**4. Discussion and conclusions**

This chapter synthesizes several timber harvesting research threads and principles in the Southern Cone of South America and in North Carolina in the U.S. South, based on detailed empirical survey, economic, and simulation approaches. The research summarized here estimates timber harvesting productivity and costs in Southern Cone and in North Carolina; reviews the current literature about Southern U.S. timber harvesting productivity and costs; and provides unique components on innovation in the Southern Cone and on timber harvesting capacity in North Carolina. As such, the chapter provides a handy combination of current timber harvesting research, theory, and applications that can be useful for comparisons of comparative advantage between the U.S. South and the Southern Cone of South America, and provide benchmarking for logging and forest products firms, further research, or for policy considerations.

Some generalizations can be made about each of the possible international comparisons. Logging production data were calculated by each of our studies, and widely available in the literature. Cost data are reported in the Southern Cone research and the North Carolina survey, and some is available in the literature for both broad regions. The innovation research such as in our work in the Southern Cone is less common, but some comparisons can be made with other literature, and some insights can be drawn from our North Carolina research. Logging capacity has been talked about quite a bit, but our study in North Carolina is the only empirical example we found.

First, timber harvesting production rates have continued to increase along with mechanization for decades [35]. Carter et al. [16] reported the highest mechanized feller-buncher grapple-skidder system had average logging production rates of 2600 tons per month, or about 30,000 tons per year in 1990 in the U.S. South. By 2007, Baker and Greene [17] reported average production rates in Georgia of 5800 tons per month, or about 70,000 tons per year. By 2014, Hahn [2] found that logging firms in eastern North Carolina produce 2960 tons of roundwood per week, and work 49 weeks per year. Thus the North Carolina average firm production was 145,000 tons per year or 12,000 tons per month. Baker et al. [22] reported average weekly production among 22 firms in the South to be 4197 tons, which would be about 200,000 tons per year or 17,000 per month.

These average U.S. South production rates were usually on a per crew basis, but still were considerably less than the average rates of more than 300,000 tons per year per firm in Brazil and Uruguay in 2012. This is somewhat surprising that the Southern Cone is more productive, but reasonable upon reflection. Perhaps the biggest driver

**129**

not very good.

market innovation.

*Timber Harvesting Production, Costs, Innovation, and Capacity in the Southern Cone…*

for this is that almost all timber harvesting in the Southern Cone is occurring in planted Southern U.S. pine species (e.g., *Pinus taeda*) or eucalyptus stands, which have much higher growth rates and much higher stand volumes per unit of area at harvest than in the planted and natural stands in the U.S. South—perhaps two to three times more volume per area at final harvest [10]. At least half of U.S. South timber production and logging still occurs in natural stands, which are less uniform and have lower stand volumes at harvest. Thus it would be easier to achieve high production rates with more wood volume per turn for machines and for systems. The reported production rates in South America also may include some multiple crews and multiple

As the productivity rates would suggest, timber harvesting costs per ton for the Southern Cone were usually less than in the U.S. South. For their logging cost index in the U.S. South, Baker et al. [25] set the initial cut and load at roadside logging value in 2011 as US\$ 12.50 per ton. Hahn [2] found that reported cut and load logging contract rates in North Carolina (which presumably include some profit, so should be higher than logging costs) were US\$ 13.74 per ton. These values were somewhat greater than those found in most of the production in the Southern Cone for about the same period—US\$ 7.41 per ton in Argentina, US\$ 8.19 per ton in

The rank of this difference makes sense since productivity rates are higher in the Southern Cone, if the equipment fixed and operating costs are similar in all countries. Uruguay costs probably were somewhat greater because they did use more expensive full timber processor/forwarder equipment, and had high fuel costs as well. The higher timber production volumes per area at harvest and the use of multiple shifts help drive these higher logging productivities and lower logging costs. While we do not review logging transport costs here, they too are problematic in both the U.S. South, where it is hard to find drivers who meet the strict license requirements, and in the southern Cone, where transportation networks often are

