Q&A: It Takes More Than Money and Trees
Interfor's CEO on the future of forestry in the Southeast
July 25, 2019
Photo by Story for Story
Ahead of his keynote address at the 2019 Georgia Forestry Association (GFA) Annual Conference, we spoke with Duncan Davies, CEO of Interfor, about the strengths, challenges and future opportunities ahead for the forest products industry in our region.
Photo by Dave Roels
GEORGIA FORESTRY MAGAZINE: In your opinion, what does the future of forestry look like in the southeastern United States?
DAVIES: The Southeast quadrant of the U.S. is the largest lumber market in North America. There's a significant timber resources in the region, and it's a very friendly business environment relative to other regions in North America. And, I think to the extent that it's within North America, it's an awful lot easier than looking at some opportunities that would exist in other parts of the world.
We've announced something like $300 million of investment capital flowing into our operations in the Southeast over the course of the next three or four years. And I think that's a reflection of how attractive the business environment is in the area. We're really excited about what we see in the region, and we're putting up the money to invest in technology. I think all of those things are positive - not just for us, but really positive for the region and its communities. We're pretty excited about it.
GEORGIA FORESTRY MAGAZINE: You mentioned the friendly business climate in Georgia having a lot to do with your decision to invest here. What were some of the things on the forestry side that specifically led you to to decide to expand your capacity for your Georgia mills?
DAVIES: Well, there's a bunch of things that go into that. Obviously, log supplies are a big part of it. There's an ample log supply in the area. There's a big market in the area. The traffic, transportation and logistics infrastructure is very good. The programs that are available from the government on things like training are very supportive.
I just find, relative to other regions, that there's much more interest in supporting business investment than we find in other regions. It hasn't been difficult for us to zero in on the South as one of the most attractive regions in North America.
GEORGIA FORESTRY MAGAZINE: You've talked about the fair business climate and opportunities ahead for the forestry industry in our region. What are some challenges facing continued investment in the Southeast?
DAVIES: Well, I guess there's a couple of things. The availability of labor, particularly skilled trades, is becoming a challenge, especially in an environment where the economy is improving and unemployment rates are dropping. It takes more than trees and money to make a successful business. The stability inside the employment base is a really, really important consideration. And as you're moving to advanced levels of technology, that becomes a challenge.
We've done a bunch of work on the type of people we're hiring, how much we're paying them, the kinds of working conditions that we're asking people to work in. We've also created our own training and apprenticeship programs. So we're growing our skilled trades. It's something we felt was necessary in the Southeast, and we've seen some pretty significant gains being made, both from a turnover standpoint and from a skill set standpoint.
The other concern is transportation and logistics. As the North American economy grows and production moves from some of the traditional supply regions, more of the product is going to move by rail, which brings some additional challenges to the business. More is going to be shipped overseas, which means more access to ports. Fortunately, there's very good infrastructure in that regard in the South.
But as the business ramps up, both on log trucking and on transporting finished product and other products from the mill, you need more capacity on the trucking side of things. That's an area where we're spending lots of time and effort working on that. I think it's really important to recognize that, as we produce these products, we have to move them to market, and the market often isn't just down the street. So efficient transportation is a really big piece of the puzzle to be successful and break down the limitations on that. But a lot of effort is going into addressing those constraints. And I think that's positive.
GEORGIA FORESTRY MAGAZINE: It sounds like you're really optimistic and hopeful about the future growth of the industry in the Southeast.
DAVIES: Well, I wouldn't be investing the kind of money we're investing if we weren't hopeful and optimistic about the future. This is a place we can invest and operate successfully.
DAVIES: The Southeast quadrant of the U.S. is the largest lumber market in North America. There's a significant timber resources in the region, and it's a very friendly business environment relative to other regions in North America. And, I think to the extent that it's within North America, it's an awful lot easier than looking at some opportunities that would exist in other parts of the world.
We've announced something like $300 million of investment capital flowing into our operations in the Southeast over the course of the next three or four years. And I think that's a reflection of how attractive the business environment is in the area. We're really excited about what we see in the region, and we're putting up the money to invest in technology. I think all of those things are positive - not just for us, but really positive for the region and its communities. We're pretty excited about it.
GEORGIA FORESTRY MAGAZINE: You mentioned the friendly business climate in Georgia having a lot to do with your decision to invest here. What were some of the things on the forestry side that specifically led you to to decide to expand your capacity for your Georgia mills?
DAVIES: Well, there's a bunch of things that go into that. Obviously, log supplies are a big part of it. There's an ample log supply in the area. There's a big market in the area. The traffic, transportation and logistics infrastructure is very good. The programs that are available from the government on things like training are very supportive.
I just find, relative to other regions, that there's much more interest in supporting business investment than we find in other regions. It hasn't been difficult for us to zero in on the South as one of the most attractive regions in North America.
GEORGIA FORESTRY MAGAZINE: You've talked about the fair business climate and opportunities ahead for the forestry industry in our region. What are some challenges facing continued investment in the Southeast?
DAVIES: Well, I guess there's a couple of things. The availability of labor, particularly skilled trades, is becoming a challenge, especially in an environment where the economy is improving and unemployment rates are dropping. It takes more than trees and money to make a successful business. The stability inside the employment base is a really, really important consideration. And as you're moving to advanced levels of technology, that becomes a challenge.
We've done a bunch of work on the type of people we're hiring, how much we're paying them, the kinds of working conditions that we're asking people to work in. We've also created our own training and apprenticeship programs. So we're growing our skilled trades. It's something we felt was necessary in the Southeast, and we've seen some pretty significant gains being made, both from a turnover standpoint and from a skill set standpoint.
The other concern is transportation and logistics. As the North American economy grows and production moves from some of the traditional supply regions, more of the product is going to move by rail, which brings some additional challenges to the business. More is going to be shipped overseas, which means more access to ports. Fortunately, there's very good infrastructure in that regard in the South.
But as the business ramps up, both on log trucking and on transporting finished product and other products from the mill, you need more capacity on the trucking side of things. That's an area where we're spending lots of time and effort working on that. I think it's really important to recognize that, as we produce these products, we have to move them to market, and the market often isn't just down the street. So efficient transportation is a really big piece of the puzzle to be successful and break down the limitations on that. But a lot of effort is going into addressing those constraints. And I think that's positive.
GEORGIA FORESTRY MAGAZINE: It sounds like you're really optimistic and hopeful about the future growth of the industry in the Southeast.
DAVIES: Well, I wouldn't be investing the kind of money we're investing if we weren't hopeful and optimistic about the future. This is a place we can invest and operate successfully.
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Georgia Forestry Magazine is published by HL Strategy, an integrated marketing and communications firm focused on our nation's biggest challenges and opportunities. Learn more at hlstrategy.com
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