Letter from Phil Kirk

Forest Products Grows Our Economy

The forest products industry is one of the least publicized components of the manufacturing sector in North Carolina, but one of the most important.

It touches each of our state’s 100 counties and is responsible for more than 300,000 jobs — direct and indirect — and an annual economic impact of more than $29 billion, according to a report issued as a result of a joint project of the North Carolina Forestry Association and the North Carolina Industries of the Future program. There are more than 3,000 forest product manufacturing facilities in our state.

Robert W. Slocum Jr., executive vice president of the North Carolina Forestry Association, in a cover letter accompanying the report, writes, “This industry is also critical to our environment. Forests cover approximately 58 percent of North Carolina. The vast majority of these forests — 89 percent — are privately owned. By providing a market for wood, the forest products industry provides a critical incentive to private landowners to keep and manage their forests. If we lose the forest products industry, we will lose much of our forest land.”

However, the industry faces many of the same challenges as textiles, furniture and apparel. Cheap imports are flooding into our domestic markets while many other nations are restricting the import of our products.

Slocum writes, “The U.S. has gone from the world’s low-cost producer of forest products to the world’s high cost producer.” There is a growing exodus of companies to other countries where costs are less and governments are more friendly to business.

We see the same things happening within North Carolina. I know of a major player who has closed three plants in North Carolina, expanded in Virginia, and personally moved to South Carolina because of the high tax policy of North Carolina.

That is why the reduction of the corporate income tax (the third largest in the Southeast) and the personal income tax (the highest in the Southeast) is one of NCCBI’s very top legislative priorities. How much more industry and high-income individuals will we lose before legislators improve our tax policies?

The number of family-owned businesses — sawmills, logging companies and related businesses — has declined in North Carolina as have the number of companies that manufactured equipment and products for the forest products industry. Consolidation of operations is also an important factor.

State policymakers, including the governor and the General Assembly, need to understand and recognize the importance of this industry as well as take specific actions to allow it to survive and expand in our state. Business-oriented citizens need to be appointed to key positions, such as the Industrial Commission and Environmental Management Commission. Regretfully, both these commissions are dominated by anti-jobs, anti-business individuals despite pleas to change this through the governor’s appointive powers, as well as those from the legislative leadership.

The executive branch carries a heavy responsibility in the survival of the industry. The report urges the Department of Commerce to create a Basic Manufacturing Council to focus on the special needs of manufacturers, which provide at least 16 percent of the jobs in our state.

The report repeats the often-heard complaint about the Department of Environment and Natural Resources. “The Department needs to recognize that its role is to help business comply with regulations and that business is a critical customer. The agency must become more customer-oriented and shed its anti-business attitude and image.”

NCCBI is meeting with officials of both departments and Revenue to press the point that too much of government is hurting efforts to create jobs.

Receiving high marks for working with the forest products industry in the report are the College of Natural Resources at N.C. State University; the Department of Labor, headed by the elected Commissioner of Labor, Cherie Berry; and the Community College System, which is headed by President Martin Lancaster. Kudos to these individuals and programs for recognizing that government can be a helper, rather than an enemy of jobs!

If these steps aren’t taken, we may not have a forest products industry in our state to write about in a few years.