Mac Donagh [15] analyzed the role of innovation specifically in the performance of logging firms in the Southern Cone. That study showed that that the mechanization and innovation process there has been through the diffusion and adoption process throughout much of plantation forestry sector in the Southern Cone, and that good management will lead to better outcomes and more profits there like developed countries in the northern hemisphere. Loggers that had mutualistic, cooperative relations with contracting pulp and paper companies had the highest production rates and the lowest production cost per ton—which was the opposite of findings in more developed countries. Mechanization with the highest technology

Logging innovation capacities were more important than the business skills for production and growth. Innovation was more important than just buying the newest equipment in determining firm success [15]. In both the Southern Cone and in the study by Stone et al. [14] in Maine, the research found that the most successful logging contractors were the best innovators in products or process, followed by

The last research focus on timber harvesting and logging capacity in this chapter was only directly investigated by Roll [26], although we can infer much about this question from other research and popular articles. In brief, there are pervasive concerns that as the forest products manufacturing sector expands, at least in the U.S., there will not be enough loggers to harvest all the wood needed [36]. Timber harvesting is hard, dangerous, and the pay is relatively modest. Surveys by Hahn [2] and Baker and Greene [17] and Greene et al., [19–21] indicate that both the average

age of loggers, and often the age of their equipment, is getting much older.

shifts per firm, which is not the case in most of the U.S. data.

Brazil—although less than the \$14.82 per ton in Uruguay.

produced the highest production output levels.

*DOI: http://dx.doi.org/10.5772/intechopen.85412*

#### *Timber Harvesting Production, Costs, Innovation, and Capacity in the Southern Cone… DOI: http://dx.doi.org/10.5772/intechopen.85412*

for this is that almost all timber harvesting in the Southern Cone is occurring in planted Southern U.S. pine species (e.g., *Pinus taeda*) or eucalyptus stands, which have much higher growth rates and much higher stand volumes per unit of area at harvest than in the planted and natural stands in the U.S. South—perhaps two to three times more volume per area at final harvest [10]. At least half of U.S. South timber production and logging still occurs in natural stands, which are less uniform and have lower stand volumes at harvest. Thus it would be easier to achieve high production rates with more wood volume per turn for machines and for systems. The reported production rates in South America also may include some multiple crews and multiple shifts per firm, which is not the case in most of the U.S. data.

As the productivity rates would suggest, timber harvesting costs per ton for the Southern Cone were usually less than in the U.S. South. For their logging cost index in the U.S. South, Baker et al. [25] set the initial cut and load at roadside logging value in 2011 as US\$ 12.50 per ton. Hahn [2] found that reported cut and load logging contract rates in North Carolina (which presumably include some profit, so should be higher than logging costs) were US\$ 13.74 per ton. These values were somewhat greater than those found in most of the production in the Southern Cone for about the same period—US\$ 7.41 per ton in Argentina, US\$ 8.19 per ton in Brazil—although less than the \$14.82 per ton in Uruguay.

The rank of this difference makes sense since productivity rates are higher in the Southern Cone, if the equipment fixed and operating costs are similar in all countries. Uruguay costs probably were somewhat greater because they did use more expensive full timber processor/forwarder equipment, and had high fuel costs as well. The higher timber production volumes per area at harvest and the use of multiple shifts help drive these higher logging productivities and lower logging costs. While we do not review logging transport costs here, they too are problematic in both the U.S. South, where it is hard to find drivers who meet the strict license requirements, and in the southern Cone, where transportation networks often are not very good.

Mac Donagh [15] analyzed the role of innovation specifically in the performance of logging firms in the Southern Cone. That study showed that that the mechanization and innovation process there has been through the diffusion and adoption process throughout much of plantation forestry sector in the Southern Cone, and that good management will lead to better outcomes and more profits there like developed countries in the northern hemisphere. Loggers that had mutualistic, cooperative relations with contracting pulp and paper companies had the highest production rates and the lowest production cost per ton—which was the opposite of findings in more developed countries. Mechanization with the highest technology produced the highest production output levels.

