Oregon Prosperity Council ReportJune 2026 · progressive-disclosure index

35. Oregon Forest Industries Council

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35. Oregon Forest Industries Council

Oregon Forest Industries Council Memorandum to the Oregon Prosperity Council Date: April 2026 Re: Strengthening Oregon’s Forest Products Sector as a Foundation for Statewide Prosperity Executive Summary Oregon’s forest products sector is one of the state’s oldest and most important traded sectors and one of the few industries that simultaneously advances statewide prosperity, rural economic stability and Oregon’s environmental objectives. Oregon’s 10 million acres of working forestland (roughly a third of the total forestland in the state) proudly make Oregon the nation’s top producer of lumber, plywood and engineered wood products like mass timber - roughly three quarters of the state’s timber harvest comes from private and tribal forestland. The forest sector also supports more than 62,000 direct jobs with a higher than state average annual wage - a large percentage of which are in rural communities and 1 do not require a post-secondary degree. The forest sector plays a unique role in Oregon’s economy. As a traded sector, the forest products industry does not simply circulate money already inside the state. Close to 75 percent of the products made here are sold outside Oregon, injecting new dollars into local communities and supporting jobs in trucking, equipment repair, professional services, distribution and manufacturing. That traded-sector role is especially important in rural counties, where forest-sector jobs make up six percent of all employment, compared with two percent in metropolitan counties, and in some counties the sector accounts for more 2 than one in ten jobs. The Oregon Prosperity Council recommendations should therefore treat the forest sector not as a narrow special interest, but as a test case for whether Oregon is serious about competitiveness. Oregon Business and Industry’s (OBI’s) recommendations correctly emphasize predictable regulation, manageable cost structures and a more durable business climate. OFIC agrees with that framework and urges the Council to apply it with specificity to Oregon’s forest sector, where policy choices are made over decades, capital 3 is mobile and market share can be lost slowly but permanently. 1 OFRI, Oregon Forest Facts 2025-26, pp. 3, 5, 7, 14. 2 Oregon Employment Department, “Oregon’s Forest Sector Employment Totaled 62,300 in 2023” (2024); OFRI, Oregon Forest Facts 2025-26, p. 8. 3 OBI, Recommendations to Governor Kotek’s Prosperity Council (Apr. 2, 2026).

Recommendations for the Prosperity Council

  1. Treat the forest products sector as a priority traded sector in the Council’s final report. The Council should expressly recognize the forest products sector as a core traded sector that supports statewide prosperity and rural economic and environmental resilience. That recognition should not be symbolic. It should guide tax, permitting, workforce, land use and housing recommendations toward preserving in-state production and manufacturing capacity. Support: • Oregon remains the nation’s top producer of softwood lumber, plywood and 4 engineered wood products like mass timber. • Even though privately-owned forestland makes up less than 50 percent of the forested land base, 72 percent of Oregon’s 2023 timber harvest came from 5 private lands. Private landowners, family forest landowners, tribal forests and private-sector manufacturers play an outsized role in maintaining the strength of the sector. Without their sustained participation, mills, contractors, loggers and haulers that make up Oregon’s forest economy 6 cannot function at scale. Figure 1. Private lands supply a much larger share of Oregon timber harvest than their share of the forest base. 4 OFRI, Oregon Forest Facts 2025-26, p. 8. 5 Id. at p. 3. 6 Id. at p. 5. 2

• Oregon’s forest sector directly employed 62,300 people in 2023 with an average annual wage of $71,900, compared with an average of about $68,283 for Oregon employment overall. In some rural counties forest sector wages 7 paid as much as 77 percent more than the all-jobs average. • Prosperity in rural Oregon depends less on headline job counts than on the availability of year-round, stable employment that produces a viable living wage and benefits. These jobs cannot be replaced by seasonal, lower paying leisure, tourism and hospitality jobs that often do not provide the salary and benefits necessary to support a family. 8 Figure 2. Forest-sector wages exceed the statewide average and are well above leisure-and-hospitality 9 earnings . • Close to 75 percent of Oregon wood products are sold outside the state, bringing external revenue into the state economy rather than merely 10 recirculating local spending. • Forest-sector employment includes far more than logging and sawmilling. It also includes trucking, reforestation, equipment maintenance, engineering, hydrology, management, dock work and wood products distribution. These are durable jobs that stabilize school district and local government tax bases 11 and induce small business demand in communities. 7 Oregon Employment Department (2024); Oregon Blue Book, “Oregon’s Economy: Wages.” 8 OFRI, Oregon Forest Facts 2025-26, p. 15. 9 FRED series SMU41000007000000003A (BLS source); annualized at 2,080 hours. 10 OFRI, “Oregon’s forest economy.” 11 Oregon Employment Department (2024). 3

