Contribution of Forest Industries to the Southern 
Economy 
Scope of Forest Industry Manufacturing 
The value of roundwood timber products is one measure of 
timber’s contribution to the economy of the South. 
Payments to landowners for stumpage and to operators for 
harvesting and hauling roundwood to processing sites 
represent income and jobs directly attributable to the forest 
resource. 
Timber supports income and employment in many other sec- 
tors of the economy as well. Roundwood products provide 
raw material for a diversified array of manufacturing indus- 
tries. Some industries, such as sawmills and paper mills, 
process roundwood directly into lumber, newsprint, or 
other marketable commodities. Other industries purchase 
these primary wood products to manufacture more highly 
finished goods, such as millwork, cabinets, furniture, pre- 
fabricated buildings, pallets, containers, boxes, bags, and 
high-grade paper products. Timber is also essential for pro- 
ducers of gum and wood chemicals and wood-preserving 
firms. Income and employment in all of these industries de- 
pend on the timber resource. 
The 1982 Census of Manufactures published by the U.S. 
Bureau of the Census—the most recent source of compre- 
hensive data—provides some measures of the contribution 
of these forest industries to the economy of the South in 
terms of the number of timber-based manufacturing estab- 
lishments, the value of their shipments and the value added 
to their products in the manufacturing process, and the em- 
ployment and wages and salaries they provide. ‘‘Forest 
industries,’’ as the term is used here, encompasses all or 
part of four main industry groups under the Standard Indus- 
trial Classification system used by the Bureau of the Cen- 
sus in collecting data on manufacturing: lumber and wood 
products, furniture and fixtures, paper and allied products, 
and gum and wood chemicals. The Census data represent the 
total activity of forest industry establishments, even though 
timber is only one of the raw materials they use. These data 
do not measure the economic importance of forest indus- 
tries as producers and consumers of goods and services for 
nonmanufacturing sectors of the economy, including whole- 
sale and retail trade, construction, transportation, communi- 
cations, energy, finance and banking; nor do they measure 
the additional production induced throughout the economy 
by the income generated from jobs in forest industries. 
Contributions to the Economy Southwide 
In 1982 there were nearly 17,000 establishments engaged in 
some aspect of timber-based manufacturing in the South. 
This number represents nearly one out of every five manu- 
facturing establishments. Forest industries employed 557,000 
people and paid $8.5 billion annually in wages and salaries. 
Their product shipments were valued at over $49 billion. 
The value added by manufacture amounted to nearly $20 
billion. Value added is a net measure of an industry’s con- 
tribution to production in the economy in that the value of 
the materials received from other firms and used in the 
manufacturing process is subtracted from the value of the 
products shipped. 
In addition to providing income and employment in timber- 
based manufacturing, forest industries support jobs in those 
sectors of the economy that supply forest product firms 
with the services and materials they need for production, 
such as machinery, chemicals, and energy. Similarly, 
wages and salaries paid to employees of forest product firms 
and associated industries are spent in part to buy groceries, 
clothing, household furnishings, and other goods and ser- 
vices in the community, thereby stimulating income and em- 
ployment in those sectors. Input—output models for national, 
regional, State, or local economies are often used to gener- 
ate measures of this interdependence among sectors of an 
economy. Multipliers from these models indicate the im- 
pact of a one-unit increase (or decrease) in output, employ- 
ment, or income (wages and salaries) in one sector on the 
sectors from which it purchases services and materials and 
on all sectors throughout the economy as household income 
and consumption increases. 
State-level input-output models developed in recent years 
for States in the South show a range of multipliers for for- 
est industries, reflecting the many differences among indi- 
vidual State economies (app. table 1.7). The median value 
for State-level income multipliers in both lumber and wood 
products manufacturing and in pulp and paper manufactur- 
ing is approximately 2.4.' These multipliers indicate that 
a $1 increase in wages and salaries in the lumber and wood 
products sector or the pulp and paper products sector would 
result in an expansion of wages and salaries for all sectors 
Statewide of $2.40. Median values of employment multi- 
pliers from individual State models in the South are around 
' The multipliers cited for income and employment are Type II multipliers, 
reflecting direct, indirect, and induced effects, compiled in Flick (1986 
unpubl.). 