Logging innovation capacities were more important than the business skills for production and growth. Innovation was more important than just buying the newest equipment in determining firm success [15]. In both the Southern Cone and in the study by Stone et al. [14] in Maine, the research found that the most successful logging contractors were the best innovators in products or process, followed by market innovation.

The last research focus on timber harvesting and logging capacity in this chapter was only directly investigated by Roll [26], although we can infer much about this question from other research and popular articles. In brief, there are pervasive concerns that as the forest products manufacturing sector expands, at least in the U.S., there will not be enough loggers to harvest all the wood needed [36]. Timber harvesting is hard, dangerous, and the pay is relatively modest. Surveys by Hahn [2] and Baker and Greene [17] and Greene et al., [19–21] indicate that both the average age of loggers, and often the age of their equipment, is getting much older.

*Timber Buildings and Sustainability*

an additional 1 million green tons.

**4. Discussion and conclusions**

further research, or for policy considerations.

about 200,000 tons per year or 17,000 per month.

analyze the sensitivity of the logging workforce to different rates of growth. The first scenario represented an additional 1.2-million-ton growth annually in timber output, or 0.5%. In scenario two, timber output increased by 1.289 million tons annually, or 1.0%. The third scenario increased at 1.5% per year, or 1.378 million additional tons annually. Under a 0.5% growth rate in timber output, an average of 8.2 additional logging crews or 34 logging employees will be needed each year to produce this level of output. At a 1.0% growth rate, an average of 8.77 additional crews per or 37 loggers will be needed each year to meet growth in production. Under a 1.5% growth rate in timber production, an additional 9.37 crews or 39 logging employees on average will be required each year over the 10-year period. Finally, to provide a "loggers required per million tons" metric, we estimate that an additional 29 "in-woods" employees (6.8 crews) are required each year to produce

This chapter synthesizes several timber harvesting research threads and principles in the Southern Cone of South America and in North Carolina in the U.S. South, based on detailed empirical survey, economic, and simulation approaches. The research summarized here estimates timber harvesting productivity and costs in Southern Cone and in North Carolina; reviews the current literature about Southern U.S. timber harvesting productivity and costs; and provides unique components on innovation in the Southern Cone and on timber harvesting capacity in North Carolina. As such, the chapter provides a handy combination of current timber harvesting research, theory, and applications that can be useful for comparisons of comparative advantage between the U.S. South and the Southern Cone of South America, and provide benchmarking for logging and forest products firms,

Some generalizations can be made about each of the possible international comparisons. Logging production data were calculated by each of our studies, and widely available in the literature. Cost data are reported in the Southern Cone research and the North Carolina survey, and some is available in the literature for both broad regions. The innovation research such as in our work in the Southern Cone is less common, but some comparisons can be made with other literature, and some insights can be drawn from our North Carolina research. Logging capacity has been talked about quite a bit, but our study in North Carolina is the only empirical

First, timber harvesting production rates have continued to increase along with mechanization for decades [35]. Carter et al. [16] reported the highest mechanized feller-buncher grapple-skidder system had average logging production rates of 2600 tons per month, or about 30,000 tons per year in 1990 in the U.S. South. By 2007, Baker and Greene [17] reported average production rates in Georgia of 5800 tons per month, or about 70,000 tons per year. By 2014, Hahn [2] found that logging firms in eastern North Carolina produce 2960 tons of roundwood per week, and work 49 weeks per year. Thus the North Carolina average firm production was 145,000 tons per year or 12,000 tons per month. Baker et al. [22] reported average weekly production among 22 firms in the South to be 4197 tons, which would be

These average U.S. South production rates were usually on a per crew basis, but still were considerably less than the average rates of more than 300,000 tons per year per firm in Brazil and Uruguay in 2012. This is somewhat surprising that the Southern Cone is more productive, but reasonable upon reflection. Perhaps the biggest driver

**128**

example we found.