  1. Endorse the OBI framework on cost structure and predictability and apply it specifically to forestry. OFIC agrees with OBI’s call for a more predictable regulatory environment, modernization of the Corporate Activities Tax (CAT) and a stronger competitiveness lens in policymaking. In forestry, the Council should recommend that major new rules be evaluated for technological and economic feasibility, interaction with existing programs and cumulative cost on a traded-sector supply chain. Support: • Rising production costs for a commodity producer such as a lumber mill, which must compete in national and international markets, often cannot pass increased local production costs onto the end consumer. When production costs in Oregon rise faster than in competing jurisdictions, the result is not simply thinner margins. Over time, such increases are likely to result in reduced market share, deferred capital investment and the gradual 12 relocation of processing capacity out of state. • Cheaper wood products from places with far less stringent environmental protections are regularly taking market share away from Oregon landowners and manufacturers. Continual increases to the cost of operating in Oregon and regulatory and cost uncertainty is resulting in the certain replacement of Oregon products by products from less desirable regions – resulting in a net environmental cost and loss of Oregon jobs. • Forest investments are made on long time horizons. Timberlands are managed over decades, and mills require large, fixed capital outlays that are 13 difficult to redeploy once committed. • A single Oregon log may move through multiple taxable transactions before becoming lumber, plywood, engineered wood or a secondary product sold out of state. Each step can add cost before the product ever reaches a final 14 market. • Therefore, the cumulative effect of policy choices is often more important than any single rule. The interaction and cumulative effect of taxes, labor costs, permitting risk, environmental rules, carbon policy and emerging land use constraints aimed at manufacturers together make Oregon 15 incrementally less attractive than competing jurisdictions. 12 OFRI, “Oregon’s forest economy”; OBI (Apr. 2, 2026). 13 OBI, “OBI Shares Recommendations with Prosperity Council” (Apr. 2, 2026) 14 OBI (Apr. 2, 2026). 15 OBI (Apr. 2, 2026); OFIC policy analysis. 4

• The result is older facilities are not modernized, and new lines are built elsewhere. Each decision to divert capital and invest elsewhere is a loss to 16 the state’s overall vitality and competitiveness. 3. Recommend full and durable implementation of the Private Forest Accord. The Council should emphasize that the PFA should be respected as a negotiated, science- based framework that builds on a long history of cooperative salmon and watershed restoration. Oregon should not signal to investors that even major settlements of this kind merely invite the next round of regulatory layering before the ink is dry. Support: • The Oregon Plan for Salmon and Watersheds, launched in 1997, created a statewide framework for restoring salmon populations, water quality, habitat and watershed health through cooperation among agencies, private citizens, watershed councils and other organizations. • Between 1997 and 2021, that voluntary program resulted in roughly 20,000 17 projects – half of which were privately funded - to improve aquatic habitat. • Since 2014, the Oregon Department of Environmental Quality’s Water Quality Index Report has confirmed that forestland provides the highest quality water 18 of any land use in the state. • The PFA is the most recent iteration of a historical cooperative water quality strategy that has produced measurable gains over decades. It has formed the basis for more than 100 changes to Forest Practices Act rules, affecting around 10 million acres of private forestland. ODF itself has acknowledged 19 just how monumental this update has been. • The 2024 annual report on the Oregon Coast Coho Conservation Plan reported an estimated 161,293 wild spawners, or 125 percent of the prior 34- 20 year average. • This successful policy framework should be reinforced, not treated as a floor for perpetual ratcheting. The prosperity problem in Oregon is not that the sector lacks environmental obligations. It is that businesses increasingly doubt whether agreed upon, science-based regulatory frameworks will 21 actually be respected and afforded the durability they deserve. 16 OBI (Apr. 2, 2026); commodity-market effects stated as economic analysis. 17 Oregon Watershed Restoration Inventory, 2022 18 Oregon Water Quality Index Data Summary, March 2026 19 Oregon Department of Forestry, “Private Forest Accord”; ODF, “Private Forest Accord Updates: Habitat Conservation Plan.” 20 ODFW, Oregon Coast Coho Conservation Plan 2024 Annual Report. 21 OBI (Apr. 2, 2026). 5

