Source: UNIVERSITY OF WASHINGTON submitted to NRP
COMPETITIVENESS IN INTERNATIONAL FOREST PRODUCTS
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
SPECIAL GRANT
Reporting Frequency
Annual
Accession No.
0199549
Grant No.
2004-34270-14671
Cumulative Award Amt.
(N/A)
Proposal No.
2004-06041
Multistate No.
(N/A)
Project Start Date
Jul 15, 2004
Project End Date
Jul 14, 2006
Grant Year
2004
Program Code
[HQ]- (N/A)
Recipient Organization
UNIVERSITY OF WASHINGTON
4333 BROOKLYN AVE NE
SEATTLE,WA 98195
Performing Department
MANAGEMENT AND ENGINEERING
Non Technical Summary
Forest product exports from Washington and Oregon have been declining and mills have been forced to shut down because of local raw material shortages, while Canadian products have replaced US products in many markets. CINTRAFOR works in partnership with state and federal agencies, trade associations and forest industry managers, providing research data collection and analysis, policy review, information dissemination, and the ability to bring multidisciplinary skills together in problem-solving efforts.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6030699301033%
6050699301034%
6060699301033%
Knowledge Area
605 - Natural Resource and Environmental Economics; 603 - Market Economics; 606 - International Trade and Development;

Subject Of Investigation
0699 - Trees, forests, and forest products, general;

Field Of Science
3010 - Economics;
Goals / Objectives
To provide both quality research and effective communications to potential users, the Center's activities are organized into three interrelated areas: Research, Outreach/Public Service, and Information Services. Current priorities for productive research include: Research: Address key, current or future issues arising from or impacting the international traide of forest products (such as the restructuring resulting from the Asian financial crisis); Provide research support for solving problems that impede the development of forest products exports (such as the causes of lower quality in Japanese 2x4 construction); Provide detailed country-market analysis and competing supplier profiles for those countries involved in forest products trade (such as the increasing opportunity in China and the increasing competition from Latin American countries); Assess technical, economic, and policy aspects of market opportunities for industry (such as the impacts of engineered wood products, tariff and non-tariff barriers and local standards, and changing environmental policies); Maintain a computer-based competitive trade model that supports research on regional development in global forest products trade, environmental linkages, and the evaluation of policy changes [the CINTRAFOR Global Trade Model (CGTM) is the only such model in the US]; Accumulate and disseminate, worldwide, information on wood construction, design, and development that provides potential for exports of value-added products (such as changing export trends by product category, and place of origin and destination); Provide new technologies or technology transfers that can substantially impact productivity, yield, utilization, and trade opportunities (such as the best use of 2x4 technology construction systems in Japanese construction); Evaluate the socioeconomic impact and stability issues related to international trade (such as the impact of changing environmental and trade regulations). Outreach/Public Service: Provide and disseminate information from research program activities to regional, national and international audiences impacted by international trade (by a newsletter and fact sheets on recent research findings available on the international web and published research reports); Maintain a structured program of symposia, conferences, workshops, seminars, publications and consultations in cooperation with others working in support of international trade. Information Services: Collect, maintain and distribute comprehensive data and research related to the international trade of forest products where it is otherwise not generally available to researchers, industry, and agency users; Support cooperative efforts in providing information services, avoiding duplication of easily accessed reference materials available from other sources.
Project Methods
CINTRAFOR has assembled a statistical database on China. An analysis of the changing housing/construction market and how constraints on harvesting will likely affect the sourcing of building materials for these markets is needed to determine how best to penetrate China's growing market. Canadian and NAFTA free trade pacts are being challenged by structural and policy changes which may undermine the intent of these agreements. Evaluation of these changes relating to the intent of the agreements and the impact on international competitiveness is considered a high priority in anticipation of the approaching reassessment of the quota agreement. A cooperative research program with the Washington State Department of Community, Trade, and Economic Development on improving the technology transfer of 2x4 housing construction systems to Japan has identified engineered products as a potential area with less cultural resistance. These research findings will provide the basis for an in-depth analysis of the progress of transferring building technology to Japan and the design of an Advanced 2x4 Technology Transfer Seminar Series. The CINTRAFOR Global Trade Model of competing international forest product supply regions was redeveloped from data collection and research modeling efforts by the International Institute for Applied Systems Analysis. The model has supported policy simulations that demonstrate the impacts of both trade and environmental policies. Supplementary funding has been obtained from the World Bank, USEPA, USAID, IIASA, and other sources for specific projects. Improvements in understanding the economic effectiveness of new riparian protection regulations and stream restoration efforts are needed. It is critical that changing regulations and foreign competition that may affect the viability of the forst products sector in the PNW be evaluated. The success of the CINTRAFOR sponsored 1996 Japan Housing Conference led to successful three more export forums. Conference participants recommended similar conferences in alternate years. An international wood marketing conference has become an annual goal. Conferences are planned to be self-sufficient but may require financial support. Brief summaries of research results in newsletter format and as summary fact sheets are distributed to a targeted distribution list of interested parties with unrestricted access also available through our website. Completed working papers are made available to the public at cost with complimentary copies provided to peer researchers. Presentations will continue to be made at trade association meetings and other conferences on a travel-cost reimbursement basis. Export statistics not readily available through other sources are collected, analyzed, and made available to researchers, company managers, and policy makers. Published statistical data is provided through the newsletter and other reports to users. Statistical data includes bi-directional wood trade flows for several world regions to help assess the impacts of timber supply disruptions on country competitiveness.

