Coos Economic Action Plan
Wood Products Technical Review Committee
Third Meeting Summary
Lancaster, NH
January 30, 2008
The meeting was opened by Brad Wyman, Chair. Introductions were made of the following people participating:
Will Abbott, SPNHF
Roy Amey, R&L Amey, Inc
Bill Andreas, BEDCO
Bob Berti, North Country Procurement
Ron Bugeau, Hancock Lumber Co.
Marty Driscoll, North Country Procurement
John Dyer, White Mountains Community College
Thad Guldbrandsen, Plymouth State University
Jeff Hayes (representing the EAP Steering Committee), North Country Council
Peter Riviere (representing the EAP Steering Committee), CEDC
Sarah Smith, UNH Cooperative Extension
Sam Stoddard (facilitator), UNH Cooperative Extension
Matt Tansey, NH Div of Forests & Lands
Jeff Williams, US Forest Service
Brad Wyman (Chair)
Jim Wagner, NCIC Economic Development Director
Brad presented an anti-trust admonition saying that we needed to exercise due diligence and avoid talking about prices, anticompetitive matters. If anyone feels we have crossed the line into that area to please advise the chair, and if that feeling continues should feel free to leave the room and make note of the circumstances for the record.
Brad distributed copies of four key draft action plan recommendations developed since the last meeting on January 17th. The four key recommendations addressed these topics:
1) Market Diversity and Forest Products Development Center
2) Fiber Sustainability
3) Energy Efficiency in the Wood Products Industry
4) Existing Business and Labor
Brad Wyman welcomed newcomer John Dyer, Director of Workforce Development and Community Education, White Mountains Community College, Berlin and Littleton [formerly Berlin Technical College].
Brad asked for comments regarding minutes from the last meeting. There were none.
Brad described the purpose of today’s meeting--- to examine and enhance the four draft papers developed since the last meeting. A spokesperson would present each paper for review and comment by the committee during the morning session. In the afternoon each small focus group would do further work on the drafts by incorporating ideas and suggestions developed in the morning. Small groups will then report out to the full committee near the end of the meeting. The goal would be to get the drafts into a state that will be appropriate for Brad and Sam to bring to the steering committee meeting on February 6th. Brad and Sam will bring the steering committee suggestions and guidance back to the TRC at the next meeting in February.
Sam summarized contributions to the TRC blog since last meeting. He showed a short video on the subject of GM’s commitment to ethanol and the production of ethanol in the near term using wood and waste products. He also highlighted an article on biofuel from the Carsey Institute at UNH that was posted to the blog. See the blog at: http://extension.unh.edu/blogs/woodtrc
Peter referenced an article from Governor’s Taskforce on Climate Change, containing about 40 pages on energy conservation issues, alternative energy initiatives, and legislative discussions. Peter will provide link or copy to Sam for posting to the blog.
Roy mentioned a Farming magazine article about a farmer in New York who started his own biomass plant, making about 4000 gallons of fuel per week. He supplied his own farm’s needs as well as all his neighbor’s farms.
Peter cited other examples of local biofuel production that might be expanded to a commercial venture to improve the local economy.
Discussion of the MARKET DIVERSITY draft:
Thad asked if this was the right level of detail. --- Jeff thought it was a good level of detail in the action step statement and justification. More is needed for the lead role, timeline, measures of success and the resources for funding. Specifically, Jeff thought that Thad (PSU) and John Dyer (WMCC) are interested in playing a lead role initially with getting the development center going. Thad had done a lot of work on this earlier, as was mentioned at a previous meeting. We decided to hold back on the concept until we could get more involvement from the private sector, which would be producing the products. We need a stronger connection with the private sector in order to make it work.
Groveton (Rob Larson) is still asking about the development center. Sarah met with the group and helped to add some reality to the concept. It was a surprise validation when the TRC identified this project as the top priority.
One of the action steps was to find the entrepreneurs. It had been suggested to go to existing businesses in the area and ask if they have any appetite as an investor in taking on some innovative product that this development center comes up with --- this would be one of the follow-up pieces. Peter thought that if this were going to be presented to the steering committee it would be good to pull out those bullet action items like: maximize resource utilization; add as much value as possible; develop mechanisms to bring R&D folks together with entrepreneur and investors---- and build more action steps on those (i.e. Who is going to do those things). ---- That is what a full-blown action step would look like--- flushing out all those details. Where is funding for it? Who is doing R&D? --- We need to say who is going to do all that. It won’t be just Beno doing that. DRED and PSU should have lead roles.
