DETERMINANTS OF PRIMARY TIMBER PROCESSING FACILITY CLOSURES IN COLORADO: A SURVIVAL ANALYSIS

Abstract

The forest products industry (FPI) in the United States (US) plays a vital role in sustaining rural economies, providing employment opportunities, and supporting healthy forests. Over the past several decades, the FPI has undergone significant changes as the number of timber processing facilities has declined across the US. While this trend of closures is evident, little research has examined patterns of forest plant closure or the factors influencing such patterns. Using a Complementary Log-Log discrete-time survival model, we identify the external and internal factors driving the closure of primary forest product manufacturers in Colorado between 2002 and 2020. Internal factors, such as plant size and plant type, and external factors, such as the volume of timber removed from federal lands, had a significant impact on the survival probability. Compared with larger mills, small mills (<250 MCF) exhibited an 82% higher risk of closure. Sawmills and log home manufacturers were less likely to exit the industry than log furniture manufacturers. In addition, an increase in the average annual volume of timber cut from federal forests was associated with a 1% reduction in the closure hazard. Similarly, an increase in industry employment of 100 employees was associated with a 13% decrease in closure hazard. Findings from this study highlight the importance of federal timber availability, skilled labor availability, and targeted policies for local FPI, depending on product type and input capacity. This study offers one of the first applications of survival modeling to the FPI in the southwestern US, providing insights into policy implications that support federal timber programs and investment in workforce development as effective instruments for improving industry viability.