Progress 07/15/04 to 07/14/06

Outputs
The deck building industry is going through a period of rapid growth and dramatic change with respect to the types of materials available to build decks. A recently completed study by the Center for International Trade in Forest Products (CINTRAFOR) at the University of Washington estimates that the demand for decking materials will increase by almost 12% between 2003 and 2008. While wood is the dominant material used to build decks, the market share for wood-plastic composite decking products has reached 18.8% and is projected to reach 23.5% by 2008. In contrast, this study estimates that the market share for wood decking materials will drop from 76.5% in 2003 to 70% in 2008. To better understand material use and contractor preferences within the deck building industry, CINTRAFOR recently completed a survey of 368 home builders and deck builders across the US. Material use in the substructure was dominated by treated lumber with a market share of over 90%. Material use in deck surface applications was dominated by wood-plastic composite products followed by treated lumber and western red cedar. Finally, approximately 30% of deck accessories were built using wood-plastic composites and treated lumber while an additional 18% were built from western red cedar. Deck builders were also asked to indicate the relative importance of a variety of product attributes in their material specification decision. The most important attributes in the material specification process were long life, visual appearance, consistent material quality and product availability. In contrast, the lowest rated attribute was low price. In other words, deck builders base their material purchase decisions less on price, preferring to focus on material quality. This suggests that home owners are less price sensitive in the purchase of a deck, preferring high quality, durability and ease of maintenance over low price.

Impacts
The expected impact of this project is to demonstrate the potential market for Alaskan species in the US decking market. In particular, this project clearly showed that Alaskan yellow cedar can be successfully marketed in decking applications.

Publications

  • Eastin, I.L., I. Ganguly and J. Roos. Material Use and Contractor Preferences. Professional Deck Builder. July/August. pp:66-68. 2005
  • Eastin, I.L., I. Ganguly, S. Shook and A. Brackley. An Assessment of the Market Potential for Alaskan Species in Decking Applications in the US. CINTRAFOR Working Paper No. 98. University of Washington, Seattle. 2005


Progress 10/01/04 to 10/01/05

Outputs
The forest products industry must restructure in order to offset increasing costs related to declining timber resources. At the same time, firms must increase their value-added manufacturing to offset losses in market share in primary products. Learning how to compete with the growing exports from radiata pine plantations such as New Zealand and Chile and other regions that have substantial inventory including Russia, South America, and Europe has become more important. Overseas buyers generally import from those who are able to make long-term commitments; for Northwest suppliers this has become difficult as a consequence of uncertain resource management policy. European exports to Japan increased substantially from 1993 to 2004 by meeting their Japanese customers performance requirements with kiln-dried lumber and engineered wood products. Competition from non-wood substitutes has also increased and the use of engineered products that utilize lower grade resources represents new opportunities and a problem for existing products. Understanding environmental impacts, changing export opportunities, new forest product trade policies, and value-added processing opportunities are critical as industry attempts to offset some of the negative effects of declining supply. Rural timber-dependent communities continue to experience high unemployment rates, some exceeding 10%, even as the nation approaches the lowest unemployment in several decades. Regional and national public policies must do a better job of establishing and implementing environmental goals with fewer negative economic consequences if structural unemployment in these communities is to be reduced. Increasing the flow of critical research information about these supply problems and market opportunities is crucial to better policy analysis, strategy formulation and, in the end, export success. Exports of higher-valued secondary manufactured products from the Pacific Northwest (PNW) increased 260% from 1989 to 1996 and the PNW was leading the US wood products export market, even while primary processing exports were declining. Although secondary product exports have also declined substantially with the continuing Asian economic malaise, exports products such as builders carpentry have rebounded faster than other wood products and still represent sizable opportunities for the region to offset the declining availability of US Forest Service timber, even while the Asian slowdown seems to be spurring the restructuring of Asian producers making them more competitive. If US exporters can continue to make progress in improving the transfer of US building technology to countries like Japan and China, they should also be able to remain competitive. Given Japanese housing sector deregulation, greater penetration of secondary manufacturing markets in Japan should be possible. Following Japans lead there are also growing opportunities in China where technology transfer programs are just beginning to introduce US wood products in both the nascent wood frame construction market and the interiors market of mid and high-rise masonry construction.

Impacts
This grant helps to support international marketing and economic research aimed at promoting the competitiveness of the US forest products industry and forest products exporters. In addition, CINTRAFOR market research helps to introduce exporters to newly emerging markets where there is potential to export US wood products.