Brad commented: From steering committee meeting, one of the objectives is to be able to highlight the pieces that we think are most important for funding or action and that would enable us to marshal all the forces in the region in the political sphere and to say “this is where we want our funding --- here and not over here. This is what we think is really important.” So, you may want to put in here “political persuasion” as part of the funding, but I came away from that with the idea that this process is going to inform the rest of the State how we want to do this.
Hayes: I think there is a lot of potential for funding. The harder thing is figuring out something that is going to work. Funding sources: Tillotson Fund, USDA, DRED, EDA, CDBG, CDFA and tax credits, etc. But, we don’t have a proven concept yet on how to make it work.
Thad explained that the idea for a development center came out of conversations we were having with the US Forest Service’s Forest Products Laboratory, Madison, WI, which concludes that we really don’t need to do R&D, because that has already been done very adequately. I don’t want to be seen as a zealous advocate for this concept--- if a workable concept emerges I will be happy to support it, but I am not going to push it too hard. I do think it is very fundable. The biggest issue is private sector participation. At the heart of it there needs to be a close relationship among the private sector, institutions of higher education and government. If we get the right three organizations at the heart of that then it might make sense. The limiting factor in all this is the private sector. Without buy-in from the private sector it will be dead in the water.
In response to the question “has this model been successful elsewhere--- there is a 48,000 sq ft center in Maine (University of Maine). They do have some commercialization labs to help commercialize products for the private sector. They have machine shops. We have not yet gotten to the next step to learn more about it and how successful it is.
To what extent do we need to replicate what is out there at UMaine and Univ of NY? Or, to do extent can we connect to those resources? Do we need a brick-and-mortar facility; or do we simply need better ways of bringing those resources to our area?
As a footnote: the link to the UMaine facility is posted on the blog.
Jeff Williams: there are a number of different kinds of models. Most of the time people think about a bricks-and-mortar incubator, or an R&D center. Maybe what we are talking about is a little bit different from what has been done in the past, and focusing a little bit more on just getting people a little more excited about innovation; maybe helping to connect people to various forms of capital, helping with business plans, etc. As far as the Maine center is concerned: it has been a real good site. A lot of people have been real enthusiastic about what they have done, although some are a little disappointed about what they have done--- the critique has been that they have provided R&D to businesses that are not necessarily in Maine. So, although they are located in Maine at UMaine, the effect of their work is not necessarily felt in Maine.
Is the key thing getting information to people, such as off a website; or is it having personal interactions with people? --- We need to make connections with investors, entrepreneurs, and the R&D labs. Somehow we need a way of connecting those three. The entrepreneur is the major missing link.
Having an on-line portal for the abundant information that is available on-line would be helpful, but another opportunity to bring people together is through a lecture series. You could have people from R&D, entrepreneurs and investors getting together occasionally for a lecture series—who knows where it might lead. Someone could be sitting somewhere in a home office or a real place to answer phone and direct email traffic, and do triage on interesting ideas and maybe help with business plans, etc. It is really the Business Development Center that is a critical piece.
The USDA wants its R&D results to be commercialized.
Idea: we could hire a consultant to look at the 300-500 inventions that have been created in Madison, WI, and come up with three or four that seem to have a high potential in the North Country on NH. Develop model business plans to commercialize these products. We could pay for all that with grant funds and non-profit resources and university resources. But, then what do we do? ---- We need the entrepreneur to take that product and take a risk.
Another opinion was to not be limited to 2-3 products, but to capture potential in 50-100 products from Wisconsin and market to the world.
The products at Wisconsin run the gamut from very low tech like using round wood in building; at the other extreme there are high tech products like using nanotechnology --- e.g. replacing carbon nanotubes with cellulose which is much cheaper for light-weight aircraft materials made from wood. In the middle there are things like wood-plastic composites for new types of shingles that are more energy efficient, because they keep roof cooler in the summer and warmer in the winter--- that is something that is ready for commercialization right now.
Interjection by Sam: Are we on track with what we need to do? --- answer: yes. Let’s use: Who, What, When, Why, Where and How and start filling in the blanks. That’s the level we where we need to start. We want to get at as much specifics as possible. We know that it is going to be the lead organizations that are going to take it to the next level. We don’t need to answer every question. This is a draft at this stage and we are going to come back and talk about it again. There will be some lead organizations that will be leading some discussions about this as we get closer to implementation. So, this draft is pretty ready to be presented. We just need to add some lead players and resources to the list. We are in pretty good shape for this early a stage in the process.
The crux is how do you find investors? Will they come here?
Discussion of the FIBER SUSTAINABILITY draft:
Matt commented that Jasen’s decision tree was good, talking about existing businesses and ways to expand the wood supply. And, in the case of inadequate wood supply to talk about focusing on value-added. That gets a little outside what we are trying to do, but it is a point well taken.
