a large nearby market. 1E. R. Schafer, J. S. Martin and E. L. Keller, Pulping Characteristics of Lake States and NOrtheastern WOOds, Forest Products Laboratory Report No. 1675, Forest Service, U.S. Department of Agriculture (rev.; Madison, November, 1955), PP- 6-12. CHAPTER VII RELATIONSHIPS BETWEEN FOREST UTILIZATION AND ECONOMIC GROWTH AND DEVELOPMENT Introduction The process of forest mining has been examined, and the utilization of a managed forest resource for which a comparative advantage exists was investigated. It remains to generalize the phenomena observed in such a manner as to gain insight into the nature of the relationship between forest utilization and economic growth and development. In this chapter, the internal structural character common to forested areas is related to concepts of economic expansion and to the conceptualized models of forest resource utili- zation. These sequences are compared with the empirical observations of the evolution of the forest product industries in Northern Michigan. From the analyses of these relation— ships emerge principles which afford insight into the problem of resource utilization and the arrangement of human activity. To illustrate the character of the relationship between man and forest when the resource is managed for continuous pro- duction, the contributions of the pulp and paper industry to the Northern Michigan economy are examined. Much of the 162 163 data is presented on maps and tables illustrating the areal distribution of the direct effects of the industry. In ad— dition, the Opportunities for further research in this problem area are discussed. Models of Forest Resource Utilization In Chapter I, it was postulated that the relation- ship between forest utilization and human activity is a function of the method by which the resource is appropriated for use. Conceptually, the methods were represented by two models, each of which expressed a unique quality of the re- lationship between forest utilization and human activity. In the first sequence, the forest is mined and the economic inputs generated by the exploitation of the forest terminated when the resource is physically depleted. The second se- quence stated that when a forest resource is managed for con- tinuous production, the inputs influencing man's arrangement of activities persist through time. The data gathered through observing the evolution of forest product industries in Northern Michigan within this framework of mining and continuous production sequences substantiated the basic hypothesis. The exploitation of the Northern Michigan forest re- source for the lumber industry in the latter half of the nineteenth century illustrates the process of timber mining. 164 The region was characterized by an immature organization of economic activity with few communities or people, and circu- lation and service facilities were virtually nonexistent. With the rapid increase in inputs following the ascendancy of the lumber industry, a new spatial structure emerged (see Chapter II). Commercial centers were established, railroads built, social institutions and political activity organized and new personal and professional services introduced. Rapid volume growth also occurred with the addition of people, capital and industry. But when the resource was depleted, the inputs terminated. There was a subsequent contraction of all developmental elements supported by or related to the exploitation of the forest and an absolute decline in growth. As nearly the entire economy was in some fashion related to forest utilization, the decay was particularly striking. The model of persisting inputs resulting from manage— ment of the forest resource for continuous production is illustrated by the contemporary expansion of the pulp and paper industry in the same region. Here, because of an ap— parent advantage for a national growth industry, the contri- bution is continuous and increasing. To evaluate the extent of this contribution to the economy of Northern Michigan necessitates a varied approach. The standard techniques of measuring the multiplier effect of an industry require pre- cise data regarding employment, value added by manufacture 165 and input—output data linking the basic industry to all other activities. In the pulp and paper industry, the most pervasive activity is logging, which is a part-time occu- pation for many, with few records kept concerning the number of men engaged or time expended. Also, in the case of Northern Michigan, three of the mills process the wood to pulp and convert the pulp to paper and board products out— side the region, leaving only the costs of the primary logging activities to benefit the area. Because of the immature structure of the regional economy, few of the inputs re- quired by the industry are satisfied locally, and few of the products are marketed internally. The only activities which occur wholly within the region are logging and transportation of wood to mills or to the defined boundary with Southern Michigan. These costs, together with the value of stumpage, contribute directly to the regional economy, influencing every county and community. It is estimated that, in 1965, stumpage alone contributed nearly $1,100,000 to the regional economy.1 Forest land owners in all counties received a portion of this money, with owners in Crawford County sharing $84,100 and those in lUsing 1965 data provided by the Michigan Department of Conservation, the average stumpage value per cord of each species was multiplied by the production in cords for the species in each county. The total value was $1,066,000, an average of $1.72 per cord. 166 Oscoda County $109,925 (see Figure 16).1 If it is assumed that the production of pulpwood will increase at the rate of 3% annually, stumpage would add $1,236,000 in 1970, using current (1965) prices. By 1980, the value of stumpage would approximate $1,700,000 and would exceed $2,000,000 prior to the year 2000. To measure the influence of logging, established in- m dices of time and cost expended to produce a cord of wood )lL‘.“ are utilized. The problem of measuring the labor of part- time workers is approached by using estimates of man-days or man-years. Although productivity varies with the individual, the equipment, the site and the species, averages are as- sumed. Various authorities estimate the production of one man with a power saw at about 2.7 cords per day. This in— cludes felling, limbing and bucking, but not bark removal or skidding to the roadside. Based on 620,000 cords produced in 1965, Northern Michigan provided 230,000 man-days of em- ployment for cutting alone. Using the standard 200 days' work year for logging,2 this gives a full—time equivalent 1To avoid disclosing the procurement pattern of the particle board plant, only data for the pulp mills are shown. The values for Otsego and several proximate counties are therefore low. 2Lee M. James, Opportunities for Economic Development in Michigan's Upper Peninsula, study prepared for the Com- mittee on Public Works, U.S. Senate (Washington: U.S. Government Printing Office, 1962), p. 31. 83’ 84° 1137 85' STU MPAGE VALUE I965 86‘ 46°. 49m 44a 43% 4224 lo 20 SOMILES “'"T- I I - 1- I I I .1 IO 0 ,_ 59%wflflwiéé . m a... V... . ....~..........."..mm...........n..umn.m .1....u............................”..u.. L. x ..,..........................m.. _ . \ '% ..u..u........ o m #Iolln. n“ . _ Av _ _ _ I I— I --__--L_--_. “0.000- 030,000 I 30.000- "0.000 I I.OOO - ”0.000 UNDER ".000 oven I 70.000 VUILIJEI @§&@! .450 .45- .44- .43- -42° 83’ l 84‘ 1 THE NICHIGAN DEPARTHENT OF CONSERVATION. 85. Figure 16 1 SOURCE‘CALCULATED FRO“ PRICE AND WION DATA PROVIDED .7 86° 168 employment Of 1,150 men.1 If the labor force were to in— crease at an annual rate of 3%, there would be an equivalent of 1,330 full-time workers in 1970 and 1,790 in 1980. Allo- cating $7.40 per cord2 for cutting and preparing the wood for barking and transport, approximately $4,600,000 was contribu— ted to the regional economy in 1965. With anticipated growth, this would rise to over $5,300,000 in 1970 and $7,200,000 in In- 1980. ' m 1 z'flL.’ .- In 1965, an estimated 70,000 cords of wood were peeled by hand at a cost of $5.00 per cord before being transported. As all mills now have mechanical debarkers, little or no wood will be peeled by hand after 1966.3 Al- though the recent introduction of new equipment makes calcu- lation difficult, it is usually estimated that $3.00 a cord is paid for skidding the wood to roadside. At this rate, skidding contributed $1,860,000 in 1965 and would add $2,898,000 to the economy in 1980. Estimating the cost of transporting the pulpwood from roadside to mill is also 1Actually, the number of men involved in cutting far exceeds this number, as most loggers work only part-time in the woods. The pulp mills using Northern Michigan wood esti- mate their current loggers tO number in excess of 3,000. 2Calculated from data provided by the Michigan De— partment Of Conservation. 3The history Of debarking shows the pulp mills changing back and forth between using their own debarkers and buying peeled wood. With the introduction of better equipment, it is possible that the Operation will return to the woods in order to avoid the transport of bark. 169 onerous, as the average length of haul within the region is unknown. Using an established index of $7.00 a cord,1 trans- portation costs totaled $4,340,000 in 1965, and would pro- vide $6,760,000 in 1980. Adding the costs of stumpage, logging and transpor- tation within the region, the total value of these activities was estimated to be over $12,200,000 in 1965 (see Figure 17).2 The estimated contributions to the regional economy for 1965, 1970 and 1980 are summarized in Table 25. Table 25.—-Estimated contribution of primary forest activity Of the pulp and paper industry to the NOrthern Michigan economy. T ‘1‘— r W Activity 1965 1970 1980 Stumpage $ 1,066,000 $ 1,236,000 $ 1,662,000 Cutting 4,600,000 5,325,000 7,156,000 Barking 350,000 0 0 Skidding 1,860,000 2,156,000 2,898,000 Transport 4,340,000 5,032,000 6,762,000 Total $12,216,000 $13,749,000 $18,478,000 1The index of $7.00 a cord for transportation is used by the Michigan Conservation Department and agrees with a study by James and Lewis on transportation costs. See Lee M. James and Gordon D. Lewis, "Transportation Costs to Pulpwood Shippers in Lower Michigan," Michigan State University Agri- cultural Experiment Station, Quarterly Bulletip, XLII (Febru- ary, 1960), pp. 449-69. 2Does not include procurement of the particle board plant. 170 816' 815' 8‘4‘ 813' ESTIMATED CONTRIBJTIW OF PRIMARY FOREST ACTIVITIES >46" 46'- .45- ‘5'. P44. 44" '43. N 43% I I I I ' ___- ”42° I— “ T’—'—I-”‘"I'L"'I"Jm’T" ‘ 424 ' ' ' ' I --_--L--_.!-__-_I__--_I I i sagm IN DOLLARS E5 oven 750,000 ammo-750.000 00000350000 2:21.: 50000-450000 [.3 ms 50.000 8:30 8?. 314° 813' m ‘ Figure 17 171 It is evident that logging for the pulp and paper industry contributes substantially to the economic structure of Northern Michigan. Being a space-using activity, forestry spreads the wealth to all parts of the region. Besides putting into production uncropped land and providing work for many people through logging, the management of the forest itself requires energy. The Forest Service estimates that depending on the intensity of management, between one and two men for every 1,000 acres are needed to manage forest land.1 At the extensive limit of management, Northern Michi- gan would require 7,525 men to manage the resource.2 Other forestry activities facilitate use of the land by vacation- ists and other non-foresters. The Michigan Department of Conservation estimates that for every 1,200 cords of pulp- wood produced, one mile Of woods road must be built. Using this index, nearly 520 miles of woods road were constructed for the use of the logger, hunter and camper in Northern Michigan in 1965. lWhitaker and Ackerman, p. 229. 2It is estimated that the equivalent of 3,100 full— time workers were engaged in managing Michigan's forest re- source in 1962. See Lee M. James, "Timber Production," Part 1 of Michigan Timber Production and Industry--NOw and in 1980, Agricultural Experiment Station and COOperative Ex- tension Service Research Report NO. 38: Natural Resources, Michigan State University (East Lansing, 1966), p. 11. 172 Contribution of the Pulp and Paper Mills The forest resource contributes most to society through the forest product industries, which produce goods desired by consumers. In this section, we are concerned with the benefits accruing to the communities in which these es— tablishments are located. unlike the primary logging activi— ties considered previously, most of these contributions are spatially restricted to the immediate areas Of the mills themselves. The most important support given to a region in which an industry is located involves the employment pro- vided, expenditures made locally for supplies and materials and the payment of taxes. Local expenditures are numerous and varied, including costs such as the initial investment in mill sites, buildings and plant equipment, and disburse— ments for wages, taxes and transportation. In addition, there are the benefits accruing from the attracting of ancil— lary industries linked to the basic pulp and paper mill. A1— 50, in the case of the pulp and paper industry, there are the broad advantages derived from the possession Of a growth industry that is seasonably stable in Operation. As much useful data is not released for competitive and legal reasons, it is difficult to establish an accurate measure of the local or regional impact of the pulp and paper mills. Numbers of employees and indices of value added by 173 manufacture provide a good estimate of the direct contri- bution of the industry, but the indirect influences of the industry, such as the employment generated in secondary local enterprises,are much less susceptible to measurement. Because of the large market area in Southern Michigan adjacent to populous areas to the south, the importance of intermediate sites between the forest and the market is in- creased. Only two Of the five pulp mills and the particle board plant are physically located in NOrthern Michigan. But each of these enterprises is growing rapidly and is a pace- maker of industrial development in the region. A direct contribution of these three plants to the regional economy includes the employment Of a large number of local residents. However, as in nearly all manufacturing industries, progress is marked by the substituting and supplementing of human energy with inanimate machinery. Nationally, paper and board productivity rose from 103 tons per production worker in 1953 to 139 tons in 1963.1 Because Of increased auto- mation and per capita production, the growth of the labor force has not kept pace with the growth in production. In June, 1966, the employment Of the three establishments in Northern Michigan totaled 1,335 and is increasing at the rate of about 1% a year in the pulp mills. lAubrey wylie, "Timber Industry," Part 2 of Michigan Timber Production and Industry—-Now and in 1980, Agricultural Experiment Station and COOperative Extension Service Research Report NO. 38: Natural Resources, Michigan State University (East Lansing, 1966), p. 23. 174 One of the best measures Of the economic importance Of a manufacturing enterprise is the value added by manu- facture. It represents the capital addition to the value of a product through the application of labor, capital and tech- nology.1 Individual data are not available on the value added by pulp and paper mills in NOrthern Michigan, but in 1957 Kearns calculated the value added per cord Of pulpwood’ utilized to be $349.00 for mills operating in the Lake States.2 According to the views of forest economists, this figure remains relatively accurate, as wage and materials costs have increased to the same extent that the value of products manufactured has declined.3 At a rate of $350 per cord utilized, the two pulp mills accounted for nearly $130,000,000 value added by manufacture in 1965. Another measure of the support Of the pulp and paper industry is the wages and salaries paid to employees. In 1John A. Guthrie and William Iulo, Some Economic As- pects of the Pulppand Paper Industry with Particular Refer- ence to Washington and Oreggp, Part I of a research project entitled The Pulp and Paper Industry of the Pacific North- west, prepared under the sponsorship of The NOrthwest Pulp and Paper AssOciation, p. 88. 