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In the almost ten years since the Alaska National Interest 

 Lands Conservation Act was enacted, we have gained a much 

 clearer understanding of what effects timber employment in 

 southeast Alaska. 



First, we know that massive public subsidies to log 

 the Tongass can not offset declines in timber demand 

 and resulting job losses. This means recent gains in 

 employment will be followed by losses as we proceed 

 through the ups and downs of the timber market cycle. 



- Second, we know that the increases in timber industry 

 employment are the result of accelerated logging on 

 private lands which has masked a decline in Tongass 

 timber dependent jobs since 1980. 



- Third, we know that the Tongass Timber Reform Act will 

 not effect Tongass dependent employment. In fact, the 

 Tongass Timber Reform Act will provide greater job 

 opportunities throughout the region and make the 

 timber industry more competitive. 



The remainder of my testimony puts the factors affecting 

 past and present Tongass-dependent timber employment into 

 perspective. 



What Controls Tongass Timber Employment 



Tongass-dependent timber employment is first limited by the 

 overall competitiveness of the Alaska timber industry in Pacific 

 Rim markets. Within this structure, employment levels will 

 fluctuate with the cyclical demand for Alaska timber. 



In recent years, the timber industries in Alaska, British 

 Columbia and the Pacific Northwest have reduced production costs 

 to become more competitive in Pacific Rim markets. However, 

 Alaska's competitors in British Columbia have higher quality and 

 more accessible timber. In the Pacific Northwest, logging costs 

 are significantly lower because high-quality second-growth 

 timber is readily accessible. Native corporations in southeast 

 Alaska have higher logging costs, but enjoy higher timber prices 

 which make them more competitive. Being less competitive, the 

 Tongass-dependent timber industry is the last to enjoy new and 

 improving markets and the first to lose-out in softening 

 markets. Employment opportunities are directly tied to the 

 demand for timber and will follow the ups and downs of Tongass 

 timber demand. 



Because of Alaska's last-in and first-out market position, 

 the Tongass timber industry has not fully captured the benefits 

 of market recovery. The region's sawmills are still operating 

 at low levels. Lumber exports in FY88 were 120-150 mmbf, lumber 