Regarding determination of timber resources within the study area: we still have to define the study area if we are going to reach into Vermont and Maine. So, that is something to think about this afternoon.
Won’t some of this come from the conference scheduled in March? --- this is likely, but there has to be an atmosphere to discuss this and it is not clear yet how that will take place.
We need to look at harvesting practices and utilize everything that comes off the stump. There is too much waste being left in the woods, because of the way logging is conducted that does not ensure complete utilization of what is cut. A lot of useable wood is left in the woods.
There was a brief debate about finding other sources of fiber, such as switch grass, to supplement wood as a way to extend the wood resource, because wood is a “finite renewable resource”. It was pointed out that this study was intended to answer the question about the availability of wood. We have to have the answer about the wood supply before we can have the wider discussion about alternative materials.
We have got to have this wood supply study. It becomes the basis for whatever we do.
The investors are going to ask for this information. The first thing bankers ask is, “what’s out there for wood and how available is it?” The second question is: “how much is it going to cost?” The third item of interest by investors concerns regulators and the public. The fourth thing is the focus on “green”. The global competition is such that starting a new business based on traditional uses is just not going to happen---- why did the pulp companies move out of the Northeast? ---you have to ask this question; that is the question that gets asked by investors. The money is out there, but investor’s focus is on being able to use that on a regional basis where it cannot come from anywhere else, and growing “green”. There is a Fortune magazine article on these global, multi-billion dollar companies. I think we can bring the information they are looking for, but we need some foundations.
Are “adequacy” and “availability” being used interchangeably in this paper? --- these are two separate things. “Availability” refers to how much of the fiber that is out there is capturable. Growth and removal studies over the years have not gotten at the issue of availability. The FIA data reports how much wood is out there, but does not address it availability.
Several people opined that the study should not address agricultural crops or other non-wood fiber. --- it is not really in the purview of this TRC. Thad further stated a concern that one of the interests in having a vibrant, forest-based economy is that we want to sustain forests, so if we open the floodgates for things like plantations, etc. that may be more productive for things like biomass, it does not accomplish our other goals of having beautiful forests that are going to continue to attract people for tourism, continue to sustain creative economies, etc. So, let’s focus the study on availability of wood based on sustainable forestry.
If we are going to focus on availability, how are we going to get the missing information? If you don’t know what is growing out there and FIA doesn’t tell us, what is the best way to get the information? ---
We shouldn’t underestimate the value for carbon markets. They neatly fit in to this discussion. A lot of investors in New York are almost more interested in the capacity of the carbon market than they are in the capacity of the timber market. --- if you manage sustainably, may be able to have your cake and eat it too. There is real money there for carbon sequestration. What is the timber owner’s propensity if the use of the wood becomes “green”. If the product is greener, does that change people attitude toward timber harvesting? --- conclusion: not germane to the present study.
This study is funded and ready to go. The sustainability conference on March 7th is being co-sponsored by this TRC and will be invited to attend. Phil is getting speakers and panelists. The conference will be held at the White Mountains Regional High School in Whitefield from 10 to 3. There will probably be a charge for lunch. North Country Council is doing some of the leg work for Phil. Invitees include federal and state legislators, this TRC, the press, the North Country Council committee, development organizations. Sarah will provide names from the wood industry to be added to the invitation list.
Discussion of the ENERGY EFFICIENCIES draft:
This goal is concerned with the cost of the timber industry doing business, and is designed to help make the timber industry more energy efficient to reduce costs.
The low-hanging fruit in this paper is the fuel cooperative. The highest-hanging fruit is the manufacture of biofuel. We should pursue the low-hanging fruit first. Should re-order the action items in the order of easiest first.
There have been disincentives for people to invest in wood-fired plants. Should we expand this? --- could put it into “Existing Business Issues” recommendation under the heading of cost of doing business. Energy is a big part of it, and labor is another. They both might be merged into one recommendation called “business issues”.
There are certainly issues that are common to all the TRCs, such as legislative issues and regulatory issues. The steering committee might ask “what are the dumb laws?” – we may end up with a legislative/regulatory catch-all. Load limits, speed limits, fuel costs and taxes, etc.
If a mill that produces its own power happens to go off-line and uses PSNH power for 15 minutes there will be a demand charge that applies for the full remainder of the year. (availability charge or interconnect charge) --- unrealistic costs that they don’t want to talk about openly. Why should you be penalized? – can drive people out of business.
See the Governor’s Task Force report on climate change that contains about 40 pages on energy initiatives. ---- posted to the blog.
