Harvesting Cost and Productivity Analysis of Independent Contractors in the Appalachian Region: 1995-1997

Abstract

The study examined contractor demographics, business and technological characteristics, costs, and production information for 15 independent logging firms in the Appalachians. Contractors represented nine states and were studied from 1995 to 1997. Each contractor's cost and production information was used to determine his economic efficiency for the study period.

Total annual production for the firms ranged from 2,728.26 tons to 213,194.74 during the three-year period. Four contractors' median weekly production decreased from 1996 to 1997, while three contractors increased their weekly median production. Labor was the largest cost category for the smaller production contractors and contracted services tended to be the largest category for the larger producers. Regression analyses found that the cost of producing an additional ton increased from 1995 to 1996 and decreased from 1996 to 1997. Total cost per ton increased for four contractors from 1995 to 1996, while four showed decreasing cost per ton. For 1996 to 1997, five contractors had a cost per ton increase and seven showed a cost per ton decrease. Some of these shifts can be attributed to the fact that several of the mechanized contractors in the Central-Appalachians were "start-up" contractors when the study began.

West Virginia contractors had the highest workers' compensation premiums per ton and Georgia contractors had the lowest. Labor costs per ton were highest for North-Central Appalachian contractors and lowest for the Southern Appalachian contractors. Contractors who produced predominantly sawlogs tended to have higher efficiency rankings than those who produced primarily pulpwood.