  1. Align housing and industrial policy by supporting wood and mass timber. The Council should connect Oregon’s housing agenda to Oregon’s forest economy. That means supporting mass timber manufacture and utilization, encouraging public procurement of wood for appropriate projects and recognizing that higher delivered wood costs reduce the number of projects that pencil and therefore reduce housing starts and supply. Building on the strength of a longstanding traded sector to address a statewide 22 need is the type of win-win Oregon strategy we need. Support: • The National Association of Home Builders (NAHB) reports that the average new single-family home uses roughly 15,000 board feet of framing lumber, more than 2,200 square feet of softwood plywood, and more than 6,800 23 square feet of oriented strand board (OSB). This underscores the point that wood is not a marginal input to a house; it is a foundational one. When the delivered cost of those inputs rises materially, the economics of projects change. More expensive inputs contribute to higher overall building costs, lower affordability and constrained supply relative to demand – further exacerbating the problem. • At the same time, Oregon has become a leader in advanced engineered wood. OFRI reports that 18 of the nation’s 77 engineered-wood manufacturing plants are in Oregon, and state agencies have been promoting 24 mass timber and modular housing as part of the state’s housing strategy. • Public procurement that prioritizes mass timber construction where appropriate can help undergird Oregon manufacturing, attract and expand local design and construction expertise and create more demand for high value Oregon wood products.
  2. Protect existing industrial uses in land use policy. The Council should recommend land use modernization that preserves industrial lands and explicitly protects longstanding lawful industrial uses from being penalized when non- industrial uses are later sited nearby. Support: • A new land use problem is emerging in industrial communities: local planning decisions sometimes place new residential or “vulnerable uses” near long-established industrial operations, after which those existing operations face new scrutiny over truck traffic, air discharges, noise, 25 emergency planning or ordinary industrial activity. This new source of 22 Oregon DLCD, “Mass Timber and Modular Housing Resources.” 23 NAHB 24 OFRI, Oregon Forest Facts 2025-26, p. 8. 25 OBI (Apr. 2, 2026). 6

uncertainty acts as a disincentive against the capital investment required to maintain competitiveness in national and international markets. • Longstanding lawful industrial uses should not be penalized because uses that some believe are incompatible are subsequently sited nearby. • Oregon can both create more housing and preserve industrial employment, but it cannot do so by curtailing ordinary industrial activity via regulation 26 every time the planning map changes around an existing facility. 6. Prioritize the active management of state forests The Council should direct the state to prioritize leveraging its revenue-generating forest assets through active forest management on acres outside of habitat conservation area set-asides. Support: • Oregon’s management of its state forest land base has historically been guided by three principles: (1) generation of revenue through timber harvest; (2) protection of critical habitat; and (3) promotion of recreational opportunities. • In 2023, the state voluntarily set aside nearly half of its publicly-owned timberlands as habitat for various threatened and endangered species in the pursuit of a federally approved habitat conservation plan and incidental take permit. Notably, these “habitat conservation areas” (HCAs) are mostly off- limits to timber harvest, though they are still available for public recreation and other non-harvest uses. • Sustainable timber harvest should be prioritized on those acres that fall outside of the HCAs, and no further constraints should be placed on active management of state forests in the name of habitat preservation or ecosystem services. • Annual harvest targets should be clearly articulated and any shortfalls in anticipated harvest should be rolled forward to future years. This would provide greater predictability and certainty for purchasers of state timber and local governments who depend on the revenue from them. • Prioritizing harvest on non-HCA acres not only supports the timber industry and local communities that receive a share of the revenue from state timber sales, but it also furthers the state’s climate goals by maximizing the carbon sequestration potential of these forests through a continuous cycle of timber harvest, conversion of harvested timber into long-lived wood products, and renewal. 26 OFIC planning analysis. 7