2Frank W. Kearns et al., An Economic Appraisal Of Michigan's State Forests, Forestry Division Technical Publi- cation NO. 2, Michigan Department of Conservation (Lansing, 1962), p. 13. 3In 1957, Northern Michigan mills produced a greater amount of high-value tissue and other expensive papers than is currently manufactured. The change Of products is largely the result of the expanding use of the abundant hardwood species, along with market considerations. 175 1962, the mills operating in Northern Michigan had a local payroll of about $7,200,000. This is in addition to any in- come provided the woodsworkers, as they are not employees of the mills. The payment of taxes helps support a variety of services provided by the local government. Nearly $600,000 was paid for state and local taxes by the mills in 1962.1 Other influences of the pulp and paper industry on I the regional economy include the purchase of supplies and ma— terials locally and the employment and income created by the expenditures of the industry employees. The industry also requires transportation, storage, marketing and financing. Because of these multiple relationships, industrial growth is cumulative, and often the output of one plant becomes the raw material for another. Cohn describes the multiplier pro- cess thus: "New factories are erected to utilize the by- products of the existing ones. Industries develop to pro- vide supplies and machinery for expanding businesses."2 In the past two years, the pulpwood-using industries Of NOrthern Michigan have added nearly 100 production workers to their payrolls. According to an oft—quoted Chamber Of Commerce publication, this increase would add 359 more people 1Data provided by the Michigan Department Of Conservation. 2Cohn, p. 33. 176 and $710,000 more personal income a year to the region.1 Perhaps a more refined indication of the contribution of a pulp and paper industry is provided by the Department of Com— merce analysis of the input-output matrix of the industry. It was shown that nearly 20% of the dollar requirements of the paper and allied products industries were provided by other sectors of the same industry. This includes the sales of pulp to paper mills and paper and board to conversion plants. Other important sources of materials were the lumber and wood products industries, transportation and warehousing, and wholesale-retail trades.2 But there is not a direct correlation between the growth of an industry and its multi— plier effect in inducing additional economic growth within a region.3 As most sectors of the economy are poorly develOped in NOrthern Michigan, little Of the non-wood supplies or ser- vices are acquired locally. This has substantially reduced the multiplier effect of the industry on the local economy. 1Chamber of Commerce of the United States, What New Industrial Jobs Mean to a Community, research study pre- pared by the Economic Research Department (Washington: Chamber of Commerce of the United States, 1965), p. 4. 2American Paper and Pulp Association, Monthly Sta- tistical Summary, XLIII (April, 1965), p. 17. 3Hans Blumenfeld, "The Economic Base of the Metropo- lis," in The Technigpes of Urban Economic Analysis, ed. Ralph W. Pfouts (West Trenton, New Jersey: Chandler—Davis Publishing Co., 1960), p. 269. 177 Forest Utilization and Structural Change Because of an apparent comparative advantage for cer— tain segments of the pulp and paper industry, the Northern Michigan economy receives a persisting flow of inputs from the utilization of the managed forest resource. The capacity of the region to produce a good demanded by a large and ex- panding market and to export it at competitive prices pro- motes a continuous and dynamic influence by the resource. Northern Michigan's ability to satisfy a part of the Mid- west's expanding demand for pulp and paper products induces a flow of income and activities into the region which per- sistingly alters the growth (volume change) and development (structural change) of the economy.1 Measuring the degree of change generated by resource utilization is a difficult task, for the extent of the multiplier effect of increased inward flow of capital, goods and people on a regional economy de- pends on the character of the existing economic and social structure.2 Economic growth includes such variables as population, employment, value added by manufacture and various indices of 1See Hill for a discussion differentiating between volume and structural changes in a dynamic economy. Forest G. Hill, ”Regional Aspects of Economic Development," Land Economics, XXXVIII (May, 1962), p. 86. 2Harvey S. Perloff and Lowden Wingo, Jr., "Natural Resource Endowment and Regional Growth," in Natural Resources for Economic Growth, ed. Spengler, p. 199. is 178 production. With the introduction of new investment is brought in a series of economic effects on the volume growth Of a region.1 As a result Of the increase in the production of pulp and paper, new employment is created, and a somewhat predictable increase in volume growth occurs. Economic de- velopment has concrete manifestations in space because it involves changes in the spatial organization of human activi— ty. The extent of structural and volume change varies with the degree of development of the existing structure.2 De— ve10pmentalschanges resulting from new investment may be much less in a "mature" region already well-equipped with activity-related facilities than in an "immature" region, characterized by a low level of functional specialization. A weakly developed organization of human occupance may be re- placed or greatly expanded to serve a new investment, while a more mature economy can readily accept new inputs within its existing framework. A comparison of the structural change resulting from the exploitation of the Northern Michigan forest resource for lumber in the nineteenth century with the present utilization for the pulp and paper industry illustrates this generalization. lPErloff et al., p. 93. 2For a detailed examination of the influence of spa- tial structure on economic development and, conversely, the influence of economic development on spatial structure, see John Friedman, The Spatial Structure of Economic Deve10pment in the Tennessee Valley, Department of Geography Research Paper NO. 39 (Chicago: University of Chicago Press, 1955), pp. 14-16. 179 During the mining phase of forest utilization, a new pattern of human organization supplanted the existing eotech- nic society. A completely new political, social and economic pattern was established to serve the dominant lumber industry. The result was the construction of sawmilling towns, which are the present commercial centers, logging and interregional railroads, which form the base of the existing circulation pattern, and a political organization of territorial space which survives as the contemporary townships and counties. l But the structural changes following the ascendancy of the pulp and paper industry are much less pronounced. Recent expansion has necessitated the construction of a rail spur, many miles Of woods road and additional water and sewage treatment facilities. NO new railroads or highways have been built,1 no new towns have emerged and political organi- zation remains unchanged. In the first case, the poorly de— veloped structure was replaced by a new form of organization of activity; in the latter, the existing structure is only modified, perhaps maturing, as Old units are enlarged and new ones added. In order to view another aspect of the relationship between economic growth and development and inputs added by forest utilization, examination of the existing structural organization of Northern Michigan is carried further. The 1The construction of I 75 through the region is not directly related to the growth of the pulp and paper industry. 