Thursday, November 18, 2010

Growing the Market for Sustainably Produced Wood Products



Through November 30, 2010, the USDA Agricultural Marketing Service Research and Promotion Branch is accepting public comments regarding a proposed Softwood Lumber Research, Promotion, Consumer Education and Industry Information Order. Following are excerpts from the Endowment's comments on that proposed order.

Among the first initiatives undertaken by the Endowment was a study that led to the report, "Commodity Check-off: The Potential for North American Softwood Lumber." The study led to the creation of the Blue Ribbon Commission for Softwood Lumber Check-off (BRC). At that point the Endowment was joined by the BiNational Softwood Lumber Council (an industry support group also created under the Softwood Lumber Agreement 2006) in advancing and providing financial support to the BRC.

The Need for Check-off

Grow the Market for Renewable Products: North America is a continent of forests and a society founded on forest products. In spite of the fact that wood is the greenest of all building products, it has increasingly lost share to competing products (e.g. steel, plastic and concrete) that are not renewable, require greater energy consumption in production and have more environmental impacts. The widely fragmented forest products sector has never been able to mount and sustain a broad-based research and promotion program to grow its markets due to lack of broad participation in underwriting those activities. A USDA check-off is the only solution to remedy this situation.

Provide Markets to Encourage Management of Forests: North America is plagued by increasing forest health challenges driven by globalization and climate change. Varied and vibrant markets for forest products are the most important tool in providing outlets that encourage and allow forest owners to appropriately manage their holdings. A strong promotion program funded by a check-off will stimulate new and increased demand for forest owners' products, and the expanding revenue streams that will flow from this will support management required by new forest health challenges.

Focus on Growing: An Indisputable Business Case: We believe that one of the greatest gains from check-off will come in improved relations between the U.S. and Canadian industries through a laser-like focus on the all important need to grow markets for the good of all. North America's forest industry has long experienced conflict between the U.S. and Canadian systems, which continues today. While these issues go unresolved, competing products continue to take market share from wood. Both countries and their respective industries will benefit greatly from a collective focus on growing the market pie through a powerful promotion program funded by a check-off.

Family-Supporting Jobs in Rural Communities: By their very nature the growing, harvesting, manufacturing and renewing forests and forest products are rural. The forest products industry has been one of the most important pillars of rural community life through provision of family-supporting jobs. Growing markets through concerted research and promotion will retain and create needed jobs.

Keeping Forests as Forests: Forests blanket one-third of the United States and those forests are held primarily by families -- some 11,000,000 of them. If we hope to retain those non-public lands as forests for the many benefits they provide to society (e.g. sources of wood products, homes to wildlife, places for recreation, providers of water, etc.) it is important that we provide the economic incentives -- markets -- for those trees when landowners need to sell to meet their management and economic objectives. A check-off can be a strong driver to maintain forests as forests.

Check-off: Extending Lessons from Traditional Agriculture to Forests
American farmers have shown for decades the importance and power of collaboration to grow markets for their products. The literally hundreds of millions of dollars that have been provided through voluntary self-assessments under check-offs have led to new products and markets through research and expanded consumer understanding, appreciation and use. We feel strongly that the forest products industry as represented by softwood lumber producers domestically and those from around the world who wish to access the U.S. market will benefit greatly from adoption to check-off.

Friday, July 09, 2010

Staffing for the Future

From inception in late 2006 until just recently the Endowment operated with what we believe is the leanest staff model in our peer group. That model -- three full-time staff and a rotating university intern; later augmented with a part-time financial consultant -- served us well through our start-up and early program implementation phase.

As we've learned more about how we can best achieve our mission and stick to our niche, the Board and staff have been looking at options to ensure that we can meet the needs of the future. Our leadership began discussions in mid-2009 and presented a staffing plan for the Board late that fall. After thorough discussion and review the Board agreed that it was time to make some adjustments. As a result, we beefed-up the finance role and added depth to the program staff. Those changes, which we'll address in a bit more detail, position us well for the next several years.

Getting our Financial Systems in Order
The Endowment began like few other organizations with a one-time infusion of funds that had to be placed under management all at once. While many organizations have the benefit of a "quiet period," often of three years or more to allow the corpus to grow, the Endowment had no such buffer. Our overhead costs began on day one even as we were just starting to consider how best to achieve our challenging missional objectives. Timing is everything. Our entry into the market allowed us the all-too-brief euphoria associated with the upward ride of an aging bull market; followed by harrowing declines associated with the "Great Recession."

But for the wisdom of a Board that had adopted a "down market" programmatic investment spending plan before the market declined, things would have been even more chaotic. The good news of the saga is that we have been very successful in forging strong partnerships that have allowed us to "leverage" our diminished spending potential to still have a total impact near that anticipated pre-market decline. In short, we've been able to commit nearly $40 million to missional investments.

The flip side of that coin is that each of those partnerships -- especially those with federal agencies -- has added complexity and need for additional review and controls. Thus, we "up-graded" our part-time Chief Financial Officer role to a full-time Director of Finance. Kim Morgan, a deeply experienced CPA, joined us in March to help steer the financial ship day-to-day.

Re-directing and Expanding the Program Team
The Board also agreed that it was time to add some all-star strength to the program team that had been represented by significantly less than two full-time equivalents of the original three-person model. We began with a commitment to add senior experience. With the addition of a Senior Vice President who brings rich program experience augmented by a re-direction of our community development program, we were able to do just that. These two new team members -- Peter Stangel and Alan McGregor -- respectively, along with our President who also serves a dual role as a program officer, position us well for the future. Each brings significant experience and a proven record of success.

Stirring the Technology Pot
As if adding three new faces to a five-person staff model all at once wasn't enough, we determined that is was also time to up-grade our information technology systems. That transition has proven challenging but holds significant promise of better days for those who survive the journey.

The Future is Now
As we begin the second half of 2010 -- which coincides with the second half of our fourth year as an entity -- we believe we are well positioned to serve the needs and challenges of these trying times. Our five full-time team members are individually and collectively excited to be granted the privilege of being a part of the important work being undertaken by the Endowment and our partners. Too, we want to assure you that even with this significant growth -- from 3+ to 5 -- we remain among the leanest organizations of our kind and we don't expect that to change.

One of our beliefs is that this small staff model, while challenging at times, ensures that we keep the focus on delivery at the wholesale vs. retail level. We plan to remain a grantmaking institution that works with strong partners in the field to achieve important "systemic, transformative and sustainable" advances for the nation's working forests and forest-reliant communities.