  1. Support active management on federal forests and maintain the manufacturing base needed to perform that work. The Council should view federal forest restoration and Oregon manufacturing capacity as interdependent. Without mills and associated infrastructure, large-scale restoration is more expensive and less feasible. Support: • Federal harvest in Oregon fell sharply in the late 1980s and early 1990s with changes in federal forest management, and because of that federal policy, many rural communities lost both jobs and associated public revenues. Local jobs and revenues are not all that was lost because of this misguided policy, however. Oregon State University notes that passive management of federal forestland has contributed to declining forest health and decreased fire resiliency for many federal lands, especially in the drier forests east of the 27 Cascades. • If policymakers intend on addressing the wildfire crisis in the West with fuels reduction and prescribed fire, it cannot be done without local loggers, truckers, contractors and sawmills to remove and process wood fiber. When manufacturing capacity erodes because supply is unreliable or policy risk is too high, the state loses the very industrial infrastructure needed to make 28 federal forest restoration financially and logistically feasible.
  2. Require carbon policy to evaluate substitution effects, leakage and disturbance risk. Any recommendation on climate or carbon should account for the full lifecycle benefits of wood products and the risk of offshoring production to other states or countries. Oregon should not pursue carbon maximalism that weakens one of its most sustainable natural- resource sectors while increasing dependence on more emissions-intensive substitutes. Support: • Working forests and a robust forest products industry are key to any domestic or international climate change mitigation strategy. • Forests are a natural climate solution, as actively growing forests pull carbon dioxide from the atmosphere and store carbon in woody vegetation. By sustainably managing forests, these benefits can be enhanced above and beyond the natural forest carbon cycle. Carbon sequestered by harvested trees from working forests is stored in wood products and used as a carbon- neutral energy source. Not only are primary wood products, wood 27 OFRI, “Oregon’s forest economy.” 28 OFRI, “Oregon’s forest economy.” 8

manufacturing byproducts and biomass-derived energy carbon neutral, but they provide a substitutionary benefit over the use of fossil fuel-intensive 29 alternatives. • This cycle of carbon capture and storage from working forests can be indefinitely and sustainably maintained through a continuous process of adaptive reforestation (replanting and regrowth) and harvest, and is dependent on a thriving, local, integrated forest products industry. Growth of the forest products industry is essential for the social and economic wellbeing of Oregon communities and is key in maximizing the climate benefits of our state’s forests. • Policies that suppress active management on either state or private forests may increase stored carbon on paper while increasing the risk that some of 30 that carbon is later lost through disturbance. Conclusion The forest products sector occupies a unique place in Oregon. It is deeply rooted in rural and suburban communities, it is exposed to national and international competition, and it is able to contribute meaningfully to the advancement of Oregon’s housing development and climate goals. Few industries touch this many aspects of state policy. For that reason, the Prosperity Council should not treat forest policy as separate from a statewide 31 prosperity policy. In Oregon, they are intertwined. If the Council wants to recommend policies that materially improve Oregon’s economic trajectory, it should include clear, sector-specific recommendations that reduce avoidable costs, improve predictability, protect existing industrial capacity and respect successful cooperative conservation frameworks. Doing so would not be a favor to one industry. It would be a concrete step toward a more prosperous and balanced Oregon economy across 32 the entirety of the state. 29 OFRI, Oregon Forest Facts & Figures, carbon section. 30 OFRI carbon materials; disturbance-risk discussion stated as policy analysis. 31 OFRI materials; OBI recommendations. 32 OBI (Apr. 2, 2026); OFIC policy analysis. 9

Parent: Appendix E: Submissions & Feedback · PDF: pp. 323-331