180 region has an extensive, rather than an intensive, develop- ment of utilities and commercial and service activities. As social overhead facilities are limited in scope, certain units such as sewage treatment plants must be enlarged as the pulp and paper industry expands. However, because of the relatively low level of development, the region is re- stricted in its participation in the volume change generated by the industry. The supply sources and markets of the pulp and paper industry are such that its input and output ties are almost wholly external. Often,the most important contribution of a local industry to a regional economy is its influences on other industries and services. For the forest product industries, Dana cites the purchase of "axes, saws, tractors, planes, lathes, digesters, paper machines and other equipment" and the "sales of lumber, veneer, plywood, boxes, pulp, paper, and similar items to other industries for use in the manu— facture and marketing of their products."1 But these back— ward and forward linkages are external to Northern Michigan and most other forested regions. Forested areas are, by definition, extensively covered with a mantle of trees, re— sulting in limited agriculture or industrial activity and sparse population. Few regions dependent on forest products 1Samuel T. Dana, "Forest Influences," Chapter 3 of_A World Geography of Forest Resources, ed. Haden—Guest, Wright and Teclaff, p. 61. 181 have an organization of economic and social activity mature enough to enable them to either supply needed technology, non-wood materials and mechanical inputs or to purchase the products of the industries. Therefore, it is suggested that because Of the space—using character of the forest resource, forested regions do not experience great change in economic growth or development from expansion of resource-based indus- try unless the inputs are supporting the initial organization ’ ‘. .1.D"."_‘I.-oLI " of activity within the region. I; It might be questioned here what advantages exist for a region to develop its forest resources if both volume and structural expansion are limited by the inherent character of forest activity.l Perhaps the greatest contribution of a forest resource to a regional economy is stability;2 a managed forest resource affords the possibility of a permanent contribution. If an area possesses a comparative advantage for a nationally growing forest product industry, a persisting 1Of course, there can be no question of the value Of wood industries to the national economy. They create capital and perform a necessary service for society by converting trees into a variety of useful, salable goods. 2W. B. Greeley et a1., "Timber Mine or Crop?" in Yearbook: 1922, U.S. Department Of Agriculture (Washington: U.S. Government Printing Office, 1923), p. 103. 182 flow of inputs is assured.1 Also, the utilization of the forest resource supplies benefits from land that might other— . . . . . . 2 Wise be unproductive because of 5011 or access limitations. Opportunities for Further Research The geographer possesses the scope and breadth of outlook necessary to approach problems regarding the relation- ship Of man and resources. Often, in other disciplines, re- search is focused on a single aspect Of resource utilization; the economist may be concerned only with net return, the engineer with efficient utilization, the forester with sus— tained yield and the conservationist with "wise use." Grounded in the study of spatial relationships and man-land associations, the geographer considers the ecological, cultural and spatial components Of resource utilization and 1However, as the demand for paper and board products is derived, the industry seems to be particularly affected by downward fluctuations in business conditions. In the business slow-down of 1958 and 1959, the pulp and paper mills in Michigan operated under 85% of capacity and laid Off part of their labor forces. The persisting flow of in— puts conceptualized in the pattern Of a managed resource is therefore dependent on economic conditions as a whole. 2According to Crafts and Dietz, "An important natural resource is unnecessarily wasted if there are too few wood— using industries in a particular area or if they are not di- versified enough to permit full utilization Of the raw ma- terial commensurate with leaving the land reasonably productive and on its way to producing another crop." Edward C. Crafts and Martha A. Dietz, "Forest Resources and the Nation's Economy," in Trees: The Yearbook of Agri- culture, 1949, U.S. Department Of Agriculture (Washington: U.S. GOvernment Printing Office, 1949), p. 728. 183 is aware of the significance of the apparent fixed location of resources. The growth of geography as a research disci- pline is as much a product of the development of a formal conceptual structure as empirical investigations, and both types of research are needed to improve our knowledge of re- sources. In studying the relationship between man and re- sources, the problem Of assuring sufficient resources in the future is of paramount concern. The maintenance of high pro- ductivity and standards of living during the transition from a higher to a lower grade resource base may be seen as the critical issue. In forest land management, concern centers about man's ability to provide the quantity and quality of forest products required by a growing population, while satisfying the increasing public needs for water, forage, wildlife and forest recreation. Although scientists today believe that the total resource base will be improved as a product of technology,1 in the past new innovation has had some negative effects on man's ability to sustain resource production. A century ago, Marsh was concerned with man's misuse of his environment: with the tools of neotechnic so— ciety, man's influence can be even more destructive. How— ever, it does appear that current technology is oriented 1For a concise discussion of the possible role of technological innovation in expanding the resource base, see Thomas B. Nolan, "Use and Renewal Of Natural Resources," Science, CXXVIII (September 19, 1958), p. 632. 184 toward improving the supply of resources rather than merely facilitating their removal. Clawson, Held and Stoddard have Observed that technological advance in forestry has changed from searching for better ways to exploit the resource to looking for improved methods of management.1 Another fertile area for investigation stresses the interrelationships between the plant, animal and mineral worlds. In advocating an environmental approach to conser- vation, Dasmann asserts that each "natural region be regarded as an organic whole and developed to provide an optimum habi- tat for man."2 Supporting this approach, weiss maintains that to single out one component of the ecological complex for study creates an artificial appraisal of the resource situation.3 The failure of man to consider the existing . interrelationships when appropriating a particular resource has Often destroyed sources of food, material and energy. In mining the forest resource of Northern Michigan, the eco- logical balance Of nature was disrupted, giving rise to lMarion Clawson, R. Burnell Held and Charles H. Stoddard, Land for the Future, published for Resources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1960), P. 334. 2Raymond F. Dasmann, Epvirgpmental Conservation (New York: John Wiley & Sons, Inc., 1959), p. 256. 3Paul Weiss, Renewable Resources, a report to the Committee on Natural Resources of the National Academy Of Sciences—-National Research Council(WMshington: National Academy of Sciences—-National Research Counc11, 1962), p. 7. 