Discussion of the EXISTING BUSINESS AND LABOR draft:
The second part refers to a survey that was commissioned by the White Mountains Community College to the Family Resource Center of Gorham, NH. Cathy McDowell has been talking to businesses to discover what the labor resource needs are. She pretty much wrapped that up and is now in the phase of writing up the results, which should be available within one month. She shared, for example, the expressed need for people to come to work ready to work (work ethic). Another thing she learned is that some people are very good at using technology, and others are not. She sees technology needs as a real opportunity. Sue Buteau may have some further information that bears on this issue.
Roy mentioned the example of workers in the wood industry knowing how to identify tree species. Some people are ready to learn this sort of thing and others are not.
Thad mentioned he is chairing a committee to look at Coos labor resources as part of a Department of Labor regionalization grant. It is likely that a good needs study will be required. Such a study is glaring in its absence.
Peter noted that when Dept of Employment Security tries to find a job for someone they only look at one skill code. A person may have a much more marketable set of skills that don’t show up on their skill sets. A survey may help to better determine just what the skill sets are.
Brad mentioned we were lucky to learn about the survey being conducted be the Family Resource Center. He is less sure about the first part and how it might specifically be addressed. Thad’s point is that in all the other discussions we need to make sure to engage the local entrepreneurs. On the other hand, do we want to take it beyond that and conduct something similar to what the Family Resource Center is doing with respect to investment? --- Sarah thought that the Resource Center was doing a phone survey, so there is very little contact. The first one is more that continuous day to day economic development work that goes on with people like Peter, Bill and Beno. We would not want to put something forward that did not recognize that this is still the bread and butter of what is happening.
Thad’s point is that all the TRC recommendations build on past work and that the Existing Businesses is not the only topic dealing with existing businesses.
Number one is very tightly woven with the market diversity topic. But, it is focused on retention and expansion as opposed to new technologies. It is helping people that are already here to maximize the investments they already have, but that is still market diversity. It is strengthening what is here in addition to adding additional diversity to our economic base. We can never forget what is already here. (And all the better if the folks who are here are contributing to that diversity and participating in it.)
Peter asked about age of the work force. Sarah commented that there have been surveys done in the logging industry that show the average age is 45. There is a concern that not many young people are getting into the industry. The logging work force is aging. --- This may be a big sustainability issue: tree may be growing, but are we going to have anyone to cut the trees?
We talk about training labor, but it is really labor availability. When we talk about fiber sustainability, it is financial resources. As an economic practitioner I look at the surveys nationwide of what companies are looking for. In the top three is always labor availability. Products and markets are usually up there in that top three also. Without labor availability the product will not get to market.
People need to be taught about labor. It requires labor to do many of the things necessary in the wood products industry. When you look at who is graduating from schools, nobody is coming out to be a laborer.
Brad assigned each small group the task to discuss revisions to three of the drafts (market diversity, fiber sustainability, and existing business/labor) during break-out sessions and then to report back to the full TRC. The energy efficiency draft is in pretty good shape and will not be further addressed today. The goal will be for Sam and Brad to then take the revised drafts to the steering committee on February 6th. We anticipate a new charge coming out of that meeting, which will be addressed by the TRC at a meeting later in February.
The market diversity small group included: Ron Bugeau, Bill Andreas and Jim Wagner.
The fiber sustainability small group included: Matt Tansey, Will Abbott, Jeff Williams, Bob Berti and Marty Driscoll.
The existing business and labor small group included: Sarah Smith, John Dyer, Roy Amey and John Dyer.
Jeff Hayes, Brad Wyman and Sam Stoddard conducted a side discussion concerning recommendations for the wood supply conference to be presented to Phil Bryce.
FOCUS GROUPS REPORT ON REVISIONS TO DRAFTS
MARKET DIVERSITY:
The justification statement was examined. It was proposed to add the same point number one of the “Existing Business and Labor” justification, in order to incorporate existing businesses to the marketing diversity topic.
Lead roles were examined and expanded to include: DRED (Beno and Mike Bergeron); universities (UNH, UMO, White Mountains Community College, and maybe those in Wisconsin/Michigan, etc); local nonprofits such as BEDCO, CEDC, NCIC and North Country Council.
The time table to be fully operational would be September, 2009. It was thought that to do it in six months was too aggressive.
The funding and implementation section was expanded to include: Department of Labor, Economic Development Administration, CDFA/CBDG, Tillotson, private sector, educational communities and US Forest Service.