Publications

  • Roos, Joseph and I.L. Eastin. Market Segmentation and Analysis of Japans Residential Post and Beam Construction Market. Forest Products Journal. V(55)N(4). pp:1-7. 2005
  • Eastin, I.L., J. Roos and K. Cunningham. Factors that Influence the Export Success of Forest Products Firms in the PNW. Forest Products Journal. V(54)N(7/8). pp:29-34. 2004
  • Eastin, I.L., J. Roos, and P. Boardman. A Technical Assessment of the Market for Wood Windows in Japanese Post and Beam Construction. Forest Products Journal V(54)N(6). pp:23-30. 2004
  • Eastin, I.L. The Impact of China on the Forest Products Industry in the PNW. Published Testimony before the US-China Economic and Security Review Commission. Seattle, WA. 2005
  • Eastin, I.L. and S. Gardner. NTFPs and Rural Economic Development in the Philippines: A Case Study of Abaca Fibers. in: Forests and Society: Sustainability and Life Cycles of Forests in Human Landscapes by Vogt, K.A., Honea, J.M., Vogt, D.J., Edmonds, R.L., Patel-Weynand, T., Sigurdardottir, R. and Andreu M.G. CABI Publishing, CAB International, Oxfordshire, United Kingdom. 2005
  • Janssens, E., Nicolai Burdin, and I.L. Eastin. Wood-based Panels Markets 2004-2005. UNECE/FAO Forest Products Annual Market Review. Timber Bulletin V(LVIII). Geneva. pp:65-72. 2005
  • Does Wood Quality Really Matter to Builders? Proceedings of the Productivity of Western Forests Conference. Oregon State University. 2005
  • Eastin, I.L., I. Ganguly and J. Roos. Material Use and Contractor Preferences. Professional Deck Builder. July/August. pp:66-68. 2005
  • Eastin, I.L., I. Ganguly, S. Shook and A. Brackley. An Assessment of the Market Potential for Alaskan Species in Decking Applications in the US. CINTRAFOR Working Paper No. 98. University of Washington, Seattle. 2005
  • Boardman, P., I.L. Eastin and J. Perez-Garcia. Global Emerging Market Opportunities for Structural and Other Wood Products. Final Report Submitted to the American Forest and Paper Association. 83 pages. 2004
  • Eastin, I.L. and J. Perez-Garcia. Discrepancies in Forest Products Trade Statistics. CINTRAFOR News, Fall. 2004
  • Eastin, I.L. and J. Perez-Garcia. Discrepancies in Forest Products Trade Statistics. CINTRAFOR Working Paper No. 95. University of Washington, Seattle. 2004
  • Eastin, I.L. Current Status of the Softwood Lumber Dispute Between the US and Canada. CINTRAFOR News, Summer. 2004
  • Garth, J., I.L. Eastin, and J. Edelsen. Material Substitution Trends in Residential Construction: 1995,1998 and 2001. CINTRAFOR Working Paper No. 93. University of Washington, Seattle. 2004
  • Eastin, I.L. Structural Analysis of Post and Beam Homes In Japan. CINTRAFOR NEWS Winter. 2004
  • Eastin, I.L. and C. Larsen. Branding Douglas-fir Lumber in Japan: Switching from a Commodity to a Niche Market Focus. CINTRAFOR News Winter. 2004


Progress 10/01/03 to 09/30/04

Outputs
A range of research projects has been developed and implemented. Examples of the projects supported under this grant include: an analysis of trade disparities, branding of Douglas-fir lumber in Japan, analysis of the Japanese remodel market, among others. In addition the Center has embarked upon a review of its strategic plan with the assistance of its Board of Directors.

Impacts
The results of this research will continue to promote the competitiveness of US wood products in international trade

Publications

  • CINTRAFOR News. Winter 2004. 8 pages. CINTRAFOR News. Summer 2004. 8 pages. CINTRAFOR News. Fall, 2004. 8 pages. Roos, J. and I.L. Eastin. 2004. A Market Segmentation and Analysis of Japanese Residential Post and Beam Market. Forest Products Journal. Eastin, I.L., J. Roos and K. Cunningham. 2004. Factors that Influence the Export Success of Forest Products Firms in the PNW. Forest Products Journal. Eastin, I.L., J. Roos, and P. Boardman. 2004. A Technical Assessment of the Market for Wood Windows in Japanese Post and Beam Construction. Forest Products Journal. Eastin, I.L. and Perez-Garcia, J. 2004. Discrepancies in Forest Products Trade Statistics. CINTRAFOR Working Paper No. 95. University of Washington, Seattle Eastin, I.L., J. Roos, and P. Boardman. 2004. A Technical Assessment of the Market for Wood Windows in Japanese Post and Beam Construction. Forest Products Journal. Eastin, I.L. and Perez-Garcia, J. 2004. Discrepancies in Forest Products Trade Statistics. CINTRAFOR Working Paper No. 95. U