185 erosion, floods and a poor quality Of regrowth. For man to improve the quality of his existence, along with the new utopias of technology and industrial progress, he must con- sider the older notions of balance and harmony.1 Another problem acknowledged in this study is the inconsistent view of resources within a society. The early American settlers saw the forest both as a source of food, fuel and material and as a barrier to agriculture and com- munication. Only twenty-five years ago, in Northern Michigan the now valuable aspen was scoffed at as a weed. Problems Of perception are of particular interest to the cultural geographer, whose methods enable him to probe the patterns of resource selection within a society. The sociologist Firey maintains that for any given people there are "re- source complexes" which are not possible, others that are not adaptable and still others which are not gainful.2 In other words, ecological, ethnological and economic consider— ations are all significant in studies Of resource utilization. One is reminded of the popular American view of the cattle "resource" of India and the timber "resource" of Central Siberia. A final problem area relates to the role of re- sources in the economic well-being of man. Research is 1Arthur A. Ekirch, Jr., Man and Nature in America ~(New York: Columbia University Press, 1963), p. 5. 2Firey, p. 37. 186 needed concerning the differing influences of individual re- sources and the importance of resources in specific situ- ations. The question arises as to the importance of the spatial character Of resources in limiting or facilitating their economic influence. In this study, it was suggested that because Of the spatial character Of forestry, its in- fluence on economic growth and development is limited. An example of research regarding the role of resources in spe— cific locations is the study Of the importance Of the pre— sence Of falling water to economic development in Oregon. Perhaps the difference in cost of energy would have little influence on the existing industrial structure. As the role of resources in the economic well-being is poorly under- stood,1 it is an area that geographers would do well to give more attention. 1According to Fisher, "The role of resources in the economic growth and stability of regions is a subject upon which we have very little data, not much analysis, and there— fore meager understanding." Fisher, Natural Resources, pp. 541-42. CHAPTER VIII SUMMARY AND CONCLUSIONS The Nature of Resources Resources constitute that part of the environment to which man attaches value and appropriates to satisfy his economic, social and spiritual desires. In order to facili- tate a more effective utilization of the environment, man has long investigated the behavior Of resources in various societies and the contribution of resources to human pro- gress. Geographers, in particular, are vitally interested in the variable character Of the landscape as it is modified through the interchange between man and his environment. One of the most rewarding approaches to this problem is the study of the activities which man pursues, using his resources, to sustain his existence and develop his economic well-being. Through viewing the relationship of man's organization of activity in space to the exploitation Of resources, problems regarding the nature of various resources are probed in order to provide a better understanding of man's utilization of his environment. One of the most important resources to our Western society, the forest, has contributed to the progress of man- kind since the beginning Of civilization. But geographers 187 188 have largely ignored the fertile field of forest utilization, concentrating instead on the more unique non-renewable re— sources. As with all resources, the forest is relative in the temporal, spatial and cultural dimensions, but the forest has been exceptionally useful to man wherever found, regardless Of the society or time period. Functionally, the forest yields warmth, shelter, food, energy and material for the manufacture of goods. Because of its many and diverse uses, the forest has been termed the "universal" resource. In addition to being a highly versatile resource, the forests are renewable; with effective management, they will produce through time without being depleted. The attributes of con- tinuous production and varied use have made the forest one Of mankind's most valuable resources. The purpose of this study was to gain a better under— standing Of resources through an investigation of the re— lationship between the utilization of the forest resource and the organization of human activity in space. It was postu- lated that the character of the relationship is a function of the methods used to appropriate the resource for use. The techniques of forest utilization were conceptualized as oc- curring in two distinct forms: in one sequence, the resource is cut without regard for future production, and in the other, it is managed for sustained yield. In the depletion or mining model, the inputs influencing man's activities in space which result from forest utilization are terminated when the 189 timber is removed from the landscape, while in the latter se- quence, through management of the resource for continuous production, the inputs influencing the human organization of space persist through time. In order to study the processes involved in each sequence, the conduct of the Northern Michigan lumber industry between 1850 and 1910 and the pulp and paper industry following World War II were Observed. These industries, which dominated exploitation of the re- source in the region during their respective spans, serve as the link between the two concepts of forest utilization and the physical organization of activity in space. Through in— vestigating the processes involved in the mining and manage- ment of the Northern Michigan forest resource, generali— zations were made that reflected the reality of the relation— ship between man and forest utilization. Mining of the Forest Resource The exploitation Of the Northern Michigan forest re- source tO supply a part of the increasing national demand for lumber during the second half of the nineteenth century was shown to closely approximate the conceptualized model Of forest depletion. In the early years of the exploitation of the forest, the economy of the region experienced rapid growth with the addition of logging camps, wood-processing mills and an influx of people to man and support these pri— mary activities. Forest industry dominated the economy, ‘I‘. . ‘1": 190 with sawmilling providing at least one-quarter of the manu- facturing employment throughout the period. It was during this time that the towns were settled, the roads and rail— roads constructed and the region politically organized. Lumber attracted wood products industries, storekeepers and farmers; the secondary and tertiary sectors of the economy expanded rapidly as the pace of timber mining quickened. Be- cause Of the activity-inducing inputs generated by the con- version Of the resource to useful products, economic growth occurred and structural elements were added or strengthened as long as the timber remained. But as a result Of the unabated mining Of the timber, the forest resource of Northern Michigan was depleted. By 1900, the commercially prominent softwoods had been cut, and within another ten to fifteen years the hardwoods also ran out. The economic activity Of the region was greatly altered as the inputs resulting from forest exploitation were termi- nated and new means of support were sought. As the economy was centered on the forest, the region's most important re- source, the decline Of the economy and the contraction Of the structural elements were particularly striking. There was no transition from a forest-based economy to a diversi- fied industrial and agricultural economy. The thin soils and restrictive climate rebuffed attempts to substitute agri- culture for logging, and with little opportunity for em- ployment, the population flagged. As trade centers lost 'F .