Hardwood Checkoff Promotion: Is It Right for Industry?
By Karen Koenig | Posted: 01/06/2014 1:39PM
Hardwood lumber and hardwood plywood producers have until January 13 to submit comments on the proposed Hardwood Checkoff program - Hardwood Lumber and Hardwood Plywood Promotion, Research and Information Order.
Is it the right move for the industry?
Checkoff programs are collective marketing efforts funded by the product producers and run by an industry-governed board; coordinated through the USDA. If the proposal passes, it would be just the second checkoff in the woodworking industry, and the first for hardwood; passed in 2011, the softwood industry's Softwood Lumber Board promotes the usage and benefits of softwood lumber products in outdoor, residential and non-residential construction.
While successful in other industries, the Hardwood Checkoff is not without its share of controversies. Chief among them is the mandatory fee assessment on large volume producers, who must shoulder the cost of the nationwide program.
Under the Hardwood Checkoff proposal, funding for the program would come from sawmills producers and kiln operating facilities with annual sales in excess of $2 million. These companies would be required to pay $1 per $1,000 on sales on the raw product. Value-added – though still considered unfinished – products, such as unfinished strip flooring, mouldings, dimensioned components, S4S, etc., will also be subject to a checkoff fee, but at a reduced rate of $0.75 per $1,000 in sales. Hardwood plywood mills with annual sales in excess of $10 million would pay $3 per 1,000 square feet of production; companies would be given a “credit” for lumber purchases, which is deducted from their fee.
On the Federal Register is the following fee example:
"A hardwood lumber value-added product manufacturer who operates a sawmill or a concentration yard that manufactures hardwood lumber value-added products would be assessed as follows: Total assessment would be $0.75 for every $1,000 in value-added product sales, plus $1 for every $1,000 in green and kiln dried lumber sales, minus $1 for every $1,000 in green and kiln dried lumber purchases. This computation is necessary to capture the purchases and sales of green hardwood lumber by this manufacturer that may be used to manufacture hardwood value-added products."
The comment posted to the National Hardwood Lumber Association's blog by Rhonda Kendrick, Kendrick Forest Products, typifies the sentiments felt by many. "...We agree we all need to market and promote to some extent. However, we also believe that we are each responsible for our own financial welfare. We each have different products and species to market, we market to different areas and in different ways. We do not need the Federal Government or a newly organized Industry Government to direct our actions. We do not believe that ANYONE should take our money and spend it on how THEY feel it is best suited..."
Detailing the benefits of the program, as well as some frequently asked questions, is the Hardwood Checkoff website, HardwoodCheckoff.com. Among the comments posted on the site is that of Jim Howard of Atlanta Hardwoods: "...The compelling question is should we stay the course and forgo industry-wide promotion, research and public education? Or alternatively do we collectively allocate approximately 1/10 penny per board foot sold toward industry vetted programs for promotion, research and education? To me, the definition of insanity is to do nothing and continue to allow our market share to erode..."
There is no disputing the fact that checkoff programs have been successful in other industries. "Pork: the Other White Meat," "Beef: It's What's for Dinner," "Got Milk" and "The Incredible, Edible Egg" are just a few examples of the successful promotions.
But is it right for the hardwood industry right now? And how might this impact users of hardwood lumber and hardwood plywood, as well as consumers? Share your comments on Woodworking Network.
About the Author
Karen M. KoenigKaren M. Koenig has more than 25 years of experience in the woodworking industry, including visits to wood products manufacturing facilities throughout North America, Europe and Asia. As Editor-in-Chief of Woodworking Network magazine (formerly Wood & Wood Products), Karen’s primary responsibilities include spearheading the writing, editing and coordinating of the editorial content of the publication, along with the Red Book resource guide and the Red Book online source and supply directory (RedBookOnline.com). She is also a frequent contributor to other Woodworking Network online and print media. She can be reached at firstname.lastname@example.org or Google+.