Fostering Relationships Among Central American and Appalachian Forest Products Companies

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Virginia Tech. Center for Forest Products Business

Exporting wood products offers many advantages for firms entering the global market, such as increased profits and credit, market growth, and economic strength (Parhizkar 2008; McMahon and Gottko 1989). In the past few years, parts of the U.S., such as the Appalachian region, have suffered from the economic crisis resulting in forest products mill closures and loss of employment due to an increase in competition. An increase in global competition has caused the decrease of domestic markets for U.S. furniture. This increase in competition has taken a toll on the Appalachian hardwood lumber industry (Bowe et al. 2001). Forest products companies in the Appalachian region must be innovative in their marketing strategies to find potential markets for their products (Naka et al. 2009). Therefore, Appalachian wood products companies may need to increase product competiveness by expanding export markets and improving product promotion (Wang et al. 2010). International marketing of wood products is essential for the Appalachian region to strengthen its economy (Hammett 1996). Studies in the forest products industry have found several factors that affect successful product export. The research of Ifju and Bush (1993) suggests that small, domestic companies view themselves as non-exporters, but they still have potential to export. Non-exporting companies attempting to enter a global market state that the primary reason they have not done so is lack of market information regarding product specifications and distribution channels (Ifju and Bush 1993). A study of Appalachian hardwood lumber exports showed that production limitations and a small number of employees did not significantly affect exporting, but the need for marketing information was a major hurdle for companies (Parsons 2002). Overall, the lack of market information is believed to be the main barrier for potential exports of forest products overseas (Ifju and Bush 1993; Naka et al 2009). Wood products companies in the Appalachian region must gain a better understanding of the trade barriers in an overlooked market, such as in Central America in order to market products and trade successfully (Salamone 2000; Figure 1). The objective of this study was to identify market drivers and barriers for the sale of Appalachian wood products to the Central American market through a survey of wood products firms.