‘2‘ u. '. - 191 their market, they declined in size and function, with many small lumbering communities disappearing from the landscape. The logs, lumber and other wood products had been the chief source Of revenue for the railroads, and they also re- stricted service despite programs to develop the region for other activities. Taxes rose to support governmental and educational services for the remaining people, and subse- quently much land reverted to the state when they were not paid. Forest exploitation initiated and then dominated the organization of neotechnic human activity in NOrthern Michi- gan, and when the forest was depleted, the economy virtually collapsed. The result was decay, depopulation and a severe contraction Of industrial and commercial functions. The Managed Resource as a Basis for the Pulp and Paper Industry Because of the germination of a second-growth forest which is effectively managed for sustained yield, Northern Michigan is again able to support an expanding and economi- cally important forest products industry. But the character Of the forest has changed: the present timber resource is dominated by hardwoods such as aspen and oak instead of soft— woods. Together with the shift in the composition of the re— source has developed a corresponding alteration in the consti— tution of the forest product industries. The lesser industries include the production Of lumber, veneer, charcoal 192 briquettes and poles. Of the numerous industries supported by the forest, pulp and paper has grown the most rapidly and has assumed a dominant position. Beginning in the re— gion around 1890 to utilize the inferior timber left by the retreating lumber industry, the pulp and paper industry prospered until it also was unable to exist on local wood. But because of the large plant investment involved in the industry, most mills remained, operating marginally on im- ported wood. However, with the growth of the second-growth forest, technological innovation allowing the use of the denser local species and an increased national demand for paper and board products, the industry has flourished since World War II. In our Western society, the concept of comparative advantage accounts for the time and place Of resource utili— zation. The relative advantage of a region for a forest products industry influences the structural organization Of the exploitation of the resource and limits the potential Of the resource to contribute to the arrangement of activity in the area. In prObing the enduring quality of the relation— ship between forest utilization and man's activities, it was postulated that based on the local timber supply, Northern Michigan holds certain advantages for the pulp and paper industry which promote a persistent contribution Of the forest resource to the arrangement of human activity in the region. To facilitate the determination of the potential 193 contribution of the forest—based pulp and paper industry to the Northern Michigan economy, the national structure Of the industry was examined and the factors which influence the spatial distribution of the industry investigated. It was found that the pulp and paper industry is a growth industry nationally and that projections for the future indicate an expectation Of continued rapid expansion. In addition, through technological advancement, the species available in Northern Michigan are being adapted to several pulping pro- cesses, facilitating the production of numerous paper and board products. Throughout its history, the pulp and paper industry has expanded its production most rapidly in those regions with the best sources of raw material consistent with the technology of the day. But the industry does not move to the least costly raw material supply unless other needed in- puts are also available. The dominant locational require- ments associated in space with the pulp and paper industry are wood, water, chemicals, power, labor, transportation and markets. Varying in degree of importance, these consider- ations are significant in locational decisions relating to all pulp and paper mills, regardless of the type of material used, the process employed to produce pulp, or the product manufactured. NOrthern Michigan's competitive position with respect to the rapidly growing pulp and paper industry varies with the locational requirement considered. The relative 194 cost and availability Of water and transportation are good, while the situation with respect to fuel and labor is less favorable. The mills accept higher overall production costs in order to seek profits of large production and low mill- to-market transfer costs. A most significant consideration in evaluating the persisting contribution of the forest resource to the organi- zation of human activity in Northern Michigan is the capa- bility of the resource to sustain an expanding pulp and paper industry. The character of the forest resource is in a state of constant change, but with effective management, growth continues to exceed drain. Assuming that inter— industry competition for wood will not be a problem, it ap— pears that the forest has the capability of supporting a pulp and paper industry expanding at the expected national rate through 1975 and probably through the year 2000. Con- sidering that technological innovation should soon allow the utilization Of all species and sawmill wastes in the near future, this assumption seems very reasonable. However, several other aspects related to the forest may negatively influence the competitive position of the region. The price and accessibility of the timber and the fragmented pattern of forest land ownership all limit the economic supply of wood. In general, Northern Michigan's competitive advantage for the pulp and paper industry lies within the production 195 Of those products which can be manufactured from locally available species and for which there exists a large nearby market. The utilization of the Northern Michigan forest re— source tO support an expanding pulp and paper and particle board industry contributes substantially to the economic 5 activity of the region. The highly pervasive primary logging E activities influence every county and community within the I region. It is estimated that these primary activities em— I. ployed the equivalent Of 1,150 men full-time and contributed over $12,200,000 to the regional economy in 1965. At an annual growth rate Of 3%, they would add about $18,500,000 and employ a full—time equivalent of 1,790 workers in 1980. In addition, thousands of miles Of woods roads constructed by the loggers are available to the hunter and camper. TO- gether with the particle board plant, the pulp and paper mills employ 1,335 workers directly, and the pulp and paper mills accounted for an estimated $130,000,000 in value added by manufacture in 1965. Together, payrolls and taxes annual- ly contribute an additional $7,800,000 to the economy. Other influences of the pulp and paper industry include the pur- chase Of some supplies and materials locally and the employ— ment and income created by the expenditures of the industry's employees. 