Loggers face major crisis with rising fuel costs
TO THE EDITOR:
Loggers face major crisis with rising fuel costs
This letter is written on behalf of the loggers in the State of Mississippi who are currently experience a major crisis in the logging industry. This crisis is the result of a long term continuation of inflated fuel prices that is forcing logging companies out of business at a fast pace. Many logging companies have already closed. Unless immediate relief is provided by the State of Mississippi in this industry, the life of the remaining logging companies in our state is short term.
Over the last several months, group meetings have been held statewide with over 300 seasoned logging companies to address this crisis. Loggers with a minimum of 27 years experience in the industry gathered from all over the state to make a concerted effort with the State of Mississippi to seek immediate relief. All logging companies report that their businesses are failing due to inflated fuel prices. There is no market to sell their equipment to get out of the business. Equipment dealers and banks are feeling the crunch of loggers not being able to make their equipment payments. The loggers all agree that unless relief is provided, the logging industry will not survive.
The forestry sector in the State of Mississippi is one of the leading industries in our great state, with a phenomenal impact:
• The logging industry in Mississippi is a $14 billion per year enterprise;
• 52,580 people are directly employed in the forestry industry;
• Forestry generates a $1.6 billion annual payroll;
• With a 3-4 multiplier, another 200,000 jobs with a aggregate payroll exceeding $6 billion results from the forestry industry;
• Sustainable communities depend on the logging industry to bring money in through employment, local investments and local ownership.
What makes logging a “different” business?
• Most are small family, micro businesses. Most are single-generation firms where the current owner built the business from the ground up.
• An up-to-date equipment spread represents a $1 million investment. The average logger has more invested in the business than the average timber owner has invested in land and timber.
• The owner is involved in the business every day: supervising, checking out the next tract, making repairs and operating equipment. Normally, the owner’s family is involved in running the company.
• There are no franchises or long-term business agreements. Business is conducted on a contract per-tract basis.
• Logging firms are often overlooked as a part of the community. They are usually located off the major business highways. There is no storefront or large sign out front or other indicators of the business size, yet they contribute billions to the economy of the state.
• Goodwill is a key asset in logging in that the logging companies have to maintain not only a disruptive activity for the landowner, but also have to follow strict regulations mandated by the rural, state and federal regulators on the roads traveled to take their products to the mills. This often involves extra work and is very costly to assure that the landowner, the state and federal agencies and the surrounding communities are satisfied with the conduct of the operation.
These are high-volume, low-margin businesses:
• One-to-5 percent of gross revenues are retained as profit in the best of times;
• Maintaining cash flow is critical: There is no “season” for logging in the South; Operations are expected to have 50-week work year with no allowances for scheduling payments “when the crop comes in;” Labor, the largest single expense, must be paid on a weekly basis while equipment payments, repair bills and other consumable supplies must be paid monthly.
Fuel costs are soaring in recent years, jeopardizing the survival of these business.
The Mississippi Loggers have issued a plea of relief to the State of Mississippi in support of this failing industry. Survival will depend on relief in the following areas:
• An immediate waiver for the remainder of 2008 of the fuel tax on off-road diesel and on-road diesel.
• An increase in highway weight limits to 88,000 pounds;
• Waiver of sales tax on purchase of parts and supplies needed to repair and maintain equipment and trucks;
• Landowner waiver on severance tax collected from the mills for the state to assist landowners in offsetting the stumpage price;
• Landowner waiver on long-term capital tax to offset stumpage prices, thus increasing the logging company revenue.
Mississippi Loggers have requested to Gov. Haley Barbour to be placed on the Call for the Special Section forthcoming in the State of Mississippi for immediate relief to the logging industry. The logging industry’s survival depends on it.
– 30 –
CONTACTS:
Tamme Bufkin, Circle B Timber/Mississippi Loggers Association, 601-545-1239, Cell: 601-408-8508;
John Mabry, Sam Mabry Lumber Co./Mississippi Loggers Association, 601-657-8061, Cell: 601-660-3993;
Cecil Johnson, executive director, Mississippi Loggers Association, 601-776-5754, cell 662-418-8891
LOGGING INDUSTRY CONTACTS:
Stone Timber Inc., Wiggins
Randy Miller, 251-331-8242
Greg Green Logging, Leakesville
Greg Green, 601-270-5894
Timberline Trucking, Hattiesburg
David Harvison, 601-545-8873
Circle B Timber, Inc., Hattiesburg
Lowell Bufkin, 601-545-1239 or 601-315-0789
Soujourner Logging, Hazlehurst
Wayne Soujourner, 601-892-4021