As the uncertainty of the global economy continues to influence the forest products industry, 2015 has proven to be a noteworthy year in terms of industry change. No other US region with significant forest resources has experienced this pace of change as acutely as the Pacific Northwest (PNW), which has seen at least 15 mills change hands, alter capacity or shutter altogether this year alone. As the industry continues to evolve by improving supply-chain efficiencies and go-to-market strategies, adaptive change-and oftentimes consolidation-becomes necessary for survival.

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The Northeast has experienced a loss of markets for pulpwood over the last few years. In 2013, the Great Northern Paper mill in East Millinocket, Maine closed its doors and in 2014, Verso's mill in Bucksport, Maine shuttered forever. The closing of these two mills alone has resulted in a permanent loss of over a million tons of pulpwood demand annually.

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Because wood supply to forest products mills is governed primarily by the ownership objectives of forest owners, forest products companies have a vested interest in understanding who owns the forests in their procurement areas. This is as true in Finland as it is in the United States. A closer look at forest ownership and ownership trends in these two countries reveals additional similarities. The primary similarity is that private forestry plays a key role in in both countries. In Finland, 80 percent of the domestic wood used by the forest industry comes from privately owned forests. In the United States, the number varies by region, but is roughly 55 percent.

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Lumber prices have taken a dive this summer, falling 21% from a February high of $380 per MBF to an August low of $307 per MBF (Figure 1). Composite prices are near the lowest level they have been in three years. This reversal is a result of several market forces that have collectively put downward pressure on prices.

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While US trade agreements rarely pique the interest of mainstream media outlets for very long, the ongoing development of the Trans Pacific Partnership (TPP) has overshadowed a lesser-known agreement that is set to expire in less than 60 days. The Softwood Lumber Agreement (SLA) between the United States and Canada has been in place since 2006 and over the last nine years has, for the most part, provided some degree of stability for lumber producers on both sides of the border. With the October expiration fast approaching, uncertainty is now on the horizon.

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Forestry-related industry performance in both the manufacturing and non-manufacturing sectors for the latter part of June and July followed the marginally up/down trend that it has maintained for most of 2015. After annual revisions in late July that included changing the benchmark year to 2012 (from 2007), total industrial production (IP) increased 0.2% in June but fell at an annualized rate of 1.6% during 2Q2015. Manufacturing output edged down by 0.1%. At 107.1% of its 2012 average, total IP in June was 1.7% above its year-earlier level. Wood Products output fell by 1.9% (-1.4% YoY) but Paper rose by 0.5% (+0.3% YoY).

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Despite US stocks having lost significant ground this summer-the Dow is currently down over 1,300 points from its all-time high in late-May-the US dollar remains strong, which has kept interest rates low and buoyed housing through the construction and selling season. Housing starts for July were up, which-with the exception of a temporary dip in May-is a continuation of the positive numbers this segment has posted since early spring.

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