196 Forest Utilization and Spatial Structure The hypothesis that the character of the relation- ship between forest utilization and the activities of man is a function Of the methods used tO exploit the resource was empirically substantiated by Observing the evolution of forest product industries in Northern Michigan. The exploi- "mxw tation of the Northern Michigan forest approximated the con- ceptualized sequence Of a mined and managed resource. In max A! I I. the lumbering era, the forests contributed to the economy until they were depleted, and in the present period, sus- tained production through management provides a constant flow Of inputs. Through examining forest exploitation in the framework of sequences of depletion and continuous pro- duction, a number of other concepts regarding forest resource utilization and the organization Of human activity in space emerged. It was Observed that the structural influence of the forest exploitation is related not only to the form of utilization but also to the structural character Of the region. During the lumbering period, a new pattern Of organization replaced the previous eotechnic society, result- ing in the establishment of a completely new political, so- cial and economic structure. But with the expansion of the pulp and paper industry, the existing structure, which evolved originally to serve a forest economy, was virtually unchanged. NO new railroads or highways were built to serve 197 the mills, no new towns emerged and political organization remained stable. In the first case, the more primitive culture was supplanted by a new form Of organization Of activity, while in the latter, the existing structure is merely being modified as existing elements are altered and some new ones added. It was also Observed that the basic extensive character of the structure persisted as the utilization of the forest progressed from exploitation with no regard to the future to management of the resource for continuous pro— duction. Northern Michigan's ability to satisfy a part of the increasing demand for paper and board products induces a persisting flow of income and activities into the region that strengthens economic growth but has little measurable influence on developmental change. Because the regiOn has an extensive development Of utilities and commercial and service activities, the area is restricted in its partici— pation in the volume change generated by industrial growth. The sources Of supply and markets for the pulp and paper industry are almost whOlly external, greatly reducing the multiplier effect Of the industry's expansion. It was sug- gested that, as regions dependent on forest product indus- tries are usually heavily forested and sparsely populated, few would have an organization Of social and economic activi— ty mature enough to enable them to supply needed technology, non—wood materials and mechanical inputs or to purchase the 198 products of the industries. In other words, as a result of the space—using character of forestry, forested regions do not benefit significantly from the multiplier effect of ex- pansion in resource-based industry and are restricted in the extent of participation in economic growth and development. Only if the inputs from the growth of the forest products my industry are supporting the initial organization Of activity within a forested area does the region experience a signifi- cant change in volume and structure. I. Although both volume and structural expansion appear to be limited by the inherent space—using character of forestry, the forest resource can provide a stable influence on a regional economy. Because the forest is renewable, a continuous production of wood for industrial use can be ob- tained through effective management. If an area possesses a comparative advantage for a nationally growing forest indus— try, a persisting flow of inputs into the regional economy is assured. In addition, the utilization of the forest re- source supplies benefits from land that might otherwise be unproductive because of soil or access conditions and pro— vides both part-time and full-time employment. Although this study affords an elementary notion of the process through which the utilization of the forest re— source influences the evolving spatial pattern Of a forested region, much more work needs to be done. And the tools and method of study Of geography well qualify geographers to 199 approach the vital questions regarding the relationship be- tween man and resources. Problems concerned with the scarcity of resources and the use of technology in resource development are particularly important at this time. Other fields Of inquiry include the perception of resources with- in each society and the role of resources in the economic well-being of man. . 1111'”, ‘__y W T fir V I APPENDIX I Date Name of Firm Address of Firm Name and Title of Respondent A. l. General How many years has your firm been operating at this location? What were the principal products of your firm at this location in 1965? a. b. c. How many full-time employees did you have at this lo- cation in 1965? How many of these were female? How many seasonal employees did you have in 1965? Approximately how many additional men are employed in supplying your mill? For each of your products, indicate the percentage Of the total production cost that is assessed against each of the following items. Add any costs not listed so that the total is 100%. Wood Labor Chemicals Management Other materials Capital Equipment Taxes Depreciation Other How does the above cost structure differ from the national pattern for your product(s)? 200 201 Raw Material What is the 1965 wood procurement area for your mill? List counties and, if possible, parts of counties; indi— cate any other states or countries. Outline area on at— tached map, and indicate radius of operation in miles. Have there been any significant changes in the wood supply area for your mill over the period 1956-1965? YES NO If YES, what were the changes? What is the ownership of the forest land from which the 1965 wood supply was obtained? Indicate by percentage. a. Own land d. National forest b. Farmer e. State forest c. Other private f. Other public Have there been any significant changes in the wood supply obtained from different forest land ownership sources over the period 1956—1965? YES NO If YES, what were the changes, and why were they made? Transport What percentages of the volume of your wood receipts in 1965 were delivered to your mill by the following methods of transportation? a. Truck c. Ship b. Railroad d. Other (Specify) What changes in the use of different methods of transpor— tation for deliveries of raw wood have occurred over the period 1956-1965? What changes in the distances of haul for deliveries of ' raw wood to your mill have occurred over the period 1956— 1965? a. Truck deliveries b. Rail deliveries c. Ship deliveries Sales What was the total volume of production at your plant in 1965? List by products. 202 What percentage of plant capacity did your 1965 production represent? What area did your sales territory cover in 1965? List by product, indicating counties or cities, states and countries. Outline area on attached map of the United States, and indicate maximum distances. Have there been any significant changes in the product market areas for your firm over the period 1956-1965? YES NO If YES, why were the changes made and what were they? Factors in Location Where is your most important competitor located? How would you rate your location as compared to his? In your Opinion, could Northern Michigan support addition- al pulp-producing and pulp-using plants like your own? Questions 4 and 5 relate to the list Of factors appearing (n1 the following page. 4. Using the following numerical scale, rate Northern Michi— gan with respect to the factors listed below. 