It was noted that earlier discussions really only considered recruiting new businesses into the area. The meeting process we are using is really good, because our small group had missed the matter of working with existing businesses. In the big group we were talking about retention and expansion, which is obviously part of market diversity. The best chance we have of expanding and having new things done is with businesses that are already here. Getting new businesses to come in to the area is sometimes tricky. So, the process we are using of small group discussions and then interacting with the large group is working well. It is really important to have added the piece concerning expansion and retention.
FIBER SUSTAINABILITY:
The completion date will be June 1, 2008. The RFP has not yet been sent out, but there is a concern that the grant has to be closed out soon.
The comments from Jasen were felt to be more appropriate for the market diversity or existing business topics. He mentions value-added and some wood products, which go beyond the scope of wood availability.
For deliverables we cut out number six (statement of impact or issues regarding non-timber benefits. It was felt that it was just so wide in scope that too much time would be required than is appropriate. Some of the concepts involved in it deal with silvicultural guidelines, BMPs, etc. which are beyond the scope of a wood availability study.
Regarding the wood supply conference on March 7th, Phil is thinking of morning presentations by people and organizations that have been involved with wood stocks, including Todd Caldwell, Eric Kingsley, FIA, and Burke from Vermont. In the afternoon there would be a panel discussion to provide information about the scope of the study. The panel would include folks from Coos County who have a real stake and interest in the outcome. We will suggest to Phil that panelists include: biomass energy (possibly Bob Berti); large landowner (possibly Don Tase, Lyme Timber, or Tom Colgan); mill owner (possibly Barry Kelley); logger (possibly Mike Kelley or Forrest Hicks); environmental conservation groups (possibly Will Abbott); and someone representing a business prospect interested in the area and who has asked about wood supplies in the past (possibly Brian Ballantyne).
EXISTING BUSINESS AND LABOR:
Basically we took the contents of number one and propose to move it to a preamble about the context and assumptions that we need to retain and expand existing businesses. We got down to data needs--- the labor studies, a business survey. The business survey would look at what are the products; what labor do they have; what labor do they need; training needs; and the challenges and obstacles. From there the discussion will incorporate regulatory/legislative issues (the dumb rules and disincentives that get in the way; workers compensation costs, etc). Labor surveys we are looking at are building off the Family Resource Center, but also the more in-depth Department of Labor information which includes salary and benefit comparisons, out-migration and demographic shifts, reasons graduates are leaving this area and will they come back; what will keep them here; what kind of job security and wage opportunities are there. We talked about school to career and job shadowing; the State has shifted its view that everything has to be based on seat time and granting equivalent credits for real-world learning (for example, working in a log yard and learning about identification of tree species and log products would be credited toward education).
We really wanted to play up the fact that existing business relies a lot on market diversity, which relies on lots of partnerships between business, labor, education and government. There has to be private business involvement. There is power in numbers---we need to make sure we get everybody at the table.
The list of resources for funding and implementation was expanded to include: DRED, educational institutions, Dept of Labor, SBDC, SCORE, Micro-credit, CEDC, BEDCO, and NCIC. Also added was the government’s job training fund (incentives).
Observation: kids who go off to college and graduate often do not come back to the area. There is an opportunity here, because people who work in the production end of the wood products industry are basically better paid than those in jobs of the retail sector, etc. For example, the better logging crews and sawmills are now paid $12 to $15 per hour with benefits. So, this could be an opportunity for the expansion of this area to retain those people who are not going to go off to college, and to provide them with an opportunity to get a really good wage. Losing manual labor people is really critical. We are losing people who work with their hands; working with your hands is not all that bad. We have an opportunity here to retain workers who work with their hands. People who go off to college are unlikely to come back, so it is a waste effort to try to retain those people.
What about the other factors that young people are interested in? --- The cultural, the social sorts of things. It’s not just the job, it is also their social network (concerts, etc) that has an effect on them and that is missing up here. Perhaps that also has an effect on retaining the young labor market up here in addition to the job opportunities. ---- The question is how do you frame that?
For example, government should relax their rules about the age of truck drivers allowed to cross state lines. ---- A truck driver has to be 25 years old to drive a truck across the state line. In northern Coos a good 18-year old driver is not allowed to drive a quarter of a mile over to the Beecher Falls mill, or over to Rumford. This is a regulation which is nonsense and a disincentive that the government could back off on.
Further, there is a need for new drivers to train with heavy loads equivalent to log loads rather than the light loads used in driver schools. There is a world of difference in handling heavy versus light loads. John Dyer expressed interest in having a trailer of pulp for use in the driver training program at White Mountains Community College.
The next TRC meeting starts at 10 AM on Tuesday, February 19th at UNH Cooperative Extension in Lancaster.
