Over the last 10-15 years, the forest products industry has migrated away from the vertical integration model. This trend has created a number of challenges within the larger market that have also been more pronounced in the Lake States. Consider the situation in the region as we head into 2Q2016.
Regional Ownership & Inventory Challenges
- Regional paper mills are no longer integrated, which means they no longer own the timberlands that provided 10-30 percent of their raw material requirements. Initially, these mills sold much of their land to Real Estate Investment Trusts (REIT), which operate with the philosophy of generating annual income through the sale of both land and timber.