1 — Excellent 3 - Fair 2 — Good 4 — Poor 203 Using the following alphabetical scale, indicate the im— portance you place on each of the listed factors in de- cisions involving expansion or relocation. A 4 Very Important B — Important C - Not important Northern Michigan Importance Presence of raw materials Availability of information con- cerning the forest resource Availability of power and fuel Water supply Disposal of waste products Transportation facilities Transportation rates Labor supply Labor skills Local management and technical personnel Wage rates and labor costs Availability Of local capital and credit Access to markets Relationship to established suppliers Of needed raw materials Local government restrictions Local taxes IIIIIIIII Overall community attitude toward F. 1. industry State taxes and policy Future Deve10pment If you decided to expand in a new location or move your operation, do you have any idea where you would try to locate? YES NO If YES, Where? Indicate in order of importance those items which would in— fluence you in expanding in your present or a new location or moving your plant. Resource limitation in present location Lower costs and better competitive position More advantageous location in relation to markets To avoid restrictive practices (tax, law, etc.) .F”“”“”I APPENDIX II In the 1954 study of the future growth of the pulp and paper industry by the Forest Service, a number of basic assumptions were made. The key assumptions are summarized here: (1) There would be peace but continued military preparedness. (2) There would be a rapid rise in population to 215 million in 1975 and 275 million in the year 2000. (3) There will be economic prosperity and high living standards, with the gross national product rising to 630 billion dollars in 1975 and lower and upper estimates of 200 billion dollars and 1,450 billion dollars in 1975 and 2000 respectively. (4) The total labor force will rise to 85 million in 1975. (5) Disposable personal income will rise to 441 billion dollars in 1975. (6) Forest products will continue to be a basic raw material, and there will be no change in the prices of these products relative to the prices of com— peting materials. The quantity of wood pulp required to meet the de- mands derived from these assumptions was determined and the quantity of wood pulp required for non-paper products esti- mated. Medium and upper projections for pulpwood were derived directly from the estimates of demand for wood pulp. A lower projection of demand for pulpwood was approximated from the medium projection assuming a substantial rise in the relative 1Forest Service, Timber Resources for America's Future, pp. 7 and 9. 204 205 price of wood. The total demand for all paper and board products was projected for 1975 and 2000 and the demand for individual grade classes for 1975. The medium projection for each grade in 1975 was established by using the relation between trends in paper consumption and trends in gross national product, modified by past trends in particular grade classes where it was considered appropriate. In 1964, the Forest Service revised upward its basic assumptions concerning the economy and population and issued a new set of projections. The revised assumptions were as follows: (1) The population will reach 208 million by 1970 and 325 million by 2000. (2) The gross national product is to rise to 1,920 billion dollars (1961 dollars) in 2000. (3) Disposable income is to rise to 1,340 billion dollars in 2000, with per capita disposable in- come rising to 4,120 dollars. (4) The labor force will rise to 82.5 million in 1970 and 126.4 million in 2000. (5) The future price trends of timber products will not differ significantly from price trends for competing materials. Consumption estimates of the Stanford Research Insti— tute (1954) were based on the following assumptions relating to the future size and level of the national economy: (1) There will be no all-out war, but a high level of military preparedness will continue. (2) There will be no radical advances in technology to increase productivity at a more rapid rate than has occurred in the past. 1Forest Service, Timber Trends in the United States, pp. 5-9. 206 (3) There will be a greater level of stability in business cycles in future years than in the past twenty-five years with high, but not full, employment. (4) Population will increase to 212 million by 1975. (5) Gross national product will rise to 586 billion dollars (1952 dollars) in 1975. (6) Disposable income payments to individuals is ex- pected to rise to 367 billion dollars in 1975. (7) The labor force will increase to 90.7 million by 1975, and employment will rise to 84.4 million. (8) The price of pulp will remain in approximately the same relationship to prices of competing materials as in the past. Other studies predicting the future consumption Of pulp and paper products have been undertaken by Resources for the Future2 and Guthrie and Armstrong.3 The projected demands in the Resources for the Future study were related with such economic variables as the total value of all goods produced, consumer purchases of non-durable goods4 and per— sonal disposable income. This study assumed a 1980 pOpu— lation Of 245 million and a 1990 population of 331 million. In their study Of forest product industries in 1975, Guthrie lStanford Research Institute, America's:2§mand for Wood, p. ii. 2Hans H. Landsberg, Leonard L. Fischman and Joseph L. Fisher, Resources in America's Future: Patterpppof Re- quirements and Availabilities, 1960-2000, published for Re- sources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1963). 3John A. Guthrie and George R. Armstrong, Western Forest Industpy: An Economic Outlook, published for Re- sources for the Future, Inc. (Baltimore: The Johns Hopkins Press, 1961). 4Paper itself is a non-durable good, and the major markets for its packaging and consumer grades are non-durable goods manufactures. 207 and Armstrong assumed that population would rise to 224 million in 1975 and the per capita consumption Of pulpwood would rise from .22 cords in 1959 to .30 to .35 cords in 1975.1 From Table 26, it can be seen that the projections vary significantly and that for the relatively short period that has elapsed, the Stanford Report estimates are too low. ‘Eififlfl I The differences in the projections result chiefly from the “fill-u ‘ variations in the basic assumptions Of each. Considering the two key assumptions, population and gross national product, the Stanford Report was the most conservative and Resources for the Future the most liberal. Reviewing the projections in light of what has occurred in the past five years, it appears that the liberal estimates may prove to be the more accurate. However, the last five years have been decidedly above the average with respect to national prosperity. Table 27 shows the expected consumption of pulpwood to supply the demands of the expanding pulp and paper industry. 1Guthrie and Armstrong, pp. 155 and 199. 208 Table 26.--Projected domestic consumption of paper and board products (in million tons).a ..————::*3':::. ~42: 8:22:32 R33“??? A353? --——- Future sumption 1960 -— -- 37.4 -- 39.2 1965 -- -- 42.6 —— 48.4 1970 -- 52.7 47.9 54.9 __ 1975 60.0 -— 53.5 —_ __ 1980 -- 69.3 -- 76.1 —- 1990 -- 90.0 —— 104.2 __ 2000 105.0 115.5 80.0 140.7 -- aU.S. Forest Service, Timber Resources for America's Future, p. 433: U.S. Forest Service, Timber Trends in the United States, p. 487 Stanford Research Institute, America's Demand for WOOd, p. 293; Landsberg, Fischman and Fisher, for Resources for the Future, Inc., p. 707. 209 Table 27.-—Projections for domestic pulpwood consumption (in million cords).a Timber -EEE§§£ Stanford Guthrie & Actual Year -—-——- Re— Con— Trends -—- Report Armstrong . -——-—- sources sumption Total}J Dom. Total Dom. Dom. Total Dom. 1960 -— -- —- 36.0 -— 48.7 40.5 1962 -- -- -- -- —— 52.9 44.1 1965 -- -- -— 42.2 __ -_ __ 1970 67.5 58.0 -- 48.9 —— __ __ 1975 -- -- 72.0 55.4 67-78 —— _- 1980 88.5 78.5 -— —— __ __ __ 1990 111.0 99.5 -- —- __ __ -_ 2000 141.5 127.0 100.0 86.6 -- -— —- aU.S. Forest Service, Timber Trends in the United States, p. 59: U.S. Forest Service, Timber Resources for America's Future, p. 441; Stanford Research Institute, America's Demand for Wood, p. 324: and Guthrie and Armstrong, p. 199. bTotal consumption includes imports of pulpwood. L V CM “3 . é BIBLIOGRAPHY Public Documents and Governmental Publications Barlowe, Raleigh. Administration of Tax-Reverted Lands in the Lake States. Michigan State College Agricultural Experiment Station Technical Bulletin 225. East Lansing, December, 1951. Blyth, James E. Water Resources for ExpandingyWOOd-Using Industries in Northeastern Minnesota. Lake States. 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