#### *Timber Buildings and Sustainability*

While the logger demographics are disconcerting, there were high production levels in North Carolina as found by Hahn [2], and corroborated by the simulations of Roll [26] and others in the South. Roll determined that a relatively modest number of 30 employees and seven harvesting crews of four in-woods persons could harvest an additional 1 million tons of wood in the Coastal Plain of North Carolina. However, this is only an 8% increase based on 13 million tons of production in the state; large production increases could require many more workers quickly.

We conclude that an expansion of the number of logging crews—which can harvest from 150,000 to 200,00 tons of production per year—would most likely come from expansion and innovation from existing logging firms, not completely new entrants to the business, or from wood dealers who serve as middlemen in the procurement process in Eastern North Carolina. Thus an expansion of moderate amounts of timber harvesting production at the margin does not seem insurmountable, although several million tons or more of production would become increasingly harder to achieve by merely expanding current, often undercapitalized, logging firms. Innovation to achieve higher productivity would be important in this case.

While not examined specifically, we believe it would be easier for logging companies in the Southern Cone to expand to achieve higher logging production to supply forest products manufacturing facilities. The logging production rates exceeding 300,000 tons per year were higher than in the U.S. South; the work is still perceived comparatively favorably by rural workers in the Southern Cone; and there are fewer rural manufacturing or service alternatives to timber extraction.

Overall, these linked studies of timber harvesting/logging in the Southern Cone of South America and the U.S. South are very informative. While the timber harvesting productivity rates and costs were not far apart, the Southern Cone generally had a competitive advantage, with observably higher logging production rates and lower logging costs. Timber harvesting technology and innovation had matured considerably in the Southern Cone in the last two decades. The studies reviewed here suggest that average logging cut and haul rates were perhaps \$3–\$5 per ton cheaper in the Southern Cone, which multiplied by one quarter to a million tons per sawmill or pulp mill, adds up to a considerable cost advantage per mill, and for South America.

In addition, the timber plantation growth rates, final harvest yields, and investment returns for stumpage alone also are much better in South America than the U.S. South [10]. Cheaper fast grown timber plantation costs and timber harvesting production and cost advantages unite to provide substantial competitive advantages throughout the value chain to Southern Cone planation forestry. These countries of course have considerable challenges and more variable macroeconomic factors, political risk, poor roads and infrastructure, and other issues, which constrain their excellent forestry opportunities.

However, if the underlying institutional fundamentals do align well, the Southern Cone can grow and harvest wood cheaply, and will continue to expand forest products mills and harvesting capacity more quickly as well. This trend is evidenced by the opening of many new pulp and paper mills in the Southern Cone over the last few decades, while a large number have closed in the U.S. South. The Southern Cone roundwood production increased about 25% from 171 million m3 in 2008 to 217 million m3 in 2017 [5, 6], while that in the U.S. South was relatively flat at about 185 million m3 [7]. The South still has the most forest manufacturing production capacity in the world, but has a decreasing total output share, which is likely to continue based on the timber harvesting costs examined here, as well as timber plantation production and cost advantages in the Southern Cone.

**131**

provided the original work is properly cited.

, Joshua Roll2

2 International Paper-Mansfield & Campti Mills, LA, USA

\*Address all correspondence to: fredcubbage@yahoo.com

1 Universidad Nacional de Misiones, Eldorado, Misiones, Argentina

4 North Carolina State University, Raleigh, North Carolina, USA

© 2019 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

, George Hahn3

3 Virginia Polytechnic Institute and State University, Blacksburg, Virginia, USA

and Frederick Cubbage4

\*

*Timber Harvesting Production, Costs, Innovation, and Capacity in the Southern Cone…*

Partial funding for the research on was provided by the USDA Forest Service Southern Research Station; by the NC State University Southern Forest Resource Assessment Consortium; and by the respective organizations of the co-authors. Karen Abt of the USDA Forest provided insightful review comments for the

*DOI: http://dx.doi.org/10.5772/intechopen.85412*

**Acknowledgements**

manuscript.

**Author details**

Patricio Mac Donagh1

*Timber Harvesting Production, Costs, Innovation, and Capacity in the Southern Cone… DOI: http://dx.doi.org/10.5772/intechopen.85412*
