HD71 - Encouraging Wood Processors to Consider Virginia as an Expansion Site


Executive Summary:
INTRODUCTION

Virginia is blessed with ample timber resources. In fact, approximately 61 percent of the state's 25.4 million acres is classified as commercial timberland. Over the years, Virginia has been highly successful in attracting wood product-related industries. In 1993 and 1994 alone, seven new timber-related companies located in Virginia and 15 others expanded (see Appendix B). Notable examples of this industry include Georgia Pacific Corporation, J. M. Huber Corporation, Union Camp Corporation, and Woodtech Inc., a foreign affiliated company. With the implementation of the Commonwealth's first comprehensive strategic economic development plan, "Opportunity Virginia," wood product-related industries, as part of the forestry sector, will likely receive heightened marketing attention.

Surveys of Virginia's forest resources are usually completed every five years by the U.S. Department of Agriculture's Forest Experiment Station in Asheville, North Carolina. The most recent comprehensive inventory of the state's timber (1992) shows that the volume of timber in Virginia has been expanding. Between 1977 and 1992 the volume of sawtimber increased almost 28 percent. (*1) Annual sawtimber growth now exceeds removals by 62 percent This documented surplus of growth over harvest can provide a basis for expanding production of lumber, pulp and other primary wood products, as well as for expanded production of furniture, cabinets and other secondary wood products.

METHODOLOGY

In fulfillment of House Joint Resolution 211, passed by the 1994 Session of the General Assembly, a committee was formed by the Departments of Economic Development, Forestry, Agriculture and Consumer Services, and Virginia Tech's Brooks Forest Products Center to develop a plan to market Virginia as a location for forest resource-based industries. After meeting with the Director of National Business Development for the Department of Economic Development, subcommittee research areas were assigned by various marketing topics. Subcommittees were formed to review work by previous committees and develop relevant information on demonstrated successful marketing strategies along with associated cost estimates. Three marketing approaches were selected as having the highest probability for success:

• Direct Mail Campaign
• Trade Shows Display and Attendance
• Print Advertising

FINDINGS

Our researchers found that sufficient renewable forest based-resources are available to sustain additional primary and secondary wood processing manufacturers in the Commonwealth.

Our researchers further found that there were 1,965 forest resource-based companies located in the thirty-three (33) states in twenty-three (23) forest-based industrial classification codes and that at least sixty percent (60%), or 1,179, have sales that are growing. Therefore, those growing companies would be likely candidates for any targeted marketing campaign.

CONCLUSIONS

The Department of Economic Development (DED), the Virginia Department of Agriculture and Consumer Services (VDACS), and the Department of Forestry (DOF) will continue to meet the objectives outlined in Opportunity Virginia regarding pulpwood processors and wood industries. To complement current marketing efforts of VDACS, the Division of National Business Development, within OED, plans to assign a marketing manager as an industry specialist.

Implementation of the targeted marketing plan outlined in the Chapter on Findings is dependent upon the availability of resources.

RECOMMENDATIONS

In order to expand the marketing efforts of Virginia's pulpwood processors and wood industries beyond what is outlined in Opportunity Virginia, additional resources may be required by the Departments of Economic Development, Agriculture and Consumer Services, and Forestry to support the marketing strategy of a direct mail campaign, trade show participation and advertising campaign for each year these activities are deemed appropriate.
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(*1) Thompson, Michael T., et aI, "Forest Statistics for Virginia, 1977-1992," [Resource Bulletins, SE-43, -87 and -131], (Asheville, NC: U.S. Department of Agriculture, Forest Service, Southeastern Experiment Station, 1993).