WVFA Mountain State Forestry Summer 2020

I N D U S T R Y N E W S www.wvfa.org Summer 2020 | West Virginia Forestry Association Mountain State Forestry 11 The intent of this report is to examine changes in the industry’s economic performance from one year to the next. The analysis of economic contributions made by the forest products industry over time is crucial to better understand its role to the regional economy. Such data can provide policymakers and other interested groups (e.g., industry members, industry organizations/associations, landowners) important information for policy and industry decisions. Assessing the contribution of the major sectors that make up the forest products industry will identify those sectors of the industry performing well relative to other analyzed sectors. This information can then be used to identify sectors of the industry where government efforts should be focused in terms of providing industry assistance and economic development support. The IMPLAN software and data was used to construct an input- output model of the West Virginia economy in order to estimate the economic contribution of the forest products industry as a whole as well as the contribution of individual sectors that make up the industry. Direct, indirect, induced, and total effects are reported by IMPLAN for the following measures of industry-specific economic activity: Employment: The number of full and part time jobs. Employee Compensation: The total payroll cost of wage and salary to the employer. Output: The value of industry production, or industry sales. Value Added: The difference between an industry’s output and the cost of its intermediate inputs. This consists of employee compensation, proprietor income, indirect business taxes, and other property type income. Just like the study conducted by Gabbert et al. (2020) for previous years’ industry contribution, this 2018 analysis also examined seven individual major forest products sectors: (1) forestry, (2) logging, (3) primary solid wood products, (4) secondary solid wood products, (5) wood furniture, (6) pulp, paper, and paperboard, and (7) secondary paperboard and other paper products (Table 1). These sectors were created in IMPLAN through the aggregation of 30 individual IMPLAN sectors. Direct and total economic contributions in 2018 are provided in Tables 2 and 3. In terms of direct contribution to the WV economy, the WV FPI contributed 10,099 jobs in 2018, $550 million in labor income, $624.7 million in value added, and $2 billion in output. Direct employment (Figure 1), direct value added, and direct output (Figure 2) all showed a decrease from 2017 data. Specifically, employment went down by about 1% from 2017, value added by 19%, and direct output showed an 11% decrease. In contrast, direct labor income went slightly up by about 1%. Figure 2. Direct and total economic contributions of the WV FPI in terms of labor income, value-added, and output in 2017 and 2018. Figure 1. Direct and total economic contributions of the WV FPI in terms of employment in 2017 and 2018.