Forest2Mill E-Newsletter
September 2009
In This Issue
Housing Market Update
BCAP Matching Payments
Impact of Dixie Pellet's Closure
Logging Capacity Crisis Looming?
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After July's statistics were released, Norbert J. Ore, chair of the Institute for Supply Management's Manufacturing Business Survey Committee, said: "The Employment and Inventories Indexes are still contracting, but the rate is slowing and they are moving in the right direction. It is also worth noting that the New Export Orders Index shows growth following nine consecutive months of decline, suggesting that the global economy is recovering. Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue."

For a performance overview of the Wood and Paper Products industries in July, click here.
House Sold  
Statistics for the sale of both existing and new homes in July showed marked improvement.
Existing home sales accomplished the following milestones during the month; they: 
 - Increased for four consecutive months--the last time we saw four consecutive months of gains was in June 2004.
 - Were higher than they were in July 2008--the last time year-over-year results were higher since November 2005.
 - Saw the highest gain on record since 1999.
US Capitol BuildingThe Obama Administration's acceleration of the Biomass Crop Assistance Program (BCAP) Matching Payments Program is working. The comment period on the implementation process ended on August 10. Three weeks later:
 - The agency that administers the program, the Farm Service Agency (part of the USDA), announced a list of companies that have qualified as biomass conversion facilities. Of the nine facilities currently qualified, eight use wood as part of their feedstock. Of those, one--Dixie Pellets--closed the day after the notice was made public.
 - Secretary of Agriculture Tom Vilsack announced that the first matching payments had been made. The payments went to suppliers delivering biomass to Show Me Energy, a Johnson County, Missouri pellet manufacturer. Show Me Energy was the first facility to qualify under the program.

Wood Chips
It's the worst kind of irony really. Over the summer, Dixie Pellets in Selma, Alabama was featured in the inaugural issue of Wood Bioenergy magazine. In July, the company was mentioned in a Wall Street Journal article on European demand for wood pellets. Good news was followed by bad, however, when later that month, news reports explained that Dixie Green Pellets (an announced sister plant in Jackson, Alabama) was on hold indefinitely. The reports suggested the delay was caused by difficulty obtaining funding.
Truck Hauling Timber
Over the course of the last year, there has been much discussion of the health of the logging industry. How can logging companies maintain profitability in the face of housing and general economic slumps? What will happen as logging company owners age and the next generation looks for more lucrative employment? How will logging companies get financing for the equipment they need to take advantage of new markets.
In its recent update of the Logging Capacity Survey, the Wood Supply Research Institute (WSRI) has helped quantify the state of the industry and the potential shortages as the economic recovery takes shape. According to Daniel Dructor, Executive Vice President of the American Loggers Council (ALC), the summary of the update results, which appeared in the Summer 2009 issue of Forest Operations Review, "nailed down what we've been thinking all along." 
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