At least two Maine paper mills that have been major buyers of pulpwood dramatically cut orders in the past couple months, causing headaches for smaller logging contractors.
Sappi North America in Skowhegan and ND Paper in Rumford cut back pulpwood orders within the past couple months, citing global market conditions, soft demand for certain papers and high inventories.
It is a reversal of the booming business last summer through mid-winter, when the mills were buying as much pulpwood as they could get to make paper and paying a high price. The downturn is already being felt in a Maine industry that employs 5,600 loggers and wood truckers, or about 1 percent of the state’s workforce.
“This is causing a world of hurt throughout the logging industry,” said Harold Burnett, owner of forestry consulting firm Two Trees Forestry in Winthrop.
Burnett said he has had to redirect contractors to lots with pine or hardwood sawlogs and firewood-quality hardwood because there is no demand for pulpwood. He suspects a lot of pulpwood is being chipped and sold to biomass plants at much lower prices than contractors would have received a month ago from mills.
Leslie Pepper, a logger in Belgrade for 36 years, said he normally sold about 30 tons of pulpwood per week to ND Paper. By spring, his buyer told him things weren’t looking good and dropped the price $6 per ton to $36 per ton, he said. Now, he has to call each Monday morning to see if the mill will take his wood.
Meantime, Pepper is focusing on selling firewood. He said this downturn is worse than others he has experienced in almost four decades as a logger, a profession that has frequent ups and downs with which to contend. His son, who sells to Sappi, is experiencing similar impacts.
“I feel very much like a 3-year-old trying to put the stars in the squares and circles and can’t quite get them turned just right,” Pepper said. “Nothing ever seems to match up.”
Scott Arnold, a Chelsea-based logger who has harvested pulpwood for almost 40 years, said his business was just getting back to normal after the Androscoggin Mill in Jay explosion in 2020. That eliminated one of the customers for his pulpwood, leaving Sappi and ND Paper.
He had spent more than $250,000 for new equipment in 2020 that he just paid off, and now pulpwood prices and demand have fallen. At the same time most of his costs, including maintenance, gas, tires and oil, are up 30 percent or more.
He has money tucked away for emergencies, but making ends meet has been a struggle. Arnold, who is 60, said he had planned to work for two more years but may change his mind if business doesn’t improve by this fall.
“I could care less if I move on anymore,” he said of the logging business.
He is not alone. Volatile and uncertain work conditions are driving more harvesters and truckers to diversify businesses. Arnold is handling more types of wood for different markets. Nearly 63 percent of contractors in the Professional Logging Contractors of Maine have turned to construction or road maintenance in the past year to supplement their income, according to Maine Public. Between 5 percent and 7 percent have retired or left the business.
Logging and wood trucking contributed $582 million to the state’s economy in 2021 and $318 million in labor income, according to a study released in March by the University of Maine and the Professional Logging Contractors of Maine.
Some 1.6 million fewer tons of pulpwood are expected to be consumed in Maine in 2023 relative to last year, Eric Kingsley, vice president at consultancy Innovative Natural Resource Solutions, said in a recent analysis. The difference is equivalent to 145 truckloads every day of the year. He predicted demand will stay soft through the summer.
The paper mills said they still are buying, but not as much as usual. ND Paper CEO Ken Liu said the company is continuing to buy pulpwood in Maine and New England “despite wood prices being higher than other similar regions in the country and challenging market conditions.” He did not comment about how much pulpwood the company is buying.
ND Paper shut down its Old Town mill in April, taking what it called an “extended downtime.” The mill, which produces unbleached softwood kraft pulp and recycled market pulp, cited rising costs for fiber, energy costs and market conditions. ND Paper also significantly reduced market pulp production at a West Virginia mill due to market conditions.
Sappi has and will continue to purchase pulpwood and pulp for making paper and packaging grades, spokesperson Peter Steele said. The company is curtailing work on its paper machines to match market demand, “which has a ripple effect on our pulpwood purchases,” he said.
Most loggers sell at least some pulpwood in an effort to use the whole harvested tree, but they are buying less from the landowners and farmers that supply the trees, Patrick Strauch, executive director of the Maine Forest Products Council, said.
Strauch said the pulpwood downturn is a wider issue and reflects a confluence of factors. Consumption in China and the rest of the world is down, and a number of pulp mills came online over the past five years in South America, notably in Brazil, bringing new competition to the market.
Other factors for the dropoff in demand include the decline in publishing papers and print media during the height of COVID-19 and less consumption of office paper as people worked from home, he said. Also factoring in is a drop in demand for the brown wrapping paper made from pulpwood that is used by Amazon and other shippers for packaging, he said. Demand for that rose sharply during the height of the COVID-19 pandemic as online shopping’s popularity grew, but shoppers are returning to physical stores.
There also is a labor issue. There are not enough workers for the second and third shifts in mills and more loggers are needed in the workforce, Strauch said. Labor, inventories and demand need to be in better balance and consumer demand needs to improve to get the pulpwood market back up to where it was before the pandemic and financial crisis, he said.
“Growth opportunities are still there,” Strauch said. “We just need all those factors to line up again.”